Research Paper on Brazil's Economic Growth Driven By Renewable Energy Production

Introduction

Renewable energy is one of the critical drivers of the economy of Brazil after the government shifted its effort in full utilization of clean energy. There is a common belief among researchers that there is a positive correlation between economic development and consumption of renewable energy across the globe. Brazil being one of the highest consumers of energy, is experiencing tremendous economic growth. Over the recent past, there has been growing propulsion in Brazil towards production renewable energy in the national energy sector. Renewable energy is currently touted as the future fuel, and Brazil is not left behind in the maximum utilization of the energy in its economic production. It is imperative to note that the connection between consumption of renewable and the growth of the economy has not been exhaustively covered in literature reviews, and the varying impacts of the production of clean energy production across the globe have not systematically been analyzed. In this paper, the differential impacts of renewable energy on the Brazilian economy will be discussed. The discussion will cover both gross domestic product and other factors, such as the formation of gross fixed capital and the total labor force in analyzing the connection between renewable energy use and the growth of the economy.

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Literature Review

Renewable Energy Use in Brazil

Brazil is one of the leading renewable energy markets in the world, not considering flat economic growth since it has a strong commitment to renewable energy, and it has continuously invested in that segment. The primary renewable energy sources in Brazil are wind and hydropower. Besides the two sources of energy, the new solar energy development will offer substantial progress over the long term. Brazil has different renewable sources of energy, such as hydropower dams, which accounts for the largest total energy capacity in the country, biomass, wind power, and waste-to-energy (Oliveira & Trindade, 2018). The Brazilian government approved the construction of additional wind power since the state has the most durable wind resource base and that wind is the largest installed capacity in Latin America. Based on the research that was done by the Brazilian Government's Energy Research Agency, the country should invest new wind capacity in the future to meet then target set by the government, which should be realized by 2024. Brazil is famously known as a country of the future, and it will always be given the attention that it provides on renewable energy sources. The use of renewable energy in Brazil has resulted in rapid economic growth, with the government claiming that roughly 40 million people have been taken out of poverty in the last ten years (Apergis & Payne, 2011).

There is an incessant growing demand for energy in Brazil, and it is approximated the demand would increase by 60 percent in the next ten years (Menegaki, 2011). The increase in the need for renewable energy has been propagated by the rise in expenditure on consumer goods, economic growth, and massive spending on infrastructure, which occurred as a result of the nation hosting the world cup in 2014. Besides the external influence, Brazil also has set measures on how it can reduce carbon emissions by 39 percent by 2020 by reiterating and ensuring that the country focusses on the consumption of clean energy (Oliveira & Trindade, 2018). The objectives set thus far by the Brazilian government requires the nation to invest roughly BRL 190 billion. Approximately BRL 100 billion of the total amount will be set for renewable energy projects; 55 percent will be reserved for hydropower and 45 percent on the wind, small hydro, and biomass (Oliveira & Trindade, 2018).

Brazil has made significant strides in embracing the use of renewable sources of energy. Eighty-three percent of its needs are met by renewable means, and it has been recognized as one of the lowest matrices of carbon electricity in the world by Washington-based Pew Environment Group (Omri, Ben Mabrouk, & Sassi-Tmar, 2015). The consumption of electricity per person in Brazil stands at just 560 kWh which is lower than the 1900kWh in the U.K. and 4500 kWh in the U.S. However; there is an increasing use of energy per person in Brazil given that the nation has increased its use clean energy sources which have spread the availability of power across the country. Besides the high demand for power in Brazil as the leading cause of the upsurge in the use of clean energy sources, the rapid expansion of the Brazilian population has also propelled the government to find more efficient ways of providing power to its citizens. According to Omri et al., the people of Brazil are expected to rise by 14 million by this year, and there would be an increase in the number of households by 15 million (2015). The growth in the economy would also increase expenditure, and this means that the average number of electronic devices per home will rise from 1.37 to 1.71 (Ocal & Aslan, 2013). The massive increase in demand for power by the Brazilian population has propelled the government to fully embrace the use of renewable sources of energy given that fossil fuels are depleting, and they are hazardous to the environment.

Shortages of electricity have for long plagued Brazil. However, the government has managed to resolve part of the significant problem and is still formulating major plans of effectively embracing the application of clean energy. The nation has both local and overseas substantial investment and utterly untapped wind potential, which is attracting attention, and these factors are integral in faster growth of the use of renewable energy sources in Brazil. Another primary source of renewable energy in Brazil is hydropower, which looms largest in meeting the needs of the Brazilians. The government projects to harness more than 115 GW from hydropower in the next ten years (Ocal & Aslan, 2013). Brazil is building the Belo Monte dam on River Xingu, and it is projected to produce 11, 233 MW (Newman, 2017). The dam will supply enough power to serve 18 million homes as estimated by EPE, though in reality, most of its output will be used for industrial purposes.

Besides hydropower, the Brazilian government has also invested in the production of wind power. Other renewable energy sources such as small-scale hydropower and biomass and small hydropower will increase the 9GW that they generated in 2016 to 27 G.W. at the end of this year (Lise & Van Montfort, 2007). This will keep the overall contribution of renewable sources of energy at 83 percent and increase their country's electricity supply to 16 percent (Lise & Van Montfort, 2007). Wind will be the most substantial contributor among the currently used renewable energy sources, and it is projected that under the current plans, it would produce seven percent by the end of this year. Bioenergy is another crucial element of a renewable energy source that is aligned to meet the Brazilians' energy demand. As projected by EPE, it will play an integral role as a result of an increase in the number of vehicles in the country that use flexible fuels such as gasoline, ethanol, or a mixture of the two. Brazil has the most significant national biofuel market, and it is the first in terms of resources that are readily available for future expansion, as observed by the PEW Environment Group's 2010 report. The consumption of energy is projected to increase immensely in Brazil with the national fleet of cars, buses, and lorries expected to increase to 56 million in the next ten years, and the demand for ethanol is estimated to triple in the same period. One of the most researched questions concerning renewable energy sources in Brazil is how its consumption is connected to the economic growth of the nation.

The Correlation between Renewable Energy Use and Economic Growth in Brazil

In light of the analysis of how renewable energy sources have contributed to the development of the Brazilian economy, one fundamental point that every research should focus on is the extension by which the mitigation of carbon emissions is integral in the growth of the nation. In old literature, the connections between economic growth and environmental degradation are analyzed in the form Environmental Kuznets Curve (EKC) which states that there is direct correlation between environmental degradation and economic growth to a certain level, beyond which there is an increase in the quality of environment as income per capita increases (Lise & Van Montfort, 2007). The EKC is explained in terms of scale effects, combination effects, and the technique effects. Based on the study that was done by the Intergovernmental Panel on Climate Change, the renewable energy sources can meet 77 percent of the energy needs of the world by 2050 despite the present figure being relatively as low as 13 percent (Oliveira & Trindade, 2018). Most nations wonder about the role they can play in that drastic transformation, given that Brazil has played a significant role in the process has contributed 44.8 percent of clean energy in 2010. The projected renewable energy production increase to 46.3 percent could be small. Still, it does not consider the enormous growth that the country will experience in terms of demands of raw energy and the point that, in the next decade, a foundation would be created to facilitate the use of clean energy in the future.

Fossil fuels are the current primary sources of global energy, which makes up to over 80 percent of the total power supplied in the world economy (Inglesi-Lotz, 2016). However, the use of fossil fuel across the globe has been met with numerous impediments that have prompted many nations, including Brazil, to find alternative reliable energy sources. Some of the challenges that the Brazilian government face in the use of fossil fuel the increasing disconnection between the demand of energy and its supply in the global market, the growing depletion of oil reserves, and emissions of harmful gases in the atmosphere (Newman, 2017). Carbon, which is a byproduct of the combustion of fossil fuels is the leading cause of the current human ecological crisis. Concerning the various crises that have rocked the energy sector, Brazil has displayed an increasing desire to develop clean and renewable energy sources in the past few years. Besides the depletion of fossil fuel, the unabated rate of environmental degradation is also another factor that has prompted the Brazilian government to embrace the green growth agenda, which fosters for tandem coexistence of economic growth and environmental conservation (Inglesi-Lotz, 2016).

According to Vaona (2012), renewable energy is highly suitable in reducing the amount of carbon in energy, which is an integral element of mitigating climate. Based on the research that was carried out by Oliveira & Trindade (2018), the consumption of renewable energy would minimize the emission of carbon by approximately 8.2% by the year 2050. The use of clean energy technologies also contributes immensely to economic development. It assists in the minimization of dependency on imported fuels. It increases the consumption and accessibility of energy across Brazil to over 1.4 million people who are not fully exposed to renewable energy sources (Newman, 2017). The deployment of renewable energy can also help in the creation of job opportunities and facilitate the growth of industries in areas that had not experienced full industrialization in Brazil. According to Menyah & Wolde-Rufael (2010), an increase in the consumption of energy by 1% point increases the GDP per capital of Brazil by 0.12% points.

The causal connection between clean energy and economic growth c...