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Brazil And India Will Exchange Information On Policies And Practices For Initiatives Through A Joint Working Group Formed By Representatives Of Foreign Affairs And The Ministries Of Energy
The Brazilian government published this week the final version of the memorandum of understanding with India to develop joint initiatives in the bioenergy industry. The aim of the agreement is to seek cooperation for the energy sector such as the production of ethanol, biodiesel, biojet fuel, biogas, and other fuels like those from biomass.
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“The US is a major player in the ethanol sector and does not want to open its market. Meanwhile, India is also very strong in this sector, and to avoid having another competitor, Brazil decided to align with it to try to have more weight in price definitions, technologies, and possible negotiations in the future,” said Vinícius Vieira, a professor at the Getulio Vargas Foundation’s Institute of International Relations, to the BNamericas portal.
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Initially, the countries will exchange information on policies and practices for bioenergy initiatives through a joint working group formed by representatives of Foreign Affairs and the Ministries of Energy. The deal was first announced in January when Brazilian President Jair Bolsonaro visited India.
India is already a long-standing partner of Brazil in the energy sector. The countries had a similar technological cooperation agreement for blending ethanol in transportation fuels between 2002 and 2004. In the first half of 2020, the Asian country was the third largest importer of Brazilian oil, buying 1.9Mt (million tons), behind China and the US.
“For Brazil, it is very interesting to have an alternative to China in Asia. If Brazil is aligned with India on ethanol and other broader energy issues, the country will be able to negotiate better with the Chinese,” said Vieira.
Brazil is expected to become one of the world’s top five oil exporters due to the rapid growth expected in production from the pre-salt region in the coming years, and India could be an important ally in this context. India is the third-largest oil consumer in the world and is expected to see its consumption growth rate surpass that of China by the middle of the decade, according to information from the International Energy Agency.
India’s Energy Demand Increasing
Additionally, India’s energy demand could double by 2040, with electricity demand potentially tripling as a result of increased ownership of electrical appliances. Meanwhile, Brazil’s energy production potential for the coming decades is far greater than the expected consumption, according to its energy expansion plan for 2050, which was put out for public consultation earlier this year.
The Asian country also has extensive experience in refining initiatives, and earlier this year, Reuters reported that the Indian group Essar might be interested in making bids for assets in Petrobras’s divestment program for refineries.
Brazil could also benefit from India’s investment capacity, taking advantage of the ideological similarities between Bolsonaro and Prime Minister Narendra Modi. The Indian energy transmission company Sterlite has already been making inroads into the Brazilian market by participating in recent auctions.
“I believe Bolsonaro realized that, aside from the affinity with Modi regarding their right-wing populist styles, there are also affinities in how they handle the market. Today, India has a lot of money, with high savings rates, so it has capital to invest, and Brazil needs foreign investment,” said Vieira.
Tightening relations with India is also seen as a strategic geopolitical move for the South American nation amidst the conflict between China and India and the trade war between the US and China. “Brazil has a great opportunity to explore these conflicts and temporarily align with India as a hedge against potential tensions,” added the FGV professor.
*Source: BNamericas
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