Oil and gas companies - Are they shifting to renewables? A study of policy mixes for energy transition in Brazil
| Autor | Alexandre Noguchi, Farley Simon Nobre |
| Cargo | Universidade Federal do Paraná, Curitiba, PR, Brazil/Universidade Federal do Paraná, Curitiba, PR, Brazil |
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BAR-Brazilian Administration Review, 20(1), e220087, 2023.
Research Article
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Keywords:
oil and gas; fossil fuel subsidies; energy
transition; policy mix; sustainability.
JEL Code:
L520.
Oil and Gas Companies — Are They Shifting to
Renewables? A Study of Policy Mixes for Energy
Transition in Brazil
Alexandre Noguchi1 , Farley Simon Nobre1
1 Universidade Federal do Paraná, Curitiba, PR, Brazil
How to cite: Noguchi, A., & Nobre, F. S. (2023). Oil and gas companies — Are they shifting to renewables? A study of policy mixes for energy transition in Brazil.
BAR-Brazilian Administration Review, 20(1), e220087.
DOI: https://doi.org/10.1590/1807-7692bar2023220087
Received:
May 27, 2022.
This paper was with the authors for two revisions.
Accepted:
January 16, 2023.
Publication date:
February 02, 2023.
Funding:
The authors have stated that there is no financial support for
the research in this article.
Conflict of Interests:
The authors have stated that there is no conflict of interest.
Corresponding author:
Farley Simon Nobre
Universidade Federal do Paraná,
Av. Prefeito Lothário Meissner, n. 632, Jardim Botânico,
CEP 80210-170, Curitiba, PR, Brazil
f.nobre@ufpr.br
Editor-in-Chief:
Ivan Lapuente Garrido
(Universidade do Vale do Rio dos Sinos, Brazil).
Associate Editor:
Claudio Zancan
(Universidade Federal do Paraná, Brazil).
Reviewers:
Laura Albuquerque
(Universidade Federal do Rio de Janeiro, Brazil),
and five anonymous reviewers.
Editorial assistants:
Kler Godoy and Simone Rafael
(ANPAD, Maringá, Brazil).
ABSTRACT
We argue that there is a need to advance further research that strengthens the anal-
ysis of policy mixes for the energy transition in major emerging economies. In this
context, this article aims to answer the following question: How do Brazil’s policies
favor or hinder an energy transition of oil and gas companies (O&G) to renewables?
To achieve this purpose, we conducted literature and archival research and interviews
with experts to analyze (a) Brazil’s energy policy mixes that address O&G and renew-
ables issues; and (b) major O&G companies’ activities and perspectives that influence
the energy transition. Results demonstrated that though some of the O&G companies
have made significant renewables investments in the last years, they continue focusing
on O&G activities. We discuss the main policy mix features that hinder the prioritization
of renewables by these O&G companies and that can undermine a sustainable energy
transition in Brazil.
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Oil and gas companies — Are they shifting to renewables? A study of policy mixes for energy transition in Brazil
BAR-Brazilian Administration Review, 20(1), e220087, 2023.
INTRODUCTION
There is continuing interest in how policy mixes can
favor energy transition (Haddad et al., 2022; Kern et
al., 2019). Facing opportunities and threats in a glob-
al energy transition movement, oil and gas (O&G)
companies started to diversify their business mod-
els to comprise new portfolios driven by renewables
(Hartmann et al., 2021). O&G companies such as Shell,
Total, bp, and Equinor have all created divisions for
renewable energies. Former O&G company Ørsted
completely divested its O&G segment in 2017, and it
is now a renewable energy organization and one of
the most sustainable firms in the world (Corporate
Knights, 2022; Pickl, 2019; Stevens, 2016; Timperley,
2021). Public policies involve strategic instruments for
an energy transition, as they directly aect firms’ in-
vestment decisions (Markard, 2018; Rogge & Reichardt,
2016; Sovacool & Geels, 2016). In a statement about
the 2021 IPCC report, UN Secretary-General António
Guterres said, “… Countries should also end all new
fossil fuel exploration and production, and shift fossil
fuel subsidies into renewable energy” (United Nations,
2021). While most publications on this subject are from
developed countries (Ghosh et al., 2021; Kern et al.,
2019) and especially from European nations (Rogge
et al., 2017), we found very few publications about the
energy transition of O&G companies and policy mix-
es from major emerging economies — subsumed by
the BRICS — that have idiosyncratic institutions and
complex socioeconomic challenges compared to de-
veloped nations. We argue that there is a need to ad-
vance further research that strengthens the analysis of
policy mixes for energy transitions in major emerging
economies. This article aims to understand the fea-
tures of Brazil’s energy policy mix that favor or hinder
a transition from O&G businesses toward renewables,
moving away from fossil fuels. While the world re-
newables usage was merely 14% in 2021, Brazil’s re-
newable energy sources shared 46% of its national
energy matrix, backed by a large production of sug-
ar cane derivatives (e.g., ethanol) and electricity from
hydropower — which accounted for 19.1% and 12.6%,
respectively, of the total energy supply. In addition,
Brazilian renewables also comprise a fast-growing so-
lar and wind energy systems market, which account-
ed for 1.7% and 8.8% in 2021, respectively (Empresa de
Pesquisa Energética [EPE], 2022; International Energy
Agency [IEA], 2021). However, the country still faces
grand societal challenges regarding poverty and in-
equality issues, in which context the royalties from
O&G can be a valuable resource to tackle them. By
discussing policies for the O&G exploration and pro-
duction (E&P), we inevitably study subsidies for fossil
fuel production, which are less researched than sub-
sidies for consumption (Rentschler & Bazilian, 2017).
The central research question (RQ) in this article is:
How do Brazil’s policies favor or hinder an energy
transition of oil and gas companies to renewables?
To answer this inquiry, we organized qualitative
research around two processes. First, we relied on
the policy mix framework proposed by Rogge and
Reichardt (2016) to analyze Brazil’s energy policy mix
regarding its elements’ consistency1 with the tran-
sition goals toward renewables. Among the three
building blocks of the framework, we analyzed ele-
ments (i.e., policy strategy and instrument mix) and
characteristics (i.e., the consistency of the elements).
Our analysis does not include political processes (i.e.,
the policymaking and implementation) because they
are not relevant to our research question. Therefore,
we studied the consistency of the elements to un-
derstand how aligned the policy strategy and instru-
ments are toward the transition of O&G companies to
renewables. This first stage contributes to enlighten-
ing how the policy mix impacts the O&G companies
in Brazil. Second, we conducted archival research and
interviews to gain reliability in our findings by draw-
ing data from multiple sources. We performed archival
research about seven major O&G companies in Brazil
to find evidence of renewables and O&G activities. We
conducted the interviews with O&G industry experts
to capture their perceptions of Brazil’s policy mix for
energy transition and O&G companies’ activities. We
focused our research on public policies and O&G activ-
ities relevant to the exploration and production (E&P)
segment. We leave other O&G value chain segments
for future research (e.g., refining and distribution).
We discuss the main barriers in the Brazilian pub-
lic policies that can hinder a transition toward renew-
ables, including the fossil fuel subsidies that under-
mine the global eorts to shift resources to a cleaner
and sustainable energy matrix. Brazil heavily subsi-
dizes its O&G production because it stimulates short-
term economic growth and creates tax revenue to
address social issues. We further discuss if these sub-
sidies have eectively accomplished these two (eco-
nomic and social) objectives and if the country should
still need them. However, at least in the short run, we
found that Brazil keeps going in an opposite direction
of a needed transition to renewables since it still relies
on a fossil fuel exploration regime with plenty of sub-
sidies. Finally, we propose directions for the Brazilian
policy mix to favor the transition of the O&G compa-
nies toward renewables and to reform their fossil fuel
subsidies.
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