Renewable Energy in Brazil Essay

Brazil is the biggest state in South America with a population of approximately 200 million ( Central Intelligence Agency [ CIA ] . 2008 ) and with abundant natural resources and land and H2O to utilize for renewable energy. With a high demand for energy and small supply. Brazil is the perfect topographic point to carry on energy related concerns. In 1999. Brazil consumed 353. 7 billion kilowatt hours of electricity ( Solarbuzz. 2008 ) . With turning concerns about beginnings of energy presents. renewable energy is a flourishing concern to come in since renewable energy usage worldwide is expected to increase by 53 % between 1999 and 2020 ( ibid ) .

Brazil has been reassessing its programs to run into turning energy demands in the state after a disabling power deficit in 2001 and a alteration of authorities in 2003 ( Aruvian Research. 2008 ) . Reforms and denationalizations have been undertaken by the Brazilian authorities to work out its power deficit and with the expected uninterrupted ascent in the country’s energy usage in the approaching old ages ; the lifting demand for energy demands to be addressed ( ibid ) .

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In turn toing this job and with the permeant job of planetary heating and environmental debasement. renewable energy is the manner to travel these yearss. Renewable energy in Brazil is classified into different concern types: renewable energy export concerns and import concerns. renewable energy makers. renewable energy non-profit organisations. renewable energy retail concerns. service concerns. and renewable energy sweeping providers ( Momentum Technologies LLC. 2008 ) .

One of the companies in the energy concern in Brazil is planetary company BP. which has merely started its solar energy operations in the state in 2000 and late brought biofuels to Brazil. A brief description of the company. its concern variables and options for success will be given. The legal model. mark market and installations will be mentioned together with the cultural. political and economic background of Brazil. The country’s Torahs sing environmental concerns. banking systems. forces direction and investings will be stated.

The economic and political hazards and the security clime will besides be stated to give farther understanding on how to set up a concern in Brazil. BP and the Brazilian Market BP is a century old planetary company that is into the geographic expedition. production. polish and selling of assorted energy resources all over the universe and carries the trade names BP. Castrol. Arco. Aral. am/pm and Wild Bean Cafe. Its chief merchandise is oil and it targets assorted markets from the maker to the distributer down to the consumer ( BP. 2008 ) .

In Brazil. BP has been around for 50 old ages and they are involved in every phase of the oil concern. It started with the Castrol lubricator and it has expanded of all time since. They sell lubricators to the transportation industry and its Castrol Offshore supplies high-quality control fluids to the seaward oil and gas production market. Since 1998. BP Brasil Ltda has been involved in oil and gas geographic expeditions and in 2002 the company launched its Air BP in the state. which distributes air power fuels and lubricators.

In 2000. the company started its solar power concern operation and in 2003 it completed its largest solar undertaking in the history of the state by put ining systems for 1. 852 schools in distant off-grid communities across 11 different provinces in Brazil ( ibid ) . Its Biofuels concern is the latest to get down in Brazil and participates straight in the turning market by constructing a commercial platform for the integrating of the engineering and life science research in the country. It makes usage of ethanol production from cane sugar and will back up the development of new low C fuels such as butyl alcohol. which has lower C emanations ( ibid ) .

The company in Brazil is presently based in Rio de Janeiro and Sao Paulo with over 400 people in its work force. It has besides been involved in concern ventures in the last five old ages in the geographic expedition and production with province oil giant Petrobras. Shell. ENI. TFE and Exxon. With respect to its corporate societal duty plan. BP Brasil supports instruction in community schools through voluntary work. funding new installations and by learning computing machine accomplishments to underprivileged kids.

Besides. the company has been supplying energy to remote small towns by giving the Diesel generators to bring forth no more than four hours of energy a twenty-four hours and by supplying solar energy systems to the 800 occupants of the small town of Sucuriji ( ibid ) . The company aims to convey new energy in everything they do in Brazil. One of the factors of success for BP Brasil is holding the established planetary trade name of Castrol. It besides entered the Brazilian market during the old ages when the state was being industrialized ; hence. it started early and entered the market in front of other participants.

The company besides had the fiscal backup of its female parent company BP which was already planetary at that clip. The huge oil resources in Brazil has besides made it a great site for geographic expedition and fabrication for the company and since BP has been in the state for 51 old ages. it has benefited from the reforms of the energy policies of Brazil and has allowed the company to derive entree to the oil resources in the past decennary. which helped do Brazil move from a rough oil importer to exporter ( Business Wire. 2008 ) .

In the renewable energy market. the company is wining because it identified early on the potency of Brazil in bring forthing biofuels and it gave an option to the power crisis of the state by supplying solar energy. It started the solar power concern in 2000. which was one of the perfect solutions to the power crisis which struck the state in 2001. It gave an alternate and saw early on the job in the state. It is besides successful because it leads the joint ventures with other large companies ; therefore. salvaging on fiscal investings and allows them to utilize more resources.

The planetary co-head of research at Allianz Global Investors says that “Alternative energy and solar energy are a really compelling growing opportunity…it’s traveling to be something on a par with volume growing of level panel screens. Personal computers and ready to hand phones” ( Wynn & A ; Kuehnen. 2008 ) . This growing has been seen by BP and they have led in the research of alternate energy and are providing solar energy to the state. They are supported by the Brazilian authorities and this is a really of import factor for success. Governments in other states even subsidise solar power as portion of their battle against clime alteration ( ibid ) .

Solar energy monetary values have besides declined in the market because of turning competition and addition in transition efficiencies and fabricating economic systems of graduated table because of the demand for solar panels ( Solarbuzz. 2008 ) . 20 million Brazilians live in distant communities and do non hold entree to reliable electrical power ( Business Wire. 2008 ) . and this is a large market for the solar concern. The renewable energy market in Brazil is estimated at $ 25 billion and concern chances here are illimitable ( ibid ) .

Since the authorities can non run into the demand for off-grid energy entirely. resources that are available support highly-subsidized plans ( ibid ) . Economic. Cultural and Political Situation of Brazil The authorities of Brazil stemmed from the overthrow of the Portuguese colonial power in the late nineteenth century and was replaced by a Republican military putsch ( infoplease. 2008 ) . A dictatorial authorities took over in 1930 and was overthrown by a military putsch d’etat in 1964 and the military forces remained in power until 1985.

It was merely in 1988 that a democracy was re-established and the Federal Constitution was promulgated during this twelvemonth ( Wikipedia. 2008 ) . The Brazilian Federation is based on three independent political entities: the States. Municipalities and Federal District ; power is divided into the Executive. Legislative and Judiciary subdivisions which are all governed by the cheques and balances system ( ibid ; infoplease. 2008 ) . Government plans in the recent old ages have been targeted at increasing the exports of the state which led to the Export Culture Program 2004/2007 in the Brazil for Everyone Pluri-annual Plan ( Brazilian Government. 2005 ) .

The plan encourages the engagement and support for the export potency of little concerns ; accomplishments preparation ; tuition and counsel on the export concern through Agent Network Project ; edition and distribution of proficient stuff counsel for export concerns. The authorities has besides encouraged a civilization of fight by privatising some authorities owned concerns. The Industrial. Technological and Foreign Trade Policy ( PITCE ) is besides a authorities enterprise that joins fiscal. technological. logistic. commercial and structural support plans for invention and future projection ( ibid ) .

It was launched in 2004 and BP Brasil benefits from this plan and the Law of Innovation of the Brasilian authorities since they are undergoing research for their biofuels and they are in a joint venture with province owned Petrobras. The jurisprudence of invention purposes to supply a suited environment for strategic partnerships between universities. technological establishments and concerns ; to promote the engagement of scientific discipline and engineering in the invention procedure ; and to promote invention in concerns.

This is all geared towards a competitory Brazilian market since in the past monopoly by province owned corporations where common. Bing the 10th largest energy consumer in the universe and the largest in South America. Brazil have made the National Alcohol Program. which is a nation-wide plan financed by the authorities that replaces car fuels based from fossil fuels in favour of biofuels ( Wikipedia. 2008 ) . This has made Brazil a bio-energy world power because of its ethyl alcohol fuel production. which has reduced the figure of autos running on gasolene to 10 million and reduced the country’s dependance on oil imports ( ibid ) .

The state is besides the 3rd largest manufacturer of hydro-electrical power in the universe ( ibid ) . The GDP-purchasing power para of the state is at $ 1. 83 trillion. its per capita is at $ 9. 700 and the services sector comprises 64 % of the GDP. the agricultural sector 5 % . and the industrial sector 31 % ( CIA. 2008 ) . The economic system is characterized by big and well-developed agricultural. excavation. fabrication and service sectors ; the state outweighs all the other South American states and it is spread outing its presence in the universe market ( ibid ) .

In add-on. the state has the largest and most diversified system of scientific discipline. engineering and invention in Latin America. which is a consequence of the achievements of the state in the last 50 old ages that includes prospecting oil and the ability to construct aircrafts ( Brazilian Government. 2005 ) . The demand for modernisation and substructures are made pressing in the societal docket of the authorities and are accomplished through enterprises known as Public-Private Partnerships ( ibid ) .

The conveyance sector is puting and overhauling passageways. incorporating airdromes. railroads and waterways ; R $ 61. 5 is besides being invested in 65 airdromes in the state due to increasing touristry. Poverty in metropolis centres such as Rio de Janeiro and Sao Paulo are common and wealth is in the custodies of a few but there is a large center category in Brazil. The people are diverse and came from the moving ridges of immigrants from all over the universe but most are of Portuguese and African descent ( IPACOM. 2008 ) .

Time is besides a flexible construct for Brazilians and they are mellow ( ibid ) . The official linguistic communication is Lusitanian and is spoken by 97 % of the population ( de Noronha Goros. 2003 ) and it is the linguistic communication to carry on concern in. hence. planetary companies who open a concern in Brazil have a Brazilian spouse ( Myers. 2003 ) . They will carry on concern in English if it is insisted since they recognize it is the international linguistic communication for concern but to be successful in Brazil. the national linguistic communication must be spoken ( ibid ) .

First feelings are of import for Brazilians and networking through word of oral cavity is really powerful in Brazil. particularly in Sao Paulo ; relationships are besides valuable to Brazilians ( ibid ) . Legal Framework and Business in Brazil Brazil is ranked as the 122 state in footings of easiness in making concern and in get downing a concern ( World Bank. 2007 ) . Making concern in Brazil requires 18 processs that take 152 yearss and costs 10. 38 % of GNI per capita to get down a concern in the state ( ibid ) .

The normal processs are: cheque company name. pay enrollment fees. registry with Commercial Board. registry for federal and province revenue enhancement. confirm INSS registration. have province revenue enhancement review. acquire mandate to publish grosss from province. registry with Municipal Taxpayers’ Registry. pay TFE to Municipal Taxpayers’ Registry. acquire the mandate to publish grosss from Municipal revenue enhancement authorization. acquire company bills. obtain fire Brigade License. receive review. use for operation licence. open a FGTS histories. register the employees in the societal integrating plan. advise the Ministry the employment of workers and registry with the Patronal Union and Employees Union ( ibid ) . BP opened a company in Brazil by subjecting an application to the Brazilian Government for blessing. which is granted in the signifier of a edict of the federal executive subdivision ( Sao Paulo Chamber of Commerce. n. d. ) . Corporate entities are regulated by Law No. 10406 of January 11. 2002 and by Law No. 6404 of December 15. 1976 or the Corporation Law ( ibid ) . Companies must hold at least two spouses. who do non hold to be occupants in Brazil but non-Brazilian occupants must hold an attorney-in-fact in Brazil with powers to stand for as a spouses.

All spouses. whether foreign or local must besides be enrolled in the Federal Revenue Office. which regulates revenue enhancements ( ibid ) . Taxs are based on the size of the company irrespective of the type of company ( ibid ) but usually it is computed at 15 % on adjusted income and one-year net income in surplus of r $ 240. 000. 00 is capable to a supertax of 10 per centum ( Baker & A ; McKenzie. 2006 ) . A Social Contribution Tax on Net Income or CSLL is required from most companies and it is a true corporate income revenue enhancement surcharge that is at nine per centum. which makes the overall income revenue enhancement rate at 34 % and makes Brazil a state with one of the highest income revenue enhancement rates ( ibid ) . There is besides no minimal corporate capital demand in Brazil ( Sao Paulo Chamber of Commerce. n. vitamin D ) .

There are two reforms being undertaken by the Brazilian authorities in footings of concerns in its state and these are paying revenue enhancements and implementing contracts ( World Bank. 2007 ) because of the high income revenue enhancements ( Sao Paulo Chamber of Commerce. n. d. ) and unwritten contracts are common in concerns because relationships are extremely valued in the state ( Myers. 2003 ) . One of the reforms on revenue enhancement is the part for the Intervention in the Economic Domain or CIDE ; the CIDE on Fuels is assessed on imports and gross revenues of oil and by-products. natural gas derived functions and fuel intoxicant and it is charged per three-dimensional metre ( Baker & A ; McKenzie. 2006 ; Sao Paulo Chamber of Commerce. n. d. ) BP Brasil was the local office of BP Global and it ab initio involved importing Castrol to Brazil.

Imports in Brazil are capable to authorities control from at least three degrees of authorization: the secretary of Foreign Trade. which supervises enrollment and licensing ; the Central bank of Brazil. which approves payments for financed imports ; and the Federal Tax Authorities who supervises rating for imposts intents ( Baker & A ; McKenzie. 2006 ) . Besides. both the exportation and importing of rough oil and all its byproducts should be performed in rigorous conformity with certain aims and rules of the Petroleum Law such as the protection of the consumers and the Brazilian Treasury ( ibid ) . Banking Systems in Brazil The chief banking regulative bureaus in Brazil are the National Monetary Council ( CMN ) . which is a policy-making and regulative organic structure that is responsible for set uping the recognition and currency policy of the state. and the Brazilian Securities and Exchange Commission ( CVM ) ( ibid ) .

All fiscal systems are regulated by the Brazilian Banking Law of 1964 and provinces that fiscal establishments shall merely run with permission from the Central Bank or by edict of the Executive Branch. if foreign ( De Noronha Goros. 2003 ) . Commercial banks’ minutess involves allowing of loans. retention of look intoing and investing histories. reception of hard currency sedimentations. having and processing of payments and aggregation of bill of exchanges and other recognition instruments ; nest eggs Bankss have similar functions to the commercial Bankss but are state-owned establishments ( Baker & A ; McKenzie. 2006 ) . Investment Bankss in Brazil are chiefly for carry oning investings and for funding operations in medium and extended footings for the private sector ( De Noronha Goros. 2003 ) .

Banks with multiple portfolios was besides created under the 1988 fiscal system reforms and its chief intent is to enable a individual fiscal establishment to keep different types of portfolios ; about all Bankss in Brazil are authorized to move as a multiple bank and the state-owned Banco do Brasil S. A. is the largest multiple bank ( Baker & A ; Mckenzie. 2006 ) . Bank secrecy Torahs are purely applied in Brazil and client information may merely be revealed upon judicial order and the money laundering regulations of 1998 lists all minutess that are defined as offenses ( ibid ) . Employment in Brazil Labor Torahs is Brazil include the right to protection against arbitrary dismissal. unemployment insurance. pregnancy and paternity leave. occupational accident insurance. prohibition on employment favoritism on the footing of sex. age. race and matrimonial position ( De Noronha Goros. 2003 ) .

The maximal work hr in a hebdomad in Brazil is 44 hours and a 13th month wage is required by the authorities ; the lower limit pay varies depending on the class of the employee but by and large it is R $ 280 or US $ 80 per month ( ibid ; Sao Paulo Chamber of Commerce. n. d. ) . A formal understanding is besides non required under Brazilian jurisprudence ; unwritten employment is to the full valid but employment contract should be recorded in the Work and Social Security Card of the employee within 48 hours of employment. Overall. Brazil has one of the most Numberss of procedures and ordinances that must be followed in get downing a concern and is ranked at 119 out of 130 states with respect to benchmarks in labour Torahs ( World Bank. 2007 ) .

Its energy market and fiscal systems are purely governed by the authorities and state-owned companies such as oil house Petrobras has monopoly in some countries nevertheless companies are allowed to hold joint ventures with state-owned houses. which BP Brasil is taking in with Petrobras. Taxes in the state are high and legion but the Brazilian market is really large and profitable. The renewable energy market in Brazil is a fast turning market and BP Brasil has expanded its operations in this industry and is taking advantage of it. Strict conformity with importing and exportation of merchandises every bit good as with environmental Torahs is besides needed to win in this country of concern. The concern civilization of the Brazilians and their linguistic communication must besides be mastered to to the full win in the market. which BP Brasil has done.

Economic and political hazards are besides small in the state right now and it is the perfect clip for set uping a concern at that place. Mentions Aruvian Research. ( 2008 ) . Analyzing the Energy Industry in Brazil. UK: Report Buyer. Baker & A ; Mckenzie. ( 2006 ) . Making Business in Brazil. Latin America: Baker & A ; McKenzie. Brazilian Government. ( 2005 ) . Economy and Business. Retrieved April 29. 2008from hypertext transfer protocol: //www. Brazil. gov. Br Business Wire. ( 2008. February 25 ) . Brazil’s untapped possible to use renewable energy such as biomass. solar. hydro and air current for electricity coevals is enormous. Business Network. Retrieved April 29. 2008. from hypertext transfer protocol: //findarticles.

com/p/articles/mi_m0EIN/is_2008_Feb_25/ai_n24322116 BP. ( 2008 ) . Retrieved April 29. 2008. from hypertext transfer protocol: //www. bp. com Central Intelligence Agency. ( 2008 ) . Brazil. Retrieved April 29. 2008. from hypertext transfer protocol: //www. Central Intelligence Agency. gov/library/publications/the-world-factbook/geos/br. hypertext markup language De Noronha Goros. N. ( 2003 ) . Legal usher: Business in Brazil. Brazil: Observador Legal Editora LTDA. Infoplease. com. ( 2008 ) . Brazil. Retrieved April 29. 2008. from hypertext transfer protocol: //www. infoplease. com/ipa/A0107357. hypertext markup language IPACOM. ( 2008 ) . Peoples: Meet the Cariocas. Retrieved March 29. 2008. from hypertext transfer protocol: //www. ipanema. com Momentum Technologies LLC. ( 2008 ) . Renewable Energy Businesses. Retrieved April 29. 2008. from hypertext transfer protocol: //energy. sourceguides.

com/businesses/byGeo/byC/Brazil/byB/byB. shtml Sao Paulo Chamber of Commerce. ( n. d. ) . Making Business in Brazil. Retrieved May 1. 2008. from hypertext transfer protocol: //www. brazilian-consulate. org/secom/incs/DoingBusinessinBrazil. pdf Solarbuzz. LLC. ( 2008 ) . Fast Solar Energy Facts. Retrieved April 29. 2008. from hypertext transfer protocol: //www. solarbuzz. com/FastFactsJapan. htm Wikipedia. ( 2008 ) . Brazil. Retrieved April 29. 2008. from hypertext transfer protocol: //en. wikipedia. org/wiki/Brazil World Bank. ( 2007 ) . Making Business in Brazil. Washington DC: World Bank and the International Finance Corporation. Wynn. G. and Kuehnen. E. ( 2008. February 12 ) . Is solar power confronting a roar or a flop? The International Herald Tribune.

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