Coal sector is already lobbying the government for the survival of thermal plant
07/20/2023
The Eletrobras announcement that it intends to sell the Candiota 3 coal-fired power plant in Rio Grande do Sul by 2025 has put the coal production chain in a state of attention. Fearing the plant’s shutdown, the coal sector is already lobbying the government to help the thermal plant survive.
Agents say that selling the plant to another economic group will not solve the social problem. The ideal would be a long-term energy contract, without which the consequences could affect the entire coal chain.
Located in the municipality of Candiota, in the Campanha Region, the survival of Candiota 3 intensifies the environmental debate: while units 1 and 2 of the Candiota complex have already been closed for environmental reasons, on the other hand, almost half of the local formal workers are employees in the coal chain, whose revenues account for 40% of the budget.
Eletrobras’s CEO Wilson Ferreira Jr. said at a press conference last week that the plant’s structure was recently modernized and has a useful lifespan at least until 2040. However, the plant’s contract expires at the end of 2024. According to the CEO, the thermal plant can continue to work without a contract, selling energy in short-term deals (known as Merchant plants, in the sector’s jargon).
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Fernando Zancan — Foto: Divulgacao
According to the president of the Brazilian Association of Mineral Coal (ABCM), Fernando Zancan, it is important to find a new owner, but this solves part of the problem. To him, it is important having a long-term contract, without which the plant would become unprofitable.
“There is an associated coal mine, there is no way to operate without having a minimum energy contract (…). We have a period to discuss with the federal government how a new contract for this plant will give more tranquility,” said Mr. Zancan.
In an attempt to find alternatives, the Rio Grande do Sul caucus is lobbying to convince the government of the importance of the plant. A comparable situation occurred with the Jorge Lacerda thermoelectric complex. Without a contract and a buyer, the company was in limbo. The former owner, Engie, had considered decommissioning the plant, but in 2021 it was purchased by Diamante, a subsidiary of the Fram Capital investment fund.
The exit to allow the continuity of operations occurred the following year, when the government of former President Jair Bolsonaro approved Law 712/19, which extended for 15 years, from 2025, the compulsory contracting of energy generated by coal-fired thermoelectric plants in Santa Catarina, benefiting Jorge Lacerda plant. Mr. Zancan believes that the Rio Grande do Sul caucus will likely follow the same process.
There is another point to consider: Candiota 3 has its fuel subsidized by the Energy Development Account (CDE), a sectoral fund financed by consumers through the energy tariff every month. The executive says that a new contracting model does not necessarily have to rely on CDE funds to promote the production chain.
Hermelindo da Trindade Ferreira, director of the Union of Miners of Candiota, is worried about the future of the region since Candiota is the only industrial center in an area of 90,000 km2 and there is no other economic vocation nearby.
“We want to show all the apprehension, fear, and uncertainty of the people who live here in the community with this news… with the possibility of closing the plant at the end of 2024,” he said.
With the announcement of the buyout plan of Eletrobras, the union leader says that there are rumors of a possible mass dismissal. For him, the way forward would be a process of energy transition in the process of gasification of coal, which has no carbon dioxide emissions.
For both Mr. Zancan and Mr. Ferreira, Eletrobras or any other company that acquires the plant must have a social responsibility for jobs. That is why they want to participate in the discussion about what to do with the available mineral resources. In addition to regulation, the expected solution is to develop technologies to capture all the carbon emitted.
In a statement, Eletrobras said that the decision to sell Candiota may represent new commercialization formats for the unit, such as, for example, the delivery of energy on demand. According to the company, the project offers firm energy to serve the national market, positively impacting the economy of Rio Grande do Sul.
The company emphasizes that in the actions to support the administration of the municipality and the community of Candiota will continue to contribute in the search for solutions that promote local social and economic well-being during the fair energy transition process.
The Ministry of Mines and Energy said it is open to dialogue and intends to promote a just energy transition for the region, taking into account the environmental, economic and social impacts and the valorization of energy and mineral resources aligned with carbon neutrality.
The ministry also stated that coal has great relevance in the economy of some regions in the South of the country and its use in the generation of electricity ends up being the only way to make it feasible to put the input for other uses.
*Por Robson Rodrigues — São Paulo
Source: Valor International