Displacement and Development

Brazil’s low-carbon energy sector is often spotlighted in international forums debating solutions to the global climate emergency. While agribusiness and the extractive industry are the main contributors to the country’s polluting emissions, renewable sources, especially hydroelectric power, prevail in the generation of electricity that supplies public facilities, homes, and industries. But even though the Brazilian electricity sector is widely considered to be “clean,” its history and politics cannot be ignored in a genuinely just project for transitioning away from fossil fuels.

This is due to the way the sector has been privatized in recent decades. The electrification of Brazil does not neatly follow the country’s political history. Following the high-modernist pattern of the twentieth century, demand for electricity grew exponentially with urban population and basic industry during the 1920s and 1930s. This was only possible due to state regulation. The 1934 Water Code was the first major instrument that allowed the Brazilian state to establish the criteria for expanding hydroelectric power. By the mid-1940s, regulatory law ensured that state and national governments held the majority of ownership and control over the generation and distribution of hydroelectric power. The development projects of Getúlio Vargas (1951–54) and Juscelino Kubitschek (1956–1961) included a series of public investments in infrastructure that significantly expanded the country’s electric capacity. These culminated in the 1962 establishment, under João Goulart (1961–64), of a state-owned electric company, Electrobras, designed to coordinate, oversee, and execute projects related to hydroelectric production.

This trend toward public ownership and planning was not discontinued under the 1964 military coup. What changed with the Brazilian dictatorship, however, was the nature of investment. Dependence on international private capital for productive expansion significantly increased. During the dictatorship, sixty-one large dams were built. Hydroelectric generation was crucial to the so-called “economic miracle” of the authoritarian regime: during the 1973 oil crisis, 90 percent of the electricity generated in Brazil came from hydroelectric sources. However, the deterioration of the international economic environment during the 1980s exposed the fragility of the miracle: the exponential growth bequeathed by the dictatorship was actually one of social inequality and foreign debt.

Retracing the history of Brazil’s clean electricity sources is essential to understand the terms of the country’s climate transition. The construction of power plants, especially during the military dictatorship, entailed social and environmental damage as significant as the structural advances achieved. In the regions where they were built, the dams displaced thousands of people, flooded entire towns, and eliminated biodiversity in ecosystems. Public investment in infrastructure guaranteed Brazil’s energy sovereignty. But the military’s political repression concealed the increase in international dependence, and developmental constraints, this entailed.  The widespread lack of social and environmental compensation that marked the years of expansion of the country’s system hydroelectric generation exposed the flaws of an unjust economic development model.

Redemocratization promoted a perverse shift away from the continuous energy developmentalism of the Vargas era, the Fourth Republic, and the military dictatorship. While the Movement of People Affected by Dams (MAB)—an organization aimed at defending the interests of the populations affected by the generation, distribution and sale of electricity—emerged among the social movements of the 1980s, from the 1990s onwards the electricity sector was largely privatized. Since then, the electric grid has been characterized by private control, with a strong presence of interest-bearing capital, company indebtedness, and the internationalization of prices and rates. Privatization, however, did not end the exploitation and violation of the rights of populations affected by the hydroelectric system.  The climate crisis, in light of this history,has brought new urgency to the claims of environmental justice made for years by organized sectors of Brazilian society. Hugo Fanton, editor of Phenomenal World, spoke to Gilberto Cervinski, leader of the MAB—a movement that has recently begun to include families affected by mining following the construction of dams and climate change-related events, such as the floods that hit southern Brazil this year.

Cervinski holds a master’s degree in Energy from the Federal University of ABC (UFABC) and is a collaborating professor on the Energy and Society in Contemporary Capitalism graduate program at the Urban and Regional Research and Planning Institute of the Federal University of Rio de Janeiro (IPPUR/UFRJ). 

An interview with Gilberto Cervinski

hugo fanton: How is the electricity sector in Brazil organized and why does the energy transition issue depend on its transformation?

GILBERTO CERVINSKI: The electricity sector in Brazil, which represents one part of the energy issue, was traditionally structured by the state and public companies—such as Eletrobras and state companies—that built the power plants, transmission lines, and organized the process of distributing electricity to the cities. This model lasted until the 1990s, when a process to privatize the sector began. The most efficient and largest load-bearing power plants and transmission lines in this industrial complex were privatized. As a result, wholesale rates and final prices for the population increased. Now we have a privatized electricity sector. Those who control the power plants, transmission lines, and distributors are the big banks and speculative investment funds: nowadays, the owner of all the power plants is interest-bearing capital, which we call parasitic capital. A related feature of the current model is the composition of energy prices: we currently have one of the lowest energy production costs and one of the highest prices in the world for the population. It’s a great contradiction. This is the model that has been in place since the 1990s. 

When we at MAB talk about the need to create a popular energy project, we are saying that Brazil must fundamentally change the pricing policy, recover sovereignty, and guarantee rights and adequate reparations for the people affected by the construction of the grid. This cannot be reduced to hydroelectric plants. The fight for a popular political project organized around energy is therefore a movement for changing the nation’s energy policy on all these bases, from the dams themselves to the larger question of environmental policy. This year we are experiencing the longest drought in the history of the Amazon, which is being burned to the ground. And why is that? Because major landowners are setting fires to raise cattle. These are the issues that must be fundamentally changed.

hF: Why are retail energy prices so distorted from generation and distribution costs?

GC: With privatization, rates were reformulated based on international energy prices—which are determined by the costs of coal-based thermal energy. But here energy is produced by hydroelectric plants. We have river basins with twenty plants, one right below the other. The same water produces electricity twenty times over the course of a basin—this water is renewed at no cost. But these very low costs do not translate into benefits for the people. On the contrary, it is a mechanism for accumulating wealth based on the difference between low production costs and high tariffs. This is because the regulatory agencies that oversee energy policy are captured by private finance, by the banks. In addition, there are violations of the rights of both workers in the sector and the populations affected by the projects. Power plants are built and the people affected are expelled from their territories without compensation or reparations. 

More than 80 percent of the electricity produced in Brazil comes from renewable sources, mostly hydroelectric, which accounts for 70 percent of actual electricity production. The remaining 10 percent comes from wind and solar sources. There is no cost for water like there is for coal, oil, and natural gas. In Europe, for example, producers need to buy fuel and burn it in a thermoelectric plant to produce electricity. Here in Brazil, we have many large self-replenishing lakes. It’s the lowest production cost when compared to other renewable sources or to thermoelectric or nuclear energy. But since the sector has been privatized, the price is not based on the cost of the hydroelectric plant. The international price is adopted. And the price that prevails in the world is based on what the world produces, coal-based thermoelectric power, which is precisely what costs the most. That is the reference for what they call the “ceiling price” of energy. Here, the ceiling price is adopted, the highest in the world, with the lowest production cost, so the profitability rate is extremely high.

hF: Who benefits from the present model?

GC: The banks and financial funds made a huge move during the Cardoso administration to control the Brazilian electricity sector and extract extraordinary profits. There has been a strategy of indebting the energy companies—today, they are over-indebted, paying extremely high interest rates. This cost is dumped on the consumer’s electricity bill. So there are two mechanisms that guarantee extremely high profit rates: the companies’ indebtedness and the electricity bill itself. It is parasitic capital that extracts income from all workers in Brazil. Energy prices and rates are central to the control and distribution of national wealth: they work as mechanisms for extracting income from the masses through the payment of electricity bills. In Brazil, there are 80 million residential consumer units: families that pay electricity bills. If we adopted a real price policy, consistent with the Brazilian system of low-cost generation, people would pay a lot less. There wouldn’t be this extraction of wealth from their hands. With an energy policy that guarantees high prices, a portion of workers’ wages is expropriated and concentrated in the hands of the banks and financial funds that control the sector.

hF: In 2012, Dilma Rousseff issued Provisional Measure 579 to change the way prices were set in the energy sector. Can you explain the context in which this happened and why the initiative failed?

GC: Brazil’s large hydroelectric plants were built in the 1970s. The government concession contracts for 60 percent of them were due to expire around 2012. The thirty-year concession paid off the debt incurred in building the plants: as of that year, these plants would no longer have any remaining debts from the initial investment. The proposal was to offer the country energy under new terms: at cost plus an average profit rate. This was Dilma’s policy: offer the country energy at the real cost of production, since the Brazilian people had already paid for hydroelectric plants over thirty years of concessions.

This created a political problem. Under the proposal,  generation plants would no longer carry interest costs, which triggered a strong reaction from Brazilian bankers. The Rousseff administration was calling into question two components of the extractive model: the price of electricity bills and the payment of interest on companies’ debts. The president picked a huge fight with financial capital over this. No wonder financial capital was one of the leading sectors favoring the impeachment process. The result was the coup of 2016. 

 What happened after the coup? Instead of Dilma Rousseff’s proposal of reducing electric company debts and retail prices, the companies incurred new debts—as if the old hydroelectric plants were being built again.¹ Each of them now has a new debt and is paying interest on it, once again paying for the investment in their production. And who owns the debts? Private finance.

hF: The privatization of Eletrobras was also part of this backlash from financial capital. What were its implications?

GC: After the 2016 coup, there was a move to privatize Brazil’s last major state-owned company, Eletrobras, which owns forty-eight hydroelectric plants in the country—the ones with the highest quality from a financial perspective, with debts that have been amortized. Capital didn’t want to pay what these hydroelectric plants were worth. So the privatization was carried out by the Temer administration transferring control of the company for a price far below what it would cost to sell the hydroelectric plants. This privatization was outrageous. Currently, the government controls only 10 percent of Eletrobras. Everything else is in the hands of finance capital. It was a process of plundering national wealth: 48 hydroelectric plants transferred overnight to the control of private capital, unnecessarily. And we can already see the consequences: further price increases and higher electricity bills.

hF: What would a change in the energy system to address the climate crisis mean in a country with such characteristics?

GC: The environmental debate has been going on around the world since at least the 1970s. Eco 92—the United Nations Conference on Environment and Development of 1992, or “Earth Summit,” which took place in Rio de Janeiro—was also an important milestone. Yet throughout this period there has been a linear increase in fossil fuel usage—oil, coal, and gas consumption— and a parallel upward trajectory of greenhouse gas emissions. 

It’s not only fossil fuels that cause gas emissions: here in Brazil the main cause is agricultural activity. They call it agribusiness, we call it the agrarian bourgeoisie. They produce and want to expand areas for soy, beef, cellulose, and sugar cane. In order to do so they want to deforest both the Amazon and the Cerrado, areas of the country that still have standing forests. This is a second front, therefore, of the climate transition. In the case of Brazil, we must combine changing the energy matrix with curbing the agrarian bourgeoisie’s drive to destroy forests. We need to contain deforestation, which implies a profound change in agricultural production. And when we talk about changing the energy matrix, it’s not about changing the source of electricity, but about energy policy. That’s what needs to change: the pricing policy and the control of generation, as well as the fuel sources.

hF: Specifically regarding electricity production, what would be the necessary changes?  

GC: Brazil perhaps has the best conditions in the world for generating renewable energy, with 230,000 horsepower installed in power stations built over the last hundred years. And it has the same amount of potential for offshore wind energy production. We also have regions of extremely high solar radiation, equivalent to deserts, as well as biomass and hydroelectric potential. In other words, Brazil has one of the best production conditions in the world. It has great hydroelectric potential. 

Despite having several options, big businessmen in the energy sector want to resume the construction of huge hydroelectric dams with large lakes in the Amazon. This means flooding thousands of hectares of forest. Why is this so interesting? The answer lies in energy policy, for what and for whom this electricity is destined, and in a speculative logic of the industry’s new owners. Now they’re proposing to privatize the forests here. And what is forest privatization? It’s handing over the exploitation of forests to big farmers and banks. It’s not preservation. It’s increasing private ownership of reserve areas. The initiatives to monetize and commodify the climate prevent a real solution. Who benefits from carbon credits here? It’s precisely the farmers and power plant controllers. In other words, it’s a financial mechanism that, under the guise of protecting nature and reversing climate change, benefits exactly those who are actually causing the problem.

This is what we need to tackle. Even though renewable energy is available, the Brazilian people are punished. We have to change national energy policy, pricing policy, and control over production and distribution. The environmental problem is serious, but the solution presented by financial capital is financialization and privatization. What we have been doing is exposing the fact that the privatization and commodification of the environment will not reverse the climate problem. Quite the opposite

hF: How does MAB operate in this scenario?

GC: MAB has a history linked to the impacts of hydroelectric dams, going back many decades. The movement comprises people who have been forced out by the construction of hydroelectric plants, without compensation or reparations, in various corners of Brazil. Over time we have become a national organization. The name is Movimento dos Atingidos por Barragens (Movement of People Affected by Dams), but there has been a change in recent years, because it’s not just those affected by hydroelectric power plants, but also those affected by two new situations that are very similar. The first is the collapse of tailings dams—dams created by mining waste—in Mariana and Brumadinho, in the state of Minas Gerais. There are several others that have broken in different parts of Brazil. These affected people are also organized in MAB. 

We have come to also include, over the past few years, those affected by climate change, such as the people impacted by the rains on the coast of São Paulo and, now, the more emblematic case of the major floods that swamped Porto Alegre and other cities in Rio Grande do Sul. Our struggle is both for the rights to compensation and reparation  of those affected, and for a popular energy project to transform the prevailing business model of electricity generation. Our history is intertwined with the energy issue, which is why we analyze the sector, publicly discuss these aspects, and fight to transform national energy policy.

hF: What is the current situation of those affected by dam collapses in Mariana and Brumadinho?

GC: Over nine years have passed since the dam collapse in Mariana. To date, families have not been compensated. The dam broke in the state of Minas Gerais, near Belo Horizonte. The toxic mud fell into a watershed formed by the Doce River, which runs for 670 kilometers to the coast of Espírito Santo. The entire river was destroyed by the mud, which then invaded the ocean and reached Abrolhos, in Bahia. We are currently organizing people throughout this region. Due to making greater demands and the Lula administration’s sensible approach, there is now a major compensation agreement for the families being discussed with the companies. Just to give you an idea, 700,000 people are suing the companies in London, because the Brazilian courts have, in a way, sided with the owners of the companies. The families have filed a lawsuit abroad to seek redress, and this is helping to speed up the settlement now. 

As for Brumadinho, the mud reached another river basin, the São Francisco. Thousands of people were affected. An agreement was reached recently, but the families still haven’t received their compensation, so the fight now is for the agreement to be fulfilled and for the basin to be rehabilitated. And these people are organized within the movement, fighting for their rights. There are several fronts of action, because the problem has affected people, communities, the river itself, the flora, and even the sea. It’s a very complex process, and MAB is prioritizing the issue of those affected.

hF: And what’s the situation in Rio Grande do Sul?  

GC: There are six basins in the Porto Alegre metropolitan area. They all flow down towards the capital of Rio Grande do Sul. In May 2024, it rained 900 millimeters in five days. The average in the region is 170 millimeters a month. All this water overflowed the river, which rose from 13 to 33 meters deep. The water carried everything away, bringing down houses and entire neighborhoods. More than 200 people drowned because the water rose so quickly. In all, more than 2 million people were affected in the state. Porto Alegre had a wall protection system to prevent flooding, because it is a city on a level with the Guaíba River. The municipality is responsible for maintaining this system, but in recent years, fascist and neoliberal mayors have neglected the system’s maintenance and it hasn’t worked when needed. Porto Alegre and the metropolitan region were flooded for 21 days because of this. People lost everything they had, their homes, their furniture, everything. So, in some places, the fight is about rebuilding homes and getting families back to where they used to live. We are organizing all these families. People have identified with the movement: we’ve brought together those who have lost their homes to flooding, mudslides, or dam construction. These families have legitimate claims and, of course, that places pressure on government at the center of our campaign.

Footnotes