Energy Usage for Sao Paolo Favela Households: Biogas in Context

Energy Usage for Sao Paolo Favela Households: Biogas in Context

Strategy

This paper for seeks to triangulate energy needs for Sao Paolo favela communities such as Paraisópolis and Canthino do Céu. Triangulation here denotes extrapolation between general information on sustainable technologies for energy production and English-language literature relating Brazil’s energy policy in low-income settlements. The research explores energy poverty in Brazil and energy usage and preference at the individual favela household level. Considered with the 6445 class biogas group research the potential impact of biogas production as green infrastructure in the favela context can then be formulated.

Residential sector energy policy in Brazil

In recent decades, Brazil’s national policy objectives have sought to incentivize rural settlement and growth of mid-size cities, in order to counter the explosive growth of large urban conglomerations. Such approaches have been less successful in practice; however, rapid urbanization peaked in the late 20th century while the coupling of economic development and social disparity continue into the new millenium. Favelas today function in parallel to the formal city, housing much of the service sector and the informal economy: since 1990 half of Brazil’s jobs are in the informal economy, and in Sao Paulo one in five live in favela communities. (Boa Nova, 2001; pp. 1-2)

Macroeconomic reform begun during the 1990s has shown limited success stabilizing the national economy, but has also complicated competitiveness of the informal economy and increased levels of urban poverty. Transfer of services from public sector to private companies through deregulation and utilities privatization has triggered increases in cost of service provision by 2-3 times that of inflation over the same period. (Winrock, 2005; pp. 10)

Energy policy since liberalization has responded mainly to forces of industrialization and related corporate lobby, with less weight given to the social policy needs of low-income communities and informal enterprise.

In terms of household consumption, the three primary energy sources in Brazil are LPG cylinder, electricity and gasoline (primarily automotive). International cost of petroleum directly affects not only LPG (a petroleum derivative), gasoline and diesel, but also public and private transportation costs. Energy requirements for the majority of small and medium-sized businesses in favelas are typically associated with individual households.
(Winrock, 2005; pp. 10)

In terms of relative cost differential, LPG has shown the highest cost multiplier since market reform of the 1990s. From July 1994 to June 2003, the cost of LPG has increased 550% or three times the inflation rate. Virtually all urban households in Sao Paolo and Brazil rely solely on LPG for cooking. Electricity over the same period increased by 305%, or twice the rate of inflation. Government subsidies have kept the cost of gas and diesel artifically low. (Winrock, 2005; pp. 11)

Energy constraints on sustainable livelihoods

Planning for sustainable energy is increasingly cast as a critical dimension of international development policy. A 2005 research study conducted by Winrock International, in conjunction with the Technology and Development Group of the University of Twente (Netherlands), describes the linkages between energy policy, sustainable livelihoods and small enterprise in the Brazilian context. Winrock notes that the literature in Brazil relating energy with gender and poverty typically focuses on rural areas. The Winrock research in contrast studies the urban case in order to fill the “knowledge gap” with empirical data on the micro-level impact of privatization of energy sector on the informal economy.

Key policy recommendations were tested in two poor neighborhoods of Salvador, Bahia using micro-level gender disaggregated data (514 households total, 259 in Plataforma and 255 in Canabrava): that clean, affordable energy has a positive correlation with physical well-being and productivity of urban households; and that the relationship between energy services and energy sector reform directly interfaces with social networks and urban (micro-)enterprise. (Winrock, 2005)
(Winrock, 2005; pp. 44)

The Winrock study cites earlier data that shows the breakdown of energy consumption in the residential sector and finds that energy source by application is similar for households in the low-income communities of Plataforma and Canabrava in Salvador. LPG is the primary energy source for cooking and food preparation, and a secondary source for water heating and lighting.

The survey also observed high incidence of informal (unregistered) businesses run out of the households studied, including production/sale of food and beverages, hairdresser and seamstress/tailor. The majority of these enterprises earn less than R$500/month and their limited operation as micro-enterprises is essentially an extension of household activity. Average monthly use of LPG when households include on-site businesses is closer to two LPG cylinders/month, with default household usage more generally between one and two LPG cylinders/month. (Winrock, 2005; pp. 56)

Electricity is most prevalent energy source (30-40% of business activity), and LPG was second more reported energy source (27.4% of food processing-based businesses). In terms of machine equipment utilized in business activity, the stove is most-reported (19%).

Percentage of family/small businesses, according to equipment used in the business:

(Winrock, 2005; pp. 60)

ESMAP’s 2006 case study on the Caju shantytown in Rio de Janeiro provides additional information regarding energy usage in Brazil’s low-income communities. Caju constitutes 17,500 people in 6605 households with an average per capita income of R$250/hh, residency rates of 3.5ppl/hh, and rate of employment in formal sector at 0.8 formal jobs/hh. 42.4% of Caju households have average per capita income higher than minimum wage (R$200), and approximately 15% households exceed technical definition for poverty in Brazil (greater than three times minimum wage). (ESMAP, 2006; pp. 22)

Brazil’s federal government offers energy subsidies for households using less than 220 KWh; the intention is to make available aid to the poorest households. However, ESMAP explains that recent research has demonstrated that there is no correlation between poverty and energy consumption per household. Poorer households may use less energy per capita, but have larger household sizes. (ESMAP, 2006; pp. 39) ESMAP offers that this policy failure may drive the network of extra-legal energy supply (e.g. gato connection to electricity).

ESMAP also notes that while virtually all urban households in Rio de Janeiro (including low-income households) depend on LPG for cooking fuel, distribution of LPG cylinders is controlled by organized crime in direct proportion to level of poverty. That is, the most poor households are most subject to the organized crime “tariff” (up to 20% over actual cost) although wealthier households pay for LPG at-cost. It is unclear whether this condition is unique to Rio de Janeiro or is a general indicator of energy economics in favelas.

Share of energy expenditures are particularly revealing. Given existing payment schemes for electricity (originating from the initial phases of slum electrification) and the organized crime “tariff,” most households pay effectively equivalent amounts on electricity and LPG. Adjusting for full payment of electrical consumption, and elimination of LPG price distortion, all households in Caju will pay 6.6 to 14.2 percent of income (9.8 average) on energy.

ESMAP notes that the standard definition of energy poverty is allocation to energy costs of ten percent or more of annual income (five percent for poorest 30 percent of population). Following this metric, all income groups in Caju would qualify as “energy poor,” although ESMAP does suggest that perhaps the five percent standard needs to be reconsidered in the economic structure of Brazil.

The ESMAP study also offers several points of data relevant to estimating energy needs for residents of Paraisópolis and Canthino do Céu.

LPG expenditures can be estimated as one 13 kg cylinder per month for a family of four. In 2002 the unit cost of LPG cylinder was R$20, but ranged up to R$28 or R$33, given the surcharge of organized crime to certain constituencies. (ESMAP, 2006; pp. 31)

Calculated from the total annual electricity consumption for all 291,562 shantytown households in Rio de Janeiro is 580 GWh, the average favela household in Rio de Janeiro consumes 1990 KWh annually, or 166 KWh/month. (ESMAP, 2006; pp. 37)

CENTROCLIMA and COPPE state the average electricity consumption per favela household in Sao Paolo at 175 KWh/month. The utility company Eletropaulo, under federal regulation of electrical tariffs, charges for an equivalent of 50 KWh to favela-dwellers; this translates to a monthly bill of only US$1.75 instead of actual usage at full rates US$9.40 plus taxes. (La Rovere et al, 2004; pp. 130)

Summary of per favela household energy usage:

13-26 kg LPG/month, 156-312 kg/year (typical favela)
3% of income, 2.6% under proposed costing restructure (Caju, Rio de Janeiro)

±175 KWh/month electricity, ±2100 KWh/year (Sao Paolo favelas)
3.4% of income, 7.2% under proposed costing restructure (Caju, Rio de Janeiro)

Biogas consumption rates (Sasse et al, 1991; pp. 80)

Household burner: 200 – 500 L/h
Refrigerator (100 l volume): 30 – 80 l/h
Gas lamp: 120 – 180 l/h
Biogas/Diesel engine per bhp: 420 l/h
Generation of 1 kwh electricity: 700 l
Biogas production
Natural gas production in Brazil

CENTROCLIMA/COPPE show that the IEA projects that natural gas will expand market share to 35 percent of Brazil’s power generation by 2030, up from 5 percent in 2000. Natural gas production in 2006 is 23.2 billion cubic meters, although IEA anticipates built-up to 70 billion cubic meters by 2030; the deficit is expected to be met by natural gas imports, especially the Brasil-Bolivia pipeline. In 2001, Petrobras alone flared off 8 million cubic meters of natural gas. (La Rovere et al, 2004; pp. 82-83) New legislation now makes such practices illegal, and natural gas transport infrastructure is being scaled up nationally.

As a renewable energy source with performance comparable to natural gas, biogas is already entering a stage of significant development in Brazil, partly due to the international carbon trading scheme established by the Kyoto Protocol. Such projects tend to be either agricultural (large-scale animal-fed biogas production) or peri-urban methane reclamation from urban landfills. Rural projects are successful but usually limited to on-site use of the biogas generated. Biogas production from landfills and wastewater treatment plants is now seen as viable only after several proof-of-concept projects over the past decade. Sao Paolo state today now has a 20MW plant generating electricity from biogas, together with a constellation of 50-500KWh facilities. (Alves et al; pp. 1)

Design challenges

Biogas is generally seen as a growth industry in Brazil with substantial foreign direct investment potential, but nontrivial challenges remain in terms of deploying biogas production within the urban fabric, particularly in favela communities.

∙ Balancing cost of infrastructure against the lifetime return on investment and the associated delivery cost for biogas/energy produced. Urban siting demands innovative approaches to achieve cost-effective production density.

∙ Projects such as the Canabrava landfill-biogas effort have met with strong opposition from local communities due to perceived lack of direct community benefits. Consequently, a community-based facility should generate biogas for use in the surrounding community.

∙ Localized biogas generation and consumption is consistent with general objectives for decentralized energy solutions and waste treatment. Since it is difficult to transport biogas (certain restrictions apply to CNG) in cannisters, unlike LPG, pipeline connections would likely need to be made between production facility and residential customers.

∙ Determining the ideal scale for production is not straight-forward; is biogas in the city better suited for the individual home, the neighborhood block, or the township/micro-region.

∙ While conceptually energy-from-waste is appealing in today’s era of sustainability, biogas production as a moderate- to large-scale industrial project embedded within the city demands novel approaches for resolving residents’ relationships to/with infrastructure.
Bibliography

Alves, Joao Wagner, Oswaldo dos Santos Lucon and Josilene Ferrer. Brazilian Country Profile – 3rd issue. Methane to Markets Partnership – Country Profiles. Available online at: http://www.methanetomarkets.org/resources/landfills/docs/brazil_lf_profi…

Boa Nova, Antonio Carlos and Jose Goldemberg, “Electrification of Shanty Towns in Sao Paolo,” conference proceedings for INTA23 conference: The Inclusive City: Cities for the World, Cities for People, The Hague, Netherlands, 2001.

Energy and Water Department, The World Bank Group. ESMAP Technical Paper 094. Brazil: How do the Peri-Urban Poor Meet their Energy Needs: A Case Study of Caju Shantytown, Rio de Janeiro. Washington, DC: World Bank, February 2006. Available online at: http://www.citiesalliance.org/doc/resources/paper-pres/094-06-brazil-stu…

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La Rovere, Emilio Lèbre and Ademar Ribeiro Romeiro. Country Study: Brazil. The Development and Climate Project: Phase 1. Rio de Janeiro: Center for Integrated Studies on the Environment (CENTROCLIMA) and Institute for Research and Postgraduate Studies of Engineering (COPPE), Federal University of Rio de Janeiro (UFRJ), 18 March 2004. Final Draft. Available online at: http://developmentfirst.org/Publications/BrazilCountryStudy.pdf

Sasse, Ludwig, Christopher Kellner and Ainea Kimaro. Improved Biogas Unit for Developing Countries. Eschborn: Deutsche Gesellschaft fur Technische Zusammenarbeit GmbH, 1991.

Winrock International. Country Report for the Brazil Project. Enabling Urban Poor Livelihoods Policy Making: Understanding the Role of Energy Services. DFID KaR Project R8348. Salvador, Bahia: TDG/University of Twente (Netherlands) and Department for International Development (DFID – London), November 2005. Available online at: http://www.winrock.org.br/media/Final%20Brazil%20Country%20Report%20-%20…

For GSD 6445 Green Infrastructure in the Non-formal City