Bret Kugelmass
We are here today with Agnes da Costa, who's the Head of Regulatory Advisory Office for the Brazilian Ministry of Mines and Energy. Agnes, welcome to Energy Impact.

Agnes da Costa
Hi, Bret. Nice to meet you, and I'm very proud and honored to be here talking about Brazil and the energy sector.

Bret Kugelmass
It's great to have you. I mean, Brazil has always been a fascination of mine. I was out there a couple of years ago at an energy conference and so it's really exciting to be able to explore the space further. But before we talk about the energy landscape today, we'd love to just learn a little bit about you. Can you tell us, where did you grow up and what got you into the sector?

Agnes da Costa
Okay, so I'm really a multicultural person. I have Indian, French, and Brazilian background and I went to German schools, so this is very different. I am the melting pot in person. And then I started- I have a bachelor in economics, and when I was studying economics, I started studying energy economics. This is where I fell in love with the energy sector, so I have been passionate about this area since my 20s, more or less.

Bret Kugelmass
Help me understand why more. Why economics? Did you remember anything specific about- is it your parents or?

Agnes da Costa
It's not really the most noble reason. It was because I was- I am a very curious person and I love everything that I study or read. Then I read once in a magazine about a generation of young millionaires in Brazil, and all of them studied economics. But then I went to a different university, this was not a university focused on the financial sector, where these people gain money. It was an university focus on industrial economics, so that's why I learned about infrastructure and energy. This university is the Federal University of Rio de Janeiro is also very focused on economic development. Then, when you think about the developing country, and the role that infrastructure sectors and energy may play in developing inclusion, it's enormous. This is why I fell in love, because I saw that studying this and working with this, I could add and help the country to move forward in this agenda of development. And then we are so lucky in the energy sector in Brazil, that this agenda comes also with a lot of sustainability, so this is very good.

Bret Kugelmass
Yeah, that's amazing. Can you tell me maybe though, if you can just think back to the early days of your career, something that, as you became a specialist in the sector, surprised you, something that maybe the average person and you didn't know until you got deeper into it?

Agnes da Costa
I think one thing that people, I don't think they really understand, but this is more curious for people working with infrastructure is the amount of money and investments that we are dealing with. It's always billions, it's always billions. And you sometimes lose a bit of the sensitivity to see that how big this is, but this is the world that we live in and the numbers and figures that we work with.

Bret Kugelmass
And that's just because things are just so big, like the physical structures of energy systems? The wires, the land, it's just big. It's a lot of stuff that needs to be moved.

Agnes da Costa
Now, with the technological innovation in the industry, specifically in the power sector, we see more modular energy generation projects that make things also not that big, but then we have always to pull things together, supply, demand, and the figures are big and enormous again.

Bret Kugelmass
Yeah, they always end up getting big again. Walk us through your career a little bit. So you studied this, and then where did you go to work?

Agnes da Costa
As I studied economics, then I decided to take a Master's in energy, because it was more technical and I had to learn more about thermodynamics and those things, so I took the Master's. And after I ended, having studied economics, I always thought about, if I wanted to work with economics, I should work in a bank or in a financial institution or in a government, so I first went to the bank. I worked in an investment bank before and it was good. I entered as a trainee, so I had the opportunity to work in several areas, but I ended up working with project finance for energy, because I had this background for my Master's. But then I had bad luck and there was an intervention in this bank, and I was so sad.

Bret Kugelmass
What does intervention mean? Is that government into-

Agnes da Costa
Yes, government intervention. The bank filed, afterwards, bankruptcy, so it was really a bad luck. It was not in my plans, not at all, but then this is how I ended up coming to Brasília, because then the Minister at that time was building the team for the Economic Advisory Office and she was looking for people with this academic background. Then, it's very interesting, because Brasília - for people who don't know Brazil - it's like in the middle of the country.

Bret Kugelmass
It's like a more desert environment, right?

Agnes da Costa
Yes. People working in San Paulo and Rio sometimes don't want to move to Brasília, but I had lost my job, so I came to Brasília.

Bret Kugelmass
And it's a planned city, right? I remember looking at a map once and the very interesting layout, it's like this curve.

Agnes da Costa
Yes. It's a very nice city to live in. The life quality here is very good. You don't have traffic, you have a lot of open spaces, and you see the sky from everywhere. And it's a modernist city, so you have a lot of concrete in the buildings. It's very beautiful, the design, so everybody that comes to Brazil, I always say, You should come for a weekend to Brasília, because it's something so unusual. But the first week I was living here, I was depressed, because it's such a different city and you don't see people walking on the streets, because it was built in the 60s for cars. Different, but then I love it now.

Bret Kugelmass
Amazing. So tell me, you enter government and then what do you work on? What do they- what was important at the time?

Agnes da Costa
I was in the Economic Advisory Office to the Minister of Mines and Energy, so I have been working advising Ministers for the last 16 years, but I had not that much experience. I was learning how to design public policies. And then in Brazil, we have something like in France, to become a - what we call - the officials or Public Servants Statutes. You have to pass a course, so I passed the course afterwards. It's a career that is very interesting, because we can work, in fact, in several ministries, but I always stayed in the Ministry of Mines and Energy, because I know that the expertise that you have to have to work with this area is so big, and I gained so much experience that I thought it would be a waste of resources for our taxpayers if I decided to work on terrorism or other, so I stayed here. And I love it very much, because then, my experience at the beginning was with the first sector reform of the power sector reform from the years 2003, more or less, after the energy rationing that we had in 2001. I was working more or less with the design of this power purchase agreements and the design of the energy auctions that became really a benchmark in the world for a best practice.

Bret Kugelmass
Okay, I want to get to the technology innovation for the bulk of this episode, but before we do, I need to learn a little bit more about what was going on when you first started with the market reform. Why were there power issues to begin with, because it seems to me like Brazil is a very natural resource rich country, how could you not have energy?

Agnes da Costa
Then back into history, the power sector in Brazil grew and built on big hydro power plants, and they are all over the country. They supplied, in 2004, more or less 85% of the power at the moment in Brazil. So our power and supply at that time was mainly big hydro, some thermal power plants, and an enormous interconnected transmission grid, because this is how we can benefit from the complementarity of the hydrological regimes in several basins throughout the country. But then we had like a period of very low rainfall, and this is why we had then this energy rationing coupled with a market we formed from the late 90s, where we open the market for private investments, but private investors were waiting to see how prices would develop. And then the price volatility when you depend on hydro resources is very high, because it depends on the rains. So no new investment came in time to avoid the energy rationing from 2001. So we had this reform from the 90s. This one mainly focused on privatization. We privatize a lot of distribution companies, but generation and transmission kept still state-controlled, and the state was broken at a time, so they didn't have money to invest for the projects. At the opening of the market, the expectation at that time was that private investors will come, invest in new products, but this doesn't happen. Then, in 2003, the new reform was, how do we attract private investments for expansion projects? This is when we design the energy auctions coupled with long term PPAs, and also coupled with what we call the previous environmental license for hydropower plants, and for all generation projects, but mainly for hydropower projects. Because, from the 90s to the year 2000, what happened is several private developers wanted to develop hydropower projects, but they had problems getting the licenses and this didn't move forward, so the project didn't become a reality. With this change in designing the auctions, with long term PPAs, and the environmental licenses as our requirement for participation in these auctions, the auctions were then our way of pulling demand together from all distribution companies. At that time, distribution companies is what we call our regulated market accounted firm, I think I would say 70, 75% of the market. Now, we have been opening the market, so nowadays, the regulated market accounts for more like 63%, I think, but there is then our way forward in opening the market. This is the reform that I'm working on now.

Agnes da Costa
Tell me, when you open the market, who do you open it to? What's that other remaining 40%?

Agnes da Costa
There are already 35% in the open market, so people can procure energy from who they want, from projects, from commercial traders, from-

Bret Kugelmass
Do they still operate on the exact same infrastructure? So the transmission system is the transmission system, but then like you can be a private purchaser of power in one location, but then maybe the generation asset is somewhere else? Is that the idea?

Agnes da Costa
Yes, and traders everywhere. We have this single transmission system, and it's centralized, operated by a single operator.

Bret Kugelmass
And then, but what is the- how do you operate across that transmission network? Do you just pay a fee if you want to buy power from somewhere else in the grid? Do you just pay a fee based on the distance that travels or how does that work?

Agnes da Costa
You pay fees, but it's not like in US. It's really what we call the marginal cashflow prices. Not really marginal, but it's like more or less, in Europe, we have sub-regions, this kind of fees. You have to pay the fees for transmission and for distribution if you are connected to the distribution grids, and this was the main step in the reform of the 90s. They separated the access to the grids at that time, but the investment for generation didn't come.

Bret Kugelmass
Why didn't it come? What was missing?

Agnes da Costa
At that time?

Bret Kugelmass
Oh right, this was the previous time, I see. What are the reforms now that you're looking to enable to further open up the market?

Agnes da Costa
What we are doing now is we have to think that more consumers want to be free to choose from where to buy energy. It's really thinking about the empowerment of consumers, but then we have to think how we redesign the business of power distribution in Brazil, because power distribution in Brazil is supply and grid. We have to see the activities, we have to redesign the tariffs to have like multiple part tariffs and those things.

Bret Kugelmass
When you say tariffs, you mean tariffs internal within the country?

Agnes da Costa
Yes. Tariffs, when I say tariffs, is like a paid by end consumer. So what-

Bret Kugelmass
And who is the end consumer in this case? Is it like a steel plant, or is it like an individual, even like a household?

Agnes da Costa
Well, it can be both, so let me try to explain this differently. If you are connected to a distribution company, you have to pay the energy tariff, this is the energy that supplies, the supplier part, and the grid tariff. But if you are a big consumer, you are ineligible to procure energy directly from a supplier. This is the 40% of the market, more or less, then you just have to pay the grid tariff to the distribution company and you pay directly or the energy that you buy from a supplier.

Bret Kugelmass
And the grid tariff, approximately how much is it? Is it 10% the cost of energy, 50% of cost of energy?

Agnes da Costa
The grid, I would say in distribution more or less 30%?

Bret Kugelmass
Okay, right in between. Okay, that makes sense. And then are there certain- who's driving the change? Why make this change? Is it because industry is giving you the feedback, Hey, we want it to be more open, or is it some other motivation?

Agnes da Costa
No, there are several aspects. I think one is technological innovation. I think and- people always talk about the three Ds of the word disruptive. I talked about four, but okay. Decarbonisation. We have all these renewables and also distributed generation as well, so this distribution generation comes with the decentralization of decision-making in the power sector as a whole. And then digitalization. Now what we see is that consumers can be more efficient, if they want. It's very hard if you have to think in a more centralized way that we designed the auctions, the government. Distribution companies, they have to procure their market five years ahead and they have to think well, how big will be their markets, and then we have to pull all the suppliers that want to sell. This works, but it's very rigid. With all these changes that we are living in the sector, there's no need for this anymore. But, thinking that Brazil is different from mature countries where we still have a lot of consumption growth - both in energy but also in power a lot - we still have to think about energy planning in Brazil. Our energy planning is, we call it indicative. We look at everything that's available, what are the scenarios, what kind- because we have to design still the auctions for energy procurement, but when this changes with time that people procure their energy or their megawatt-hour for their own, we have to think that maybe there won't be enough energy or maybe the projects are not coming, or maybe people are not planning ahead, I don't know. Then we have to think on what we call in Brazil the separation between energies or supply of megawatt-hours and what we called last. Last will be more or less like capacity. We are designing how to procure the expansion that doesn't come from the market itself. And this will probably still be based on auctions, but then it will be paid by everybody, by all consumers independently if they are still regulated because they want, or independently if they are procuring their own energy through probably a fee.

Bret Kugelmass
When you do capacity planning for the future, how do you decide how much of each source of power from the different types of energy?

Agnes da Costa
Well, we don't. This is another change in this reform. One is embracing technological innovation. The other is embracing the empowerment of consumers. The third one is embracing technological neutrality. What we want to say is, we plan, we see how this sector can evolve, what kind of energy resources there are, what technologies there are, what would be - I don't know - the best, the lowest cost scenario. We have several scenarios. Then, what but what we want to say is, we want to procure megawatt-hours, we want to procure megawatt-hours in the most critical hours of the month, in the most critical hours of the year, so that, from the supply side, they can develop business solutions to provide for this. We have already done this in a more controlled scenario, which is our interconnected system covers the biggest part of the country. And I would say, I don't know, 89% of the market, but we have still isolated systems there in the Amazon region where you cannot take the grid. It's too far away and too costly. There, we also do auctions. Distribution companies, they more or less say how much they think that their market will grow there with the population and business in the areas, and we design the auctions. There is where we are buying what we call supply solutions. We say, we need this kind of curve of power production and then we come. At the beginning, the isolated systems, they were only supplied with fossil fuels. This was very expensive, very polluting. Then, with this source of procurements through auctions of energy supply, we have been facing several innovative ways of supply. For example, hybrid projects with gas and solar. This is very interesting, because I would think that the private sector can come up with the solutions. In fact, you don't have to think about them.

Bret Kugelmass
How do you get gas into a more isolated region? Do you have to build a pipeline?

Agnes da Costa
Boats, I would call them barcaça, I don't know, big boats.

Bret Kugelmass
The LNG boats, okay. I see. I see. Okay, so the boats come up. And these isolated regions, I see, they still have coastal access, essentially. They're not inland, they have coastal access.

Agnes da Costa
Yes, the rivers, they go all to the-

Bret Kugelmass
Oh, you're bringing gas on a boat across a river, not just from the ocean?

Agnes da Costa
Yes, sometimes? Yes. I'm not the best person to say.

Bret Kugelmass
How much does the does the price of energy vary from region to region right now?

Agnes da Costa
If we talk about the regulated market, so the distribution companies, it depends on the auctions where they procured energy of what we call their energy portfolios, because this is what we call like a pass through. They buy there, they have to declare what they need for the years ahead, and when they buy, they buy from the projects that are there. It depends on in which auctions they bought their energy, and which projects were there to supply the energy. Then, there is the grid cost that I would say is comparable to the world, but something that is expensive in Brazil, taxation is very expensive. We have, it's a federation like the US. We have from the federal level, from state levels, and they vary a lot among the country. It's very different and someone municipal taxes as well. But mainly, so for example, there are some states where the state taxation that comes to more or less 40% of the bill. It's a lot.

Bret Kugelmass
Wow. So what about, let's say for new auctions coming up, what do you expect the PPA price to be set at for the generator itself?

Agnes da Costa
Oh, it's various on the products, because if we have renewables, they are always much cheaper, but now we have- the Congress just passed a bill in which they want us to continue procuring also thermal power plants for two reasons. One is because of this draught and the dependency that we still have on, not only hydro-

Bret Kugelmass
You need dispatchable power, it's not enough to just have power when the weather wants to give it to you, you need to be able to dispatch it when you need it.

Agnes da Costa
Exactly. For this reason, and also, because our congressmen think, with some reason, that this kind of project can also induce development in their regions, not only because of the power plant, but also because of the grid that comes. And then when you have the gas grid, you have then, also the use for gas for in the industries and all this.

Bret Kugelmass
Give me a sense of that. For a thermal power plant, what would a competitive price be for a generator to come to the country and say, I've got a thermal power plant for you?

Agnes da Costa
I don't know in dollars. I'm not- I think about 300, 350s reais per megawatt-hour, but it's very bad to compare with our exchange rate. I don't know if this gives you a sense of-

Bret Kugelmass
I'm doing a conversion right now. Okay, $67. That's about, that's normal, okay, maybe a little bit high, but for what we see in other places, but actually not too much.

Agnes da Costa
And for a new power project generator.

Bret Kugelmass
Yeah, that's actually not bad, now that I think about it. And then, something we're always interested in is nuclear energy. Does nuclear energy play a role in Brazil's future?

Agnes da Costa
Yes, it plays, but we have already two nuclear power projects in Brazil. They account for more or less to 2, 2.2% of our power supply. There is one, it's like the one in the UK that is taking long to be built.

Bret Kugelmass
This is Angora-3 or something.

Agnes da Costa
Yes, but it's really- we are moving forward this year to resume the construction works of this plant. But what we see as a future, as well, is what they call this small-

Bret Kugelmass
Small modular reactors, yeah.

Agnes da Costa
Yes, because this is something that we can think that is more distributed. And when we think for example, like this isolated systems, why not? If this development occurs, and it's non-emitting, so we are very interested in seeing and supporting how this industry moves forward. Also, because Brazil has large reserves of uranium, and plays also a big role in what we call the internalization of the fuel cycle in Brazil.

Bret Kugelmass
Who's working on this? Is this the role of the Ministry of Mines and Energy? Do you guys have like a special task force?

Agnes da Costa
No, no, for the Angora-3 project we are working together. It's the Ministry of Mines and Energy, but also the Ministry of Economics, but in terms of the nuclear policy, it's more the what we call the caspase view, and then, what's the name? It's at the presidency after where the president is that they have like special areas dedicated to this as well. And also the Ministry of Science Technology, of course.

Bret Kugelmass
Got it. Very cool. And then, you were mentioning that you are right now developing the new policy. Tell me just more about the legal system in Brazil. How does it work? Do you guys just put suggestions forth? Is there then a congress that votes on it? What happens? How does it work?

Agnes da Costa
When you talk about energy, from the Constitution, energy is a subject that is addressed at the federal level. It's not in the state level, so the energy policy is a federal level issue. What we do when we want to design policies, there are several ways. The Congress can always propose bills, but we can propose what we call the provisional measures. They are bills proposed by the government that have to pass very quickly or they get abandoned. This is how we usually foster shifts in policy when we need them with more urgency. Then, when we have the bills, and then these bills they have to pass two houses as well, as in the US, and it's a very complicated process. We have to meet a lot of compromises. It's the same thing with the thermal power plants, as I mentioned, because this was a bill dealing with the privatization process of Eletrobras, the power sector holding company. It has nothing to do with, specifically, energy planning and those things, but then, because it was from the energy sector, congressmen thought this was a good moment to discuss this as well. Then we have to meet a lot of compromises to accommodate several needs that come from Congress, but they are also legit to meet, I think now, because these people were elected and they I think they speak for several of us. Then, when we have the bills, what we can do - I think it's the same in the US - the ministries can propose a presidential decree to the President, and then he signs a decree. Usually, we detail the way to apply what is in a bill through a decree. And then there's another level, the ministerial orders. We have also, there are ways of legislating to ministerial orders in smaller issues or more detailed aspects of the loss, so this is-

Bret Kugelmass
Are these separate processes or do they all layer on each other and work with each other?

Agnes da Costa
Layer on each other, but there is a hierarchy, so there are laws and decrees and then ministerial orders. Ministerial orders can never go against decrees, never go against the law, and the Constitution. Then, after this- maybe it's very different from countries where you have this other kind of law that is based on precedence.

Bret Kugelmass
Precedence. I know it's a hard word for us too.

Agnes da Costa
But in our case, we have to write everything in everything. We have to write everything. What we want to do, we have to write them down in laws, decrees, and ministerial orders. This is then public policymaking. But, in Brazil, the energy sector is a very private one compared to other sectors. For the sector to work, we have the Minister of Mines and Energy designing the public policy and giving directives, but we have the regulatory agency for the power sector, the regulatory agency for the oil, gas, and biofuel sectors. The energy research office is more or less like the DOE in the States where we have all the studies, so it's our technical arm. All the energy planning comes from our energy research office. We have the national system operator, this big centralized operator of the whole system. And we also have our trading chamber, which is the institution who organized the wholesale market. They work together, we have to work with all these institutions to make-

Bret Kugelmass
Sorry, these are state-owned entities or they're private entities?

Agnes da Costa
The chamber that the wholesale market and the system operators are private ones, but the government may assign one of their directors, one or two of their directors, and the regulatory agencies and the research office are public.

Bret Kugelmass
How does that work, exactly? Maybe we can tie it back to you. You sit on a board, an oversight board of Petrobras, is that right?

Agnes da Costa
Yes, this is it. What happens is that the federal government controls several companies, and then, in order to be present in their administrations, it can always - what's the name, it can always - suggest names for their boards. I have been in the board of directors sometimes and sometimes in the board of what we call the oversight boards, or we call it here in Brazil called.... It's more or less like an audit committee, but the difference between an oversight board and an audit committee is that the audit committee is a part of the administration and responds to the board of directors, and the oversight board is not a part of the demonstration it spawns directly to the shareholders assembly. And we are overseeing.

Bret Kugelmass
Who are the shareholders of Petrobras?

Agnes da Costa
There is the government of Brazil, but there are several minority shareholders.

Bret Kugelmass
That are private entities, as well. Interesting.

Bret Kugelmass
It's a public into a company, as well as Eletrobras. Interesting. And are these international companies? Are these domestic? Who is this?

Agnes da Costa
No. In fact, they are, I would say not companies, but in fact, funds. People from all over the world-

Bret Kugelmass
It's truly a public market, it's freely exchanging.

Agnes da Costa
It's listed in Brazil in several markets. Also, I think in Madrid and, I don't know, in the US. Because I was previously from Eletrobras, and now I'm from Petrabus, so I'm not sure which of the stock exchanges they're listed, but they are listed everywhere. They have shareholders everywhere.

Bret Kugelmass
And then what is the current policy on foreign investment in the country in general? Is the country open to foreign investment?

Agnes da Costa
It's always open. And I think this is an agenda that has become more clear in this government, I would say. There is a special secretary in the Ministry of Economics, it's called the Special Secretary for Private Investments, PPIs, and they are always doing road shows and showing what's going on in Brazil and the several sectors. And if you see in our Constitution, we are not, in Brazil, allowed to - what's the name - defer the treatment between foreigners, foreign companies and Brazilian companies. But of course, if they are doing business in Brazil, and specifically dealing with concession rights, they have to open, to have a company in Brazil, as well, I don't know, an affiliation here in Brazil.

Bret Kugelmass
I see. And then what types of projects are good for foreign investment? Is it like new- for instance, new generating capacity. Would that be something where foreign investors would come in to build a new thermal power plants?

Agnes da Costa
We are seeing, they always come at the beginning with the auctions. They always started joint-venturing with Eletrobras, to feel how-

Bret Kugelmass
Makes sense, because Eletrobras knows the sector better than anybody, right?

Agnes da Costa
Since, I don't know, for at least 10 years, they come here. We have so many companies in Brazil, from everywhere, investors. Power generation is a good business, is a very good business, because it's really, it's a regulated annual revenue base. If they are very diligent in delivering what they promise in the projects, it's a very good business. And now, when we think about the future, there are so many alternatives. We have been discussing a lot about hydrogen, about offshore wind, there are so many things going on.

Bret Kugelmass
Yeah. Tell me more about that. I want to hear about, especially technology innovation, and how technology innovation might be coming to Brazil, and are you encouraging it or just opening up to it? How do you plan to bring new technologies into Brazil?

Agnes da Costa
What we see is that, when I was talking about technological neutrality, I think that these auctions, they have also helped in attracting innovation, new technologies, for example, solar. Solar started to participate in the auctions and now we have solar everywhere, also in distributed generation, so this is a way. But then when we talk specifically about innovation in Brazil, we have in the power sector and in the oil and gas sector, we have what are called the public and publicly-oriented R&D resources. Concessionaires - people, power producers, distribution companies, and also concessionaires in the oil and gas sector - they have to invest a part of their revenues in R&D, and this investment is regulated by the regulatory agencies. And then we have, I would say, more or less 20 years of learning in this regulation of innovation through these regulated investments. And then this year was the first year where the National Council for Energy Policy, the board of Ministers who advised the President on strategic issues on energy, published a resolution orientating the regulatory agencies to prioritize the regulation of this public and publicly-oriented resources towards themes, technologies, or energy sources related to energy transition. And this is very interesting because, in order to prioritize, we have to have data, and this was then a development from 2018, 2019, until today, that together with international collaboration, we started designing a platform to collect data on innovation in the energy sector as a whole. This was done with, I think, with the International Energy Agency, the government of the UK, Singapore, and several other bodies, and also with the Ministry of Science and Technology. And then the outcomes of this first part of the project are four reports where they make the mapping and saw where these resources were being concentrated. Usually in projects that were looking into short term results, and not really innovation long term results, usually in issues - in the power sector - usually in issues related to the grid, for example. And this gave us some insights into looking for other areas that will be interesting for the country aligned, also, with the directives that came from our 30-year energy plan, pointing out disruptive technologies that will be important in the energy sector as well, like hydrogen, for example. This was the thing. This work to map and get to know better where innovation is taking place in Brazil in the energy sector is moving forward. I think next month, the Energy Research Office will launch the platform there in Innova-e, the name of the platform, where this data will be then publicly accessible.

Bret Kugelmass
Great. We're coming up on time here, so I just wanted to make sure that we were able to address any other issues that you might have wanted to bring up with our audience. What else is on your mind? What else do you see as important to the future of Brazil?

Agnes da Costa
Also, for the future, we are talking a lot about decarbonisation. One thing that we see and we defend a lot in Brazil is that there is no one size fits all for energy transition for decarbonisation. When we look into the net-zero scenario by 2050 from the International Energy Agency, we see that biofuels will play an important role. We are really pushing this agenda forward, showing how biofuels are important. We cannot only talk about electrification. Of course, electrification is important and Brazil is a very electrified country, so this is really not a problem for us, but when we think about energy transition, we talk a lot about just transition, but we have to be accountable also in terms of inclusion. And when we think about other continents that don't have like a big grid like Brazil, for example, electrification will be much harder to obtain. These countries, for example, think about Africa, they have a lot of land, they have a lot of sun like we do, and they can easily move into another agenda, also fostering biofuels, and this will help them in their decarbonisation strategies as well. What we are discussing is a lot. Brazil is taking part on this high-level dialogue on energy from the United Nations, and is one of the global champions in the theme of energy transition. We are collaborating in this report that they are designing with all these countries about this theme, but then every country that takes part as a global champion is encouraged to present an energy compact, an international voluntary commitment, and we presented wo. One of them is in hydrogen, and the other one is in biofuels. So we have a policy in Brazil called the RenovaBio. It's a policy that aims at increasing the participation of the mix of biofuels in the fossil fuels for the transport sector. We have specific targets and goals, and it's also designed to really address the decarbonisation. We designed financial instruments called the CBios, that the distribution- the fuel distribution companies have to buy in order to certify that they bought the biofuel. And then, so this policy, it's now an international commitment that we are signed, hoping to inspire other countries to also develop this agenda. I think we have to think of all strategies that are on hand and there are ones that are more easier on hand. And so, when we talk about energy transition, we think that the countries have to recognize where they are starting from and which ways, which pathways are more cost effective for them to end at the decarbonisation target where everybody wants to end at the end.

Bret Kugelmass
What an important note to end on. Agnes da Costa, thank you so much for taking the time today. This has been an amazing conversation and really appreciate you sharing your insight with us.

Agnes da Costa
Okay, thank you for the pleasure.