Brazil faces presidential runoff: Lula and Bolsonaro clash over their plans for the country's energy future

Just two days before the presidential runoff in Brazil, current president Luiz Inácio Lula da Silva, of the Workers' Party (PT), and opposition senator Flávio Bolsonaro, of the Liberal Party (PL) , are facing off with two different models for the country's energy future.

The expansion of renewables, investments in electricity transmission, battery storage and the role of state-owned enterprises appear among the main points of contrast.

Lula, a leading figure of the Brazilian left who is seeking a fourth non-consecutive presidential term, proposes to continue transmission auctions, expand investments in storage, and strengthen Petrobras as an instrument of energy and industrial policy.

In contrast, Bolsonaro, a representative of the right and son of former president Jair Bolsonaro , is committed to modernizing the electrical grids, implementing large-scale batteries, and attracting private capital through concessions, regulatory stability, and lower tax burdens.

In quantitative terms, the government highlights 31,289 MW added to the electrical system, with 80% from renewable sources, and 21,847 kilometers of contracted transmission lines , which will allow an 18% expansion of the national grid.

For its part, the opposition program proposes expanding the energy infrastructure, although without establishing new specific goals for installed capacity, kilometers of power lines or battery storage.

The race will be decided next Sunday, October 25, after a first round in which Flávio Bolsonaro obtained 47.03% of the valid votes, compared to Lula da Silva's 45.16% . The difference was 1.87 percentage points and 2,227,651 votes, according to the results from the Superior Electoral Court (TSE).

With an abstention rate of 21.08%, equivalent to more than 33 million voters, both candidates reach the final stage of the campaign with proposals that will also define the conditions for investment and infrastructure contracting in one of the main energy markets in Latin America.

Both programs agree on promoting solar and wind power generation, along with BESS systems, but the main difference between the two programs lies in the instruments planned to finance, contract and execute the projects from 2027 onwards.

Why? While the PT links the energy transition with public planning, tenders and the development of national industry , the PL prioritizes private initiative, market opening and the reduction of taxes and subsidies.

The government also proposes opening a new frontier of investment in batteries , with the aim of managing the variability of renewable energy sources and strengthening security of supply. This development is linked to an industrial strategy that also includes low-emission hydrogen, green petrochemicals, and technological components.

For his part, Flávio Bolsonaro seeks to expand renewable energy sources through private investment and improvements to the power grid infrastructure . The program recognizes the availability of clean electricity as a “factor for attracting industries and new technology projects.”

However, instead of establishing an electricity auction program with defined dates and volumes, the PL candidacy proposes using concessions and public-private partnerships to mobilize capital towards infrastructure projects.

This approach is complemented by contractual stability, less state intervention, and regulatory reforms aimed at facilitating the participation of new operators.

In this sense, Bolsonaro proposes transforming Brazil into a global hub for sustainable data centers , linking the expansion of electricity with the establishment of digital infrastructure, as well as the national processing of critical minerals, such as lithium, niobium, graphite, nickel, copper and rare earths, used in batteries, electric vehicles and wind turbines.

The program sets 2030 as the horizon to "position Brazil among the main international destinations for investment in energy transition ."

Petrobras, tariffs and biofuels: the other points of contention

The participation of state-owned enterprises constitutes another major difference between the two presidential candidates.

For instance, Lula plans to "strengthen Petrobras and expand its presence in exploration, refining, natural gas and fuel distribution," including increased onshore and offshore exploration, revitalization of mature fields and recovery of participation in the control of national reserves.

The measures even include Petrobras' return to fuel distribution, along with increased investment in refining and the strengthening of Transpetro in liquefied natural gas logistics.

It also proposes maintaining local content clauses in contracts to stimulate the shipbuilding, petrochemical, and domestic fertilizer manufacturing industries.

In contrast, Bolsonaro proposes less direct state business participation, reinforcing the 2016 State Enterprises Law and professional management selection mechanisms.

His proposal includes reactivating the National Privatization Program to evaluate the sale of public assets, along with measures aimed at guaranteeing competition and regulatory stability.

In oil and gas, the candidate proposes expanding refining capacity, developing pre-salt gas transport infrastructure, and authorizing the exploration of unconventional resources through hydraulic fracturing, subject to environmental regulations.

Tariffs also show differences. Bolsonaro proposes gradually reducing the Energy Development Account (CDE), streamlining cross-subsidies, and lowering taxes on electricity and fuels , while maintaining the social tariff for vulnerable consumers.

The program seeks to simplify the electricity bill by changing the charges and subsidies that make up its composition, although it does not quantify the expected savings for consumers.

Lula, on the other hand, proposes to discuss cost reduction mechanisms for residential and industrial consumers, preserving the economic and financial balance of the sector.

In addition, it maintains the Luz do Povo and Luz para Todos programs. The former provides free electricity consumption of up to 80 kWh per month for families registered in the Cadastro Único (Single Registry), with a declared reach of over 60 million people.

In biofuels, both candidates agree on the expansion of ethanol, biodiesel, biogas and sustainable aviation fuels, although they present different instruments to promote their commercialization.

Bolsonaro proposes strengthening RenovaBio and expanding its integration with international carbon markets , in addition to offering special financing lines for biogas companies and promoting the Fuel of the Future Law.

The initiative includes incentives for renewable diesel and sustainable aviation fuels, whose regulatory obligations will begin to be implemented from 2027.

Lula, for his part, proposes expanding RenovaBio, incentivizing second- and third-generation biofuels, and developing new biorefineries. The program also incorporates biomethane and the electrification of public transportation.

The Brazilian agenda includes blends of 32% ethanol in gasoline and 15% biodiesel in diesel , in addition to the development of eight second-generation ethanol plants and two sustainable aviation fuel biorefineries, according to the supplementary documentation analyzed.

The government also links this industry to climate goals, including reducing net greenhouse gas emissions by between 59% and 67% by 2035 , compared to 2005, in accordance with national commitments submitted to the United Nations.

Thus, investment conditions, transmission auctions, energy storage, the tariff structure and the role of Petrobras appear as some of the main points that distinguish the proposals for the 2027-2030 period.

Days before the runoff election, both candidates agree on the need to expand infrastructure and take advantage of the country's renewable resources, but they present different mechanisms to develop projects and define public and private participation in the Brazilian energy sector.