Rivers of Diesel in the Amazon: Why does the region with Brazil's biggest hydroelectric plants still rely on expensive, dirty fuel?

This report by the Climate Policy Initiative examines the paradox of the Legal Amazon, a region that generates over 25% of Brazil's electricity via large hydroelectric plants but where millions of residents remain disconnected from the National Interconnected System (SIN). These populations rely on expensive, polluting diesel-powered isolated systems or lack reliable electricity entirely, a situation linked to poor socioeconomic indicators and inefficient auction models for energy supply.

• The Legal Amazon is a critical energy producer for Brazil but suffers from significant internal energy inequality. In 2020, the region generated over 26% of the national electricity supply but consumed only 8% of the total generated.
• Approximately four million people in the Legal Amazon lack access to the National Interconnected System (SIN). This includes around three million people served by isolated systems—mostly diesel-powered thermal plants—and nearly one million people who lack full access and rely on small generators for only a few hours of electricity per day.
• Isolated systems are heavily dependent on diesel fuel, which accounts for 97% of the power installed in these systems as of 2018. This reliance is driven by an auction model that favors lower initial costs over long-term environmental and economic benefits, as well as state tax incentives (ICMS) on diesel fuel.
• The high cost of generating electricity in isolated systems is subsidized by the Fuel Consumption Fund (CCC), which is funded by consumers nationwide through the Energy Development Fund (CDE). In 2022, the estimated value of the CCC was over R$ 10 billion, representing a per capita subsidy of more than R$ 3,000 per consumer of isolated systems.
• Municipalities relying on isolated systems exhibit significantly worse socioeconomic performance than those connected to the national grid. They score lower on the Municipal Human Development Index (MHDI) and Social Progress Index, and have lower per capita GDP, higher illiteracy rates, and fewer medical facilities.
• The 'More Light for the Amazon' program, launched in February 2020 to provide renewable energy to remote communities, is criticized for lacking clear goals, monitoring capacity, and penalties for non-compliance by distributors.

APA

Climate Policy Initiative (2022). Rivers of Diesel in the Amazon: Why does the region with Brazil's biggest hydroelectric plants still rely on expensive, dirty fuel? https://www.climatepolicyinitiative.org/publication/rivers-of-diesel-in-the-amazon-why-does-the-region-with-brazils-biggest-hydroelectric-plants-still-rely-on-expensive-dirty-fuel/

Chicago

Climate Policy Initiative. Rivers of Diesel in the Amazon: Why does the region with Brazil's biggest hydroelectric plants still rely on expensive, dirty fuel? 2022. https://www.climatepolicyinitiative.org/publication/rivers-of-diesel-in-the-amazon-why-does-the-region-with-brazils-biggest-hydroelectric-plants-still-rely-on-expensive-dirty-fuel/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Rivers of Diesel in the Amazon: Why does the region with Brazil's biggest hydroelectric plants still rely on expensive, dirty fuel? |date=3 June 2022 |url=https://www.climatepolicyinitiative.org/publication/rivers-of-diesel-in-the-amazon-why-does-the-region-with-brazils-biggest-hydroelectric-plants-still-rely-on-expensive-dirty-fuel/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2022rivers, author = {{Climate Policy Initiative}}, title = {{Rivers of Diesel in the Amazon: Why does the region with Brazil's biggest hydroelectric plants still rely on expensive, dirty fuel?}}, institution = {Climate Policy Initiative}, year = {2022}, month = jun, url = {https://www.climatepolicyinitiative.org/publication/rivers-of-diesel-in-the-amazon-why-does-the-region-with-brazils-biggest-hydroelectric-plants-still-rely-on-expensive-dirty-fuel/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }