Brazil's a country worth watching. It can boast about the 2014 FIFA World Cup, the 2016 Olympic Games and, more important (although nothing's more important than soccer in Brazil), a fast-growing, diverse and mostly clean supply of energy to power one of the world's most robust economies.

ImageIf nothing else, Brazil's energy story is a reminder (not that we need one) that the rest of the world isn't standing still while the U.S. struggles to come up with smart energy and climate policy.

What kinds of energy is Brazil developing? A better question would be what is Brazil not developing. The government is, of course, drilling for oil off the Atlantic coast, without fretting much about the BP oil spill. It is building big hydroelectric projects. It's developing a nuclear power plant. And Brazil is the world's leading producer of low-carbon sugar-cane ethanol, the most efficiently produced biofuel in the world.

Recently, I spent a week in Brazil  on a government-sponsored tour for foreign journalists focusing on the Amazon and the environment. So many questions about energy arose in the first few days that organizers arranged an interview over dinner in Brasilia with Marcio Zimmerman, Brazil's energy minister.

Marcio ZimmermanHe spoke through a translator and graciously answered all of our questions. Only once did he get  testy--when he was asked about film director James Cameron (Avatar), who this spring joined with environmentalists in the Amazon to protest the controversial Belo Monte Dam. "People seem to have doubts about who the Amazon region belongs to," Zimmerman said, wryly.

Before getting to the interview, a bit of context: Brazil today is the world's 12th largest oil producer, just behind Norway and ahead of Iraq, according to the U.S. EIA, but it will soon climb the charts because some of the largest oil discoveries in recent years have come from its offshore, pre-salt basins. More than 80% of Brazil's country's electricity, meanwhile, comes from renewable sources, predominantly hydropower. As for biofuels, Brazil decided afterthe 1970s oil shortage to develop sugar-cane ethanol, built an unparalleled distribution network and required all new cars to be able to burn any mix of gasoline and ethanol. Brazilians call this a big victory for the environment and energy independence.

In any event, here are a few highlights from our conversation with Marcio Zimmerman:

On offshore oil drilling: Brazil's deposits are deeper under the sea and further offshore than anything BP was producing in the Gulf of Mexico. But, Zimmermans said: "We're going to keep on exploring oil deposits in deep water. (State-owned oil company) Petrobras has a lot of expertise. Can you imagine if the entire aviation industry had ground to a halt after the first major aviation accident?" Brazil, currently an importer of oil, expects to become an exporter soon, although much of its oil will be used to power the domestic economy.

On renewable energy: The energy ministry put into place an auction-based model to produce electricity from wind or solar power, Zimmerman said. About 10,000 megawatts of projects were submitted, and the government commissioned 2400 megawatts of wind "at an affordable price" and signed a 20-year power purchase agreement. He didn't get into much detail, but I was interested to read in today's WSJ (sub. req'd) that a Republican congressman named Devin Nunes has proposed a reverse auction for renewable energy projects in which projects "that can produce the most megawatts for the least money win."

On biofuels: Not surprisingly, ZImmerman wants the U.S. to eliminate its tariffs on imported ethanol which essentially protect corn farmers. "The most efficient crop for ethanol production worldwide is sugar cane," he said. (Here's a dissenting view from Foreign Policy magazine and Tom Philipott of Grist.) There's no reason, he said, while ethanol shouldn't be traded globally as a commodity, just as oil and coal are. To win allies to this cause, Brazil is helping Ghana and Senegal product biofuels. "Brazil does want to become the ethanol OPEC," he said.

On nuclear: According to Zimmerman, Brazil has the world's 6th largest uranium reserves and expects that it could easily find more. The country has two nuclear power plants, and expects to add a third by 2019. "The nuclear development process in Brazil is irreversible," he said. "It's a clean source of electricity."

On the controversial Belo Monte dam: "It’s a very good and sophisticated project. It will not flood one centimeter of indigineous reserves,” he said. He said the dam would produce 4700MW of power at a cost of about 13 billion U.S. dollars. To generate as much power from wind, he said, you'd have to build 16,000MW of wind farms at a cost of about $32 billion U.S.

What does all this add up to?

Well, Brazil is currently the world's 8th largest economy, according to the World Bank (via Wikipedia).

That won't last, Zimmerman says. “In the next five years," he declared, "Brazil will likely become the world’s fifth largest economy.” It will be behind the U.S., Japan, China and German--but ahead of France, the UK and Italy, as well as India and Russia.


Disclosure: My trip to Brazil was organized and financed by Apex-Brasil, a government backed agency that promotes trade and development, and Petrobras, Eletrobras and Banco do Brasil