Customer Logins

Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.

Customer Logins

Energy transition dialogue a path to trust, calming Latin American unrest: panel

20 May 2021 Keiron Greenhalgh

Engagement on the energy transition can help tackle the civil unrest flaring up across Latin America in recent weeks and months, restoring trust that has disappeared in a number of countries, say observers.

The energy transition is a topic through which political leaders can regain trust and the confidence of citizens, said Mauricio Cárdenas, Center on Global Energy Policy visiting senior research scholar and a former finance and energy minister in Colombia, where protests, strikes, and blockades are currently entering their fourth week.

Speaking at the 2021 Columbia Global Energy Summit (CGES), Cárdenas said climate change and the energy transition can be part of the solution to the current unrest. The transition can be a tool no matter the political leanings of a government, he added.

The Colombian protesters have an 18-point list of grievances for the government to satisfy, he said, of which four are energy transition-related. The energy transition issues, on which there is often wide agreement across political leanings, can bridge some of the high tensions on other issues, he added.

Tensions across Latin America have been exacerbated by the economic impacts of and lockdowns imposed due to the COVID-19 pandemic, members of the panel said. Existing grievances over disparities in society and governments' inability or unwillingness to address voters' needs has eroded trust between citizens and the ruling classes.

But there is no dialogue at the moment in many Latin American countries between working and middle class protestors, including indigenous peoples, and the authorities, said Cárdenas.

Most recently, the divide was exposed in Colombia, where the government was widely condemned for troops firing on protestors. The protests began 28 April after a tax package was introduced that would have added a 19% tax on goods and services basic to everyday needs such as water, electricity, natural gas, petrol, as well as staples such as flour, salt, milk, and coffee. The government is short of cash.

President Ivan Duque Márquez repealed the planned tax package. However, the protests widened due to anger at proposed health and pension reforms, according to local media.

In this context, renewable power can become a rallying point because it offers investment, jobs, and a healthier public and environment. Colombia has 1 GW of non-conventional renewable generation and expects to reach 2.5 GW by 2022, Márquez told CERAWeek by IHS Markit conference attendees in March. The country will hold auctions to build 4.8 GW of renewable generation capacity, which will be installed in the next five years, he added.

Márquez wants state-owned Ecopetrol, the country's biggest oil and natural gas producer, and other industrial companies to become leaders in the use of renewables, he said during a session at the conference. It "builds trust," he added.

Trust

But trust has been destroyed across society throughout the region, former Inter-American Development Bank President Luis Alberto Moreno told CGES summit attendees, creating a need to fill the information gaps between the various socio-economic strata.

Utilizing inclusive talks on the energy transition would be very different from the way in which governments in Latin America have sought to solve problems previously, and could be a road to restoring the trust lost in some respect, Moreno said.

Last weekend Chileans went to the polls to elect an assembly that will write a new constitution. Traditional parties have hemorrhaged votes in elections after anti-establishment protests that began in 2019 and continued through the pandemic, during which the gap between the haves and have-nots was further exposed.

Chilean Minister of Energy and Mining Juan Carlos Jobet agreed with Moreno, arguing that what he said was a just energy policy was built in Chile by looking toward 2050 with an inclusive perspective that incorporated the views of academics, industry, the government, and indigenous citizens. Such a perspective improves the quality of that vision, he said, adding that such a methodology decreased the chances that an incoming administration would dismantle the plans.

Chile has the potential to increase its current renewable capacity 70-fold, Jobet said. It has "enormous" potential for building out its solar capacity in the north of the country and the wind generation fleet in the south of the country, including Patagonia, he said.

The government is targeting 70-75 GW of renewable generation in Chile by 2030, the minister said, adding that the country would be using 100% renewable energy by 2050.

Wind and solar generation contributed a combined 13.7% (11,113 GWh) of Chilean power output in 2019, while coal-fired units contributed 32.7% and gas 18.7%, according to International Energy Agency (IEA) data. Between 1990 and 2018, according to the latest IEA data, power consumption rose 379.6% to 78.8 TWh.

Dichotomy

Everyone agrees on an abstract level with tackling climate change and implementing the energy transition, but it's more complicated than that, Jobet said.

Consider the issue of transmission lines, said Jobet. Long-distance lines are needed to transport the power created by renewable or fossil fuel resources to load centers, but the grid projects create their own opposition.

Some of the greatest resistance to power lines involves those that cross international borders, said Cárdenas.

Transmission lines are not unlike mines in some respect, said Jobet. Change is sought, but plans for continued or expanded mining - such as for the copper and lithium required for the energy transition - are often poorly received by residents, including in areas with long histories in the sector, he said. Residents also want a greater slice of the profits of projects that often export nearly all their output. Chile produces some 30% of the world's mined copper.

Alongside wind and solar projects and copper exports, Chile wants to produce the cheapest green hydrogen in the world by 2030 and to be among the world's three largest hydrogen exporters by 2040. It unveiled a strategy in November 2020 that targets having 5 GW of electrolysis capacity -- for splitting water into hydrogen and oxygen -- under development by 2025.

The Chilean government announced a tender for green hydrogen projects of 10 MW or larger that could be operating by the end of 2025 at the end of April. Applications are due in September. "Our strategy contemplates the development of the fuel in different stages. First, we seek to produce for and clean our local industries, and once the industry is consolidated and sufficiently scaled, we will be able to export hydrogen," Jobet said in a statement announcing the tender.

Still, a just energy transition is needed, according to Jobet, especially when it comes to closing coal-fired power plants and replacing the jobs they support. The energy transition will be challenging, he said. The transition won't just be about coal-fired power plants though, he said, with replacing the use of firewood as a cooking and heating fuel just as important, especially in the south of the country.

However, the energy transition can help with both recovery from the pandemic and in creating jobs, he said. This was especially important because, said Cárdenas, Latin America, on a regional basis, saw the sharpest contraction as a percentage of GDP due to the pandemic.

Funding sources

Where the financing for the energy transition, particularly in developing countries, comes from is a key question, the panelists said. It is, perhaps, the most difficult question, said Moreno. What is needed, he said, is a blend of backing from public and private sources, and from multilateral and domestic purses. The pension funds and asset managers espousing support for the energy transition need to step up their support in developing nations, he added.

The US government has an opportunity and an obligation, too, Moreno said. President Joe Biden must come good on the promise made during a March 2020 Democratic presidential nominee debate with Senator Bernie Sanders of $20 billion to protect the Amazon rainforest, he said, adding that Latin American countries' confidence in the developed world's commitment to climate change would decrease if those funds are not forthcoming.

Brazilian President Jair Bolsonaro on 22 April announced the country would achieve climate neutrality by 2050, a decade ahead of the country's previous commitment, but he said such efforts would need substantial international funding to succeed. Bolsonaro had previously reached out to Biden in person, asking for help to end illegal deforestation of the Amazon in an early April letter, according to US media.

Posted 20 May 2021 by Keiron Greenhalgh, Editor, Climate & Sustainability Group, IHS Markit

Explore

Follow Us

Filter Sort