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Energy policy

26 lonely rangers

by Eva-Maria Verfürth

In brief

Itaipu dam in Brazil, pictured  at night, is the world’s largest hydroelectric power plant

Itaipu dam in Brazil, pictured at night, is the world’s largest hydroelectric power plant

Latin America not only produces fossil fuels; its immense wealth of natural resources enables it to produce clean, renewable energy. That could be a major forte, both in political and economic terms, but Latin America risks missing its opportunities and remaining a raw materials supplier instead.

When talk turns to biodiesel, attention turns to Brazil: the emerging economic power has promoted that sector for years and became the world’s biggest ethanol fuel exporter. Other Latin American economies are still a long way from making such targeted use of their resources. But Brazil is also taking risks: sugar cane for ethanol production takes up lots of land that could be used for food production.

The entire continent is packed with sources of energy: from coal through hydropower to biodiesel production – everything seems possible and a great deal economically feasible. Many Latin American countries are net exporters of oil, and the region produces 20 % of the world’s hydro energy. Nevertheless, around 15 % of Latin Americans still have no access to electricity. As population figures rise, so does energy consumption – and so, too, does the pressure to save energy. At the same time, the region is seriously at risk from climate change: the IPCC anticipates a staggering 70 % decrease in maize, rice and coffee harvests in Brazil and Mexico alone by 2050. María Cristina Silva Parejas, a former vice-director of the Latin American Centre for Relations with Europe in Chile, considers such data reason to focus on ecosystem-preservation and question products such as ethanol fuel.

Regional cooperation needed

Latin American countries’ behaviour is not in accordance with the environmental threats. That was the unanimous verdict of the experts that met at the 2nd Cologne Latin America Symposium organised by Connosco Consulting in Cologne in early October. All countries face the same challenges, the conference was told again and again, but they cannot agree on joint solutions.

Regional cooperation is essential to secure power supplies, said Rolf Linkohr, who headed the Centre for European Energy Strategy in Brussels until 2009. Latin America still has no international power grid that might link energy-importing to -exporting countries. As Linkohr told the conference, this is partly due to the fact that energy is not traded in Latin America as it is in Europe; rather, it is regarded as a political instrument for defending national interests. Bolivia, for example, supplies gas to Brazil and Argentina but not to disliked neighbour Chile. So Chile has to import expensive energy from Indonesia. Moreover, Linkohr pointed out that many governments worry that, if the energy market were opened up, US-based companies would buy national utilities and dominate the scene.

However, the first moves have already been made to promote cooperation on energy policy. In May 2008, the Union of South American States (UNASUR) approved a resolution establishing a South American Energy Council (Consejo enerjético sudamericano) to pave the way for a regional energy agreement. At a UNASUR summit in May, the relevant energy strategy guidelines were approved.

Innovation key to competitive capacity

It is not easy to say which sources of energy are worth promoting at present. Many economies continue to be based on coal, oil and gas – Venezuela, for example, funds around half its national budget with oil revenues – but production is tailing off. Catastrophes like the one in the Gulf of Mexico raise the question whether Latin America should be producing oil at all – not only for environmental but also for economic reasons.

Even renewable energy production is not without its problems. In Brazil, where hydropower meets 80 % of national energy requirements, parts of the Amazon forest needed to be cleared for dams. Counting in the damage this does to the atmosphere, hydro energy generated there could even cause more carbon emissions than oil or coal production, Linkohr warned. So new solutions need to be found.

Copying European models is not the way forward for Latin America, said Carsten Linnenberg of Anaerobic Digestion Solutions. Electricity needs to be produced as near to the consumer as possible. Providers should take account of local conditions. In other words, Linnenberg’s argument is that every region requires its own technological solutions.

While a number of poor countries in Asia, including Vietnam, have developed strategies of their own, the day when that happens in Latin America seems a long way off. The prerequisites for innovation are lacking, said Mario Pacas of Siegen University. Above all, there are too few engineers. Energy engineering has never been a priority of vocational training, he added, although it is an area of expertise vital for the development of new technologies.

On the consumer side, too, Latin America lacks the awareness needed to make efficient use of energy. “In some cases, we need twice as much energy to make a product as Germany,” reported Silva Parejas. Imme Scholz of the German Development Institute (DIE) agrees, adding that this is why Latin America risks falling behind Asia in terms of mitigation and technological development: “Technology will determine a region’s competitive capacity in the future.” Without home-grown innovation, Latin American countries risk remaining mere commodity exporters.

Making efficient use of energy

The experts in Cologne agreed that three things need to be improved in order to keep Latin America competitive:
– Its countries must boost regional integration and cooperate on energy issues, for instance by setting up an international power grid.
– They need to invest more in innovation and technology.
– Latin American society needs to become more aware of the importance of saving energy.

Governments, science and society face a major but inescapable challenge to protect and efficiently use natural resources in order to ensure environmental sustainability and food security. “Our future lies in energy production,” Andrés González of Ecuador’s San Francisco University sums up. “If we get it together, it’s an opportunity. But we are not yet a team; we are 26 lonely rangers.”

Eva-Maria Verfürth