Energy Transition and Post-Covid Recovery, a Challenge for Latin America

Windmills in Calama, in the Atacama Desert, in northern Chile.
The projects in Chile to take advantage of its high potential in
unconventional renewable energies have managed to reduce the
country’s dependence on imported fossil fuels and to reach a fall
in the general cost of energy. Image: Marianela Jarroud / IPS

By Emilio Godoy
MEXICO CITY, Oct 2 2020 (IPS)

The way forward for energy transition and its link to an
economic recovery after the depression caused by the covid-19
pandemic is focusing attention in Latin America and Europe,
according to the 2nd Madrid Energy Conference (MEC), which
concluded this Friday 2.

The intercontinental forum was held since Monday, September 28,
in this case virtually due to the pandemic, organized by the
non-governmental Institute of
the Americas (IA)
, which is headquartered in the coastal town
of La Jolla, in western United States.

Jorge Rivera, Panama’s Secretary of Energy and one of the
sector’s leaders in Latin America who participated in the
Conference, stressed that the transition is not an automatic
process, but depends on a political decision and on the sector’s
corporations.

“We have a great opportunity. We have an energy transition
agenda for the next 10 years, aligned with the Sustainable
Development Goals (SDGs), which includes a series of national
strategies, decarbonization, digitalization, and energy
democratization. We have a lot to do in transportation, industry,
in the uses of energy,” he said.

Rivera insisted that “these measures have the potential to
become a tool for post-covid economic recovery.

The Conference, which lasted five days and whose first edition
took place in 2019 in the Spanish capital, brought together
virtually ministers from five American nations, more than 20
companies´ presidents and more than 400 delegates from
international organizations and experts from both continents.

The agenda addressed issues such as the climate crisis in the
context of the pandemic, the situation of renewable energy on both
sides of the Atlantic Ocean, the financing of post-covid recovery,
the energy transition towards lower carbon models, energy storage
in batteries and power grids, as well as different aspects of
mobility.

Topics such as transport, gas, the outlook for oil corporations
or the digitalization of the sector were also tackled.

An important part of the debates was linked to the climate
crisis, such as carbon capture and storage and greenhouse gas
emissions generated by human activities responsible for global
warming, as well as methane and the prospects of hydrogen, seen as
an alternative to fossil fuels, on both continents.

For Alfonso Blanco, OLADE –
Latin American Energy Organization
’s executive secretary, the
region has made significant efforts to accelerate the transition,
but the impact of Covid-19 has generated an uncertain outlook.

One of the debate sessions of the Madrid Energy Conference,
dedicated to the energy transition, which held its second virtual
edition, between September 28 and October 2, organized by the
Institute of the Americas. Image: IA

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“Sustainability will depend on regional measures, but the
region does not have a defined regional action. If we do not
analyze the (financial) risk and develop a financing model for
renewables, we will see problems of further incorporation of
renewables. We have to think of specific strategies, according to
the role of each sector,†he said.

In recent years, Latin America has advanced in the development
of wind and solar sources as clean alternatives, but it faces the
challenge of reducing the burning of fossil fuels in industry and
transportation and improving energy efficiency.

This transition has come to a halt in nations such as Mexico,
which prioritize support for hydrocarbons, as pointed out by Joost
Samsom, partner and co-founder of the consulting firm Voltiq –
Renewable Energy Finance, and Claudio Rodríguez, partner of the
law firm Thompson & Knight LLP.

Stuart Broadley, executive director of the non-governmental
Energy Industries Council
(EIC)
– based in London and which brings together energy
companies – explained that phase I of the energy transition,
currently underway, consists of the adoption of technologies such
as wind and solar, and during which most countries have not
invested much for different reasons.

 

The forthcoming future

Phase II, which the world has not yet entered, involves energy
variations such as hydrogen and carbon capture and storage
(CCS).

Broadley said that companies dedicated to promoting renewable
sources are not going to invest in hydrocarbons and do not like oil
companies jumping into their market, so they are not going to help
each other. In view of this, regulations imply or should imply
forcing them to work together and, for this, the government’s
role is critical.

For Fernando Cubillos, head of Energy at IDB Invest, the private investment
arm of the Inter-American Development Bank, renewable energies have
shown resilience during the pandemic, competitiveness and
attractiveness.

“The possibilities of reviving the economy may give a chance
to introduce more renewable energy, which can help the recovery,
and there is an opportunity to deploy more renewables. We see good
conditions for renewables today. What is missing in some countries
is the regulatory framework,†he said during the discussions.

 

The installation of photovoltaic panels in poor neighborhoods in
Brazil, like these in Morro de Santa Marta, in Rio de Janeiro,
which often respond to community and distributed generation
projects. They also contribute to reducing the energy bill in these
populations and moving towards sustainable generation and
consumption. Credit: Mario Osava/IPS.

 

In nations such as Brazil, distributed (decentralized) and
small-scale solar generation has become important on a commercial
scale and has registered growth, which was possible thanks to the
regulatory framework.

“We have seen that state-of-the-art technology is wind and
solar, due to low costs, and it is very difficult to expand
hydropower generation. We have seen potential for battery storage,
but it’s not attractive yetâ€, Thiago Barral, executive
president of Brazil’s state-owned Energy Research Agency, analyzed
during the MEC.

Although the energy transition is in its first phase, Latin
America is beginning to consider emerging technologies, such as CCS
and hydrogen, whether from gas or renewables.

In the first case, CCS, the intergovernmental International
Energy Agency (IEA), which brings together major industrial
countries and is based in Paris, said that by 2020, governments and
industry have committed around some $4 billion to such initiatives
worldwide.

In the world, there are at least 15 projects in operation and
seven under construction, but during the MEC experts estimated that
at least 500 are needed globally.

The use of hydrogen is an unknown variant in the Latin American
region. At the beginning of this century, Brazil was a pioneer in
exploring this path, but abandoned it to develop sugar cane
ethanol, renewable sources and hydro energy.

Chris Sladen, founder and director of the UK-based consulting
firm Reconnoitre Ltd, said
CCS “has been a dream for hydrocarbons. But it’s not a simple
concept, it involves several joint projects†and the big question
is how to take them to a commercial scale.

That technology, he proposed, should occur close to where carbon
is generated, such as power plants, petrochemicals or cement
factories.

Some 50 countries, most of them in the developed North, have
instituted policies for the use of hydrogen. In Latin America,
Chile has the potential to produce this resource at low prices and
that can be a mitigation measure for a cleaner electrical matrix,
according to its Undersecretary of Energy, Francisco López.

 

The post
Energy Transition and Post-Covid Recovery, a Challenge for Latin
America
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Source: FS – All – Ecology – News
Energy Transition and Post-Covid Recovery, a Challenge for
Latin America