"I have met personally Konrad Adenauer "

3th German – Latin American Good Governance on Energy Transition Dialogue

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Experts met at the 3th Good Governance on Transition Conference to debate energy related issues in Latin America and German. Topics ranged from political framework conditions to battery storage capacity and new technologies as Blockchain.

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Panel político

Political panel

“As is the case with many other Latin American countries, Chile has a wide renewable energy spectrum. We are on the right track towards a new and clean energy sector” said _Hans Richter__, Head of the Austral University in Chile. Richter set the positive tone for the audience at the Good Governance towards Energy Transition Conference held at the university auditorium sponsored by the Konrad Adenauer Foundation Regional Energy Safety and Climate Change Program (EKLA KAS) every year. The 2016 edition took place in Montevideo (Uruguay) and the 2015 edition in Lima, capital city of Peru. This year´s edition venue is Valdivia in southern Chile where energy is produced by mini-hydro power plants on rivers. Conference participants could see the facilities first hand in a day trip during the conference.

Christian Hübner, EKLA KAS Director started by stating the goal of the conference: “We want to foster exchange between German and Latin American energy sector experts. In some Latin American countries renewable energy is already a success story, while others are just starting.” Germany has already implemented great innovations and can share expertise, added Hübner.

Rheinhardt Stuth, CDU politician and HanBao Erneuerbare Energie GmbH manager made a presentation on future energy market assumptions. One of them is that global energy demand will grow to such an extent that it will only be fulfilled by renewable energy. Another one is that renewable energy will compete with fossil energy in many locations and prices will keep on dropping. Stuth described the current situation in Germany: the German Republic has already started the lignite phase out although parties have not yet set a specific date. Coal is hazardous for the environment and health. If external costs produced by fine dust, mercury and dioxide emissions in lignite combustion were counted in, that energy source would not be as cost effective as it seems at first sight. Stuth pointed out nuclear energy has no established party support and mentioned the success of the international movement Divestment which accounts for the increasing recognition of fossil sector investment risks and investor interest in clean energy.

Gabriel Blanco from the National University of Central Buenos Aires, Argentina made a presentation in his first panel on the topic “Political framework for a successful energy shift “and stated that renewable energy should not be measured only by its cost. They are the essential component of sustainable development and as such should be considered a long term investment for a clean energy future. Incentive policies for research are needed to further implement renewable energies, Blanco added. In this sense, conservative President Mauricio Macri mentioned tax incentives for renewable energy facilities as well as special tariffs and import duties for technology to set up wind and solar projects. Argentina will chair of the G-20 next year and this may be the chance for climate to make it to the top of the agenda. Clarissa Lins, independent renewable energy advisor in Brazil mentioned clean energy investment in many Latin American countries is still too low. For the moment, the wind energy market in Brazil is in the hands of Chinese companies. Investors, especially European, are still prospecting possibilities in the country. Political instability scares them off. “The government has to be wiser”, Lins said. Philipp Nießen from the German Industry Confederation (PDI) focused on the technical and infrastructure challenges Germany has to overcome in the energy shift, as for instance, high energy costs and lack of networks. Surplus energy in the north cannot get to the south for the time being. If there are network bottlenecks, wind turbines are shut off and clean wind is wasted. Nießen went on to say that renewable energies were heavily subsidized for a long time. “Not everyone liked that”. Renewable energy grew at a quick pace in the past but in an uncontrolled manner. The time has come to phase out inefficient coal power plants form the market, Nießen concluded. Germany is now in the situation of having to decide whether energy supply will come from the “hand of the neighbor” or whether good price energy comes first. The following debate focused on the fact that the introduction of an intersectorial CO2 price would be advisable for both Latin American and Europe. At least in Germany such a price would at least phase out inefficient coal power plants form the market. Established parties have not issued any statements on the price of CO2. Europe still has to wait for the effects of the EU Emissions Trading System (EU-ETS).

Teodore Kausel from Chile University introduced some energy market innovations, as for instance, the dramatic drop of solar energy prices in the second panel on “A Business Model for the Future Energy Market”. This situation could have taken place much earlier if there had been political will, said Kausel. President Ronald Reagan had all solar panels removed from the roof of the White House because he wanted to focus exclusively on fossil energy back in 1986. “This episode shows that unfortunately politics run behind innovations”, argued Kausel. The German can industry is also running behind as far as launching electric cars is concerned due to lack of political lobby. Tim Reutemann, Red Morpheus GmBH founder, explained the “Blockchain” application in the energy sector. This type of technology does away with intermediaries – in this case the classic energy distributor. Trade between producers and consumers can be direct. “For the moment Blockchain is hype in the energy sector. We still need to see how the technology will be implemented”, Reutemann said. The possible future of Blockchain energy distribution can be seen in Brooklyn, in the New York district. Start-Ups are the ones testing Blockchain in the energy market in Germany. Political frameworks are not yet ready for such a technology. For instance, how does the Prosumidor legal case work? These are the questions the next government will have to deal with. Daniel Chacón, form Mexico Climate Initiative made a presentation on the Mexican energy market that has emerged from a massive transformation due to a CO2 tax. Carbon trade will start in 2018. At least 60 companies are currently participating in the pilot project. But Chacón pointed out that the fossil market in México (unlike Germany) is hardly interested in fostering an energy market change.

The third panel introduced the following question: Up to what an extent can renewable energies fulfill all industry needs? Industry in Colombia has an 85% total energy share, Omar Preis, from Bogotá University explained. Oil and gas is number one in the energy sector. Renewable energies could contribute to economic diversification according to Prias. Julia Badeda, at Batterieingenieure GmbH talked about the state of battery technology in Germany. Electricity accumulators provide the necessary flexibility needed to balance fluctuating electricity sources that are not totally reliable. Badeda introduced the word “Dunkelflaute”, a moment in which renewable energies are useless or almost useless, to her Latin-American colleagues. According to Badeda “Batteries are the best solution for this type of situation”. Home battery prices have dropped dramatically and industrial batteries will follow suit shortly. Germany is testing industry great capacity batteries in different projects. Badeda´s Latin-American colleagues were especially interested in accumulator efficiency. Engineer Badeda pointed out that lithium is abundant but copper could eventually become scarce. José Mardones from Austral University in Chile shared insights on a small “Smart Grids” research Project at the University. According to Mardones, the big question for Latin America is whether networks can become more intelligent rather than the use of battery accumulators.

The second day at the conference kicked off with a speech by the renowned Chilean German economist Manfred Max Artur Neef that moved everyone in the audience. “I think I am the only one that met Konrad Adenauer in person. I was a student in Germany at the time”, said Neef to the public. At that time Neef worked for Schell, the oil Company, but soon enough he became interested in developing countries issues. In his presentation he stated global problems cannot be faced form a one-dimensional or economic perspective, the energy problem included. ”It is our responsibility to take care of the environment for future generations”, said Neef The last panel at the conference hosted Pia Molitor, EU energy policy specialist who talked about the EU Winter Package (the EU Commission Energy Reform). The winter package introduces proposals to improve coordination of national energy policies, reform energy efficiency standards and both promote renewable energies and the energy market design. The Package of measures will greatly influence the energy framework till 2030. “We need to wait and see whether 2030 targets can be met “concluded Molitor at the end of her speech. Juan Carlos Sánchez presented the renewable energy outlook in Venezuela, “Unfortunately, to say the truth, there is not much going on”, stated Sanchez. During Nicolas Maduro´s Administration not much will change. He wants to get closer to Russia in energy matters. Venezuela has almost 90% of all oil fields in the region. We could ultimately leave CO2 emissions aside, said Sanchez.

“Fossil fuels in Brazil are booming” said Matias Francini from Brazil. “But wind energy is a success story”. Wind energy bids started in Brazil in 2014. According to Mancini the most important measures were to stop fossil energy incentives and create a reliable framework for interested foreign investors. “The energy shift only take place when the government has a long term firm strategy for change”, said Francini at the end of his presentation. Carlos Finat and Roberto Pasten talked about Chilean prospects. “Fortunately our government has understood the importance of renewable energies for safe energy supply in our country”, Finat mentioned. Our clean energy percentage for the moment is 15% and the target is 20% in the next three years.

The conference once again showed that different Latin-American countries see the energy shift basically as an economic possibility for greater energy safety and independency. But the energy shift will only be a success story if governments give the topic top priority and implement long term strategies in stable government frameworks. If this is not the case, efforts made are useless. Brazil just like Argentina is taking its first steps. Renewable energies are the last item on the agenda due to the political situation in Venezuela. This conference introduced key technologies such as energy accumulators and totally new concepts like Blockchain. These applications play a secondary role in many Latin American countries but their development raises great expectations in Germany. New business models and new technologies are essential for the energy shift in Germany and are a key step for the energy, heat and mobility sectors. The path towards energy sector transformation is greatly paved in Germany while the mobility and heat areas are still in paper. In closing, there was no comment at all during the conference about the fact that the US President Donald Trump withdrew from the Paris Climate Agreement. Latin American countries were rather indifferent and that is good news.