ACCESS TO ENERGY GLOBAL MARKET TO IMPROVE THE LOCAL ENERGY SECURITY: THE LATIN AMERICAN CASE - Regional Programme Energy Security and Climate Change in Latin America
Event Reports
CONTENT
1. First day: Specialist workshop
a. Energy Political Survey in Latin America after the Paris Agreement
b. Panel 1: Possibility for an energy political Integration and regional energy Security
c. Panel 2: Challenges and opportunities for the incorporation of the Latin American energy matrix into the global market.
d. Panel 3: Global investment in energy in Latin America.
2. Second day: Political debate
Energy integration opportunities in Latin America.
Introduction
When talking about integration (in any geographic, economic, energy sense, etc.), all eyes turn immediately to Europe while the opposite occurs when trying to relate the words integration and Latin America. Nevertheless, specially talking about energy, no region in the world has the potential of this region to achieve the integration. For this reason, the EKLA Program of the Konrad Adenauer Foundation the International Study Center of Brazil (Centro de Estudios Internacionales de Brasil - CEBRI) and the International Study Institute (Instituto de Estudios Internacionales - IDEI), of the Pontificia Universidad Catolica del Peru (Pontifical Catholic University of Peru) make efforts to promote the different options of Latin America to become a consolidated and stable place that generates, exports and receives investment in energy. Furthermore, it has created spaces for specialists and leaders of the topic to get together and share experiences and ideas that contribute for a Latin American continent firmly integrated.
First day: Specialist workshop
To start this first work day, the representatives of the organizing institutions, Ph.D. Christian Hübner, Director of the EKLA-KAS Regional Program; Ph.D. Armando Mariante, a Member of Board of Directors of CEBRI, and Ph.D. Fabián Novak, Director of IDEI, offered a welcome speech emphasizing specifically the need to generate integration spaces in Latin America. After that, the first results of the survey were presented, “Energy Policy in Latin America after the Paris Agreement”.
The purpose of the survey was to know the perception of different social agents (politicians, opinion leaders, specialists and youngsters) about the impact of Paris Agreement on energy security. The results reported to the attendees were given in order to encourage and enrich the discussion since the final results will be disclosed along with the final publication of the ongoing research.
Panel 1: Possibility of an energy political Integration and regional energy Security
•There is a technical consensus on the need for integration to improve the energy security in Latin America; but that consensus is not put into practice.
•The challenges for regulatory convergence will depend on the integration level that could be reached.
• It is necessary to start with small-scale integration: bilateral or trilateral agreements.
•There is no confidence and stability to develop large-scale innovative solutions for a regional integration.
•There are already case studies in Latin America that show the successful integration.
Lennys Rivera, Director of OLADE (Latin American Energy Organization) Integration (Ecuador), she was the first panelist to take the floor for presenting the barriers of the Americas before achieving energy integration. They include political and regulatory barriers such as agreement generation, regional planning, regional or multilateral coordination instead of local. Regarding that, OLADE has developed an Energy Planning Manual in order to strengthen the relationship between the State and the energy policy. This is focused on the development of capacities of agents involved in decision making.
The global population growth is unstoppable, it is estimated that it will reach more than 9 billion people by 2050. In addition to poverty reduction and significant growth of the middle class. Furthermore, the economic development generating a higher consumption capacity and resulting in bigger wastage. All this translates into the need to increase the energy offer by 45% stated Ricardo Raineri, former Minister of Energy and President of IAEE (International Association for Energy Economics) (Chile). Latin America has the largest fossil fuel and gas reserves of the world, in addition to the high potential for the development of renewable energy. Nevertheless, the efforts for energy integration are still very basic and have little impact. Raineri stated, among the energy integration advantages, the abundance of resources, security, complementarity, exchange and export. However, that integration, in the Latin American reality, brings many risks of political, macroeconomic, stability and corruption type. For example, corruption and dependency of resources of another country, along with the misuse of integration in geopolitical problems. Therefore, it is necessary to identify the own resources and generate an environment of stability, confidence and security that allows to strengthen export and investment.
Alberto Sosa, Founder, researcher and a member of the AMERSUR Board (Argentina), he complemented these ideas by making a historical overview of the energy integration attempts of Latin America, for example, the Brazil-Argentina electrical interconnection. However, these attempts have occurred according to the geopolitical situation of every country and its relationship with the neighbors and investors. Nowadays, investments are mainly made in Asia, with a very little presence in Europe and North America. Sosa concluded that there is a technical consensus among the countries, but there are no progresses in practice.
Finally, José Botafogo Gonçalves, emeritus Vice-Chairman of the Board of Directors of CEBRI (Brazil), who was the moderator of the panel, ended saying that it is needed to start talking about waste conservation, reduction and reuse, and also about the coexistence between fossil energy with non-conventional sources and sustainability.
Panel 2: Challenges and opportunities for the incorporation of the energy matrix of Latin America into the global market.
•The main opportunities of the region to generate an integrated energy matrix are based on its natural resources: sun, wind and water.
•The solar, wind and hydraulic energy are markets with potential to be developed, without damaging the environment.
•In Latin America it is necessary to heal the relationship among neighboring countries, remove the mistrust, build confidence and seek stability.
Currently, there are 164 countries around the world with environmental goals; and Latin America does not stay behind in this transition and change process in the way to relate to the environment. Brazil, Argentina, Mexico and Uruguay are leading the field with respect to environmental goals and good practices. Isaac Dyner, Dean of the Jorge Tadeo Lozano Bogotá University (Colombia), highlighted the important role of complementarity that the Latin American countries should have, due to their resources availability and the climate change processes. The sun, water and wind availability in the region allows the development of an energy matrix to support, in a relevant way, the energy supply increase. This is due to the complementarity among countries according to, for example, their rainy and dry season, such as El Niño and La Niña phenomena.
However, Anthony Laub, Director of Laub&Quijandría Energy Group (Peru) said that there is still a long way to go before dealing with energy integration with the necessary maturity. He said that prior to the integration it is necessary to reach that 100% of the population has access to energy, water and drainage. He emphasized that it is necessary to focus on renewable energy but it is imperative to make them competitive to avoid the risk of putting the highest costs in the invoices of those who have the least; or with many abandoned wind parks because they do not meet the conditions to be a successful case.
Laub said that, in his opinion, the region is not ready for integration because there are coexistence and mistrust problems without being solved. “It is needed to start the first steps to get bilateral agreements. The Andean Community (CAN) is a good example of these efforts, which are still insufficient, but they are the beginning”, Laub stated. He complemented saying that the Latin American countries continue changing their policies, regulations and even the way to relate themselves to their neighbors in accordance with the will of the current government; in that way it is very difficult to integrate and give confidence to investors.
As the last participation in this panel, Pilar Ostos, Researcher and professor at the National Autonomous University of Mexico UNAM (Mexico), focused on two key elements: the good and potential example of the Pacific Alliance and the importance of seeking autarchy in the region. Regarding the Pacific Alliance, Ostos indicated that this is a successful case which may be considered to start energy integration. Nowadays, this alliance is made up of 4 countries (Mexico, Colombia, Chile and Peru), 2 in process to enter (Panama and Costa Rica) and 1 applicant as an observer (Argentina). This would allow to go towards integration and then the above-mentioned autarchy, which is nothing more that the ability of a country or region to be self-sufficient.
All of this in a context that, as indicated by Henning Suhr, Representative of the Konrad-Adenauer-Stiftung KAS Office in Venezuela, is changing. The end of the XXI century socialism (Brazil and Argentina), end of the Obama doctrine, changes in Cuba, a low price of oil, signing of the peace in Colombia, among others events which have arisen.
Panel 3: Global investment in energy in Latin America
•The main tendencies for the future in the region are the wind and hydraulic energy development.
•The renewable energy may substitute oil and gas in the future, but there is a lot to do in the geopolitical field to achieve this.
Chen Mo, Responsible for the Master's Program for developing countries of the Institute of the Beijing Normal University (China), confirmed that China is one of the most contaminating countries of the world, since 73% of its energy is based on coal.
For this reason, they are very interested in investing in non-conventional energy sources and generating the energy cooperation that helps them achieve their environmental objectives. He emphasized that wind and solar energy in China are not very competitive and require the impulse of the State. Without a doubt, Latin America is one of the destinations of the investment of China, particularly in the case of energy.
The role of the State regarding rules and policies to support the investment is crucial. Luis Carlos Peralta, CEO PECOM S.A. de S.V. (Mexico), stated that in his country the energy reform opened the doors for investment significantly, maintaining certain regulations and having even some open tender procedures. However, controls may not be excessive because they turn into limitations for investors. Nowadays, the great opportunity for Mexico is the wide territory in Baja California, which has optimal natural conditions for the development of solar and wind energy, but it has not been exploited yet.
For his part, Luis Eduardo Garcia, General Manager of SOWITEC Peru, stated that within the country there is a legal framework which seeks to promote the development of the renewable energy and investment on it. The Energy Policy is based on: competition (free market), safety (reliability and access) and sustainability (environment). Garcia proposed the need that the regulations coexist with the free market in the renewable energy. But additionally, in Peru it is necessary to work in the territorial organization, technological diversification (because of the dependence on a single gas pipeline) and rural electrification, for which there is already a regulatory framework. He finished his speech with the phrase “The intelligent regulation encourages the market.”
With this, the moderator Emma Pérez, the editor of the Stakeholders (Peru) magazine, concluded that the potentiality of the region, in the development of the wind and solar energy, is very attractive for investment, but there are other elements to be previously reviewed, such as the political and macroeconomic stability. This means it is possible that renewable energy may substitute oil and gas; however, Latin America has a long way to go before achieving it, starting with the access to energy for 100% of population.
To finish this first day Dr. Hubertus Bardt, Main Researcher of the Institute of Economic Research of Colonia (Germany), stated the three factors that are envisaging the future of the energy: that it is clean, accessible and safe: For the first factor, we are seeking to substitute the nuclear energy with renewable energy and reduce the CO2 emissions. “The Paris Agreement is not enough to generate the change, local energy policies for each country and region are necessary”, Bardt said. The second factor deprives the need that the cost of the energy is accessible, especially for the consumer. And finally, safety in the energy supply both in the geopolitical framework and the continuous availability of the service.
Second day: Political discussion
Opportunities of Energy Integration in Latin America
In the second day of this international seminar the Vice Minister of Energy and Mines of Peru, Raúl Pérez-Reyes was present, who discussed on the energy policy in Peru and its applicability in a context of poverty reduction, technological innovation, even when 15% of accessibility is pending to be covered. The policy seeks to diversify the energy matrix with particular emphasis in the renewable energy; get a competitive energy provision with universal access, improve efficiency, generate self-sufficiency in the energy production, minimize the environmental impact, develop the industry of natural gas, strengthen the institutionality of the sector and promote the regional energy integration, with emphasis on the interconnections with Ecuador and Chile.
After his participation, five panelists who were part of the political discuss spoke: F ábio Rosa, Executive Director of the Institute for Development of Alternative Energies and Self-Sustainability – IDEAAS (Brazil); Marco Arróspide, Manager of Gas and Energy – ENAP (Chile); Enrique Portaluppi, Executive Director and Equitatis S.A. (Ecuador); Armando Zamora, International Consultant and Professor of the CEPMLP of the University of Dundee (Colombia) and Alfredo Novoa, former Ambassador of Peru in Germany and Founder of the Peruvian Renewable Energy Association (Peru). With the moderation of Fabián Novak, Director of IDEI, the following conclusions were reached:
• There is not any more reliable energy than another one. Energies best suited to the reality and available resources are developed and used.
• Waste production is not going to end, especially in cities; therefore, it is necessary to think about the use of these residues for energy generation.
• Latin America has the potential to substitute all its energy sources with renewable sources.
• The State must not have excessive controls on the energy market.
• It is necessary to strengthen bilateral interconnections, which are the basis for future energy integration.
• It is necessary to develop equipment, materials and professionals of the region. It is necessary to begin to train professionals in the area and Latin America will have the ability to generate its own solar panels, for example, without having to continue importing them.
• The region lacks security, stability, commitment and trust (internally in each country and in the relationship with its neighbors) in order to strengthen investment and development of this type of energy.
• The transition to renewable energy, integration and energy security may not depend on the will of the current government. This is a work in complementarity, generating confidence and fulfilling the commitments undertaken.
