Costa Rica is standing out when it comes to the energy transition in Central America. The small country is temporarily achieving to obtain 100% from renewable energies. However, other states in their vicinity want to go forward in freeing themselves from their dependence on fossil fuels. Given this background it´s also worth looking at Guatemala.

The 4th conference “Good Governance for Energy Transition” of the Regional Program Energy Security and Climate Change in Latin America, from the Konrad Adenauer Foundation (EKLA KAS) took place in Guatemala, after Peru, Uruguay and Chile. In Guatemala City around 30 experts from Germany and Latin America discussed topics of energy and climate security as well as the raw materials policy for the energy transition.

“We want to establish a dialogue between the countries of Latin America and Germany about the chances and challenges in the energy transition”, reminded Christian Hübner, director of EKLA-KAS, in the welcome as the goal of the series of conferences. As different as these countries are, certain parallels can be drawn. In Germany as well as in Latin America is necessary assistance from politics, economy and civil society for a successful energy transition. On the other hand, economy requires from politics, the creation of a reliable framework, so that investments, for example, in new technologies will be profitable.

An overview about the instruments that are being used to enhance the energy transition in Latin American countries, was given by Cecilia Aguillon, director of the American Energy Transition Initiative. Bids in Uruguay have made wind power an attractive business. Other countries could learn from this. “But this is not the case for all countries. Tenders also bring problems”, explained Aguillon. She also pointed out that carbon pricing will play an increasingly important role in Latin America. Mexico, for example, has since 2014 a CO2 tax and is planning the introduction of the emission trading. However, it remains to be seen how effective the instrument will be.

Further details about the energy sector of the host country Guatemala were given by Desirée Mendez, energy expert from Guatemala. The most highly populated country in Central America has privatized its energy market for about ten years. One of its policy’s goals for 2020 is to cover 60 percent of the electricity demand with renewable energy. Already today a large part is coming from hydropower, which is defined as clean energy. In some cases, indigenous tribes are affected by the construction of new hydropower plants. “It is part of a political strategy to not incorporate Indigenous communities in hydropower projects and to deprive them of their rights” commented Guiséla Mayén, a Guatemalan researcher, later at the conference.

Beside wind power Guatemala has a high potential for solar energy. But nowadays this constitutes only a small part. “The expansion of the renewable energy would give the country the possibility to increase the export of excess energy and contribute to the national economic growth”, explained energy expert Mendez. Adequate relations would already exist with Mexico, it would also be possible to export to other neighboring states. But the objectives in the energy sector would depend on the political situation of the country. Corruption and crime are also an ongoing problem for the development of the energy sector.

During the conference the connection between energy transition and energy security was discussed. “Countries on their own should see the energy transition to a far greater extent as a geopolitical opportunity for more energy security and energy independence, than as an economic opportunity” added Andres Schuschny from OLADE in Ecuador. The requirement would be that governments make this topic a priority, which should be supported by long-term strategies. Countries could be temporarily assisted with related funding from institutions like the World Bank or the Inter-American Development Bank. But the ideas must be defined by each country itself.

In connection with energy security another topic was cyber security. Increasing hacker attacks like “Wanna Cry” in May 2017 have shown how vulnerable authorities, companies and private persons have become because of digital interconnection. Also, the energy system is becoming more and more decentralized and depends increasingly from digitalization. Georg Meyer-Braune, from the transmission system operator 50Hertz, explained the relevance of these topics for Germany. “It not only depends on having a theoretic concept about what to do in case of a cyber attack. It must be practiced,” advised Meyer-Braune. Christian Hübner director of EKLA-KAS added: “The Latin American countries should look urgently at the cyber security topic. It will be important.”

A topic that is already having a high priority in Latin America is the lithium exploitation. With the global advance in the energy transition and the changes in the models of traffic and transport, this raw material is becoming increasingly important. Australia is worldwide the biggest producer of lithium with 40%, Chile occupies the second place with 34%, while Argentina is contributing with 14% on the global lithium production. Bolivia is not yet exporting lithium; instead it is trying to create a national value chain for the battery production in pilot factories. “We see great opportunities for Bolivia’s economy”, told Carlos Pelaez, consultant for the energy industry in Bolivia. “But of course, the political situation has to remain stable.”

In contrast to Australia, where lithium is obtained by classical mining, the exploitation in Latin America is done by evaporation of naturally occurring brine in salt lakes. The salt lakes are in the so-called lithium-countries-triangle, Argentina (Salar de Hombre Muerto), Bolivia (Salar de Uyuni) and Chile (Salar de Atacama). The exploitation of lithium from salt lakes is regarded as environmentally friendly because of the directed evaporation by the use of the sun.

At this moment 30.000 tons of these raw materials are being exploited every year at a market price of 2,000 dollar per ton. The price is subject to strong fluctuations. According to Felix Spangenberg´s estimation, from A.T. Kearney consulting, with the existing reserve the lithium demand can be satisfied for the next 400 years. It is expected that the german automobile industry will require more lithium in the future, affirmed Spangenberg. His recommendations for the producer countries of South America are: “To sign long-term agreements and to prove exploitation capacity.”

Victoria Flexer, expert in lithium mining technologies, imparted her critical view of the development in relevance of the progress on this area. “It doesn´t matter how high the demand is, it will not be possible to disable physical conditions.” It is important that the Latin American mining countries start implementing at an early stage the projects. “We are only able to satisfy the increasing demand, if we investigate the right methods.”

Another important topic at the conference was climate security. Carl-Friedrich Schleusser, from Climate-Analytics, showed study results on global warming, natural disasters und consequences for humans, with a look on Latin America.

In the region, melting glaciers and the increasing desertification, can bring especially dramatic changes to the water supply. Countries like Guatemala, in which great parts of the population live from agriculture, are more affected. Indigenous populations are also endangered, being generally poorer and less protected from natural disasters.

With the conclusion of the 4thconference “Good Governance for Energy Transition” it became clear, that the energy transition in Latin America is widely considered as a method to achieve more energy independence. Given this background, smaller countries like Uruguay and Costa Rica, that don´t have many fossil resources, are leaders by the implementation of renewable energy. However, more and more countries are following and have set goals in renewable energy, but unfortunately, other topics seem to be more important at the first sight because of the own political heritage.

More time will be needed, until the energy transition is becoming a political priority, but many countries of Latin America are progressing well. At the end it also needed to fight climate change, which is already having impact on the region. On this topic Latin America is also trusting in the West that must lead in the field of climate protection. Latin America will also observe closely Germany´s next steps in energy and climate policy.

Edited by Christian Hübner