Latin Amer­ica stands di­vided be­tween oil and green en­ergy


Latin Amer­ica spends bil­lions of dol­lars sub­si­diz­ing fos­sil fu­els each year, but also has some of the world’s largest re­new­able power pro­grams, high­light­ing the en­er­gy­hun­gry re­gion’s di­vi­sions as it charts its fu­ture.

Ex­hibit A is Venezuela, es­ti­mated to have the big­gest oil re­serves on Earth, where driv­ers can fill their gas tanks for about US$1. Ex­hibit B is Uruguay, which has one of the most ad­vanced winden­ergy pro­grams any­where and was gen­er­at­ing 96 per­cent of its elec­tric­ity with re­new­ables at the end of last year. With elec­tric­ity de­mand pro­jected to dou­ble in the next 15 years, the re­gion is split be­tween coun­tries de­vour­ing their rich oil, gas and coal de­posits and those bank­ing on green en­ergy.

“It’s true it’s a re­gion with a lot of oil and nat­u­ral gas, but a lot of coun­tries don’t have any,” said Uruguay’s for­mer na­tional en­ergy direc­tor Ra­mon Men­dez, who stepped down from the post in Fe­bru­ary. “In Uruguay, we don’t have oil, or gas, or coal.”

That has pushed the small coun­try of 3.3 mil­lion peo­ple to go green, plop­ping wind­mills down among the graz­ing cows in its vast stretches of un­bro­ken fields to take ad­van­tage of the gales that of­ten sweep the plains. Other coun­tries are mak­ing sim­i­lar bets. Chile has in­au­gu­rated sev­eral so­lar en­ergy projects in re­cent years and is at work on a mas­sive so­lar park. Mex­ico and Brazil have also in­vested heav­ily in wind power.

In De­cem­ber, en­vi­ron­men­tal group WWF de­clared Latin Amer­ica the lead­ing re­gion in the world on re­new­able en­ergy, nam­ing five top per­form­ers: Costa Rica — on its way to be­com­ing “the first Latin Amer­i­can coun­try with 100 per­cent re­new­able elec­tric­ity” — Brazil, Chile, Mex­ico and Uruguay.

“From 2002 to 2012, elec­tric­ity gen­er­ated by wind in­creased an av­er­age of 26 per­cent world­wide. In South Amer­ica, it in­creased 51 per­cent, and in Cen­tral Amer­ica 42 per­cent,” said Tabare Ar­royo Cur­ras, a WWF en­ergy spe­cial­ist based in Mex­ico. Some 20 Latin Amer­i­can coun­tries of­fer in­cen­tives for green power pro­duc­ers. But there is room for im­prove­ment, Ar­royo Cur­ras said. “In so­lar en­ergy, we haven’t made much ef­fort ... We gen­er­ate less than 0.5 per­cent of our elec­tric­ity” from so­lar, he said.

Re­searchers fore­cast elec­tric­ity de­mand will dou­ble by 2030. “This puts pres­sure on the en­ergy sys­tem, mak­ing en­ergy a chal­lenge for the re­gion,” said Ger­ard Al­leng, cli­mate change spe­cial­ist at the In­ter-Amer­i­can Devel­op­ment Bank (IDB) in Wash­ing­ton. “But it also pro­vides an op­por­tu­nity in terms of a longterm per­spec­tive when it comes to re­new­able en­ergy.”

The IDB pre­dicts the re­gion’s bright sun and strong winds could cover more than 20 per­cent of Latin Amer­ica’s elec­tric­ity de­mand by 2050. But ob­sta­cles re­main, in­clud­ing what the WWF calls “per­verse sub­si­dies for fos­sil fu­els.”

“The coun­tries where it’s very com­pli­cated for re­new­ables to make in­roads are Bo­livia, Peru and Ecuador, which have sub­si­dies for fos­sil fu­els,” said Ar­royo Cur­ras. He said those three coun­tries, to­gether with Ar­gentina, spent around US$40 bil­lion sub­si­diz­ing fos­sil fu­els in 2013. That “is ba­si­cally twice what was in­vested in re­new­able en­ergy across the en­tire con­ti­nent that year,” he said.

A source close to one of the gov­ern­ments said there were “ten­sions” across the re­gion be­tween coun­tries back­ing re­new­ables and “a group led by Venezuela, Bo­livia, Ar­gentina and Ecuador.”

“We’re in the process of draft­ing an en­ergy treaty for UNASUR (the South Amer­i­can re­gional bloc), but we can’t get past the ta­ble of con­tents be­cause we have com­pletely dif­fer­ent views,” said the source.

Even star pupil Uruguay an­nounced in Jan­uary that it had found po­ten­tial crude de­posits off its coast. “Yes, of course, we’re look­ing for oil,” said Men­dez.

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