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The energy transition is one of the keys of the moment in environmental matters. The challenge is to reduce the use of fossil fuels (gas, oil and coal) to progressively replace them with renewable energy. In this scenario, Latin America finds itself facing a great opportunity. With enormous potential for the development of photovoltaic, wind, biofuels or green hydrogen energy, the question is how to take advantage of it and what path to take to accelerate the process.
Latin America begins with an advantage that, according to Germán Bersalli, an Argentine researcher specialized in the evaluation of climate and energy policies at the RIFS (Research Institute for Sustainability) in Potsdam, Germany, “is explained by a very high hydroelectricity base, which in the last 20 years has been complemented with investments in other renewable energies, such as wind onshore and photovoltaic solar energy.” On the other hand, countries like Costa Rica, Uruguay and Brazil “have in common the relatively high percentage of renewable energies in the energy matrix and specifically in the generation of electricity,” says the expert. Data from Energy Transition Index of the World Economic Forum, indicate that Brazil, Uruguay and Costa Rica occupy the first places in the region, along with Colombia and Chile.
Renewable energies, on the rise
According to him energy panorama 2023 of Latin America and the Caribbean, published by the Latin American Energy Organization (Olade), the electricity generation capacity with non-conventional renewable energy sources in 2022 increased: wind, by 10% and solar, 46%. “95% of the new installed capacity in electricity generation in 2022 was renewable and there is still a gap to cover of 16.2 million inhabitants in terms of electricity service coverage,” the report clarifies.
Brazil, for example, is one of the world leaders in investment in wind energy, “in addition to having a good level of investment in research and development, both public and private,” adds Bersalli. While in Chile, according to María Trinidad Castro Crichton, executive director of the World Energy Council (WEC) In that country, “renewable energies reach 54% in the energy matrix, he explains. In addition, “it has a projected capacity to produce 70 times the requirements for fuels such as low-emission hydrogen.” Added to this, the expert points out, is the great capacity for generating photovoltaic energy, thanks especially to the high solar radiation in the north and also wind energy due to the strong winds in the south of Chile.
The importance of planning
The South American country committed to the challenge of carbon neutrality by the year 2050 with an energy transition that must consider the accessibility, security and sustainability of the energy supply, Castro recalls. “Chile focused its energy policy as part of its development strategy. It is a long-term vision that transcends the governments in power. In this sense, we have a roadmap that defines structural axes that we update in a participatory manner as the years progress,” he points out.
Along these same lines, the Minister of Mines and Energy of Colombia, Andrés Camacho, highlights that there are two key elements for the fair energy transition process that his country is developing: that it is a commitment of all areas of the Government – not only of those of energy—and that there is a favorable response from society. “We seek to reduce extractivism, developing other sectors of the economy, such as the countryside, industry and tourism. The idea is to guarantee sources of income that replace those from oil, gas and coal,” the official details to América Futura.
He even remembers that Colombia made the decision not to grant more oil or hydrocarbon exploration contracts and, thus, not to further increase the extractive frontier. In addition, they are carrying out an energy communities project: “We are in the midst of developing more than 5,000 energy communities throughout the country that have the purpose of democratizing energy. We have water, sun and wind to take advantage of. As a continent we could transform ourselves into an energy power, complementing ourselves with the countries that have minerals, which would give us a good margin of competitiveness in the geopolitical dispute that the world is going through.”
In the case of Costa Rica, “what is most exploited is hydroelectric energy, which occupies more than 70% of the matrix,” explains Federico Varela, General Manager of HiPower, a leading Costa Rican company in solar energy. ”What happens is that when you have such a high dependence on one type of energy, demand planning is crucial. In 2023, as the El Niño phenomenon spread, the reservoirs emptied, causing energy to be imported from other countries. Given this, solar and wind energy should be alternatives to hydroelectric energy,” he maintains. However, current public policy in Costa Rica does not encourage the adoption of this type of energy, which comes with rate increases.
And what about Argentina? Martín Dapelo, specialist in renewable energies and founder of the company On Networking, affirms that, with the new Government of Javier Milei and the changes it is bringing, “benefits were taken away from renewables and hydrocarbons are maintained.” In that sense, the DNU mentions, the decree of necessity and urgency, which “repealed the fiscal benefits in energy matters that distributed generation had”, which allows each user of the electrical network to generate their own energy from sources renewables and can inject surpluses into the traditional energy system. Meanwhile, hydrocarbons still have subsidies.
The challenges of Latin America
Specialists agree that Latin America needs to resolve certain differences to unite in pursuit of a regional alliance that facilitates and gives strength to this type of policies. “The challenges imposed by the climate emergency, geopolitical conflicts, the post-pandemic era, among others, require the leadership of people who serve as a guide to jointly build a better common house for all,” says Crichton, from WEC Chile.
In the same sense, Anahí Urquiza, researcher at the Center for Climate and Resilience Science CR2, says that in the region there is a lot to do in terms of own research and development of science, without stopping to look at the indigenous peoples who “ “They live differently in their relationship with ecosystems.” “We must gain strength to not lose focus in the face of political ups and downs,” says Urquiza. “To advance in these areas, we need greater investments, creating institutions that allow for the generation of adequate articulation between scientific evidence, dialogue with the territories and long-term decisions.” Will Latin America be up to the task of carrying out a long-term sovereign transition, focusing on the region's strengths?
How to accelerate the energy transition
The specialists consulted by América Futura agree on a series of steps that each country must work on to accelerate the transition:
1. Focus on energy efficiency measures and invest in renewables.
2. At a macro level, facilitate investments in renewable energy technologies but also in infrastructure, such as transmission and distribution lines, storage systems.
3. Adapt regulations, legislation and progressively reorient energy subsidies that benefit fossil fuels towards clean energy.
4. Develop solid alliances at the Latin American level to create regional value chains around renewable energies, electric mobility, public transportation such as, for example, fast railway lines.
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