Latin America has immense potential for renewable energy sources for electricity generation and could lead the global energy transition with tangible benefits for its economies, populations and ecosystems. But moving in that direction requires leaving coal and other fossil fuels aside, and that implies demystifying one of the main obstacles to decarbonization in our region: considering the misnamed natural gas as an alternative for the energy transition. Gas, in reality, like coal and oil, is a fossil fuel but it is still promoted as a “clean” and “transitional” fuel, to the point of hindering and delaying the expansion of renewable energies.
It is said to be clean because it emits less greenhouse gases (GHG) such as carbon dioxide (CO2) compared to other fuels. But that is only half true, because it hides the fact that gas is a significant source of methane emissions, GHG, which is 28 times more polluting than CO2. In addition, a report on gas in Latin America published by the UNEP in 2022 projects that an energy transition towards renewable energy would reduce 80% of GHG emissions by 2050, while a transition based on natural gas would reduce only 20%.
Furthermore, the International Energy Agency (IEA) has warned countries about the insufficiency of government commitments and actions to achieve a reduction in GHG emissions in line with 1.5ºC and carbon neutrality by 2050, and therefore recommends the year 2035 as the deadline for the exit of gas from the electricity sector. However, certain economic interests are driving large investments in gas infrastructure (especially in Brazil, Mexico and Argentina) as is the case of Vaca Muerta: a large-scale project to exploit unconventional gas and oil deposits in Argentina, with more than a decade in development. Initiatives like this take years to complete and decades to achieve financial returns, investing efforts and resources in future stranded assets in an industry that we already know must change.
Abandoning fossil fuels is complex for exporting and dependent countries like Trinidad and Tobago, where oil and gas represent 40% of its GDP and 80% of its exports. Also because, in recent years, efforts to improve access to energy for vulnerable populations have focused on subsidizing fossil fuels. This is the case of Colombia, which recently approved a 70% subsidy for the connection and installation of gas in low-income homes.
Renewable energies contribute precisely to reducing economic dependence and democratising access to clean and sustainable energy in many countries. UNEP indicates in its report that renewable energies would create approximately 1,300,000 new jobs in Latin America by 2030, compared to just 14,000 if gas-powered energy infrastructure were chosen. In a region with unemployment rates above 7%, renewables represent, once again, a better alternative.
So what can governments, national and international financial institutions, and the private sector do to drive a transition that accelerates the widespread adoption of renewable energy?
- Planning for the long term and acting now: these actors can and must structure fair energy transition strategies that generate enabling conditions to accelerate the massive introduction of renewable energies, thus outlining the energy future of the region for the following decades.
- Giving a clear signal for the exit from gas production and use in our countries. This must be accompanied by concrete plans and timelines for the exit of gas in sectors where it is cost-efficient, followed by sectors that are difficult to reduce, such as freight transport and highly energy-intensive industries.
- Dismantle and reorient socially and environmentally regressive fossil fuel subsidies. Socially and politically careful reform must include compensation measures to minimize negative impacts and support vulnerable sectors and communities during the transition and promotion of renewable generation, ensuring direct, cost-efficient and affordable energy access for vulnerable populations.
- Prioritize electricity generation with renewable sources. Two studies carried out in Chile by KAS Engineering in 2022 and for the Institute for Complex Engineering Systems in 2023 They project a significant decrease in natural gas-fired power generation, from 15 TWh/year to approximately 5 TWh/year by 2030. This shift is due to the increase in generation from variable renewable sources such as solar and wind, and energy storage infrastructure. Both studies predict that by 2035-2036, renewable generation will represent between 95% and 96.5% of the Chilean electricity grid.
Accelerating the introduction of renewable energies and abandoning gas is a challenge, but it is possible. And challenges bring out the best we have to offer. It is not in vain that we spent two weeks enjoying the Olympic Games in Paris, admiring the result of years of effort and the best version of each Olympic sport. Let us maintain a high standard for the energy transition and demand its best version: a fair and rapid transition to 100% renewable electricity systems backed by storage.
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