America and especially South America, is a region touched by the wand of raw materials. That has been his blessing when, as now, the buying fury prevails and prices rise. But also its curse: the high, at times enormous, dependence on basic products has slowed the development of other more productive and sustainable sectors in the long term, such as industry. And in those comes the forced decarbonisation to face climate change, which will cause an earthquake of great proportions on the growth matrix of practically all the countries of the bloc: in not so many years, hydrocarbons will lose value in favor of the minerals essential for the development of renewables. The change will not be overnight, but in the long term copper, lithium or cobalt have many traces of becoming, in short, something like the new oil.
The recent increase in oil prices, something that practically no one had in their forecasts just a few months ago, leaves some important lessons: oil will lose steam but it still has years of dominance in the market. mix Global energy and a lack of investment in exploration in recent years leaves producers with well-oiled machinery in a better position to take advantage of their throes. But there is little doubt that we are facing the latest oil waltz.
“Exporters who have not prepared with investments for the era of renewable energy will lose out,” says Karen Smith Stegen, a professor of International Relations at Jacobs University in Bremen specializing in the implications of the transition to green energy. “As the hydrocarbon market shrinks, they will enter a phase of economic decline.”
This change will reposition the regional economic balance. Apart from the United States and Canada, two countries that are very oil-rich but with many and very powerful sources of growth beyond crude oil, Venezuela appears as the great victim: if in recent years it has already been losing weight in the global oil market, no one He doubts that a good part of the hydrocarbons that the country with the largest oil reserves in the world has under the ground will remain there for the times of the times. As in the case of coal – of which Colombia was the only net exporter in Latin America last year – the planet simply cannot afford to burn it.
Next, Brazil and Mexico, both net exporters, have the upper hand in this gradual lag. Same as Argentina, Colombia and Ecuador. In the Caribbean, two much smaller countries, Guyana and Trinidad and Tobago, are also embarking on this sort of race against time to take advantage of the last years of oil hegemony.
Something similar can be said for natural gas. This fuel, of enormous importance for the industry and for the generation of electricity, has a longer route than its older brother due to the lower emissions that it carries and its usefulness as a backup for renewables when the sun or the wind are not enough. But the gradual weight loss that it should have in the coming years if the world wants to avoid the most dramatic scenario of climate change will also leave victims in the exporters’ gutter.
After the US, which has become the world’s leading producer in recent years thanks to shale, the largest reserves are again in Venezuela and Canada, and, light years away, in Argentina, Brazil, Mexico, Bolivia, Peru or Trinidad and Tobago. These last three countries, however, have the upper hand as they are the only net exporters in the region in recent years. Bolivia sells by gas pipeline to its two southern neighbors, Brazil and Argentina. And Peru and Trinidad and Tobago sell at better prices per ship, in the form of liquefied natural gas (LNG), as Alfonso Blanco, executive secretary of the Latin American Energy Organization (Olade). However, the validity of your business is much greater than in the case of purely oil countries.
The transition from losers to winners of the climate transition comes hand in hand with minerals. “The countries rich in copper and other metals [que jueguen un papel relevante en el desarrollo de las renovables] and that they manage to develop their supply chains, they will be victorious, ”says Smith Stegen by email. “And, given that economic and geopolitical power are interconnected, they will also climb positions in this section”
The mention of the Jacobs University professor to copper is far from free: her contest is essential in the manufacturing processes of solar panels and wind energy mills. On this front, two American countries have the upper hand: Peru, the second world producer of this mineral, origin of just over a tenth of the copper consumed in the world; and, above all, Chile, the first long, which contributes more than one in every four tons produced. Although to a much lesser extent, the US, Mexico and Canada will also get their share. “In the coming years, the global markets for copper and other metals can only go in one direction: growth,” deepens Smith Stegen.
But the revenue from the energy change that is to come in the coming years is not limited, far from it, to copper, cobalt (necessary for the development of practically all green technologies); zinc (vital for the development of photovoltaics); lithium, nickel, graphite or manganese (essential for batteries, one of the key elements of the energy transition); or the so-called rare minerals, as scarce as their name suggests but equally relevant to the explosion of renewables. On the contrary, the two factors sine qua non So that photovoltaics and wind power can replace fossil fuels are the sun and the wind.
Chile, Argentina or Bolivia have a solar energy potential graced by the specific territories that receive high radiation close to world maximums. In Mexico, the benefit comes from the high average level in a majority of the territory. In all of them, a potential that would require public-private investment in appropriate infrastructure remains to be explored.
Something similar happens with wind power: the development possibilities are enormous, especially in the case of offshore turbines for nations located on Caribbean islands, but the option would have to be turned into reality.
The enormous growth options for renewables also open up new avenues for growth and exports in the region. Among them, that of hydrogen, called to be one of the fuels of the future and for whose production the help of green energy is essential. “It is a slow but important road,” says Bárbara Valenzuela Klagges, a professor at the Gabriela Mistral University in Santiago de Chile. “And the region presents the necessary conditions for its development.”
Countries and companies in Latin America have, finally, a possible path before them to reap the very high potential benefits of the energy transition process. But it is one paved with efforts and investments that in many cases will only pay off in the long term. In the short, immediate returns from fossil fuels remain tempting, or in many cases directly necessary, to finance homes, projects, and entire states.
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