BELO HORIZONTE, Brasil - The countries of Latin America and the Caribbean must increase their energy consumption to raise living standards, but at the same time create a financial and policy environment to stimulate innovative technologies to produce clean energy from nontraditional sources, according to experts speaking at a seminar today.
“The dilemma is that the countries of Latin America must grow more, and for this they must consume more energy,” said Inter-American Development President Luis Alberto Moreno in his inaugural statement at the seminar “Financing of clean energy,” which is being held in conjunction with the Bank’s 47th Annual Meeting. He noted that the per capita energy consumption in developing countries is only a tiny fraction compared to that in industrialized countries. In some of the poorest Latin American countries 30-50 percent of the population lacks access to modern electricity services.
But at the same time, energy production and use is growing, creating pollution problems at the local level as well as contributing to climate change.
“The good news is that the patterns of consumption and production in Latin America and the Caribbean can be more environmentally friendly than in the past,” said Moreno. He continued that some clean energy technologies are already cost-effective when used on a large scale, and there are many opportunities to increase energy efficiency and substitute petroleum with natural gas.
Moreno singled out Brazil as a leader in clean energy development, noting that ethanol produced from sugar cane comprises 40 percent of the fuels used by the country’s vehicles. Moreover, half of the new vehicles in Brazil are hybrids, equipped to use ethanol or gasoline.
The IDB president pledged the Bank’s support to its borrowing member countries by helping to create a policy and financial environment that will spur investment in energy projects that are “economically efficient, financially sustainable, and environmentally and socially sustainable.” The IDB will use its comparative advantages in helping to finance such projects through the use of guarantees that complement direct private investment.
“The borrowing countries must take the leadership role, although the IDB can provide technical and financial support,” Moreno said.
Moreno closed by acknowledging support provided by the Bank’s nonborrowing member countries in advancing the clean energy agenda. Among them are Germany, Great Britain, Canada and Spain, in addition to Japan, the Netherlands, Switzerland and the United States. “We expect to continue these successful alliances in the coming years,” he said.
Other speakers set forth a rationale for using clean, renewable energy sources, among them, Ingrid-Gabriela Hoven, deputy director general for Latin America and the Caribbean Germany’s Federal Ministry for Economic Cooperation and Development.
She acknowledged the irony of industrialized countries giving advice on energy issues to developing countries: “While Latin America is responsible for about 4 percent of energy-related carbon emissions, Germany alone emits almost the same amount,” she said. “It may be argued that industrialized countries should resolve their energy and emission problems before coming to seminars like this to give advice to others,” she said.
Nevertheless, there are solid, pragmatic reasons why energy efficiency is in the best interests of developing countries, and why it “is not just an ideological idea of a few environmentalists,” she said.
Clean energy translates into energy security, she said, both as a means to ensure political independence and also help reduce poverty.
“Renewable energy utilizes domestic resources that can displace imports, generate employment and new enterprises and by-product sales improve enterprise viability,” she said.
At the present time, 70 percent of Latin America’s energy mix relies on hydrocarbons, making many countries highly vulnerable to price shocks, she said. At the same time, there is a high potential for renewable energy in the region, including further hydropower development. She added that geothermal, wind and solar power potentials are barely known in many countries.
Successful approaches for encouraging clean energy in Germany have included legislation that guarantees access to the power grid and fixed tariffs over 20 years for private investors in renewable energy generation. One result has been a dramatic increase in wind power. In addition, an energy tax was instituted to reduce energy consumption and subsidize the pension system, and subsidized loans are provided for investments in energy efficiency.
At the IDB, Germany has entered into a strategic partnership agreement that as of today directs 10.6 million Euros for a series of energy-related initiatives, including a study on biofuels in Mexico, a study on incentives for renewable energy systems in Chile, and a plan for energy efficiency and greenhouse gas mitigation in Central America.
José Goldemberg, environment secretary and member of the IDB’s Blue Ribbon Panel on the Environment, called on governments to create policies that will encourage investment in clean energy. He also noted that only a small part of the IDB’s portfolio is presently dedicated to investments in clean energy. He called on the Bank to increase its investments in this area to the point where renewable energy represents 10 percent of its portfolio.
Other speakers at the seminar included Fernando Sánchez Albavera, director for natural resources and infrastructure at the Economic Commission for Latin America and the Caribbean; José Ramón Ardavín, Mexico’s undersecretary for development and environmental regulation; Raymond Wright, general manager of Jamaica’s Petroleum Company; Luis Eduardo Lima, senior financial analyst at Brazil’s Econery; Guilherme Fagundes, of Brazil’s Commodities and Futures Market; Marcelo Duque, from Ecosecurities, Brazil; Antonio Vives, acting manager of the IDB’s Sustainable Development Department, and Valvanera Ulargui, from Spain’s Environment Ministry.