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10 | JOSÉ MIGUEL INSULZA ENERGY AND DEVELOPMENT IN SOUTH AMERICA | 11 Today there are still around 50 million people in the region—the majority of them poor and living in remote and isolated areas—who do not have reliable or affordable access to electricity. Approximately 85 percent of the population in Latin America has access to electricity; now, however, in addition to the grow- ing demand for energy by the traditional economic powers in society, there is strong pressure to deliver energy to the 15 percent of the poor who have no access. Over the medium term, the region’s economies must also find a solution to the projected increase in demand for energy. According to the Inter-American Development Bank, energy demand will have increased 75 percent by the year 2030. The capacity to generate electricity will need to increase by 145 percent in order to satisfy this new demand. But can the region produce that much ener- gy? Doing so requires increased investment and improvements in quality, capac- ity, training, and efficiency in energy production. Latin America’s demand for energy is very high relative to the region’s rate of growth, meaning that the region is not efficient in its use of energy. Production in Europe uses only half as much energy as in Latin America. What this means is that one unit of production uses twice as much energy in Latin America as it does in Europe. This demonstrates the lack of efficient energy use in the region.1 There is a serious imbalance between countries that produce and countries that import energy resources. Countries live in different circumstances and at times in completely opposite ways vis-à-vis world energy markets. This is espe- cially true concerning the effects of energy price increases and price volatility. Only three or four countries in Latin America are significant oil producers, and rising prices for oil create problems among Latin American countries. On the other hand, more than 80 percent of global oil resources are publicly owned. Companies produce and profit from oil, but the countries themselves own the resource; hence, governments are able to manipulate public policy, not only regarding oil but also natural gas. Furthermore, energy producers can use times of abundance to exert political pressure on importing countries, seeking to create an area of influence or to obtain concessions, with the predictable result that intraregional political tensions are generated. The relationship between oil and politics cannot be avoided. An additional political issue concerns the environment. The provision and use of energy must go hand-in-hand with a search for ways to diminish the envi- ronmental impact of energy consumption. This point cannot be overstated, as there is broad recognition that the principal source of air pollution—with sul- fur dioxide, carbon, mercury, and other substances—is the energy sector. The sector’s contribution to global warming is also no longer in doubt. Recent reports by the United Nations establish with certainty not only the existence of global warming but also the energy sector’s contribution to it. The burning of fossil fuels is the principal source of greenhouse gases. One-fourth of the global emission of greenhouse gases comes from the generation of energy and heating used by buildings and industries. Global warming is thus another constraint to increases in energy production; future production must be much cleaner. The agenda for dealing with this complex energy situation has at least four aspects. First is the promotion of rational and efficient use of conventional ener- gy sources, principally hydrocarbons. Second is to take advantage of mechanisms for emissions trading, such as those envisioned in the Kyoto Protocol, in order to attract the investment and technology necessary for “clean” industrial production in the countries of the region. Third is the diversification of the energy matrix, in order to obtain an adequate equilibrium among different sources, thereby enhanc- ing energy security and eliminating the possibility that resources will be used for political ends. Fourth, there should be incentives for using alternative and renew- able energy sources which have minimal environmental impact (for example, bio- fuels, geothermal energy, wind power, and solar and nuclear energy). The first two items on this agenda are self-explanatory. With respect to the third, the diversification of the energy matrix, the cases of Brazil and Chile are interesting to consider. The two countries are the largest consumers of gas in the region and have opted to broaden their energy matrix by incorporating lique- fied natural gas (LNG), which can be imported from many sources internal and external to the region. Regarding the use of alternative and renewable energy sources, it is impor- tant to remember that Latin America is endowed with a great diversity of renew- able natural resources: solar, wind, geothermal, biomass, oceanic, etc. These can be converted into clean energy in the form of electricity or liquid fuels such as ethanol and bio-diesel. The use of renewable energy is not new to the hemi- sphere, and the search for diversification of the energy matrix does not represent a great risk or adventure. One need only mention hydroelectric power, which has been part of the energy matrix of the region for many years and supplies approximately 90 percent of the total electricity needs for a country as impor- tant as Brazil. As I have insisted on previous occasions, nuclear energy constitutes an important option. Our peoples have the right to research, develop, and produce nuclear energy for peaceful ends, and to have access to nuclear fuels at reason- able prices to supply reactors destined for civilian use and particularly for the generation of electricity. The electricity generated by nuclear plants does notPDF Image | Energy and Development in South America
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