Our region is the greenest on the planet, with 33% renewable energy: Alfonso Blanco de Olade

The photography of the energy market at a global level and its implications for the region, as well as the opportunities and challenges of the countries of Latin America and the Caribbean in the use, generation and supply of energy, will be topics to be discussed between 12 and 16 December in Panama. This within the VII edition of the Energy Week, which will be carried out by the Latin American Energy Organization (Olade), the Secretariat of Energy of Panama and the Inter-American Development Bank (IDB), with the collaboration of EnergyNet. The executive director of Olade, Alfonso Blanco, in an interview with this newspaper, takes a tour of the latest international events on energy. He believes that Ecuador has great potential for clean energy, within a region that has 33% renewable energy.

What is Olade’s analysis of the region’s energy situation?

There have been three milestones in the last two years that have set the agenda for the energy sector globally. The first was the pandemic, which affected the energy markets by changing demand. The contraction affected the fall in crude oil prices, which were even negative at times. Then, there was a reopening of the economy, and November 2021 is reached with a strong impulse on the climate issue. In Glasgow the issue of the climate emergency is raised; carbon neutrality goals are set, and thus the climate issue becomes important on the agenda. But in February 2022, the war crisis between Russia and Ukraine arises, and the chips are moved, and everything is reconsidered. Then, energy security becomes the priority. This in a scenario where crude oil prices rise sharply and with marked supply problems.

How does this affect the region?

Everything has an important implication. For example, oil importers have an impact on their balance of payments due to the increase in imports, accompanied by a sharp rise in inflation. For other countries that have transitioned to being less dependent on oil, the impact is less. Other countries that produce crude have improved income; but, on the other hand, they experience a strong need to increase production to, in some way, go along with the scenario of good prices. The renewable energies available to the region end up being part of the path of energy security, considering that energy is required by the European and Asian markets; however, it is not a solution that can be applied immediately. Today supply problems are immediate issues, especially as winter is approaching in the northern hemisphere.

Although the region has resources available, what are the energy security risks that it could experience? I am thinking, for example, of markets like Ecuador, highly dependent on diesel…

At the moment, prices of $600 per megawatt hour are not being observed, as in Europe, but we must not depreciate the impact of the supply crisis. To carry out an analysis of import risks, an analysis must be carried out by subregion: it is not the same to speak of the Caribbean, which is highly dependent on derivatives, as someone who is self-sufficient in refining without the need to resort to imports. There is stress in terms of availability of derivatives. On the other hand, if we talk about electricity generation, our region has a large installed capacity from renewable sources. This represents an important cushion in terms of electricity, in a region that is becoming more and more electrified. Another positive aspect is that our energy matrix is ​​not very dependent on natural coal. In Latin America, the dependency matrix is ​​5%, while in European countries it is 27%. This leads us to have the greenest energy matrix in the world. The region affects greenhouse gas emissions by 5%. All of these are great opportunities. There are also risks because we have 40% of the demand for energy that goes through transportation. On the other hand, we have a wide availability of fossil resources that can be used.

How do Olade evaluate the issue of green hydrogen?

When we talk about substitution of fossil fuel, green hydrogen is an option. First, it is analyzed as a substitution of the source of energy consumers for the cement and steel industries. Green hydrogen has the capacity to influence as a fuel in a part of transport that is not very electrifiable and that is heavy, maritime and air transport. From hydrogen, synthetic fuels can be obtained that have the capacity to replace fossil sources. The hydrogen value chain generates good revenue for local economies: employment, fertilizer production; here enters the green ammonia also. We are entering the development process at the same rate as advanced countries, and that positions us in a good place.

What should we prioritize as a region? What is your advice?

I always like to give an encouraging message. As Latin Americans, we are very critical and do not highlight our strengths. While the energy markets are tremendously stressed and there is a loss of quality of life in Europe and Asia due to the increase in prices in this market, our region is the greenest on the planet, with 33% renewable compared to 13% for the rest of the world. We have extensive resource capacity: wind resources, solar resources, water…

But then, with this capability, we are resting on our laurels. Could we make more use of these renewable resources? How do you see Ecuador?

There are countries in our region that have taken advantage, with the necessary public policy to take advantage of what is available. Around the world there are 20 countries that have 70% renewability; Of these, twelve are in Latin America, and one of them is Ecuador. It has achieved strengthening based on hydroelectricity and has renewable energy above 80%. This has allowed it to temporarily export electricity to Colombia. This constitutes a success story in regional energy cooperation. (YO)