Energy discussion this week shifts focus

Jeremy Martin Contributor
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Ministers of energy from across the Western Hemisphere will descend upon Washington this week. While they may be able to catch the cherry blossoms, their principal reason for visiting is not tourism. Instead, they have been invited to Washington by Energy Secretary Steven Chu to forge a new chapter in energy cooperation and collaboration in our hemisphere.

Efforts to use energy as a catalyst for enhanced collaboration in Latin America and the entire Western Hemisphere is certainly not new. What is novel is the change in focus from a heavy emphasis on hydrocarbons to attention directed largely at renewable energy and conservation and how to make fossil fuel use more efficient. The regional cooperation paradigm, long centered on oil, is undergoing a transformation.

Indeed, with the inauguration of Barack Obama, the United States has sought to use green energy as the tool for collaboration and outreach in the hemisphere. Nowhere was this more evident than during President Obama’s first trip to Latin America for the Fifth Summit of the Americas a year ago. Speaking in Trinidad & Tobago, President Obama urged a new era in energy cooperation—and the Energy and Climate Partnership of the Americas was officially launched.

ECPA, as the effort has since become known—and affirming that no initiative in D.C. is worth its salt without an acronym—has sought to build a new paradigm on the back of several thematic pillars.

ECPA is fundamentally about fostering renewable energy, conservation and access to energy and the financing and regulatory frameworks to incentivize those areas. And all against the backdrop of a strong desire to reduce the region’s carbon footprint.

The pillars also less than subtly underscore the shifting focus and move away from a desire to spend time discussing fossil fuels. This despite its continued dominance in the regional energy matrix; estimates are that fossil fuels still meet 70 percent of energy demand.

Myriad reasons can be cited for such a paradigm shift, not the least of which has been the statements made by the current U.S. administration. But another reason merits mention: Hydrocarbons remain a veritable snake pit for consensus building and jump-starting dormant collaboration.

How to best develop Canada’s oil sands, Mexico’s continued grappling with its nationalist legacy and corresponding impact on oil production, Venezuela’s on-again, off-again dance with foreign investors in its oil patch, Brazil’s domestic debate over its hugely important Pre-Salt oil fields, and the recent flap in the Falkland Islands over drilling are but a smattering of examples.

For better, but often for worse, oil cuts deeply across the political and economic heart of many countries in the region. Indeed, there’s not much hope at this stage that a critical element for regional cooperation—ceding domestic demands and concerns for the good of a regional effort—is attainable vis-à-vis hydrocarbons.

But let’s look at the idea of regional cooperation from a more positive angle. At the aforementioned Summit of the Americas the region heartily embraced the idea of a renewed endeavor to foster cooperation on energy and climate issues—and particularly the linkage of energy and climate.

Those involved in the new effort can point to a strong rationale behind the desire to transform the regional energy collaboration paradigm to one based upon renewable energy and conservation.

The region’s renewable energy potential is great and largely untapped. Latin American Energy Organization (OLADE) data indicates that the region is only utilizing 22 percent of its hydroelectric capacity and only 4 percent of its capacity for other renewable resources.

Work under way across the region to further incorporation of renewables into the energy matrix makes the topic a natural for cooperation. It is a focal point that creates a unique commonality among the diverse roster of nations in the hemisphere. Projects and developments from the Caribbean, Mexico, Brazil, Peru and Chile provide a varied menu of topics for a robust renewable energy discussion in D.C.

As ECPA’s proponents are quick to point out, improved conservation and increased energy efficiency across the region is additional “low-hanging fruit.” Reduced energy demand, they note, can also play an important role in tackling greenhouse gas emissions and thus lowering the region’s carbon footprint.

And they have a point. While there have been huge gains globally on conservation and efficiency, Latin America is still not adequately seizing the opportunity.

On a worldwide basis, the region is not doing terrible in terms of energy intensity; it is besting China but lagging behind Europe. But there are trends that further support the rationale for including conservation as a central focus for the new cooperation.

More OLADE data shows that electricity consumption growth has far outpaced GDP growth in the region over the last 10 years. These facts are ever more glaring when compared with Germany, where GDP grew by 30 percent between 1990 and 2007 and primary energy consumption decreased by 7 percent.

Again, as with renewable energy, the space for gains and common interests is considerable and the upside for the region huge.

But perhaps no other area within the broader concept is riper for immediate advancement then the issue of electric interconnection. From Canada to the Southern Cone the hemisphere is literally dotted with important, immensely beneficial electric interconnection projects.

In many cases, such as the SIEPAC project in Central America, a lifetime’s worth of effort has produced a project soon to be put into service. Electric interconnection between Panama and Colombia, as well as Colombia and Ecuador and Peru and Brazil and many others underscore the sub regional efforts to cooperate across borders. As with the overall effort, political challenges are large and the often-different national systems and market approaches pose significant hurdles but the benefits significant.

There is reason to be cautiously optimistic that renewed efforts toward cooperation are moving ahead. But don’t expect a consensus declaration from the visiting leaders this week. Yet we should insist from the two-day confab that leaders continue to focus on the positive elements that make a new chapter in regional collaboration possible.

It’s important for us optimists to hear echoes of our hope that the regional energy cooperation glass is half-full.

Jeremy Martin is a frequent commentator and writer on Latin American and energy issues. Working at the Institute of the Americas at the University of California, San Diego, he spends his time delving into the geopolitics of energy and closely following energy industry trends and policy issues across the Americas. He can be found on Twitter at @jermartinioa and contacted via e-mail at