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Latin America: The Link Between Energy Transformation and Prosperity

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High-level energy and climate decision makers from Latin America and the Caribbean underlined the importance of low-carbon energy policy to securing stable, long-term prosperity across regional economies, during a webinar co-hosted by the International Renewable Energy Agency (IRENA) and the Latin American Energy Organization (OLADE).

The virtual meeting entitled Accelerating Latin America’s Energy Transformation: RE and Economic Recovery was built around the recent analytical work featured in the Agency’s Global Renewables Outlook report, Power Generation Cost 2019 and the Post-Covid Recovery report – all of which reinforce the centrality of energy transformation to positive long-term economic outcomes in Latin America and around the world.

The discussion sought to deepen regional decision makers’ understanding of the strengthening economic case for more purposeful energy transformation action, highlighting the socio-economic benefits of a renewables-based energy system. The virtual meeting also served as an important platform for an exchange of knowledge and experience between regional governments and development partners. Representatives from Panama, Uruguay and the Global Wind Energy Council participated alongside IRENA and OLADE and the UK’s Regional COP 26 Ambassador for Latin America and the Caribbean.

Latin America has been severely affected by the Covid-19 pandemic, with persistent oil market volatility further compounding regional economic challenges. As region decision makers look to identify a pathway to recovery, Fiona Clouder, UK COP26 Regional Ambassador for Latin America and the Caribbean said the region’s recovery had to be green and sustainable, noting that it must be underpinned by renewable energy.

“In our changing world, building a green recovery and a sustainable future is even more important,” she said in opening remarks. “With vision, ambition and natural resources, countries in Latin America are well placed to transition to low carbon economies, using renewable energy as part of that transformation. COP26 gives us an opportunity to work together to share ideas and best practice to address the challenges of climate change and build a better future.”

In his opening remarks, Mr. Alfonso Blanco, Executive Secretary of OLADE stressed the importance of cooperation and highlighted the role of international and multilateral organisations to support the development of strategies for the economic recovery of the region, with the energy sector as the main driver during this process.

“We need to increase [renewable energy] investments throughout our region to reactivate the economy,” he said. “Between OLADE and IRENA, we have to start working on the necessary strategies to reactivate the regional economies and put the energy sector as the main driver of that recovery. In our region, there is a great potential in terms of energy resources, and therefore, the post-pandemic regional economies have the potential to be reactivated through the energy sector.”

Latin America is among the most dynamic renewable energy marketplaces in the world. Close to USD 120 billion of renewable investments were made between 2010 and 2015, placing several countries in Latin America among the top 10 largest renewable energy markets globally. Today, the region boasts around 200 gigawatts (GW) of installed renewable capacity, accounting for more than half of power capacity and a quarter of total primary energy.

Yet the region’s full potential remains unexplored. IRENA estimates that over 90 per cent of the region’s potential remains untapped and investment needs in the region are estimated at USD45 billion per year between now and mid-century – an increase of more than 10 per cent over current plans and policies. A regional initiative coordinated by OLADE sets a regional goal of reaching at least 70 per cent of renewable energy in electricity in by 2030.

Gauri Singh, Deputy Director-General of IRENA, said attracting the increased investment would offer the region strong returns, both in the short and long-term. “Latin America is tackling the economic toll of the pandemic and the World Economic Forum suggests the region’s economy is poised to contract in 2020,” she said, “meaning forward thinking energy and economic policy making is critical.”

“Accelerating the renewable energy transformation in Latin America and the Caribbean would create more than 3m jobs across the region by 2050,” she continued. “IRENA’s Transforming Energy Scenario offers the region the scope to develop economic returns of between 3 and 8 dollars on every dollar invested in the transformation.”

Many countries in the region have already taken positive steps towards economic recovery built around an accelerated energy transformation and the prioritization of low-carbon technologies. Serving as a platform to build regional understanding of the measures and policies being implemented, the discussion heard representatives from Panama and Uruguay share their plans and experiences.

Ms Guadalupe González, Director of Electricity, Secretary of Energy, Panama reinforced her country’s recognition of the socio-economic benefits. She noted that Panama has developed the Energy Transition Agenda 2030, built around five important pillars for renewable energy deployment that not only discuss the implementation of low-carbon technologies but also social aspects to improve energy access, job creation, role of women in the energy sector, building capacities on renewables, and the empowerment of the energy consumers.

Mr Fitzgerald Cantero, National Energy Director, Uruguay highlighted his country is following a pathway towards the decarbonisation of the economy starting with the power sector, which reached 98 per cent of renewable energy generation in 2019.He noted that Uruguay’s variable generation, particularly from wind energy, has left the country with a power surplus that can be used to support cross-border trade of power, promote the use of e-mobility and the potential production of green hydrogen for transport, industry and international trade.

Regional energy policy measures designed to aid the economic recovery following the COVID-19 pandemic were summarized as the development of more flexible power grids, energy efficiency solutions, electric vehicle charging for electric vehicle deployment, energy storage, interconnected hydropower, green hydrogen, and other technology investments consistent with long-term energy and climate sustainability.

IRENA

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Strength of IEA-ASEAN energy cooperation highlighted at Ministerial meeting

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IEA Executive Director Fatih Birol spoke today to Energy Ministers from across Southeast Asia about the latest global and regional energy trends, pathways to net zero emissions and the importance of clean energy investment.

He was participating in the seventh annual dialogue between the IEA and Ministers from the Association of Southeast Asian Nations (ASEAN) – the economic bloc comprised of 10 Southeast Asian economies. The meeting was hosted via video link by Brunei Darussalam, which is chairing ASEAN’s 39th annual Ministers on Energy Meeting (AMEM). 

“The IEA remains firmly committed to assisting ASEAN and its member states in developing pathways towards net zero that respect their capacities and capabilities,” Dr Birol told the Ministers. “One of the key messages from the IEA’s Roadmap to Net Zero by 2050 Roadmap is that not all countries are starting the race to net zero from the same place. I have and will continue to underscore the importance of ensuring that a greater share of global clean energy investment is directed towards the emerging and developing economies including in Southeast Asia to unlock new economic growth possibilities and emissions reductions.’’

This year’s ministerial marks the tenth anniversary of IEA-ASEAN energy cooperation, which was established with a Memorandum of Understanding at the 2011 AMEM in Brunei’s capital, Bandar Seri Begawan. The Ministers and Dr Birol welcomed the adoption of a Commemorative Statement on IEA-ASEAN Energy Cooperation. 

The IEA has significantly scaled up its work with ASEAN and its Member States over the past six years. Indonesia and Thailand became IEA Association Countries in 2015, and Singapore did so the following year. In 2019, under Thailand’s Chairmanship, the IEA was named a Strategic Partner of ASEAN.

The IEA is committed to continue working with ASEAN and its Member States on key energy priorities, including energy security, energy efficiency, clean energy, energy investments and decarbonisation. 

“On this, the tenth anniversary of our collaboration, the IEA is more determined than ever to continue to work hand in hand with our partners in the region to help achieve your energy goals,’’ Dr Birol said. “I very much look forward to the next ten years.” 

The ASEAN Chair in 2022 will be held by Cambodia.

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Indonesia’s First Pumped Storage Hydropower Plant to Support Energy Transition

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The World Bank’s Board of Executive Directors today approved a US$380 million loan to develop Indonesia’s first pumped storage hydropower plant, aiming to improve power generation capacity during peak demand, while supporting the country’s energy transition and decarbonization goals.

“The Indonesian government is committed to reduce greenhouse gas emissions through, among others,  development of renewable energy, energy conservation, and use of clean energy technology. Emission reduction in the energy sector will be driven by new and renewable energy generation and application of energy efficiency,” said Arifin Tasrif, Minister of Energy and Mineral Resources of the Republic of Indonesia.

Over 80 percent of the power generated for the Java-Bali grid, which supplies electricity to 70 percent of the country’s population, comes from fossil fuels. A key measure to support Indonesia’s decarbonization agenda is the development of energy storage to enable integration of renewable energy into the grid. Pumped storage hydropower plays a crucial role in this approach.

The financing will support the construction of the Upper Cisokan pumped storage hydropower plant, to be located between Jakarta and Bandung, with an expected capacity of 1,040 MW. The facility will have significant power generation capacity to meet peak demand, provide significant storage capacity to enable a larger penetration of renewable energies and, because of its close location to two large demand centers, will alleviate increasing transmission loads on the grid. As a result, a more environmentally friendly and reliable supply of electricity will benefit consumers in Java and Bali.

“We are excited about this project as it will be the first of its kind for Indonesia. It represents a turning point for Indonesia’s decarbonization pathway. The World Bank will continue to support Indonesia in its efforts to achieve resilient, sustainable, and inclusive development that will benefit the people of Indonesia now and in the future,” said Satu Kahkonen, World Bank Country Director for Indonesia and Timor-Leste.

Pumped storage hydropower makes use of two water reservoirs at different elevations. At times of low electricity demand or when there is abundant generation from clean power sources, such as solar energy, power from the grid is used to pump water to the upper reservoir. Power is generated during peak demand, usually evening hours, as water moves down to the lower reservoir using a turbine, when electricity generation costs are high.

The project will help enhance the system flexibility and efficiency in balancing supply and demand, and therefore improve the reliability and quality of electricity services in Java and Bali. It also aims to support the government to integrate variable renewable energy into the Java-Bali grid, and to do so in an environmentally and socially sustainable manner.

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Iran determined to boost oil exports despite sanctions

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Iranian Oil Minister Javad Oji has said the Islamic Republic is determined to increase its oil exports despite the U.S. sanctions on the country’s oil industry, adding that the use of oil sanctions as a “political tool” would harm the market.

“There is strong will in Iran to increase oil exports despite the unjust and illegal U.S. sanctions; I promise that good things will happen regarding Iran’s oil sales in the coming months,” Oji told the state TV.

As reported by IRIB, Oji noted that Iran can barter its crude oil for goods or even for services and investment not only in the oil industry but also in other sectors as well.

“Oil sales have dropped dramatically since the imposition of unjust sanctions, but this capacity exists in the Oil Ministry and all the industry’s departments to increase oil sales,” the minister said.

Iranian oil exports have plunged under U.S. sanctions, which were reimposed three years ago after Washington abandoned Tehran’s 2015 nuclear deal with six powers.

“Iran will return to its pre-sanctions crude production level as soon as U.S. sanctions on Iran are lifted,” Oji said.

“We are against using oil as a political tool that would harm the oil market.”

Since April 9, Tehran and six world powers have been in talks to revive the nuclear pact. The sixth round of the negotiations adjourned on June 20. The next round of talks has yet to be scheduled.

Oji said Iran backed a decision made by the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, on Wednesday to stick to a policy from July of phasing out record output cuts by adding 400,000 barrels per day (bpd) a month to the market.

Iran has been gradually boosting crude oil production to get ready for a strong comeback into the global market as the talks with world powers over the nuclear deal show signs of progress.

According to a Bloomberg report, National Iranian Oil Company (NIOC) officials have stated that the country’s oil fields are going through overhaul operations and connections with oil buyers are being re-established.

“In the most optimistic estimates, the country could return to pre-sanctions production levels of almost four million barrels a day in as little as three months,” the report published in May stated.

EF/MA

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