Corporate Social Responsibility and Investment Opportunities Discussed at Beijing Forum

Corporate Social Responsibility and Investment Opportunities Discussed at Beijing Forum

BEIJING – The Institute of the Americas and Institute of Latin American Studies of the Chinese Academy of Social Sciences held the fifth annual Beijing conference on China and Latin America, titled “Investing in Latin America: Opportunities and Lessons Learned.”

The Oct. 16, 2014, conference, sponsored by The Development Bank of Latin America (CAF), Vera & Asociados and Mexico’s Grupo Bimbo, drew an audience of more than 200 participants, including Latin American ambassadors to China, former Chinese ambassadors to Latin America, business executives, government officials from China, Latin America and the U.S., and researchers and journalists from around the world.

The conference focused on investment opportunities in Latin America’s major economic sectors, including infrastructure, energy and manufacturing, as well as a discussion of corporate social responsibility and business practices in Latin America.

The Beijing conference, sponsored by The Development Bank of Latin America (CAF), Vera & Asociados and Mexico’s Grupo Bimbo, drew an audience of more than 200 participants. Photo courtesy of ILAS/CASS

Shen Zhiliang, Director General of Latin American and Caribbean Affairs in the Chinese Ministry of Foreign Affairs, addressed the diversification of energy cooperation between China and Latin America, from traditional energy sources to renewable sources such as wind and solar. Ambassador of Chile to China Jorge Heine noted that Chile is an excellent market for renewable energy investment, thanks to its sunny deserts and windy shores.

Hamilton Moss, CAF Vice President of Energy, stressed the institutional cooperation between China and Latin America to achieve energy security and reasonably low energy prices.  And former Vice President of China Development Bank (CDB) Liu

Kegu expressed optimism for bringing together Chinese capital and Latin American energy resources.

Alberto Limas, ‎Deputy Secretary at the Embassy of Mexico in China, stated that the Mexico-China relationship is in its best moment in history, and said the two countries are working on the strategic framework established by President Xi and President Peña Nieto.

Attorney Cristina Hernandez, of the Mexico City-based law firm Vera & Asociados, spoke about Mexico’s energy reform and its far-reaching social impact. Photo courtesy of ILAS/CASS

Attorney Cristina Hernandez, from the Mexico City-based law firm Vera & Asociados, spoke about Mexico’s energy reform and the far-reaching social impact of the reform.
During an afternoon panel that focused on corporate social responsibility, Ambassador of Peru to China Juan Carlos Capuñay said social responsibility should be shared by governments and by corporations in order to help develop local communities.

Former Ambassador of Costa Rica to China Marco Ruiz said organizations and agencies that promote outbound investment should prepare investors before they go abroad because their behaviors impact the country’s national image in the countries in which they are investing.

Professor Wu Guoping, dean of the Institute of Latin American and Caribbean Studies at Southwest University of Science and Technology in Mianyang, China, urged Chinese companies to differentiate between each Latin American country and respect each country’s unique business culture.
Representatives of several Chinese companies with investments in Latin America, including the China National Petroleum Corporation (CNPC) and Sinohydro, spoke about their practices concerning corporate social responsibility.

Huang Jin from Sinohydro suggested that Chinese companies in Latin America improve their relations with the local media as a means of communicating with the local community. CNPC requires all of its overseas project companies to establish a public relations department and hire professional staff.
Sun Hongbo, a research scholar at the Institute of Latin American Studies of the Chinese Academy of Social Sciences, stressed the importance of Chinese companies strengthening their public relations and communications strategy in Latin America.

Energy and Education in the Western Hemisphere

Energy and Education in the Western Hemisphere

WASHINGTON, DC – Energy and education in the Western Hemisphere were linked at Institute of the Americas programs in Washington, DC on September 30 and October 1.

During a cocktail reception at the Mexican Cultural Institute on September 30, Roberta Jacobson, Assistant Secretary for Western Hemisphere Affairs at the State Department, highlighted the intersection between energy and education as she praised the Obama Administration’s 100,000 Strong in the Americas initiative aimed at increasing educational exchanges in our hemisphere as well as the advances in energy cooperation spurred in part by the US energy revolution.

Mexican Ambassador to the United States, Eduardo Medina Mora, spoke of Mexico’s interest in the 100,000 Strong initiative and celebrated the corresponding cross-border leadership as well as opportunities for Mexico and the United States in a 21st century economy, particularly as Mexico continues to implement major economic reforms including what he called the mother of all reforms – energy.

The reception coincided with a program on the Geopolitics of Natural Gas in the Western Hemisphere, on October 1 co-hosted by the Institute of the Americas and the University of Texas at Austin. The session opened with a keynote address by Christopher Smith, Principal Deputy Assistant Secretary of Fossil Fuels at the US Department of Energy, followed by a panel that featured Trinidad & Tobago’s ambassador to the US Neil Parsan, State Department Energy Bureau Director for Policy Analysis and Public Diplomacy Richard Westerdale, as well as Cheniere Energy’s Albert Nahas and independent analyst David Goldwyn.

PDAS Smith reviewed the US energy revolution and cited two National Petroleum Council studies to highlight how quickly the outlook has changed on the back of the United States’ resurgence as a major oil and gas producer. Smith also noted the importance of natural gas for energy security and lower emissions. Smith emphasized President Obama’s unambiguous stance on the importance of natural gas in the United States, remarking that it had been raised  in the last three State of the Union addresses. Smith also argued that environmental issues remain critical. And while he called them manageable, he underscored the difference between manageable and managed. When it came to the question of lifting the oil export ban, he was less definitive and did not make any predictions.

The panel discussion focused on how to utilize the US’ energy boom to further diplomacy but, more importantly, economic development in the Western Hemisphere. Amb. Parsan assessed the energy dilemma in the Caribbean and argued that the current energy model is unsustainable. To wit, 35% of Caribbean debt is attributed to Petrocaribe. Trinidad and Tobago is committed to supporting the energy needs of its neighbors, he noted, including through development of smaller scale liquefied natural gas (LNG) technology, such as the Gasfin project in Trinidad & Tobago.

Richard Westerdale discussed the recent diplomatic efforts the Energy Bureau is undertaking, from the Connecting the Americas 2020 initiative launched at the Summit of the Americas in Cartagena in 2012 to the more recent Caribbean Energy Security Initiative, and the hallmark agreement signed in September with the island nation of Grenada to create a pilot program intended to bring a “cleaner energy future.”

Albert Nahas and David Goldwyn asserted that given the US natural gas boom and progress on exports, the US government could and should do more, particularly when one considers the economic impact of electric prices in Latin America that are still at least 25 percent higher than the United States. Goldywn further observed that his calculations based upon an IDB study pointed to a ballpark figure of $2-3 billion for the Caribbean to convert from fuel oil and diesel generation to cleaner burning gas-fired power systems. Nahas argued for progress and action to develop US-government backed export financing structures to enable LNG exports to markets that have credit ratings below investment grade, particularly those in Central America and the Caribbean.

The Other Side of the River – Energy, Environment, and Communities in Colombia

The Other Side of the River – Energy, Environment, and Communities in Colombia

BOGOTA – In the decade since opening its energy sector, Colombia has earned a reputation for stability and success. The country has won plaudits across the hemisphere from its neighbors and investors; Colombia’s energy reforms were studied closely by Mexican authorities as they rewrote their energy laws. However, as oil and gas production has dipped below targets and exploration has fallen short of expectations, the country is battling not only to meet its own energy needs but also attract the investment necessary to sustain the energy sector into the future. Moreover, Colombia has realized that deliberate community engagement and environmental stewardship is critical to achieving that goal.

These issues and efforts to redress them figured prominently across presentations and discussions at the Institute of the Americas Colombia Energy Roundtable in Bogotá on September 9.

Colombia’s challenges are not unique. Indeed, social responsibility in the energy sector has become a key element of policies – and conflicts – across Latin America. Colombia’s Ministry of Mines and Energy notes that oil production is an estimated 40,000 barrels per day (bpd) under its 1 million bpd target; around half of the production shortfall can be attributed to social conflicts and security challenges. The government is expected to make up the financial loss by raising taxes, an increasingly polemic topic and one that many argue will still fall short of the covering the nation’s budget gap.

Beyond the economic impact, Colombia has an obligation to protect both its biodiversity and indigenous heritage. Issues of community engagement and environmental protection have arisen at all stages of the project cycle and across the value chain, from exploration and production to infrastructure to power generation and transmission projects.

The Colombian government is taking these concerns seriously. As the Ministry of Mines and Energy focuses its efforts on increasing exploration and production, particularly in the offshore and unconventional areas, the accompanying regulatory framework aims to incorporate best practices in social responsibility. Colombia is looking closely at the experience of other nations, such as the United States for approaches to a host of concerns, from water usage to “consulta previa” or prior consultation.

The struggle to balance investment and economic growth with social responsibility is not a new concern. Colombia’s indigenous peoples are recognized in the 1991 constitution but in many ways government and private sector engagement with local communities has had mixed results. For indigenous communities, the government must correct the imbalance between economic development and social and environmental goals. International sustainability efforts and the international human rights framework, they argue, should inform these efforts.

Instruments to guide indigenous participation, however patchy, are already in place in Colombia, including prior consultation and planning processes. Panelists argued that these efforts must go further to ensure the participation of indigenous people in the design and implementation of development plans, in particular zoning regulations in Colombia.  These plans should also be aligned with local indigenous initiatives such as “planes de vida” or life plans – efforts carried out by several indigenous communities as a way to articulate local development goals – and prior consultation processes.

In terms of environmental concerns, one panelist argued that companies were recycling older impact studies as a way to cut corners in light of rising costs and long permitting delays. The Colombian government has frequently stated its intention to reduce permitting times to six months, an improvement but still quite distant from Canada where environmental permits are routinely turned around in a matter of weeks.

On the industry side, although several companies are now incorporating best practices and engaging with the immediate community the full implications of the broader project area are often not taken into account. One panelist cited an example in Peru. The project bordered a river and while the company had worked closely with the community most immediately affected, they had failed to engage with those on the other side. Conflict later arose, halting the project for several weeks.

That there is a significant financial cost to inadequate community engagement and environmental responsibility is clear, even though few companies have calculated these figures. According to one panelist, stoppage at an oil production site could easily run to $20 million; halting operations at the exploration stage could cost up to $70,000 per day.

With President Santos now entering the second month of his second term, there is hope for stability on which to expand exploration and production activities. The National Hydrocarbons Agency (ANH) has set forth a two-part strategy for boosting reserves and production: 1) unconventionals; and, 2) offshore. And the government’s decision to forego any further bid rounds for the next 2 years and instead focus on bringing to fruition the long list of pending projects and investments is important.

Energy Security in Peru: Camisea and Beyond

Energy Security in Peru: Camisea and Beyond

LIMA – Government officials, NGO representatives, and energy executives from Peru, Chile, Argentina, the United States and Colombia joined the Institute of the Americas and Peru’s Ministry of Energy and Mines in Lima on August 26 for a half-day roundtable.

The program was a celebration of the tenth anniversary of the Camisea natural gas project but also a frank assessment of what must be done to consolidate the lessons and upside of the historic energy project in Peru.

The last ten years have been transformative for Peru’s energy sector. The Camisea natural gas project, inaugurated in 2004, now provides all the natural gas consumed in Lima and accounts for 50 percent of the nation’s power generation.

In many ways, Camisea has exceeded expectations. Natural gas production has kept pace with strong economic growth, while best practices developed for environmental protection and community relations have become a model for the region. And the project’s impact on Peru’s economic development is undeniable.

For the Ollanta Humala administration, Camisea has become the cornerstone of efforts to ensure energy access for all Peruvians – so-called ‘massification’ – and plays an important role in the government’s strategy to achieve economic growth with social inclusion.

But as Peru celebrates Camisea’s tenth anniversary, it has become clear that the project alone will be insufficient to meet the country’s rising energy needs.

Instead the project must be recognized as just one contributor to the much larger goal to foster energy security in Peru. In practice this requires investment along the energy value chain. Not just a rejuvenation of the country’s oil and gas exploration efforts but investment in infrastructure and championing the role of renewables in the power sector.

The question for the Humala government and Peru’s energy actors is how to sustain the economic benefits generated by Camisea. More importantly, government, industry and civil society must develop an approach that incorporates the valuable lessons learned in the last decade into energy projects across the country without undermining the competitiveness of Peru’s energy sector.

The Camisea project was launched at a time when Peru was emerging from a period of economic and political instability, providing a much needed injection of foreign capital and laying the foundation for public-private partnerships in the nation’s hydrocarbons sector.

The contribution to both the national energy sector and the broader economy has been significant. Hydrocarbons production in Peru grew an estimated 260 percent in the last decade, due in large part to the exploration and production at Camisea. Since 2004, the project has brought in over $13 billion in investment and boosted the nation’s GDP by approximately $16 billion. Natural gas liquids in particular have made an important contribution to the hydrocarbons trade balance; according to the Peruvian Hydrocarbons Society, Camisea has reduced the trade deficit by $9 billion.

The opportunities for natural gas extend beyond the power sector, with the potential to transform industry and transportation in Peru. The Ministry of Energy and Mines is exploring options for natural gas to replace diesel in fleets of trucks, for example. The government also advocates for the greater use of liquefied petroleum gas or LPG and associated natural gas.

Peru is hopeful that ongoing exploration and production in the Camisea fields will lead to new discoveries and increased reserves. For the Inter-American Development Bank, the lead financier of the Camisea project, the next step is the expansion and development of natural gas markets – both domestic and international – in order to sustain momentum and ensure adequate demand.

Natural gas also has the potential to support greater renewable deployment in Peru. Despite concerns that competition between cheap natural gas and hydropower in Peru’s electric market could cause a decline in hydropower’s contribution, panelists emphasized the importance of both energy sources in a diversified energy matrix. Over time, they argued, natural gas will play a supporting role as the electric sector makes the transition to greater renewable sources.

Synthetic Biology Dispels Fairytales

Synthetic Biology Dispels Fairytales

The Institute of the Americas concluded its 5th Summer Camp on Science and Innovation at the University of California, San Diego (UCSD) in July 2014. The 2014 group of 40 students was the largest since the beginning of the camp.  High school students attended from twelve countries: Bolivia, Brazil, Chile, Costa Rica, Cuba, Honduras, Mexico, Panama, Paraguay, Peru, Venezuela and the U.S. The students, all in high school and Spanish-speakers, came from a variety of backgrounds but had a common goal – to pursue academic studies in science, technology, engineering and math.

The success of the camp was based on a well-balanced combination of lectures, hands-on team projects, lab time, field visits, guest speakers and the dormitory experience at UCSD’s Eleanor Roosevelt College.

Pivotal to this year’s success was our new collaboration with Dr. Justin Pahara (Synbiota Inc.) and Dr. Wendy Ochoa (MoBio). Dr. Pahara flew from Canada to lead a three-day crash course on hands-on genetic engineering.

Dr. Pahara’s and Dr. Ochoa’s execution of the class was phenomenal. Everything was strategically planned out and, with Dr. Ochoa’s help, the workshop was run entirely in Spanish.

“It was exciting to see a synthetic biology workshop such as this being run in Spanish! It was the first time I’ve done intense science like this with realtime translation – very cool and extra engaging,” says Dr. Pahara.

The first day of the three-part session started with an introduction to synthetic biology, which was then followed up by an extensive discussion of the ethics of bioengineering.

Is genetic engineering good or bad? What are the possibilities of genetic engineering and what can you actually do with it?  The students were immediately engaged with Dr. Pahara’s enthusiasm and passion for teaching. There were a lot of questions, the students were, however, very anxious to get to the exciting part – actually doing science.

Dr. Pahara explained that they were going to engineer E. coli bacteria to be colourful (red, blue, yellow for single colours, as well as combinations of colours such as or-ange, green, and purple), and they also discussed how colour is formed in the living organism. The students were alternatively ecstatic and impatient because they could not wait to actually start the activity.

Before any DNA assembly could take place the students had to design the DNA they wanted to build using an open source tool called GENtle.  Students loaded the DNA parts that are included in the Rainbow Factory Kit into GENtle and created their DNA circuit using a simple pick-and-place user interface. There, they were able to see the actual DNA code that their plasmid would be composed of. After much consideration and discussion, the students assembled their DNA design using real DNA from the kit. DNA was assembled one block at a time on magnetic beads using a simple hands-on method until they had as-sembled their full DNA design. Next, they separated their DNA from the beads and had pure DNA.

Finally, they put their DNA into E. coli bacteria using a process called transformation. After mixing their DNA with bacterial cells, the group completed a “heatshock” which caused the DNA to enter the cells. Then, they incubated the cells and put them onto agar plates (like jello) and incubated the plates overnight. The next day we saw the colourful bacteria growing on the plates. Success!
Dr. Pahara’s activity was the highlight of the camp. The students were doing real-life science with trial and error, and in a matter of just three days they were able to see their living results – something that none of them had done before.

The students were beaming with happiness when they saw their results. The impact it had on the students became even more apparent when Dr. Pahara’s activity won 1st place in the students’ evaluation bumping, for the first year ever, an activity at a very well-known theme park in California to 2nd place.

Denisse A. Fernandez is the Director of the Summer Science Program for the Institute  of the Americas a non-profit organization on the University of California San Diego, campus in La Jolla, CA.

Institute of the Americas Signs Agreement with Beijing Law Firm to Promote China-Latin America Business Expansion

BEIJING – The Institute of the Americas and DeHeng Law Offices of Beijing have signed a collaborative agreement to assist Chinese businesses in launching and expanding business operations in Latin America.

DeHeng Law Offices is one of the largest law firms in China, with 1,500 attorneys on staff.  The firm, which has 23 offices in mainland China, as well as offices in New York, Seattle, Orlando, Brussels, Paris, Munich, Frankfurt, The Hague, Dubai, Sao Paulo, Australia, New Delhi, Seoul and Japan, is also focusing on assisting clients seeking to do business in Latin America.

The agreement between the Institute of the Americas and DeHeng Law Offices was signed in Beijing on July 17, when the two organizations held a seminar in collaboration with the China Overseas Development Association titled, “Investments in Latin America: Focusing on Mexico’s Energy Reform.”

Hu Weiping, secretary general of the China Industrial Overseas Development and Planning Association, spoke during a July 17 seminar in Beijing about efforts to encourage outbound investment to Latin America.The conference was attended by more than 100 business executives, including representatives of the China National Petroleum Corp. (CNPC), China National Offshore Oil Corp. (CNOOC), the China Petroleum Engineering & Construction Corp., Sany Heavy Energy Machinery Co., China Harbour Engineering Co., COSCO International Holdings Limited, SinoSure and the Bank of China.

The July 17 seminar took place on the day that Mexico’s Senate voted to approve secondary legislation to implement energy reforms.  The seminar also coincided with President Xi Jinping’s trip to Brazil, where he attended a BRICS summit and signed a host of economic agreements between China and Brazil.

Mexican Ambassador to China Julian Ventura gave a keynote speech in which he outlined key provisions in Mexico’s energy reforms, saying there are new possibilities for an “action-oriented agenda between China and Mexico.”

Ambassador Ventura told the audience that Mexico’s “oil production declined by 25 percent over the last decade. This situation is not sustainable in the long term and is hampering our progress,” he said.  “A common challenge that all countries face is taking the necessary steps to ensure the well-being of our citizens.  Energy has to be a driver and not an obstacle in any economy.”

Wu Guoping, a Latin America expert at the Institute of Latin American Studies (ILAS) of the Chinese Academy of Social Sciences, called Mexico’s energy reform “revolutionary because of the impact it will have on Mexico’s economy and its society.”

He said Mexico’s energy reform will have a huge impact on the country’s economy, creating 2.5 million jobs by 2025.

Mexican Ambassador to China Julian Ventura (left) speaks with Hu Weiping (right), secretary general of the China Industrial Overseas Development and Planning Association at a July 17 seminar in Beijing on Mexico’s energy reforms as Harrison Jia (second from left) of DeHeng Law Offices and Luis Vera (third from left) of Vera & Asociados look on.“Energy reform is revolutionary but it also faces challenges,” Wu said, “because nationalism is very strong in Mexico. The reform faces potential challenges from labor unions that have benefitted from long-standing protections in the energy sector.”

Mexican attorney Luis Vera told the audience that Mexico is looking beyond traditional energy sources to shale oil and gas and is planning major exploration projects in northern states such as Chihuahua. “Private investors, including Chinese firms, are buying land,” said Vera, who is the founding partner of Mexico City-based Vera & Asociados.  “That is where the big investment is going to be.”

Vera also emphasized the huge potential in renewable energy in Mexico over the next two decades.  “By 2030, Mexico must get 35 percent of all its energy from renewables,” he said.  “In wind energy, all of the technology comes from China. We have created the market and we are expecting you to be there,” he said.

Francisco Martinez Boluda, a partner in the Beijing office of the Uria Menendez law firm, said, “We are witnessing a change in the relationship between China and Mexico which can be complementary. We think that in 2015, things are going to start to move.”

Harrison Jia, a partner in DeHeng Law Offices, outlined labor laws and work rules in several Latin American countries that set standards for wages, hosing and medical coverage. He told the audience, “Mexico is more flexible than Brazil” in its labor requirements for foreign companies.

Jia attended a two-week Chinese Executive Program at the Institute of the Americas in May 2014 which included a week-long trip to Mexico City where he and other participants in the program met with top Mexican government officials and business executives.

“We want to introduce Mexico so more Chinese companies can go there,” he said.

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