Welcome to the September edition of Energy Panorama.
We just wrapped up the second annual Madrid Energy Conference together with our partners IPD Latin America and Global Event Partners. While we moved this year’s event online across an entire week, our goals and objectives were unchanged: to address the way that energy is generated, distributed and consumed and the investment needed in Latin America to drive the energy transition and the nexus with Europe.
This year’s Madrid Virtual Energy Conference convened six ministers, 20 CEO’s and several other experts and senior officials, along with over 400 participants, to assess and leverage developments in Europe with an eye to how they can inform policy and investment frameworks in Latin America. Since the founding and launch of the Madrid Energy Conference we have sought to develop a program in concert with the subtitle: Where Europe and Latin America meet for energy dialogue.
Below is a link to an articled developed by our principal media partner, IPS. Please stay tuned for our complete conference analysis and post-event report in the coming weeks.
In our preparation for the Madrid Energy Conference, we also continued with two more Curtain-Raiser video interviews as well as a webinar.
In line with his participation in a panel on mobility, transport and energy transition, Non-Resident Fellow, Leonardo Beltran, joined with Cecilia Aguillon, Director of the IOA’s Energy Transition Initiative, to respond to the question “Has Progress on Latin America’s E-Mobility Stalled?” for the Inter-American Dialogue’s Energy Advisor newsletter.
Also this month, Leonardo Beltran examined the impact on fuel demand post-covid and argued that we will continue to see an acceleration of the process of digitalization and automation, which in turn most likely will result in an overall global reduction in mobility.
Our colleague and fellow, Roger Tissot, published an interesting piece this month focused on the intersection of renewable energy, recovery and employment. He specifically assessed the question: Can the “energy transition” in Latin America help address the risks caused by greenhouse gases (GHG) on the climate, and the economic depression caused by the pandemic?
As always, we are pleased to include two essays from IOA board member Chris Sladen and his essays written for ANZMEX. Be sure to take the “who wants to be a millionaire” quiz that Chris included in Volume 24.
Check out the full summary of the Fourth Annual Latin America Energy Conference, as well as presenters’ slides: https://www.thedialogue.org/analysis/…
● Alejandra León, Director, Latin America Upstream, IHS Markit
● Jeremy Martin, Vice President, Energy & Sustainability, Institute of the Americas
● Sylvie D’Apote, Founder and Managing Partner, Prysma E&T Consultores Associados (Brazil)
The market for electric vehicles (EVs) is still evolving across the world. China, Western Europe and California have staked clear leadership positions in promoting the use of EVs through policies and financial incentives.
This article was first published at IPS NewsSep 22 2020
By Rene Roger Tissot
Itaipu, the largest hydroelectric power station in the Americas, shared by Brazil and Paraguay on their Paraná river border. Credit: Mario Osava / IPS
VERNON, Canada, Sep 22 2020 (IPS) – Can the “energy transition” in Latin America help address the risks caused by greenhouse gases (GHG) on the climate, and the economic depression caused by the pandemic?
Energy transition refers to the shift from fossil-based systems of energy production and consumption — including oil, natural gas, and coal — to renewable energy (RE) sources like wind and solar, etc. Proponents of investments in RE highlight investments’ impacts on jobs and industrialization opportunities. (more…)
Leonardo Beltrán Non-resident Fellow Institute of the Americas
In its April 30 edition, The Economist published an article with the headline, “The 90% economy – Life after lockdowns,” which basically reflected on the impact the COVID-19 pandemic would have on the world economy. Last month, the Mexican Central Bank (Banxico) in its latest report (Apr-Jun 2020) presented three scenarios assessing the toll of the health crisis on the Mexican economy, which averaged 11 percent contraction in GDP for 2020. One of the main components contributing to this decline in the economy is mobility. Using Google COVID-19 Community Mobility Report data, Banxico calculated that for every 1% reduction in mobility in Mexico, there was a reduction of 0.49 percent in manufacturing activity and 0.60 percent in retail sales. Moreover, in Google’s Aug. 25 Mobility Report, data showed a contraction of 42 percent in the use of public transport and 35 percent in transfers to workplaces in the country. However hard these actions were, according to national and international experience, social confinement and mobility restriction have proven to be among the most effective policies to contain the expansion of the COVID-19 pandemic.
Although in the short to medium term mobility will slowly resume, the 90 percent economy has forced businesses to downscale and prioritize their virtual interactions over physical presence, thus speeding up the process of digitalization and automation, which in turn most likely will result in an overall global reduction in mobility.
Indeed, this forced push towards a more efficient mobility model certainly includes both impact and opportunity. For instance, transport and logistics, one of the most affected sectors even before the pandemic, was starting to see a toll. Air transport was observing a wave of consolidations, not only because of tighter regulations to comply with new environmental standards (airlines have to develop projects to compensate their emissions), but also because more environmentally conscious customers along with the emergence of the flygskam (flight-shaming) movement have affected demand, resulting in low to zero profitability for some airlines, especially the low-cost carriers. However, this trend is not only seen in airlines but in transport in general, thus to survive and thrive in a 90 percent economy, with lower structural demand and more stringent environmental regulations, this industry will have to embrace an energy efficient and sustainable way of doing business; in fact, data from Bloomberg New Energy Finance shows an increasing trend toward digital hailing applications. Between the last quarter of 2017 and the first quarter of this year, the number of users more than doubled. Today, there are more than 1.2 billion users worldwide and the number of drivers almost tripled to reach 67.6 million; in other words, the future of mobility includes digital and sustainable mobility.
On the other hand, manufacturing has also been experiencing ups and downs and although the trend in Mexico has been downward since mid-2018, the implementation of restrictions on production related to non-priority activities because of the COVID-19 pandemic has resulted in one of the most acute falls in the recent history of this sector. Both in April and May of this year, activity contracted 35.5% compared to 2019. Yet, once these measures start to be lifted, manufacturing activity will gradually pick up. However, some of the associated companies and jobs would have been lost to the pandemic. In any case, the consolidated sector also will have to incorporate a smarter business model to adapt to the new normal.
The question, then, is where might you identify the investment opportunities? It definitely should be an area where by investing, the business would become more competitive, either by reducing costs and/or increasing productivity. In fact, the most promising alternative is to invest in energy efficiency, or as the International Energy Agency (IEA) has referred to it: the hidden fuel. The United Nations Industrial Development Organization has documented that organizations implementing energy management systems (EnMS) achieve reductions in energy consumption of up to 30 percent. Using data from the Latin American Energy Organization, in the Latin America and Caribbean region, industry represents 31 percent of total final energy consumption and 16 percent of greenhouse gas (GHG) emissions. In Mexico, industry’s total final energy consumption is a little bit higher, 34 percent, and contributes with 17.5 percent of GHG emissions. Assuming that in Mexico the results observed internationally are replicated, if we fully adopt EnMS across the industrial sector, we could achieve savings of US$3.9 billion per year, while cutting industrial GHG emissions in half.
If we are to see a better recovery, i.e. reducing our environmental footprint, recuperating jobs lost and creating permanent quality jobs, while improving competitiveness in production, the smartest alternative for industry is to invest in the hidden fuel. This will free resources otherwise spent on the cost of production, allowing businesses to expand operations or open new business lines that can stimulate economic and regional development, while at the same time, following a deep decarbonization pathway.