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 News
By Rene Roger Tissot
– 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…)
By Leonardo Beltrán | Tue, 09/15/2020 – 18:18
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.
Jeremy Martin on March 30
Despite photos of the president hugging babies and shaking scores of hands across the country, Mexico is not immune to the double whammy hitting major economies and energy markets: low oil prices and demand destruction due to the coronavirus. Indeed, for Mexico there may actually be a quintuple whammy if you layer on top of the two global trends three more particular ones at home: a recession and spiraling peso, plummeting oil production, and a massively indebted and fiscally imbalanced national oil company in Pemex. (more…)
IOA Briefs New Energy Policy Makers in El Salvador and Shares Regional Renewables Insights at Conference
At the end of July, Institute of the Americas Energy Transition Initiative Director, Cecilia Aguillon visited El Salvador for strategic energy policy conversations and to participate in, the Salvadoran Association of Engineers and Architects ASIA Week 2019, “90 years of ASIA: El Salvador towards sustainable development.”
Cecilia Aguillon was a featured speaker at ASIA 2019. During her keynote presentation, Aguillon spoke about the IOA’s work on energy transition issues and shared her insights on renewable energy markets in the Americas. Her remarks and presentation focused on best practices and lessons learned from renewable energy market leaders in the Americas such as California, Brazil and México.
Aguillon also joined a panel discussion with Valdemar Saravia, member of the board of directors of the regulatory authority SIGET and vice president of ASIA; Silvia Vides, Director of the UNDP for El Salvador; Victor Ventura, Chief of Energy and Natural Resources Unit at the UN Economic Commission for Latin America in Mexico; and Herbert Palacios of the El Salvador´s National Energy Council. The panel featured a robust discussion centered around the opportunities and challenges of making energy policies, energy efficiency and renewable energy more accessible to people from all socio-economic sectors of El Salvador.
During her time in El Salvador, Aguillon took the opportunity to meet with newly appointed Director of the National Energy Council, Salvador Handal and the new Superintendent of the Regulatory authority SIGET, Manuel Aguilar. The meetings with these officials proved an important complement to her remarks and presentation at the conference and are crucial for maintaining the close relationship the Institute of the Americas has enjoyed with energy policymakers in El Salvador.
On March 27-28, the Institute of the Americas convened its annual Energy Roundtable in Buenos Aires with the participation of over 100 representatives from the federal, provincial and city government, regulators, industry, academia and civil society.
The two day Roundtable counted several high level panels and an intense discussion of oil and gas issues as well as the emerging role for the lithium market and the broader contours of how the global energy transition is unfolding in Argentina. A unique lunch panel featured a debate with renowned political analysts and their insights on the intersection of energy and politics as the country heads into a presidential election this October.
Not surprisingly, much of the discussion centered on the ongoing structural adjustments and reforms enacted by the Macri administration, particularly those aimed at subsidies and fiscal incentives both in terms of consumers but also energy producers.
Vaca Muerta and the country’s success in developing the massive unconventional resource potential was also heavily debated. Though important gains have been made to reduce logistical and operation costs, continued focus on efficiency measures and creating a more competitive ecosystem is a must, panelists underscored. There is no doubt that further efforts are required to boost the amount and capabilities of service and equipment providers, but also to greatly increase the number of operators in the country’s oil and gas sector.
Furthermore, how to create sufficient infrastructure to “move the molecules” remains a key piece to the challenge. Gains have been made utilizing long-inactive pipelines and infrastructure and reopening natural gas exchanges with Chile and Brazil in the short to medium term makes eminent good sense.
A majority of panelists agreed that the key to fully monetizing Vaca Muerta’s potential was to fully plug Argentina into the global liquefied natural gas (LNG) market. To do so will require all segments of the country’s energy sector to participate in the strategic development of the resource – the government, YPF, private sector participants, regulators and civil society. The technology, geography and volumes, not to mention contractual arrangements, are but a few of the elements that will require attention and crucial decisions in the coming months and years. Further, one panelist argued that political consensus and a law supported across party lines stipulating and protecting investment in such a major infrastructure project is needed to reduce the so-called country risk component.
Beyond the fiscal impacts debated, Argentina’s energy sector is also undergoing a broader transformation and disruption brought about by global trends. Indeed, the policy efforts aimed at increasing renewable energy deployment through the government’s RenovAr program was discussed. Panelists agreed that the effort to date had been important but a thorough cost benefit analysis was required in order to best consolidate and determine the gains and to continue forward momentum. Moreover, a new distributed generation law passed last year is being developed for implementation. Benchmarking against international examples from California to Germany to Chile were discussed during the Roundtable.
And, of course, the role that mobility and electric vehicles are playing in the discussion of energy and emissions reduction is an increasing topic for debate in Argentina. Programs and goals set by the City of Buenos Aires, but also efforts made at the provincial level, have led to an uptick over the last year or so in options for citizens to utilize electric transportation, both mass transit and individual vehicles.
Finally, the topic of lithium featured an illuminating discussion of the potential for Argentina to position itself as a global player. However, the market is still quite small, prices are volatile and the number of projects that exist solely on paper far exceeds the reality that global headlines portray for lithium. But as several panelists argued, therein is the opportunity for oil and gas companies to bring to bear financing and operational insights to the sector and perhaps facilitate some of the dormant projects and boost the development of Argentina’s lithium market.