The regional response to the greenhouse issue: Latin America and the Caribbean

Francisco J. Gutierrez, Olade - Latin-American Energy Organization Casilla 6413 C.C.I Quito, Ecuador

1 Introduction

The increase in greenhouse gas emissions in Latin America and the Caribbean is not directly linked to energy consumption. It is estimated that about two thirds of the carbon compounds that are emitted annually in the Region and contribute to the greenhouse effect stem from the deforestation of 4 to 6 million hectares of forests destroyed annually by unplanned land settlement, migratory agriculture, and agribusiness. As a contribution to the debate on the global problem of increasing greenhouse effect, the present article tries to analyze the specific regional characteristics of the problem, their relation to the global issues, and the regional options for decreasing carbon compound emissions.

The developing countries, instead of waiting for the consequences of the 1 to 5 degree Centigrade increase in average temperature which is being forecast for the planet in the next 50 to 70 years, will have to deal with the possibility of seeing their land converted into ecological disaster areas, where life cannot be sustained, within the next 20 years (1). Within this context, technology can do very little, since deforestation basically is not a technological problem since its solution rather involves the application of sustainable development models that require profound economic and social changes.

2 Main regional options to cope with greenhouse gas emissions

The options that Latin America and the Caribbean has available to cope with the problem of greenhouse gas emissions must be analyzed within the broader context of the development models of its energy system structure, the availability of energy sources, its capacity for technological innovation, its possibility to obtain financial resources, and its capacity to eliminate the main enemy of environment: poverty.

Within this context, the options for the energy sector are easy to identify:

a) to continue the sustained development of the huge hydropower potential, which has come to a partial standstill because of financial problems;

b) to increase the share of natural gas in the energy balance; and

c) to enhance energy efficiency.

The development of a regional strategy based on these guidelines will not only enable countries to diminish greenhouse gas emissions but also increase their energy consumption, required to improve the living conditions of the population and eliminate poverty, without which it is impossible to remove the Region's major source of greenhouse gas emissions: deforestation.

More hydropower and natural gas: the immediate response

In general, the Region's energy system was developed positively in terms of the environment in the last two decades, especially regarding the emission of greenhouse gases and other pollutants (SOx, NOx, etc.). The share of oil in primary energy consumption fell from 63% to 51% between 1970 and 1992, whereas the use of coal accounts for only a marginal source of energy consumption, and other less polluting sources such as natural gas and hydropower have achieved substantial progress (Figure 1). As a result of this situation, the energy system of Latin America and the Caribbean currently emits into the atmosphere about 10% less carbon compounds per ton of oil equivalent than in 1970.

Figure 1.Latin America and the Caribbean, primary energy consumption.

Highly significant efforts were made to change the power production structure. The installed capacity of hydropower generation increased it share of total generation capacity from 47% in 1970 to 60% in 1992 (Figure 2). Between these years, the hydropower generation capacity increased by a factor of five. Investment and financing efforts, however, led to high foreign indebtedness. About 10% of the Region's foreign indebtedness should be attributed to the financing of hydroelectric projects. Nevertheless, because of these efforts, the production of one kWh in 1992 released into the atmosphere 35% less carbon monoxide and other pollutants than in 1970.

Figure 2. Latin America and the Caribbean, power generation capacity.

Latin America still has available unexploited hydroelectric resources, distributed with a certain geographical balance. Until 1992, the Region had taken advantage of only 13% of its total hydropower potential. Until 1989, some 700,000 MW of hydropower capacity were inventoried as capable of being exploited; this offers a clear option for reducing greenhouse gas emissions (2).

The use of hydroelectric energy may exert harmful environmental effects on human life, flora, and fauna, but it can also bring valuable benefits like flood control and the promotion of regional development. Fortunately, most of the Region's hydropower resources are located in unpopulated areas, although the construction of dams and reservoirs lead to deforestation and the resettlement of indigenous ethnic groups. Nevertheless, in the Region the construction of these projects has not provoked serious conflicts. For example, the construction in Brazil of 46 hydropower projects of various sizes caused the relocation of about 200,000 persons and the flooding of 24,000 square kilometers of woods (3), whereas the Aswan Dam in Egypt by itself flooded 5,000 square kilometers and required the resettlement of 100,000 inhabitants. Brazil's hydropower construction program envisages, by the end of the century, the flooding of an additional 13,000 square kilometers, a figure equivalent to the forest area destroyed by fires in merely one year in the Amazon River basin (4, 5).

The experience accumulated in the construction of hydropower works has endowed the Region with an important supply of engineering, construction, and equipment manufacturing services, which make the Region almost self-sufficient in this respect, and the geographical distribution of resources has made this experience beneficial to almost all the Region's countries. The development of hydropower should be viewed as the most immediate option for reducing greenhouse gas emissions; the serious economic crisis that the Region is experiencing and its high foreign debt, however, have reduced capital-intensive investments such as those needed for hydropower projects and have promoted the development of oil and coal-fired power plants, which require less capital. The only factor that could reverse this situation is a reversal of the Region's capital flows, which for some years have disappeared from the Region in the form of foreign debt payments. Efforts should be made to attract private sector investments; nevertheless, it is doubtful that this sector alone can cope with the volume of investments needed to promote hydropower development at the same level recorded by the Region during the seventies or that it would be ready to accept the risks and long capital return periods implied by the construction of these projects, compared to their coal and oil counterparts.

Another positive element, from the environmental point of view, is the growing use of natural gas. Whereas final energy consumption in the Region grew at an average annual rate of 50% during 1971-1987, natural gas consumption grew by 8.5% per year. Although this energy resource is concentrated in few countries (Argentina, Bolivia, Mexico, and Venezuela), there are projects for the interconnection of grids toward other countries, and it is hoped that the use of natural gas will be more broadly used in the medium term in the countries of South America. Gas contracts between Bolivia and Brazil and between Argentina and Chile have been discussed at a very advanced level. In addition, domestic consumption in gas-producing countries, such as Argentina, Mexico, and Venezuela, has increased substantially. There is a broad potential for increasing the share of natural gas in South America and the Caribbean, and proven reserves can ensure more than 50 years of supply even at consumption rates that are higher than current rates (6).

Biomass: an option to be considered

In 1992, biomass consumption in Latin America and the Caribbean accounted for 19% of total primary energy consumption. Biomass consumption as an energy source increased only because of industrial consumption (Figure 3). In the Region, the consumption of firewood and charcoal for residential use continues to decline as urbanization increases. According to OLADE estimates, the population that consumes firewood decreased in absolute terms by 10% between 1970 and 1985, that is, some 13 million inhabitants. Current population depending on firewood is about 30% of total population (7).

Figure 3.Latin America and the Caribbean, biomass energy consumption by sector.

Despite the increase in industrial consumption of biomass, its use as an energy source is not a main cause of deforestation. It is estimated that energy consumption directly accounts for less than 15% of the deforested area. Migratory and commercial agriculture, livestock raising, and construction of infrastructure are, in that order, the main causes of destruction of 4 to 5 million hectares a year of dense tropical forests. According to the Food and Agriculture Organization (FAO), between 10 and 11 million hectares of primary woods, secondary woods, and brush are eventually affected in Latin America and the Caribbean, a large part of which is destroyed by fires (8).

Although the population that consumes firewood is declining, deforestation is increasing. The significance of this analysis lies in the fact that about 80% to 90% of carbon compound emissions (9) into the Region's atmosphere come from deforestation; in turn, energy consumption has very little to do with the destruction of tropical forests. The causes of deforestation are deeply rooted in development models, poor use of land, and rural poverty. For the poor campesino, who practices migratory agriculture, the issue at stake is either destroying the forest or endangering his very subsistence.

Halting the destruction of the tropical forest and therefore preserving the biological habitat and diversity is not so much a technological problem: rather, it is a problem that requires the introduction of deep changes in the wealth production and distribution system, which would permit poor campesinos, who account for 25% of the Region's total population, to live without destroying the forest and which would oblige cattle ranchers and large landholders to respect nature and assume the costs for preserving the environment. If this is not taken into consideration, hydropower development or the wider use of natural gas or the more efficient use of energy or reforestation plans will be useless and greenhouse gas emission will continue increasing.

Biomass offers great comparative advantages for Latin America and the Caribbean. The Region's tropical forests hold the richest and most varied genetic bank of planet Earth; however, it is under constant threat of extinction instead of being valued at its true worth by humankind. The possibilities offered by biomass to the Region transcends the field of energy. New fibers and medicines or new processes of manufacturing and foods based on biotechnologies offer a promising future. In the field of energy, the possibilities of genetic engineering to increase yields per hectare or to increase the efficiency of the current processes of production of ethanol and methanol will undoubtedly play an important role in the Region's future energy system.

The conversion of biomass in vectors such as alcohol will help to mitigate not only carbon compound emissions and greenhouse gases, but will also improve the local conditions of many Latin American and Caribbean cities, when sulfur compounds (SOx) are eliminated and the use of lead in gasoline is reduced. Brazil's alcohol program has been questioned because of its poor economic performance, especially in the light of current oil prices, but no one appreciates the environmental benefits of the use of alcohol on the health of the population of Sao Paulo or Rio de Janeiro and how much this means in terms of the Health Ministry's budget.

The production of liquid fuels using biomass synthesis undoubtedly accounts for an important part of the fight against environmental pollution, since 60% of the Region's consumption of oil products is concentrated on road transport. The substitution of the latter with alcohol will substantially reduce the major source of atmospheric emissions in the Region.

Rational use of energy: beyond CO

2

reduction

In 1992, the per capita consumption of total primary energy of Latin America and the Caribbean amounted to 7.03 barrels of oil equivalent (BOE) per inhabitant, which corresponds to 7% of per capita consumption in the United States and 26% of Western Europe during the same year; nevertheless, this consumption is higher by factors of 1.6 and 3.5 than the per capita consumptions of Asia and Africa, respectively (Figure 4).

Figure 4.Latin America and the Caribbean, per capita energy consumption by region.

In the eighties, unfortunately called the "lost decade" by many economists and politicians, a series of economic, financial, and social crises took place as a result of which more than 40% of total population is deemed to live in conditions of poverty and the per capita income in 1989 was lower than the one recorded during the late seventies.

Because of this situation, the pace of per capita consumption of energy declined from 3% to 2% in the seventies, to -0.2% between 1980 and 1985, and then recovered slightly to 0.7% between 1985 and 1989, following closely the evolution of GDP. The growth rates of per capita oil consumption declined between 1980 and 1985 by 3.1% and then recovered very slightly to 0.2% in the following five-year period (10).

The economic recovery that all of us are hoping for will imply a substantial increase in energy consumption, but this would have to occur with greater efficiency, not only in the use of energy but also the use of all other scarce resources (capital, labor, raw materials). The only way possible for Latin America and the Caribbean to insert itself once again into the new international economic and geopolitical scene is by enhancing its economic competitiveness, which could be achieved by the more efficient use of its resources.

Energy efficiency is therefore an integral part of the strategy for productive reconversion that the Region should undertake if it does not wish to remain on the margin of the changes taking place in the world, and this requires something beyond the mere reduction of greenhouse gases, which, it should be acknowledged, is viewed as a rather exotic issue, to say the least, by many of the Region's industrialists and investors.

The energy intensity of production (energy consumption/GDP), although it does not constitute an optimal indicator to analyze energy efficiency, does enable us to have a global idea of the relation between energy and production. Statistics show that the Region is currently consuming energy with less efficiency than in the early seventies (Figure 5). Under-utilization, technological obsolescence, poor levels of maintenance, and in general a strong reduction in investments confirm these suspicions, and the savings potential, even under conditions of energy consumption growth, are significant.

Figure 5.Latin America and the Caribbean, energy intensity.

The incorporation of concrete policies for the national use of energy can lead to important energy savings with a low level of investments. In absolute values, OLADE estimates that the medium-term savings potential in oil products in the Region, by applying measures that require relatively little investment, could reach 140 million BOE per year, that is, 40% of total imports of these energy products.

The possibilities of industrialized countries investing in energy efficient technologies in the South could be a more cost-effective option than investing in their own countries and should be fostered by local laws and international trade agreements. This, in turn, would enhance the economic growth and prosperity needed in the South.

The nuclear option: an option that can wait

Nuclear energy is an option that could play an important role in the Region's energy future. At present, only four countries have initiated a nuclear power development program: Argentina, Brazil, Mexico, and Cuba. The financial problems being experienced by the Region and, in some cases, social pressures have put a halt to regional nuclear development. Moreover, the abundance of conventional and more accessible energy resources, from the technological point of view, lead to the conclusion that nuclear energy in the Region is an option that can wait for still a few more decades. As explained above, due to the existence of other more immediate options, the priorities should focus on the exploitation of hydropower resources and natural gas, energy efficiency, and the study of possibilities offered by biomass, on the basis of new transformation technologies.

3 Concluding remarks

The reduction of greenhouse gas emissions in the short or medium term is not, for Latin America and the Caribbean, as for most developing countries, a problem of technological transformation; it is rather a problem deeply linked to the unsustainability of the present models of development which in addition to destroying the environment have not even been able to solve the problem of poverty.

The lack of development, which obliges some 100 million poor campesinos, cattle ranchers, and large landowners of the Region to destroy 4 or 5 million hectares of dense tropical forests per year, is responsible for 75% of the carbon compound emissions that contribute to the greenhouse effect (Figure 6). Even in the unlikely event that the emission of greenhouse gases stemming from the use of energy in the Region were to fall to zero, some 500 million tons of greenhouse gases would continue to be released annually in the atmosphere.

If greenhouse gas emissions were to be analyzed cumulatively, since the beginning of the Industrial Revolution, on a per capita basis, a very low degree of responsibility would be attributed to Latin America and the Caribbean as well as developing countries in general for the increase of these gases (Figure 7).

Figure 6.Carbon emissions by country.

Even taking into account the demographic and energy increase among developing countries, the historical "credit" for the emission of CO2, CH4, etc. would enable Latin America, Asia, and Africa to triplicate and quadruplicate their per capita level of emissions of carbon compounds stemming from energy consumption in order to equal the historical emissions from industrialized countries, taking 2100 as the horizon year (Figure 8). These are the conclusions of a work presented in International Institute for Applied System Analysis (IIASA) in 1990 (11). On the other hand, the same study indicates that North America (USA and Canada) would have to reduce their per capita carbon compound emissions by 7.4% per year, Western Europe by 1% per year, and the Soviet Union by 1.7% per year between 1988 and 2100 in order to reach the same levels of developing country emissions (Figure 9).

This obviously shows that there exists a problem of co-responsibility which should be proportional to the damage caused. The solution of global problems such as the greenhouse effect requires global responses. A broad international consensus that would ensure the adequate financing of development is needed.

Figure 7.Carbon emissions per capita by region from the burning of fossil fuels, cumulative (1800-1987) and current (1987).

Figure 8.Average annual carbon emission allowance in tons per capita by region from 1988 to 2100, assuming inter-regional and inter-generational equity and a doubling of atmospheric CO2 levels from pre-industrial levels.

Figure 9. Average annual rate of reduction in per capita carbon emissions from 1988 to 2100, assuming scenario outline in Figure 7 under this scenario no reductions from current levels would be required in Asia, Africa or Latin America.

References

1. OLADE, Preliminary Assessment of Energy and the Environment: OLADE's Vision, Preliminary version, Quito, Ecuador, September 1990.

2. UNDP-IDB, Our Own Agenda, Development and Environment Commission of Latin America and the Caribbean, 1990.

3. Rosa, P. and Michirk, O., Impacts of Great Projects in Brazil, IDRC, Manuscript Report, 196e, 1988.

4. Sant'Ana R., "Mais Hidroeléctricas menos terras para Agricultura", Sao Paul Energía, Year II, No. 19, September 1985.

5. Rose, P., "Hidreléctricas e Meio Ambiente na Amazonia: Analise e crítica do Plano 2010", Energía, Vol. 1, No. 1, Nova Stella SP, 1989, pp. 7-24.

6. Khelil C., Gutierrez L., and Jorge T, World Bank Strategy for the Natural Gas Sector in LAC, The World Bank Regional Studies Program Report, No. 1, March 1991.

7. OLADE, "Firewood Consumption in Latin American and the Caribbean: Cause or Consequence of Deforestation?", Energy Magazine, Year 13, No. 3, November-December 1989, pp. 75-91.

8. FAO-UNEP, Los Recursos Forestales Tropicales, Estudios FAO: Montes No. 30, Rome, 1983.

9. Goldemberg J., "How to Stop Global Warming", Technology Review, MIT, Cambridge, Massachusetts, November-December 1990, pp. 25-31.

10. OLADE, "La Demanda y la Oferta de Energía en América Latin: Su Evolución en el Período 1970-1985", limited distribution, OLADE 1-033-89, June 1989.

11. International Institute for Applied System Analysis, "CO2: A Balance of Accounts", Options, December 1990, pp. 10-13.


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