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Debate on Chile’s energy options - Faced with climate change, World Bank recommends hydroelectricity

Saturday, March 14th 2009 - 15:01 UTC
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As evidence of global warming continues to mount, the world community is coming ever closer to a consensus on the issue, agreeing that climate change is very much real and that it must – before its already present effects worsen – be urgently addressed.

Latin America and the Caribbean are by no means exempt from the problem. The region is particularly vulnerable to hurricanes and tropical storms, which appear to be occurring with increasing frequency. Tropical illnesses such as malaria are spreading into areas that were historically disease free. And the Andes mountain range, the spine of the continent, is losing its glaciers at an alarming rate, promising serious water shortages that threaten the region’s biodiversity, farming industries and ultimately, human populations.

Bolivia’s Chacaltaya glacier has already lost 95 percent of its surface area while the Cotacachi glacier in Ecuador has disappeared completely, notes a recent World Bank (WB) report. Chile’s multiple glaciers are following a similar trend, according to the study, one of two climate change reports presented last week before the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) in Santiago.

“Climate change is a reality and even though historically Latin America hasn’t been responsible for making the phenomenon worse, it can certainly play a decisive role in confronting the enormous challenges that face us globally,” said WB economist Pablo Fajnzylber.

The second report, compiled by ECLAC itself, reaches a similar conclusion: that while Latin America and the Caribbean are responsible for just 12 percent of the world’s greenhouse gas emissions, they are already suffering the negative consequences of climate change and can certainly play a role in confronting the problem.

As a starting point, Chile and the rest of the countries in the region must adapt to the new reality by carrying out a detailed cost analysis, notes the report, entitled “Climate Change and Development in Latin America and the Caribbean: an Outline.” The nations of Latin America, ECLAC researchers determined, must determine first how much the effects of climate change are costing them and second, decide how much money they can spend on alleviating those effects.

Money would be well spent, for example, on improving energy efficiency and including more renewable energy sources in the region’s electricity matrixes, the study recommends. Latin America and the Caribbean, in other words, can no longer afford to simply react to difficulties associated with climate change, but instead must predict and do their best to head those problems off.

ECLAC’s recommendation contrasts sharply with current energy policy in Chile, where coal-based electricity production is on the rise in recent years. As a stop-gap solution to the country’s current energy crisis – brought on by Argentina’s decision to cut exports of natural gas – Chilean environmental authorities have fast-tracked a number of coal burning facilities. More appear to be on the way.

Two weeks ago Italian-owned electricity giant Endesa submitted an Environmental Impact Study (EIS) for a US$1.4 billion coal-burning plant it hopes to build in Chile’s Region III. Earlier this year a company called Río Seco S.A. submitted plans for a US$750 million coal-burning thermoelectric plant in Region I, approximately 60 kilometres south of Iquique.

“During the 1990s we placed our bets on natural gas, which is without a doubt better than coal in terms of its (environmental) impact” said Eduardo Bitrán, a former public works minister who now heads the National Council on Innovation. “We all know what happened with Argentina in that regard. We weren’t, therefore, able to continue (building natural gas-based plants).”

“Chile faced a very unique situation, a huge change in its energy supply for which the country wasn’t prepared,” he added. “The only way it could bridge the supply gap in the short-term was to build coal-based plants that can be completed in three to four years.”

The WB insists that part of the solution for Chile and other Latin American countries is hydroelectricity. By 2015, Latin America as a whole will be exploiting just 28 percent of its total hydroelectric potential, according to the WB report, entitled “Development with less Carbon: Latin American Responses to the Challenge of Climate Change.” The percentage will be even lower in Chile, where by 2015 hydroelectric dams will tap only 22 percent of the country’s total potential, the WB pointed out.

The WB has historically been a huge financier of large-scale dam projects in the developing world. Many of those projects have come under fire from environmental groups, which insist the ecological and social costs of such projects far outweigh their benefits.

An organization called the Whirled Bank Group reports that the WB, which it describes as the “greatest single source of funds for large dam construction,” has spent more than US$50 billion on dams since its founding in 1948.

The National Energy Commission reports that as of December 2007, Chile generated approximately 38 percent – nearly 5,000 MW – of its electricity from hydroelectric dams. Those numbers could rise significantly if environmental authorities approve the controversial HidroAysén Project, a US$3 billion plan to build five dams in far southern Chile’s Aysén Region.

The companies behind the project, Endesa and Colbún, say the project will add a whopping 2,750 MW of electricity to the country’s strained energy grid. Patagonia’s glacier-fed rivers, furthermore, represent a clean and efficient energy source, the partner companies insist. And, because the water is located right here in Chile, it is not – unlike imported oil and natural gas – subject to uncertain price and supply variations. The project’s many opponents say the dams will devastate Aysén’s Baker and Pascua Rivers and open up Chilean Patagonia – considered one of the world’s last pristine wilderness areas – to further industrial exploitation.

Pablo Fajnzylber denies that the WB in any way supports the HidroAysén project specifically. An article that appeared Wednesday morning in the Chilean daily El Mercurio suggested otherwise. “In the case of hydroelectric energy, there are environmental, social and localized effects that can be very significant in some cases. But there are also ways to minimize and mitigate those problems and to compensate people who are negatively affected,” said Fajnzylber.

“When those mechanisms allow us at the end of the day to have a project that’s beneficial for the country, with reduced social and environmental impacts, then we’ve supported those projects. We’re actually working in Chile on several smaller ventures, but not on the HidroAysén project,” the senior economist added.

The Patagonia Defense Council (CDP), an umbrella group representing some 40 Chilean and foreign organizations opposing large-scale dam construction in southern Chile, strongly disagrees with Fajnzylber’s stance on hydroelectric generation. Instead of opting for more dams, an outdated technology, Chile should follow the lead of the United States, Germany and Spain and invest heavily in wind, solar and other less-invasive energy sources, the CDP urges.

“What we need to do now is look for energy sources that are truly clean,” said CDP head Patricio Rodrigo. “In that regard, the best way forward is through totally sustainable and renewable sources that, thanks to research carried out by the Universidad de Chile, Federico Santa María and other schools, we know to be viable here.”

By Benjamin Witte ( )

Categories: Energy & Oil, Latin America.

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