Natural Gas Crisis Shifts Focus of Chile's Energy Debate

By Gustavo González Reprint | | Print |

SANTIAGO, Apr 3 2004 (IPS) - Faced with cuts in natural gas supplies from Argentina, environmentalists in Chile call for diversification of energy sources, while officials consider moving up the operational start date for a controversial hydroelectric dam on the Bío-bío River. Environmental leaders in Chile are demanding a “dramatic diversification” of energy sources in response to the cut in natural gas supplies from Argentina, which threatens local production of electricity.

“Chile must change its energy matrix immediately,” says a statement signed by environmentalists Manuel Baquedano, president of the Instituto de Ecología Política, Alvaro Gómez, coordinator of the National Ecological Action Network, and Sara Larraín, head of the Sustainable Chile Program.

Argentina decided on Apr. 1 to reduce by 14 percent — around 2.3 million cubic meters daily — its deliveries of natural gas to Chile, primarily affecting the arid Antofagasta and Atacama regions in the north, which do not have hydroelectric energy sources.

The suppliers announced that they would use diesel to alleviate the natural gas deficit. The national copper corporation, Codelco, Chile's leading source of revenues, plans to follow suit.

Chile receives 70 percent of Argentina's natural gas exports, which go to electrical plants that can also run on petroleum or coal, and cover 37 percent of the country's electricity demand.

The construction of these fossil-fuel-fired electrical plants complemented the building of hydroelectric dams in the 1990s, when natural gas pipelines were extended across the Andes from Argentina to Chile's central and northern zones.

The lack of investment for new exploitation of natural gas deposits led to the supply shortage in Argentina, which may further reduce its exports in order to cover the increasing domestic demand that has resulted from its economic recovery.

Chilean President Ricardo Lagos insists that the private companies that exploit Argentina's natural gas must comply with their contracts to supply Chile with the fuel, but recognizes that it is probably inevitable that there will be further cuts in the coming months.

In response to the potential energy shortage, the government is considering the possibility of moving up the start date for the Ralco hydroelectric dam this year.

The Pehuenche indigenous communities and environmental groups have fought construction of this mega-project on the upper Bío-bío River, which crosses the central part of Chile.

The Ralco dam would give a nine-percent boost to the current national supply of electricity, and could begin operating in June or July, depending on the river's flow volume.

In addition to staking their bets on increased hydroelectric production, officials are looking at using coal or oil for feeding the electrical plants in northern Chile, although those fuels cost more than natural gas.

The move could result in increased electricity rates for consumers in October, when the pricing system is up for review, announced Andrea Butelmann, head of the Economy Ministry's market development division, in late March.

It will be necessary to reorganize the public works plan for the central energy system, which called for the construction of seven new natural gas-fired electrical plants from now until 2015, she said.

Chile should realize that it will have to produce electricity from more expensive energy sources than natural gas, but if rates go up, it could be more economical to invest in alternative sources like geothermal energy, said the ministry official.

Baquedano, Gómez and Larraín described the energy policy based exclusively on hydroelectric dams and natural gas-fired electrical plants as “conceited and erratic”.

The greatest responsibility for this new threat of an energy crisis falls to the governments for failing to advance in policies for true diversification of energy sources, even if it is private companies that take decisions on investment and propose new infrastructure works, said the environmental leaders.

The focus on natural gas and the government's efforts to secure supplies of this fuel from Argentina “because it is cheaper” show that Chile's energy policy is governed solely by market criteria, they say in their statement.

The three activists propose seven measures, including legislation to promote the use of renewable energy sources, such as wind, solar, biomass and ocean waves, as well as small, low-impact hydroelectric plants.

They also call for accelerating plans to put at least three geothermal energy plants into operation, and the construction of three more by 2015.

“The apparently insurmountable (cost) barrier for renewable sources to enter the energy system has been overcome in most countries with the creation of funds for promoting the use of renewable energy,” stressed Baquedano, Gómez and Larraín.

This obstacle has been surmounted in other countries through investment incentives and discounts for clean energy production, they said, and insisted on the need for programs in Chile to promote efficient energy use.

Fernando Mujica, an expert in nuclear engineering and sustainable energy professor at the Universidad Austral de Valdivia, said that “a balanced plan for electrical development should analyze all production possibilities,” including hydroelectric, thermoelectric and nuclear power.