The situation of the energy transition in Central America and the Caribbean was the main issue debated this Friday 21st in the sessions at the XXX La Jolla Energy Conference, which is attended virtually by high officials, business delegates and analysts from the region.

By Emilio Godoy
MEXICO CITY, May 21 2021 (IPS)

The situation of the energy transition in Central America and the Caribbean was the main issue debated this Friday 21st in the sessions at the XXX La Jolla Energy Conference, which is attended virtually by high officials, business delegates and analysts from the region.

In the last decade, Central America and the Caribbean have advanced in the energy transition towards cleaner energy baskets, through renewable energies and gas, said high officials and experts Friday 21st at the XXX La Jolla Energy Conference, which is being held throughout the month of May.

Representatives from the area analyzed this evolution during the third round of debates at the Conference, which began on May 7th and will conclude on May 28th, and whose edition is virtual due to covid-19. It is organized by the Institute of the Americas (IA), which has its headquarters in the coastal city of La Jolla, in the U.S. state of California.

Salvador Handal, executive secretary of the state-owned but autonomous National Energy Commission of El Salvador, said that in his country “in the last decade, the energy matrix migrated from importing fossils to using renewables”.

“In the last two years, the auction of renewables and combined cycle plants have been incremental, even during the pandemic. In the last quarter (January-March), El Salvador generated more than 90 percent of renewables. We are approaching total clean generation. The transition has accelerated,” he said.

Central America has been successful in incorporating renewables into the energy matrix of all countries. Costa Rica has been the leader; it has always had a strong commitment to the environment
Silvia Alvarado, Energy Intelligence Consulting

El Salvador expects an additional 255 megawatts (Mw) based on gas combustion to come on line before March 2022. Energía del Pacífico is building a liquefied natural gas (LNG) regasification plant in the east of the country.

That plant is part of an energy complex for which IDB Invest, Inter-American Development Bank’s private financing arm, lent US$115 million.

In 2020 the Salvadoran government approved the National Energy Policy for 2050, the year in which the Central American nation aims to be carbon neutral – its polluting emissions and avoided emissions add up to zero – and which fosters wind, solar photovoltaic and geothermal energy.

By 2025, El Salvador would only use gas and renewables, according to Handal, who explained by videoconference in a session that focused on how Central American and Caribbean countries are facing the decarbonization of their economies and energy matrix.

Silvia Alvarado, the international firm Energy Intelligence Consulting’s president, outlined the current panorama of Central American countries in this regard.

“Central America has been successful in incorporating renewables into the energy matrix of all countries. Costa Rica has been the leader; it has always had a strong commitment to the environment. Steps behind, Panama and Guatemala have conducted electricity auctions in recent years. The region is in good shape. Prices are low and there is an abundance of electricity. A demand boost is needed,” she said.

In Central America, the majority of electricity generation comes from hydroelectricity, fossil fuels, renewables and geothermal, in that order, according to data from the Economic Commission for Latin America and the Caribbean (ECLAC).

As net importers of fossil fuels, the Central American countries, whose markets have been open to competition since the 1990s – with the exception of Costa Rica – are seeking ways to become less dependent on these external purchases and reduce their already low carbon footprint, agreed speakers at the Conference.

The insular Caribbean region has embarked on a similar path.

Rafael Velazco, Dominican Republic’s Superintendent of Electricity, pointed out that the country has “a diversified generation, with 37 percent based on gas, which we see as a transition fuel and which has been a factor of change”.

“In the last four years, we have registered a large increase in solar and wind projects. We allow the private sector to invest, the government guarantees that investment, but it will not invest in generation, we depend on the private sector to do so”, assured the Dominican regulator.

The Dominican Republic is about to bid for an LNG plant in the north of the country. In the next three years, the Caribbean nation expects to incorporate 200 MW of gas-fired generation.

Trinidad and Tobago faces a predicament similar to that of the Central American region, due to its dependence on gas to generate electricity.

Kevin Ramnarine, the country’s former energy minister, expressed concern about the scarcity of the molecule and the need to seek other means of electricity production.

“There is an intention to incorporate solar energy and hydrogen,” he said.

Under the Global Alliance Climate Change Plus Initiative, the European Union and the Trinidadian government are building a 110 MW-solar park and a budget of more than 1.5 million dollars.

Both Central American and Caribbean countries face the challenges of energy evolution, such as the need for battery storage and the hype for hydrogen from gas or renewables.

In this regard, Handal predicted that “we are going to transform the regulatory framework, which is obsolete, to include storage and hydrogen. We have to promote and deepen energy efficiency, we have to reduce energy vulnerability. We are going to optimize our natural resources”.

El Salvador and Costa Rica are members of the green hydrogen platform for Latin America and the Caribbean (H2LAC), sponsored by the German cooperation. In the case of El Salvador, thanks to this platform, a geothermal project is being studied in the east of the country, aimed at hydrolyzing water and injecting the fluid into the Central American Electrical Interconnection System.

In turn, Alvarado highlighted the need to bring about these technologies. “The countries are aware of this need, but it is still incipient. We have not yet seen clear regulations for it, although we will have them soon. We will see how renewables will develop a strong niche against LNG,” he said.

The Dominican Velazco also announced the revision of regulations, especially the Renewable Energy Law in force since 2007. “We want to adjust it to cover storage and electric cars,” he explained.

The Trinidadian company NewGen is advancing in a hydrogen project, which will use the heat from a combined cycle plant and will use it to electrolyze water and generate electricity. In doing so, it will also produce green ammonium, for fertilizers.

“Hydrogen through water electrolysis is an attractive option to replace methane,” said Ramnarine.

The agenda of the XXX Conference also includes topics such as the future of transportation, including its electrification; the outlook for gas in South America; energy cooperation between the United States and Mexico, as well as the future of hydrocarbons and the financing of the post-pandemic economic recovery.

Energy development in Latin America and the Caribbean is a strategic focus of the IA, which is dedicated to promoting public policy and public-private cooperation in the hemisphere.

Gas development in South America, during pandemic and post pandemic times, was the issue of a new round of debates this Friday 14 at the XXX La Jolla Energy Conference, which takes place virtually from May 7 to 28, and brings together officials , Latin American businessmen and analysts. Credit: Emilio Godoy / IPS.

By Emilio Godoy
MEXICO CITY, May 14 2021 (IPS)

The gas producing countries of South America are debating on how to make better use of the resource and how to integrate the sector, amid geographical and infrastructural barriers.

The issue was the center of discussions this Friday 14 during the weekly debate at the XXX La Jolla Energy Conference, which began May 7th and will conclude on May 28th and is being held virtually, due to the limitations imposed by the covid-19 pandemic.

The Conference will be held on Wednesdays and Fridays of every week in May and is organized by the Institute of the Americas (IA), which has its headquarters in the coastal city of La Jolla, in the state of California, in the United States. Dedicated to promoting public policies and public-private cooperation in the hemisphere, the IA has energy as one of its main focuses of action.

In the case of Argentina, Juan Bulgheroni, Pan American Energy’s vice president of Upstream Strategy and Planning for that country, highlighted the characteristics of the Vaca Muerta unconventional gas field in southwestern Argentina.

“It has sufficient resources to meet a growing demand. Productivity has increased and costs continue to fall. We have to develop new facilities to control polluting gases and to transport more gas,” he explained.

Bulgheroni assured during the discussions that “Argentina is on the road to recovery, as prices and consumption have returned.”

In 2020, Argentina produced 123.21 million cubic meters (m3) of gas, almost nine percent less than the previous year, due to the coronavirus pandemic.

In the January-February period of this year, gas production totaled 115.31 million m3 per day, a drop of 10.6 percent in relation to the same period of the previous year, in a two-month period in which the pandemic, declared a month later, had not yet broken out.

In late January, Vaca Muerta delivered 26.85 million m³ per day of the fuel, but this productive basin reported a 10 percent drop between March 2020 and the same month of 2021.

That same month the government applied the Plan Gas.Ar, which seeks to encourage investment and domestic gas production to replace imports, and through which the government pays producers for the fluid injected into the national system.

In Brazil, the Gas Law also came into force in April and puts an end to the monopoly of the state-owned Petrobras group in the access and transportation of gas and regulates the transportation, treatment, processing, storage, liquefaction, regasification and commercialization of the molecule.

The South American giant extracted 127 million m3 per day in 2020 and aims for a target of 276 million in 2030.

“We don’t have 20 years to develop our gas resources. We have to do it fast, as there is a lot of unsatisfied demand. Demand is concentrated near production centers, which is an advantage. And we have to see which fuel gas has to compete against,” said Sylvie D’Apote, Brazilian Petroleum Institute’s executive director for natural gas.

The Conference, attended by higher officials, executives and analysts from the region, will also address topics such as the future of transportation, including its electrification; the outlook for hydrogen; energy cooperation between the United States and Mexico; as well as the future of hydrocarbons and the financing of the post-covid economic recovery.

Countries such as Colombia and Peru are also analysing how to extract more gas to increase their domestic market.

Armando Zamora, Colombia’s governmental National Hydrocarbons Association president, the sector’s national regulator and administrator, predicted that investment and production “will go up when companies are authorised to return to work”.

“The expectation is to return to pre-pandemic levels of investment and exploration. This year investment is returning,” he said.

Colombian gas production is already at pre-pandemic levels, at around 1 billion cubic feet per day.

Carlos Sarmiento, Schlumberger’s managing director for Colombia, Ecuador and Peru, said the new Ecuadorian government, which will take office on 24 May, is keen to increase investment in the sector.

“Much of the effort has been made to maintain production. Therefore, a lot has to happen to the legal framework and production strategy, there must be changes to attract investment in exploration, there is the potential and the infrastructure,” he said.

Ecuador extracts some 1.08 million m3 of gas a day, which is insufficient to meet the growing demand.

Vaporous illusions

The common dream of South American gas-producing countries is to consolidate the domestic market and build an exploration platform. But this goal faces several barriers.

Argentina’s Bulgheroni highlighted opportunities in petrochemical production, for plastics, and urea, for fertilisers. “The best domestic product is to export. Many of the internal barriers will be overcome, but there is a need to invest in pipelines. There is a bottleneck to extract and transport more gas,” he said.

For Brazil’s D’Apote, there are opportunities for gas in the fertiliser industry, but there are “infrastructure and price barriers”.

One strategy is to build regasification plants for liquefied gas (LNG), imported mainly from the United States, and connected to South American gas pipeline networks.

Decio Oddone, CEO of Brazil’s Enauta, concluded that gas integration is not possible because a country’s internal problems impact the supply of the entire network.

“What I see now is that since LNG is available, it defines prices. If Bolivia or others want to be competitive in Brazil, they have to compete with LNG. I don’t see the need for pipelines,” he said.

For Oddone, “Brazil can become a gas exporter, but first it has to develop the domestic market, which can be more attractive than the foreign market”.

Sarmiento questioned that there has been little exploration in Ecuador. “We have many opportunities for integration. For example, using Ecuadorian oil in a Peruvian refinery or developing fields in southern Colombia, using Ecuadorian infrastructure,” he said.

Saverio Minervini, FitchRatings’ director of Latin American corporationst, predicted that regional integration will incorporate LNG, but “there are political risks and geographical and engineering challenges”.

The XXX La Jolla Energy Conference, organized by the Institute of the Americas, began Friday, May 7 and will conclude on May 28 is being held virtually, due to the limitations imposed by the COVID-19 pandemic..

By Emilio Godoy
MEXICO CITY, May 7 2021 (IPS)

Several Latin American countries are stepping up the pace to generate hydrogen for various uses in transportation and industry, but they must first resolve several questions.

The analysis of this environment marked the beginning of discussions at the XXX La Jolla Energy Conference, which began Friday, May 7 and will conclude on May 28 and is being held virtually, due to the limitations imposed by the covid-19 pandemic.

The XXX La Jolla Energy Conference will be held on Wednesdays and Fridays of every week in May and is organized by the Institute of the Americas (IA), which has its headquarters in the coastal city of La Jolla, in the state of California, in the United States.

Jorge Rivera, Panama’s national secretary (minister) of energy, said his country is building a market and the technology, with the support of the Inter-American Development Bank (IDB) to make hydrogen available.

“Panama is ready for that. We are working to develop the preliminary rules to participate in that market. In the short term, we see ourselves as a hydrogen hub for Latin America. We think we can play a role in building that hub,” he explained during his telematics participation.

In the short term, Rivera pointed out, the Central American country’s plan “more than producing, is to be a hub for storing and distributing hydrogen,” based on the existing logistics for storing hydrocarbons and the operation of the Panama Canal.

The “gray” hydrogen comes from gas and depends on the adaptation of gas pipelines for its transportation. In comparison, “blue” has the same origin, but plants capture the carbon dioxide (CO2) generated.

Production is based on steam methane reforming, which involves mixing the first gas with the second and heating it to obtain synthesis gas, but it yields CO2.

The production of “green” hydrogen uses electrolysis, whereby hydrogen is separated from oxygen using electrical energy as a separator. The gas reacts with air, generates electricity and releases steam. Electrolysis also makes it possible to recombine the two elements to form water and thus conceive fluid.

Green hydrogen has been added to the pool of clean sources to drive the energy transition away from fossil fuels and thus develop a low-carbon economy. Some countries also see it as a tool to generate foreign exchange and support recovery from the covid-19 pandemic.

In addition to hydrogen, the conference will also address topics such as the future of transportation, including its electrification; the outlook for gas in South America; energy cooperation between the United States and Mexico; as well as the future of hydrocarbons and the financing of the post-covid economic recovery.

For his part, Gabriel Prudencio, director of the Sustainable Energy Division of Chile’s Ministry of Mines and Energy, said that his country is in the early stages of seeking growth in a few years.

“Hydrogen is going to be important in the future, because it is already in use in several industries. We see that hydrogen will be used in transportation, as a gas to produce heat in industrial processes or domestic use,” he described.

Prudencio explained that “considering all this, Chile has a great potential to be an important player because of the renewable potential. We could produce the cheapest hydrogen in the world and use it in local development and export it to international markets”.

Chile already has a national hydrogen strategy, which aims to produce the cheapest green hydrogen on the planet by 2030, be among the top three exporters by 2040 and have five gigawatts of electrolysis capacity under development by 2025.

In addition, it has already drawn up an agenda of legal changes to promote this alternative.

In addition, the country has a US$15 million fund to support three pilot projects and a cooperation agreement with Singapore.

Uruguay is also interested in developing this resource to decarbonize its activities.

The Uruguayan Minister of Industry, Energy and Mining, Omar Paganini, said at the La Jolla Conference that “we are working to create conditions for the development of the market. We prepared the roadmap for hydrogen and developed a national strategy”.

The South American nation is executing a pilot project to replace diesel with hydrogen in heavy transport. In addition, the IDB is financing the analysis of gas use in other activities such as the production of green fertilizers.

Argentina also wants its slice of the hydrogen pie in the energy transition.

Santiago Sacerdote, general manager of YPF Tecnología, a subsidiary of state-owned oil company YPF, said the country has “extraordinary resources to develop those resources, such as ammonium, hydrogen and in other forms.”

“We can export low-carbon energy. We are going to see significant progress in the coming months,” said the executive director of Argentina’s H2Ar Consortium.

In that nation there is already a consortium of 40 companies and a public-private roundtable. It is also designing a new regulatory framework.

Argentina is focused on building an export platform, the collaborative partnership, a plan to execute pilot projects in several applications, create a domestic market and build the local supply chain.

Historically, Brazil was one of the pioneers in hydrogen analysis, but focused on biofuels and renewables. Now the country wants to catch up.

“We discussed energy transition strategies, including hydrogen. Brazil can be an exporter of green hydrogen. We thought about how to design that approach. We see export potential, but it is not the most competitive technology yet,” explained Agnes da Costa, director of the Special Advisory Committee on Regulatory Affairs at Brazil’s Ministry of Mines and Energy.

Hydrogen appears in Brazil’s National Energy Plan 2050. Last April, the National Energy Policy Council proposed the development of guidelines for the National Hydrogen Program, which should be ready in 60 days.

The Hydrogen Council, a global alliance of 13 major energy, industrial and transportation companies, sponsored the study “The Road to Hydrogen Competitiveness. A Cost Perspective,” launched in January 2020, which reviews 40 technologies used in 35 applications, such as commercial vehicles, trains, heaters and industrial conditioning.

In 22 of these, the costs incurred by a user over the lifetime of the application of one of these technologies will be comparable with other low-carbon alternatives by 2030.

One of the looming challenges is the infrastructure needed for gas storage and transportation.

Panama’s Rivera acknowledged that the big issue is the cost of electrolysis infrastructure and electricity generation, but predicted that “we can take advantage of falling prices in the future”.

In turn, the Chilean Prudencio indicated that infrastructure is needed locally and for export. “Many projects will be built at the consumption site, such as mining companies”, he exemplified.

The Uruguayan Paganini minimized the distances to be covered. “Long-term contracts are necessary and for that we need production and export schemes,” he suggested.

For the Argentine Sacerdote, the existing gas network can be a support for the market to take off. “We have to consolidate this market and create incentives, and establish strategic relationships with important buyers, such as Japan,” he said.

Finally, the Brazilian da Costa foreshadowed that when there are rules and market, investment will flow. ”

“But we are not there yet. It’s time to see if the new rules for the electric and gas sectors can include hydrogen. One of the pillars is technology neutrality, so that the market is all-inclusive,” he said.