| Energy research in developing countries |
|Volume 14: energy in Latin America|
Adriana N. Bianchi
This paper uses national, subregional, and regional examples to review energy policies and issues in Latin America from the onset of the energy crisis to the early 1980s. Practically none of the countries had an overall, coherent energy policy to ease them through this transition. The distribution of Latin America's energy resources, production capabilities, consumption patterns, and projected needs are analyzed to identify the problems and policies related to energy. Solutions to the most important problems are suggested, and priority areas for research are defined.
Energy Resources, Production, and Consumption
In Latin America, energy resources are spread inequitably but include 11.6% of the world's crude oil, 6.2% of the world's natural gas, 1.73% of the world's coal, about 20% of global hydroelectric power, and unquantified potential in biomass, solar, wind, geothermal, and nuclear power.
Coal has not been seriously exploited in Latin America, and most of the remaining reserves contain high levels of impurities. About 8% of Latin America's potential hydroelectric reserves have been used. Hydroelectricity is the most important energy resource in the region. Regional expertise to plan, design, and construct hydroelectric power stations should ensure good development prospects. The region has sufficient installed capacity to manufacture some of the machinery and materials required for hydroelectric projects.
Biomass fuel is largely fuelwood that is used for heat in the residential, industrial, and transportation sectors and sugarcane (bagasse) that is used in the sugar industry.
Geothermal resources, which are abundant in Chile, El Salvador, and Mexico, are generally harnessed to generate electricity. There is a serious lack of data on the potential for the development of geothermal energy, but it might play a vital role in some countries.
Nuclear reactors generate some electricity, but all nuclear projects have suffered during the financial crisis, which has prolonged construction and forced a reassessment of the nuclear program. Nuclear energy will not play a significant role in Latin America in the short term.
Solar water heaters are widely used, and solar energy is being substituted for a considerable amount of electricity. A solar-intensity map is being drafted. Windmills are used to pump water, and the production of a wind-velocity map is planned. Some countries are trying to integrate solar and wind energy into their national energy sectors. Research on the transfer and adaptation of technologies is leading slowly to the establishment of commercial centres for the production of equipment and machinery to harness wind and solar energy. These sources will not be a key factor in the production of renewable energy in Latin America in the near future.
Latin American production of commercial energy has increased as a result of the discovery of new oil resources in Mexico in the 1970s. The production of primary energy has remained at fairly stable proportions (oil 70%, gas 15.6%, hydroelectric energy 11.4%, coal 2.9%, and geothermal and nuclear power combined at 0. 1%).
Fuel consumption in the industrial sector is diversified. Coal and coke, biomass, oil derivatives, and electricity are all consumed in significant quantities. This diversification provides opportunities for conservation and substitution. An increase in energy consumption in the transportation sector reflects urbanization, economic expansion, and growth of the middle class. The transportation sector uses 4 of every 7 barrels ( I barrel - 0.16 m³) of oil consumed in the region and relies almost exclusively on this energy source.
The industrial sector is the major consumer of commercial energy, which reflects the growing importance of industry in the economy. Because of increased urbanization, the transportation sector displaced the residential-commercial sector as the major energy consumer, whereas the agricultural sector used little of the energy, which reflects its limited use of technology.
Alcohol is the only major nonhydrocarbon fuel used in the transportation sector, and its use is almost exclusive to Brazil. Energy use in the transportation sector, which has high levels of inefficiency and demand, could be greatly reduced by rationing.
OLADE (Organizacion Latinoamericana de Energia) has made projections of the supply and demand for energy. OLADE estimated that Brazil, Mexico, and the southern and Andean countries will require more than 94% of the region's energy by the end of the century. Because of efficiency gains, supply is expected to increase at an annual rate of 4.8%. High growth in the demand for hydrocarbons in some sectors (for example, transportation) and the lack of proven reserves in Central America make this subregion vulnerable to oil and gas shortages. Other subregions are less vulnerable because they have access to reserves or have policies that reduce their dependency on imported oil, exploit hydroelectric resources, increase energy efficiency, and intensify the use of bioenergy in industry.
Problems and Policies
The region has faced severe economic stress in the past two decades. Opinion is mixed, however, on what effect steeply increasing petroleum prices had in relation to other global factors (for example, general inflation and the structure of the productive sectors).
A direct result of rising costs for petroleum products was an increase in demand for biomass. Attendant problems were the use of animal and plant wastes as cooking fuel instead of fertilizer and declines in forests. Most Latin American families (60-80%) use firewood and charcoal to cook food and to meet domestic energy requirements. The increase in the use of firewood has contributed greatly to environmental degradation. Current levels of deforestation endanger the rural environment, hydrographic conditions, and soils. They also affect hydroelectric potential and agricultural production. The replacement of fuelwood in the short term would require the rapid development of a distribution network for affordable alternative fuels. This task is highly improbable given the immense changes that would be required in the domestic and industrial infrastructure. If governments do not regulate their forestry reserves, most of the continent will be completely deforested in 20-30 years. Often the demand for land (rather than for timber or fuelwood) is the driving force behind deforestation. Some of the wood wasted in these clearing operations could be made into charcoal in portable kilns. Simple, inexpensive wood-burning stoves are available, but rural and low-income families are not convinced of their benefits or of the need to conserve fuel.
The responses of the different countries to these problems have varied from fuelwood enhancement to an emphasis on alternative fuels (for example, hydroelectricity and alcohol). The success of these responses must be qualified. Fuelwood programs are often too small to be significant or are uncoordinated. Alternative fuel programs often lack capital or face other fiscal constraints.
An energy "transition" is defined as an effort by a country to move away from dependence on imported petroleum as its principal energy source. Countries have explored for domestic oil and nationalized energy industries. However, conservation, particularly in the industrial sector, has also had a noticeable impact on this transition. Increased fuel prices were a major conservation incentive. Conservation measures include the replacement and modification of industrial equipment, improved use of the distribution system for electricity to reduce transmission losses, and increased efficiencies in the transportation sector (for example, new tires, diesel engines, and reduced speed limits).
It may be technically possible to replace imported oil with an indigenous energy source, but the economic and social implications are not always known. The transportation sector presents the greatest challenge for substitution because it uses the largest amount of imported oil and also serves all productive enterprises. Brazil's national alcohol program is a substitution success story. The program incorporates a number of social objectives but has social and economic shortcomings. The debate focuses on competing institutional interests, progress toward production goals, and consumer response, but there is little questioning of the rationale for substituting alcohol for gasoline.
Latin America possesses large quantities of renewable energy resources that have been neglected in favour of petroleum products. These resources are distributed in a way that gives every country the potential to develop at least one cost-effective alternative to petroleum.
The absence of planning is a major drawback to the systematic development of hydroelectric energy. It is an economically feasible, nonpolluting, renewable resource that requires low maintenance and has a long life. It could provide jobs and stimulate the economy. However, its potential cannot be reached until all countries have good knowledge of possible sites and development costs. Small hydroelectric power stations, particularly in rural areas, yield significant improvements in the quality of human life.
Geothermal power resembles hydroelectric power in its capital structure, high initial investment, low operating costs, and no fuel requirement. System reliability is high because the low steam pressures necessitate a large number of small generating units. El Salvador produces one-third of its electricity from geothermal steam, and it is one of the few countries that can estimate the generating capacity of its geothermal resources.
Biogas is considered the nonconventional energy source with the greatest development prospects and the best long-term potential for growth. In addition to making contributions to agricultural production, biogas helps reduce deforestation because it can replace firewood. Biogas also reduces environmental problems because it recycles animal and vegetable wastes. Although the value of biogas has been proven in Latin America, many of the plants are idle because they lack support from both private enterprise and the government.
The use of nuclear power is limited because of high capital costs, international restrictions on fuel supply, and dependence on imported technology. Political and emotional opposition exists because of concerns about safety, security, and radioactive waste disposal.
Suggestions for Further Research
Decisions on energy should be made within the context of a well-established energy policy. However, most Latin American countries do not have such a policy. Energy conservation characterized policy efforts in the 1970s. Energy policy must provide for sustainable energy systems and include provisions for the development of energy resources and for energy use. If the energy planning process is to lead to the design of comprehensive and appropriate energy policies, it must be implemented within the context of a multidisciplinary, socioeconomic development plan.
National governments must be familiar with their own energy resources, demands, and technologies before they embark on developing the regional energy sector. There must also be greater interaction between scientists, industrialists, technologists, and policymakers to increase scientific input into energy policymaking. Energy policy is not a substitute for market mechanisms; it is a complement. Policymakers must balance the conflict between long-term planning for energy projects and short-term political objectives.
Oil will continue to be the foremost source of energy in Latin America. Conservation and rationalization programs are only first steps in the transition, not changes in consumption patterns. Reduction of oil imports is the central objective.
Vigorous efforts should be made to exploit biomass resources, and a suitable distribution system for biomass products (especially charcoal) is needed. Massive forestry programs to produce energy, and which involve local communities in their planning and implementation, are required to avoid further deforestation. Properly designed technologies to convert biomass would reduce the economic and environmental costs of cooking and heating for both rural and urban dwellers.
Where sites are available, hydroelectricity should have the highest development priority. Because the main obstacle to hydroelectric development is financial, development should concentrate on small power stations for rural electrification. The interconnection between countries must be accelerated, and hydroelectric development must be coordinated internationally. Latin America also requires realistic transportation schemes that reflect real needs, not simply preferences, and are compatible with available resources.
Most Latin American nations have the technology, resources, and expertise that are required. What is lacking is the capital to support the massive programs needed to develop alternative and renewable energy sources. Latin America has surplus energy. It also has proven capacity to carry out energy projects and to provide capital goods and engineering services for different areas of the energy sector. However, the energy sector in the region continues to depend on external markets for supplies, services, and technologies. National governments should make concerted efforts to change these import-export patterns by promoting intraregional trade.