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View the document Energy policy in Latin America: a break with the past

Energy policy in Latin America: a break with the past

Miguel S. Wionczek



Research within the "Programa de Energeticos" has addressed the past, present, and future energy problems of Mexico. As well, it has examined Latin American and global energy issues. Worldwide contacts provide a global perspective on the energy problems of developing countries. Latin America's seemingly poor endowment of oil, gas, coal, and uranium reflects its technological shortcomings rather than a lack of resources. A clear understanding of Latin America's present and medium-term energy potential is vital if a meaningful energy strategy is to be formulated. The management and uses of renewable energy only reflect the prevailing style of development; they are not instruments for change. Latin Americans cannot expect to formulate logical energy policies if they have virtually no understanding of either the extent of their own resources or contemporary developments in the global energy sector. The transition from hydrocarbons to other energy sources is likely to take more than a century, not 25-30 years.


Latin American energy policy is based on assumptions that are no longer valid. Nations continue to be classified as "oil rich" and "oil poor," and frantic pleas are made to begin substituting renewable resources for hydrocarbons.

Energy reserves are nothing more than a convenient term to express what is known about a country's energy supply. A reserve is a broad approximation. It is the amount of oil that experts suspect is available for exploitation at prevailing prices with the existing technology and within the legal systems in force. Nontechnical factors (for example, the tendency of hydrocarbon producers to adopt conservative attitudes toward reserves and to manipulate the data on reserves and resources for the purposes of energy marketing) add additional cause for caution. This pessimistic approach is reinforced by nationalistic attitudes that view energy problems and solutions as country-specific.

The oil industry has thoroughly explored and developed only a limited number of areas of the world. Latin America, Africa, and Southeast Asia contain almost 50% of the world's potential hydrocarbon reserves, but exploration in these areas has been minimal. The willingness of Latin America to trust data produced and provided by multinational oil companies and by government agencies in industrialized countries represents an almost insurmountable obstacle to energy planning and policymaking. However, exploration in oil-rich Latin American nations offers evidence that there is much more oil and natural gas.

In 1982, data presented at an international meeting suggested that Latin America was an area that produced almost no natural gas. However, a survey of the reserves and production of natural gas in Latin America by the Programa de Energeticos strongly suggested that resources in 10 major countries in Latin America were many times the figures circulated among energy experts. Large reserves of natural gas have been discovered in Latin America, and there is also a clear trend toward substituting natural gas for oil and other conventional energy sources. Because many countries also have oil reserves that were not suspected earlier, the role of nonconventional and renewable energy sources should be reexamined.

Close connections and communications between energy researchers and energy policymakers must be developed. It is difficult to organize energy research because of overspecialization, financial and institutional constraints, and a lack of clear priorities. These factors result in energy research that is random, follows ideological preferences, and is undertaken by small, like-minded groups of people. This type of research may be marginally useful at the country level, but the combined findings are unlikely to be useful for regional energy planning.

Latin America's unsatisfactory planning efforts are made worse by a lack of input from R&D projects. Policymakers take little account of R&D, and this is reflected in weak support for research activities. Few countries in the region have the necessary expertise at the national level to conduct, finance, diffuse, and use energy research.

Latin America's patterns of energy consumption are a legacy from the industrial world and are reinforced by the operations of the international oil industry. If it is assumed (it has not been proven) that Latin Americans are poor in nonrenewable energy, a greater use of renewable sources would not necessarily result in a new style of development that would lead to more equitable social and economic conditions. There is no intrinsic link between patterns of energy use and styles of development that would guarantee this outcome. Energy sources are neutral. It is the structure of the economy and society that determines who can consume the available energy. The social structure must be changed to improve both the supply and the use of energy.

Three lessons can be drawn from the analysis of the links between energy problems and equitable development. First, the conventional view is that present energy resources are mismatched with their current uses and future energy needs. However, it is a fallacy that something urgent must be done to diversify energy supplies (with a particular emphasis on renewable sources). Second, there is a need to make explicit the link between energy and socioeconomic development. Third, the lack of cooperation between researchers and policymakers weakens both research and policy.

Research designs reflect antiquated notions of the energy situation in Latin America. Little research is being done on the economic and social costs and benefits of newly proposed energy strategies. Latin America shows little, if any, spirit of innovation in the design of its energy policies; therefore, the policies become nothing more than a response to outside financial pressures.

Suggestions for Further Research

The issues that require urgent attention from researchers and policymakers in Latin America are

· The true extent of major energy resources in the region and in individual countries,

· The external constraints on the development of these resources (particularly the financial and other policies of the World Bank, the International Monetary Fund, and other international agencies dominated by industrialized countries),

· Detailed outlines, supported by analytic and technical exercises, of energy strategies for the region and the subregions that take account of available energy resources and worldwide technological advances,

· Studies of the social costs and benefits of alternative energy mixes at the national level (based on the assumptions that Latin America is not about to run out of hydrocarbons and that the transition from oil to as yet unidentified energy sources will last much longer than previously assumed),

· Real prospects for regional energy cooperation,

· Links, if any, between patterns of energy use and development style,

· The nature of the obstacles to meaningful dialogue between energy researchers and policymakers and the reasons for the sad and counterproductive state of affairs,

· Problems arising from the introduction of nuclear energy into Latin America (particularly the deceit and fraud practiced by producers of nuclear energy equipment and by the "nuclear lobbies"),

· The conditions that limit the use of "exotic" sources of renewable energy in subsistence agriculture,

· Ways to consolidate a "critical mass" of energy researchers at the national and subregional levels, and

· The limitations imposed on energy research in Latin America by the international economic crisis.