The 21st Century will belong to Latin America

“The economics of renewables are clear”

It’s been four years, and I still remember the first time I met Ramon. With his crooked smile, a torn hat, and a firm handshake, I felt welcomed into his community from our first encounter. I met him in Pedro Carbo, a farming town just outside of Guayaquil, Ecuador, where I lived for nine months.  The sun was hot and had dried up a large portion of the vegetation. Even if their homes had been flooded the previous season, they still prayed for precipitation…

Over the previous three years, Ramon told me, adverse weather patterns were affecting the production of their crops. With 90% of the town living off the land for their subsistence livelihoods, the change in rainfall and temperature negatively disrupted the quality of crops and consequently, their very existence. But despite their impoverished circumstances, Ramon greeted me with a carton of mangos that he’d grown on his land. I lived amongst them, and each evening during the season, Ramon would show up on my doorstep with a smile and a dozen freshly picked mangos. But the people of Pedro Carbo are nothing if not resilient. Often, with just a kerosene lamp for their light, they hoped that the future would be brighter than their dimly lit nights.

Ecuador, along with other countries in Latin America, is particularly vulnerable to the effects of climate change given its geographic location, population distribution and reliance on fragile natural resources for their economic wellbeing. Strategies for poverty alleviation must consider the impacts of the environment in order to truly be sustainable. As these strategies are considered, access to clean energy comes to the forefront. While Latin America’s electrification rate exceeds 93%, there are still an estimated 30 million people without electricity, the majority of these in rural areas. Lack of access to electricity is an immense herculean to economic development in the region.

Jarnail Singh, a researcher from the Teri institute, argues that “energy is the missing MDG (millennium development goal). It is the underlying development goal that fuels so much other development. It has so many co-benefits.”

Furthermore, studies have shown that access to energy can allow people to read, work and interact at a fraction of the cost, over time, in comparison to using kerosene lamps. Additional benefits include health benefits – a non-polluting lamp versus kerosene improves education, since the children can study later, as well as livelihoods since businesses can open later, opening up more opportunities to earn money. Innovative financing models are also arising, such as microcredit schemes to purchase or rent solar lamps at comparable rates to the cost of kerosene lamps.  New technologies are emerging and becoming more widespread, enabling remote communities to access energy.

“The 21st Century will belong to Latin America,” hopes Chilean President Sebastián Piñera. While 2012’s global economic growth averaged 2.2%, Latin America grew 3.1%, and a thriving middle class will increase energy demand in the region. Indubitably, the region is not homogenous; Chile for example was the first country in South America to join the OECD (Organisation for Economic Co-operation and Development) list and is often ranked as Latin America’s best country for business.  Still, the region remains the most economically unequal in the world.

Dependency upon oil and gas is commonplace in the Latin American energy mix. In addition to fossil fuels, Ecuador depends on hydro to meet its energy demands, and power outages are frequent due to decreased hydro supply during the dry season.  A growing middle class in Latin America will drive demand to seek new energy sources. In a form of ‘leapfrog development’, many are turning to renewable resources, developing them just as fast, or sometimes faster than countries that are far more developed. As prices are decreasing, the economics of renewable energy are becoming clear.  Long-term economic development is on the forefront of the political agenda and the region is not without abundant sources of potential power – i.e. solar and wind.  However, higher electricity prices for conventional energy will also drive the demand for developing renewable energy.

For several reasons, inducing political and economic, the advance of renewable energy is expected to be most predominant in Chile, Mexico, Brazil and the Dominican Republic. Brazil’s President Dilma Rousseff argues that renewable energy should drive a significant amount of the country’s economic development.

Mexico, for example, boosts high solar radiation, and currently has nearly 40MW of solar PV installed, which may seem small compared to the almost 300MW installed in Canada in 2011 alone, but three years ago the country had less than 1MW in installed capacity.

While there is remarkable potential, the path to providing energy access to remote communities and diversifying the energy mix to embrace more renewable sources will not be without its difficulties. Even with political incentives in place, large bureaucracies have led to inefficiencies in the system and access to financing remains a significant challenge.

I often think of Pedro Carbo. The community’s hospitality, resilience and sprit are enduring.  They long for clean energy sources; not simply for progress, but so that their own future generations can prosper. I stand with Piñera’s hopes and belief that this century will truly belong to Latin America.  And I often dream that Ramon’s bright light of hope continues to shine.

By Michelle Stern

Michelle Stern is a Research Director with both the CBJ and IRJ and holds a B.Comm from McGill University and a MSc. in Environment and Development from Trinity College, Dublin. Both between and during her studies, she spent two years volunteering and working with the public, private, and not-for-profit sectors in Ecuador, Rwanda, Uganda and South Africa.