An ambitious energy interconnection project dreamt up by Colombia’s current leader would see renewable energy producers in South America sell power to the United States and Canada.
Speaking at a session on Leadership for Latin America at the World Economic Forum in Davos, Switzerland, Colombia’s leftist president, Gustavo Petro, called for the region to “build an American electricity grid from Patagonia to Alaska.”
Petro, a former guerrilla fighter with the radical left-wing M-19 revolutionary movement, will most likely have a difficult time convincing his North American counterparts in the US, Canada and the First World islands of the Caribbean that such an ambitious project is necessary as the far wealthier and economically stable half of the Americas is already covered by multiple, wide-area synchronous grids but with only a few High Voltage Direct Current (HVDC) interconnectors linking them. These lines are an electric power transmission system that uses direct currents for electric power transmission.
Further complicating matters for Petro is his own political background. As a former militant, his personal history as an anti-American radical will make it difficult for any administration in Washington to give much credence to Petro’s Pan-American ambitions.
The so-called ‘Pan-American Highway’ system, which already connects most of the two continents, has never been completed across the “Darien Gap” on the Panama-Colombia border, a missing link of 106 km. Extremely rugged terrain and environmental concerns have been used to explain the inability to complete the missing segment and there are no current plans to complete the project.
The political consensus in favor of road construction to connect the two American continents collapsed after an initial attempt failed in the early 1970s. The plan was revived in 1992, only to be halted by serious environmental concerns over the large areas of wetlands that would have been damaged as a result of the construction. Further complicating matters came in the form of opposition from various indigenous tribes.
Additionally, most experts agree that the spread of foot and mouth disease from South America, to points in North America, was halted because of the difficulty in crossing the gap.
Ieda Gomes, a senior visiting fellow at the Oxford Institute for Energy Studies in London told NE Global that besides the huge investment needed to build such a grid, challenges associated with different regulatory frameworks and the comprehensive international treaties that are required could scuttle the project before it gets off the ground. “The region has been talking about energy integration for decades, but progress has been very slow,” said Gomez.
Huge renewable energy capacity
South America possesses huge potential for renewable energy, with Brazil leading the way, Gomez said, adding that 85 per cent of the country’s electricity is generated from renewable energy. Chile, Latin America’s most politically stable and successful economy for the last three decades, has devised a hydrogen-based energy strategy for the coming years.
Brazil, Argentina, Chile and Uruguay also have vast resources both in solar and wind energy.
But Gomez noted that energy integration has not progressed apart from a few localized inter-regional pipelines (for example, Bolivia-Brazil-Argentina, Argentina-Chile-Uruguay) and transmission lines connecting Brazil, Uruguay and Paraguay. Funding challenges, political, regulatory, commercial and technical issues have prevented further integration, she said.
Latin American countries try to woo foreign investment through renewables
According to the World Economic Forum, with its rich natural resources and emergence from many recent pandemic constraints, some South American nations are bullish about the region’s potential to become a global leader in providing clean energy.
“Regional specificities, such as the abundance of hydropower and solar energy, convey unique advantages – particularly if the Americas achieve greater electrical grid connectivity,” the World Economic Forum said in a press release.
Brazil’s new Finance Minister, Fernando Haddad, recently argued that the countries of South America can transform the mostly Southern Hemisphere continent of 435 million people into a center of clean energy production.
Haddad believes South America can provide vast opportunities for foreign direct investment and promote entrepreneurship through renewable energy. “All of this will depend on regional integration.”
The World Economic Forum was less enthusiastic about Haddad’s assessment, saying that better coordination amongst the South American nations is first needed to facilitate improved trade, integrate the continent’s financial markets and improve infrastructural connections in energy, transport and other sectors before major investment projects can be considered.
Opening up South America to the global markets is key
Global market access will be critical for many South and Central American countries. Costa Rica’s President Rodrigo Chaves, a widely respected economist who worked at the World Bank, has argued that his country, one the wealthiest in Central America, has done very well by including itself in supply chains that connect it to both its northern and southern neighbors.
“Costa Rica has actively promoted industries such as medical supplies, aerospace, and back-office services. The country’s leadership sees both bilateral and multilateral trade agreements as necessary for the ongoing growth of such sectors,” Chaves said.
In the Dominican Republic – a nation of 11 million located on the eastern half of the Caribbean island of Hispanola, which it shares with its Francophone neighbor Haiti, as well as being the site where Christopher Colombus first made landfall in the Americas in 1492 – medium-sized businesses represents 70% of the economy. For such a small country, with little-to-no large-scale industry, major foreign investment projects would be needed to foster economic sectors that currently do not exist.
Guillermo Lasso, Ecuador’s center-right president, said fighting corruption and keeping public spending under tabs will be the only way for his country, and the rest of South America, to free up resources that could then be used to invest in social affairs and large public works projects.
Colombia’s perpetual struggle to tackle the narcotics trade, and the enduring violence associated with the country’s still-powerful drug cartels, will continue to hinder its development, as well as its ability to attract legitimate outside investors.
Petro, Colombia’s leftist president, has suggested that his country could potentially offer new agricultural opportunities to rural communities by offering to subsidize cocaine-producing regions to convert to the production of cocoa, with the help of multinational corporations such as Nestle.
According to Petro, many wealthy First World countries in Europe and North America can help Colombia reduce narcotics-related violence by promoting the decriminalization of some drugs and increasing education-based prevention efforts.