Presentation on theme: "Energy Security in Latin America"— Presentation transcript:
1Energy Security in Latin America Thoughts on the Brazilian experience
2Dr. Edmilson Moutinho dos Santos Associated Professor Instituto de Eletrotécnica e Energia Universidade de Sao Paulo, Brasil.Dr. Dos Santos is engineer and economist from the University of São Paulo, Brazil. He is an expert on Energy Economics. He regularly consults for Brazilian government agencies, energy companies, and NGOs, and is the founder of the Brazil Energy Forum, a nonprofit Web site devoted to the open discussion of developments in the field of energy in Brazil and the world. Currently, he is a visiting professor at the University of Oklahoma's College of Earth and Energy, where he is focusing on the development of natural gas markets in Latin America.
3Initial Thoughts on Energy Security How to define energy security? The elusiveness of a conceptSome traditional definitionsBroader view of the conceptHow to improve energy security?
4Initial Thoughts How to define Energy Security? What is Energy Security?According to A.F. Alhajji (*): Energy Security is a vague concept. There are more than 15 different definitions in the literature.Empty Concept:Used to sustain bad energy policies.Real Issue: Leading to sound energy policiesOpinions divided:March 23, 2017
5Initial Thoughts How to define Energy Security? What is Energy Security?Historically, Energy Security discussion was limited to:Petroleum – The most tradable energyThe Consuming countries worried w/ energy supplyIncreasingly, Energy Security also affects:Other energies – Particularly NG and LNGThe Producing countries worried w/ market accessMarch 23, 2017
6Initial Thoughts How to define Energy Security? Energy Security X Energy CrisisHigher energy insecurity increases the risk of an energy crisis ……. But it is not necessarily an energy crisis.Energy Security or Insecurity=Energy Independence or InterdependenceMarch 23, 2017
7Initial Thoughts How to define Energy Security? Examples:Chile experiences a NG crisis (import cuts).Brazil experienced a domestic hydroelectric shortageBut just a growing NG insecurity with Bolivia.March 23, 2017
8Initial Thoughts How to define Energy Security? Energy Security X Energy NationalismReal or potential energy crisis easily becomes a political issue – Politicians having to take difficult decisions regarding a complex and not very clear issue.Political statements addressing Energy Imports and proposing Energy self-sufficiency …Just another face of ENERGY NACIONALISM?March 23, 2017
9Initial Thoughts on Energy Security How to define energy security? The elusiveness of a conceptSome traditional definitionsBroader view of the conceptHow to improve energy security?
10Initial Thoughts How to define Energy Security? Some tradition definitions – Narrow Perspective:At a narrow perspective, energy security means having the energy resources available to protect the national security apparatus …Fuel the nation`s military machine (Mainly consumers, but also producers – Access to final products – NOT A PROBLEM);Protect energy facilities against terrorism or war (Consumers and producers – GROWING WORRIES REGARDING BOLIVIA);March 23, 2017
11Initial Thoughts How to define Energy Security? Some tradition definitions – Narrow Perspective:Prevent from sudden, severe disruptions in the flow of energy to the country (Mainly consumers, but also producers considering the export channels – OUR PROBLEM).Avoiding abrupt energy price increase and volatility (Concerns for consumers – OUR PROBLEM) or price collapses (Concern for producers), which may creates economic hardships.March 23, 2017
12Initial Thoughts How to define Energy Security? An economic definition of Energy Security:“Reliable and adequate supply of energy at reasonable price”.OK for:Adequate = Uninterrupted supply (Almost OK from Bolivia, but operating with no reserve);Reliable = Low perception of risk supply (Not OK from Bolivia).March 23, 2017
13Initial Thoughts How to define Energy Security? An economic definition of Energy Security:BUT:What is a reasonable price? Particularly for NG in an emerging market?Consumers X Producers - Different points of view;Too high price – A threat for consumers;Too low price – A threat for producers … Which leads to insecurity to consumers as well.March 23, 2017
14Initial Thoughts on Energy Security How to define energy security? The elusiveness of a conceptSome traditional definitionsBroader view of the conceptHow to improve energy security?
15Initial Thoughts How to define Energy Security? Energy Security embrasses different dimensions:TECHNOLOGYSocial SecurityForeign PolicyDIMENSIONSome technologies require specific forms of energy.The final uses consideration.Energy & DevelopmentReduction of social tensions.Social equality and wealth distribution.Subsidies and long-term economic inefficiencies.Diplomatic and trade.Foreign investments and contracts.Important part of national power.March 23, 2017
16Initial Thoughts How to define Energy Security? Energy Security embrasses different dimensions:Fears of oil shortage have always led Brazil to cooperate with its neighboring countries.In the 1970s oil crisis – The construction of Itaipu.In the 1990s Iraqi Wars – The construction of Gasbol.Interdependence=More Energy Security.March 23, 2017
17Initial Thoughts How to define Energy Security? Energy Security embrasses different dimensions:Today :High dependence upon Bolivian gas = Energy insecurityGas dependence has limited Brazil`s Foreign Policy towards Bolivia in other important issues and principles.Brazilian interests abroad were confiscated threatening Brazil`s investment outflow.Bolivia`s partnerships with Argentina, Venezuela and now Iran do not help to increase Brazil`s perception of energy security.Difficult choice: Bolivia / Natural Gas = USA / Ethanol AllianceMarch 23, 2017
18Initial Thoughts How to define Energy Security? Energy Security embrasses different dimensions:Middle-and-high urban class felt threatened and betrayed by Bolivia … And not protected by President Lula.Unilateral price increase = Rupture of long-term contracts.Reduction of incomes for gas consumers – Mainly industries already struggling to keep global competitiveness.Reduced competitiveness for gas-fired power generation - Need for electricity subsidies.Subsidies leading to long-term economic inefficiencies.March 23, 2017
19Initial Thoughts How to define Energy Security? The Environmental and Social dimension:A secure source of energy must be Reliable, Affordable, Environmentally and Socially sound.ENERGY SECURITYXENVIRONMENTAL SECURITYMarch 23, 2017
20Initial Thoughts How to define Energy Security? Secure THE FINAL USE of Energy:Discussing the energy security should not be only a question of guaranteeing the access to the energy resources, but also of making the political decisions about which resources to use, and how.Looking at the perspective of the Final Uses: Energy Security also requires the access to the best available technologies.March 23, 2017
21Initial Thoughts on Energy Security How to define energy security? The elusiveness of a conceptSome traditional definitionsBroader view of the conceptHow to improve energy security?
22Initial Thoughts How to improve Energy Security? Market approach X Government intervention:Market forces are always more cost-effective (economically, politically) to solve crises?How much government intervention to increase competition in the energy markets? More competitiveness always leads to more security?Market forces and private relations can survive without political back-up?March 23, 2017
23Initial Thoughts How to improve Energy Security? Reviewing the concept of INDEPENDENCE:The Brazilian National Energy Plan 2030 is a nationalistic project aiming to reduce Brazil`s energy dependence.President Lula already stated the goal of achieving natural gas self-sufficiency.Those policies may actually reduce Brazil`s energy options and compromise Energy Security in the long term.March 23, 2017
24Initial Thoughts How to improve Energy Security? Revisiting the concept of INTERDEPENDENCE:How to re-create more sustainable and trustable cooperation between producers and consumers in the South Cone?Reducing both sides opportunisms is essential.Maybe focusing on Energy Security not as a policy of its own, but rather as part of a stronger National Security and wider Foreign Policy.March 23, 2017
25Initial Thoughts How to improve Energy Security? THE PROMOTION OF OVERALL DEVELOPMENT:The greatest source of National Security is the ability to use energy to promote …A free society with high level of basic morality and entrepreneurship;Produce wealth (with more equality and productivity) leading to more prosperity;Spillover such prosperity towards allies, partners and friends;Sharing social and geopolitical power.March 23, 2017
26Initial Thoughts How to improve Energy Security? Other angles of Energy SecurityCONTINOUS ADAPTATION TO NEW CIRCUSTANCES :The pillars of a long-term Energy Trade are …Continuous negotiation regarding the split of energy rents (mineral and technology rents) with suppliers;The sharing efforts to adapt to more efficient sources;The constant willingness to adapt to new circumstances, and especially to use technology to control those circumstances. March 23, 2017
27Initial Thoughts How to improve Energy Security? How to approach CHILE and BRAZIL inEnergy Security issues:A Bi-national Nuclear Project?Brazil`s current knowledge and technology;Chile`s eventual immediate need for nuclear power generation;Projecting the CHILBRAS Reactor (small-and-middle size) to compete in the international market.March 23, 2017