How can Latin America handle its energy supply challenges?
The Latin America and Caribbean region must optimize its energy supply options nationally and across the region in order to support the needs of its growing economies and increasing population, according to a World Energy Council report to be presented today in Bogotá at an event organized by the Colombian member committee of the WEC.
The report, “World Energy Scenarios: Composing energy futures to 2050,” finds that meeting the Latin America and Caribbean (LAC) region’s growth in energy demand will be a significant challenge.
The report assesses two contrasting policy scenarios.
- In the Jazz scenario, there is greater consumer focus on achieving energy access, affordability, and quality of supply with the use of best-available energy sources. Under this scenario, by 2050, the LAC region’s economy will be 4.5 times larger than in 2010 (in terms of trillion U.S. $ GDP in 2010 figures), while total primary energy supply will grow by 2.3 times.
- In the Symphony scenario, there is voter consensus on driving environmental sustainability and energy security through corresponding practices and policies. In this scenario, by 2050, the LAC regional economy will grow less significantly, by nearly 3.8 times, while total primary energy supply will grow by nearly 1.8 times.
“Our study finds that even in the best case, the growth of energy supply in the region will still be insufficient to meet the rising energy demand associated with economic growth,” says Professor Karl Rose, senior director of the WEC study, who presents the findings today at the WEC Colombia event.
Meeting the future energy demand in electricity alone will require between U.S. $1.33 trillion to U.S. $1.36 trillion of cumulative investment from 2010 to 2050.
The study also finds that in Latin America, large hydropower will continue to dominate the energy mix until 2050, and a major challenge will be in building the necessary infrastructure to meet future demand.
Globally, the study sees a doubling of energy demand by 2050, driven by non-OECD growth. To meet this demand, total global primary energy supply is set to increase by between 27 percent and 61 percent.
According to Rose, optimizing the region’s energy market structure will be crucial to solving the gap in demand and supply.
“Latin America and Caribbean region have a fragmented energy market,” he says. “This fragmentation has been hindering the effective use of energy resources nationally and across the region, and has compromised the competitiveness of national energy markets.”
The World Energy Council will conduct a more detailed study on Latin America with analysis of select countries. The impact of water as a scarce resource and the role of large-scale hydropower in the region are amongst the themes that will be examined in depth. It will release the results during the WEC’s annual Executive Assembly, to be held this October in Cartagena, Colombia.
“The WEC’s Jazz and Symphony scenarios show that despite variations in regional priorities and solutions, the common global message is how choosing one policy solution or the other can have significant impact on the energy sector,” said José Antonio Vargas Lleras, the World Energy Council’s vice-chair for the LAC region, and who comes from Colombia. “It’s clear that concerted urgent action is needed now from governments and industry to meet our common challenges.”
Carbon dioxide removal revenues worth £2bn a year by 2030
Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission.
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.
The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.
The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture.
It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.
The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020.
Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.
The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.
While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.
Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.
Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse.
"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.
“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.”
The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets.
Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.
Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."
McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:
- Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
- Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
- Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
- Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
- The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere