Comparing Latin American Energy Policies on Climate Change

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November 2014 Alison Kirsch Brown University

Text of Comparing Latin American Energy Policies on Climate Change

  • Comparing Latin American Energy Policies on Climate Change:

    Toward an Ambitious and Equitable International Climate Agreement

    November 2014

    Alison Kirsch Brown University

  • INTRODUCTION Since the passage of the Kyoto Pro-tocol in 1997, the regional GDP of Latin America and the Caribbean has grown by 62%.1 In 2011, emissions from the region made up 9% of the worlds total.2 The energy sector plays an increasingly important role in Latin American greenhouse gas emissions: since 1990, emissions from land use, land-use change and forestry (LULUCF) have decreased by 44%, while energy emissions in-creased by 77%. National policymak-ing in the energy sector can lock in infrastructure, garner trust in low-carbon development, and substanti-ate international climate policy rheto-ric. Thus, a critical and comparative examination of energy policies is es-sential as parties to the United Na-tions Framework Convention on Cli-mate Change (UNFCCC) prepare to pledge contributions to the global ef-fort to mitigate runaway climate change. They will do so in their In-tended Nationally Determined Con-tributions (INDCs), an outline of spe-cific mitigation goals, projects and policies, due in early 2015.3 This re-port analyzes climate change polices in the energy sectors of Brazil, the Dominican Republic, Mexico, Nica-ragua, and Peru, in order to identify successes, obstacles, and opportuni-ties for advancement.






    Dominican Republic







    1.863 1.488
















  • BRAZIL The natural gas boom and discovery of new oil reserves un-derneath layers of salt (pre-salt) have transformed the energy sector of Brazil, the worlds sixth largest emitter of greenhouse gases. Brazil aims to keep its national energy matrix clean while exploring profitable oil reserves for export.4 Written into law is a voluntary emission reduction target of 36.1-38.9% be-low business-as-usual projections by 2020,5 as well as a goal of 16% renewable electricity (excluding large hydropower) by the same year.6 Additionally, Brazil has policies to encourage distributed power generation and construct new large hydroe-lectric projects. According to the Climate Equity Reference Calculator, by 2020 Brazils voluntary commitments will yield only half of the emission reductions that make up its fair share of an equitable international climate agreement.7 DOMINICAN REPUBLIC In 2012, the Dominican Republic became the first developing country to make an unconditional pledge to reduce its green-house gas emissions to 25% below 2010 levels by 2030,8 even while another plan aims to boost GDP growth by 140%.9 The country gets 90% of its energy from imported fossil fuels, but has a legislated goal of 25% clean energy by 2025.10 The Do-minican Republic is slowly implementing a range of policies that incentivize clean and efficient energy infrastructures, such as net metering systems.11 In the quest to decrease depend-ence on imported energy, new hydrocarbon projects are un-derway, which swamp recent concessions given to renewable energy installations. 2

  • MEXICO Mexicos progressive national climate legislation of 2012 sets a renewable electricity target of 25% by 2024, as well as condi-tional emission reduction targets of 30% below baseline levels by 2020, and 50% below 2000 levels by 2050.12 This green-house gas reduction goal would account for 72% of Mexicos fair share of emission reductions by 2020. Aligned with the de-sire for energy security, the Mexican economy is highly de-pendent on oil exports, which is incongruous with its many cli-mate change and energy policies. Even though Mexico does have a carbon tax, it puts a very low price on carbon and ex-empts natural gas.13 Moreover, Mexicos 2014 energy reform package sets the country up for a major, high-carbon expan-sion of oil and gas exploration.14 NICARAGUA Nicaraguas location makes geothermal energy and other re-newables potentially successful, though imported fossil fuels make up 44% of the countrys energy matrix.15 The country has no emission reduction targets, but rather an extremely ambitious renewable energy goal of 90% by 2020.16 Renewa-ble energy incentives have benefitted a few large hydroelectric and wind projects, while fossil fuel projects are developed sim-ultaneously. Efficiency measures have not received much at-tention in Nicaraguan policy, where 74% of electricity is lost before reaching the consumer. PERU Both Perus presidency of the UNFCCC Conference of the Parties in December 2014, as well as a recent bundle of laws that lessened environmental regulations, have called interna-tional attention to Perus climate change policies.17 Peru has no economy-wide emission reduction target, but rather targets in distinct sectors. Its low renewable electricity target of 5% by 201218 has not been updated, though its voluntary target under the UNFCCC calls for 40% renewable energy consumption by 2021.19 An energy efficiency plan through 201820 is in force but in need of support from new regulations. Yet where policy and 3

  • implementation are lagging, Peru has found the political will to convene multiple bodies and reports to plan for climate change within various short- and long-term scenarios. COMPARATIVE POLICY ANALYSIS The countries in this report vary significantly in the geographic, social, and political contexts from which they approach climate change policy. Deforestation and land use change have un-derstandably been the focus of the recent Latin American and Caribbean approach to greenhouse gas mitigation, especially considering the regions bountiful hydropower resources that have allowed national governments to boast clean energy ma-trices.

    However, the fossil fuel exports of a country cannot be ignored, especially in the cases of Brazil and Mexico, whose individual greenhouse gas emission reduction targets will be more than overridden by increased oil exportation to petrole-um-hungry countries. In these two countries, the largest of those analyzed in this report, climate change rhetoric within the energy sector has not overcome the lure of fossil fuels in the quest for foreign investment. In Brazil, the focus on LULUCF policy avoids dealing with the inconsistencies between profiting from pre-salt oil exploration while reducing in-country emis-sions. Mexicos energy reforms pose the same contradiction in relation to its progressive General Law on Climate Change. Even though the oil will not be burned within the borders of

    these countries, emissions generated by fracking, extracting, and transport-ing the oil will be significant. Within na-tional politics, the agendas of the ad-ministrations in power drive these fossil fuel-based energy reforms more so than they do other public policies, such as general climate change legislation. This suggests to the public that imple-menting policies to achieve green-house gas emission reductions is not only separate from energy issues, but also of lower priority. 4

  • The two smallest countries analyzed in this report, the Dominican Republic and Nicaragua, have some of the most ambitious renewable energy and greenhouse gas emission reduction targets of the group, yet are also the most dependent on imported energy primarily Venezuelan oil. Thus, in-creased energy independence will also come at a financial benefit to these countries by lessening their debt to Venezuela. Incentives for renewable energy development are in force, though the overall energy mix will only become cleaner if the pace of renewable development exceeds increasing energy demand. The Dominican Republic has a more robust array of policies thus far, while Nicaraguas renewable energy devel-opment consists mainly of large geothermal and hydroelectric projects. Though these projects reduce emissions, they rely on existing inefficient transmis-sion structures and engender questionable ecological con-sequences. These two smaller countries have high renewable energy capacities and the op-portunity in growth to leapfrog much of the typical carbon-intensive development. Oth-erwise, these two countries move toward merely a cleaner version of the status quo, in-stead of achieving the more fundamental changes needed for an adequate global re-sponse to climate change.

    Peru emerges from this analysis as an interesting ex-ample of a country in between the Brazil/Mexico and Nicara-gua/Dominican Republic groupings. It is in the middle in terms of size, GDP, and GHG emissions, and produces three-quarters of its own energy. These conditions, and the public eye on its leadership at COP20 in Lima, could theoretically provide the country leeway for ambitious progress in climate change mitigation in the energy sector. Peru has produced a great amount of research and plans on hypothetical responses 5

  • to climate change. Yet it is the laggard of the group in terms of legislated economy-wide emission reductions, as well as with renewable energy goals. Even considering the $3.4 billion in-vested in clean energy in Peru from 2006 to 2013,21 and the resultant CDM projects, Peru cannot let clean energy policies fall to the wayside or worse, be pushed aside in favor of hy-drocarbon exploitation that is profitable in the short-term. Per-haps it is with these energy objectives in mind that Peru has been hesitant to set and update binding GHG reduction and/or clean energy targets; this approach, however, could be con-sidered more realistic than that of Nicaragua.

    All of the countries in this report demonstrate some lev-el of discordance between energy development projects