June 2021 – @alvaroriosroca – In the middle of the pandemic, during 2020, 3 very relevant events took place. The European Union launched a strategy to boost the hydrogen industry (blue and green) with a gigantic public expenditure of billions of euros in the coming decades in order to generate and market clean technology to the rest of the planet. It is not only climate change that interests them but also to stop depending on fossil resources that they do not have and that impact them negatively.
China has declared itself to be carbon neutral by 2060, almost in line with the Paris declaration where many countries have declared that they will be carbon neutral by 2050. China is and will be by far the largest manufacturer of solar, wind and of course storage batteries to be used in vehicles and backup batteries for intermittent energies.
China will also be one of the main global suppliers of electrical equipment to support distribution networks in increasingly distributed systems, electric power stations and others. In other words, it will be the new scale manufacturer of new clean energy technologies. Obviously, in order to manufacture all of the above, it will seek intensive mining throughout the planet and manufacturing in its territory using coal, oil and natural gas.
Finally, there is the arrival of the Democrats in the US government. It is not yet clear where they are aiming their artillery in energy matters. As good democrats they are green, but we will see how the future trade with China will turn out for them in energy matters. Will they stop fracking the abundant shales and import much of China’s equipment?
Very recently the International Energy Agency (IEA, dominated by the OECD countries) published a report stating that there is no need for investment in the search for new fossil fuels and no need to develop new oil and natural gas fields. This would imply that economic agents would limit themselves to producing existing assets and immediately switch their investments to new energies. If they were to be heeded, where would oil prices end up soon?
The once mighty oil and gas companies are being pushed to the wall by their shareholders. They are forcing companies like Shell, Total, BP (European) to stop investing in oil and gas projects. And now shareholders of US-based companies such as Chevron and Exxon are joining them.
The large investment funds (withdrawn from developed countries) do not lend a single cent for new fossil energy projects, not even with the cleanest natural gas. The most incomprehensible and paradoxical, for example, is what is happening in Norway, which does not lend from its funds, but the country continues to grant areas, exploring and exploiting gas and oil. It has never been like that before.
The energy matrix of Latin America is quite clean per capita compared to the countries of North America, Asia (China) and Europe, where they continue to burn large amounts of cheap coal. Our base is hydroelectricity backed by abundant natural gas. However, organizations and companies developing renewable energy (solar, wind) we do not believe should be asking for entry preferences or subsidies so that they can be dispatched. Let them come in if they are going to compete and lower costs.
Finally we wonder what we are doing from Mexico to Argentina as a region to face this energy technology battle? Will we be able to submit some technology to research and development? Will the famous lithium triangle develop science, technology, laboratories, and large storage battery manufacturing centers for example? Rather, I believe we will replace oil and gas exports with needed mining exports.
What will Venezuela and Mexico do with their huge oil and gas resources still under the ground? Will PDVSA and Pemex be able to do it alone? And Argentina with its large Vaca Muerta resources? And will Bolivia be able to generate a new exploratory cycle to supply its domestic market for the next 20 years until it can turn to new alternative energies? There are more questions about the other countries, but there is no space.
*Former Minister of Hydrocarbons of Bolivia and current Managing Partner of Gas Energy Latin America.