Page 5 - LatAmOil Week 45 2022

LatAmOil COMMENTARY LatAmOil

Politically driven shift government, no matter how well organised,
The Colombian president made those state- to inform all of its citizens about plans for the
ments while presenting a 10-point plan for complete transformation of the energy sector,
addressing the climate crisis. and Colombia faces obstacles that other states
According to a report from Argus Media, do not with respect to organisation, as well as
Petro’s plan provides for the energy transition to logistics, infrastructure, local hostility toward
be carried out by the public sector, in a planned, central authority and geography.
multi-lateral and global manner. To this end, it Likewise, six months is probably not enough
calls for international and multilateral financial for any government to assess all of its citizens’
institutions (IFIs and MFIs) to quit funding fos- needs with respect to job retraining, quali-
sil fuel-related projects. ty-of-life improvements and energy access. And
It also tasks the International Monetary once again, Colombia will face obstacles on this
Fund (IMF) with implementing a debt swap front that other states do not.
programme that would facilitate investment In the meantime, the Petro administration
in energy transition projects – in mitigation of may also face pushback within its own ranks,
the consequences and in adoption of new tech- as some of its own members are reconsider- The Petro
nologies. Additionally, it urges the World Trade ing the wisdom of the pledge to halt new oil
Organisation (WTO) to revise its rules to bring and gas development. Finance Minister Jose administration
them into line with COP emissions agreements Antonio Ocampo has said, for example, that is likely to face
rather than making COP emissions agreements Bogota might change its stance on awarding
comply with WTO rules. new contracts for hydrocarbon exploration and pushback within
development.
Call for rapid change Additionally, the Autonomous Fiscal Rule its own ranks, as
As of press time, it was not immediately clear Committee (CARF), which oversees public
what kind of reactions the Colombian leader’s spending, recently said in a statement that Pet- income from oil
remarks had evoked closer to home. However, ro’s proposed policy changes would have neg- and gas projects
at least one of Petro’s close political allies seems ative effects, as income from upstream oil and
to agree that now is the time for the presidential gas projects is crucial to Colombia’s trade bal- is crucial to
administration to push the country to give up ance and financial stability. “The nation’s high
fossil fuels to the greatest extent possible and as dependence on these transfers means that a pol- Colombia’s trade
quickly as possible. icy of suspending the activity or disincentivising
“We must overcome our own history of being investment in the sector represents an elevated balance and
strongly dependent on an economy of hydrocar- risk for the fiscal and exchange rate sustainability financial stability
bons and carbon,” said Minister of Mines and of the country, with adverse effects on develop-
Energy Irene Vélez, who was also in attendance ment and economic growth,” the statement said.
at COP 27. “The planning of a just energy tran- Under these circumstances, there are reasons
sition is fundamental for Colombia because it to doubt that Petro’s grand pronouncements at
implies a transition towards a productive econ- COP27 will lead to sweeping policy changes in
omy, which has renewable energy as a pillar.” Colombia in the short term. The South Ameri-
Vélez was quoted by El Tiempo as saying that can country may succeed in launching the series
Colombia’s strategy hinged on the concept of a of public dialogues mentioned by Vélez, but it
working in stages toward a just energy transi- probably will not be able to bring that campaign
tion. To achieve this aim, she said, the govern- to an effective finish by the end of the year or
ment will launch weekly dialogues throughout carry out the next step – the assessment – in six
the country to inform the public, starting imme- months. Consequently, by mid-2023, it is not
diately and wrapping up by the end of the year. likely to be much closer to starting the energy
It will then embark upon a six-month process of transition than it is now. ™
assessing issues such as the need for retraining
workers, improving quality of life in commu-
nities that depend on fossil fuel extraction and
expanding energy access, she stated.
These measures prioritise the social impact
of the energy transition and ensure that local
communities are able to participate in the pro-
cess of adopting new technologies, she added.

Unrealistic hopes
Once again, given Petro’s past pronouncements
on fossil fuels (and his general left-leaning politi-
cal sympathies), his call for an immediate switch
to a planned and public-sector driven switch to
renewable energy that leaves no room for oil and
gas is hardly surprising.
Even so, it is worth saying that his plan is not
exactly realistic. Likewise, the timelines laid out
by his energy minister are equally fantastic. Six Petro’s delegation unveiled a Just Energy Transition
weeks is probably not enough for any country’s programme at COP27 (Image: Twitter/@IreneVelezT)

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