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Dr. Edmilson Moutinho dos SantosAssociate Professor - [email protected]
Energy Security in Latin America
Thoughts on the Brazilian experience
Dr. Edmilson Moutinho dos SantosAssociate Professor - [email protected]
Dr. Edmilson Moutinho dos SantosAssociated Professor Instituto de Eletrotécnica e EnergiaUniversidade 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.
Dr. Edmilson Moutinho dos SantosAssociate Professor - [email protected]
Initial Thoughts on Energy SecurityHow to define energy security?
• The elusiveness of a concept• Some traditional definitions• Broader view of the concept• How to improve energy security?
Initial ThoughtsHow to define Energy Security?
April 10, 20234
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.
Opinions divided:
Real Issue:
Leading to sound energy policies
Empty Concept:Used to
sustain bad energy
policies.
Initial ThoughtsHow to define Energy Security?
April 10, 20235
What is Energy Security?
Historically, Energy Security discussion was limited to:
Petroleum – The most tradable energyThe Consuming countries worried w/ energy supply
Increasingly, Energy Security also affects:
Other energies – Particularly NG and LNGThe Producing countries worried w/ market access
Initial ThoughtsHow to define Energy Security?
April 10, 20236
Energy Security X Energy Crisis
Higher energy insecurity increases the risk of an energy crisis … …. But it is not necessarily an energy crisis.
Energy Security or Insecurity
=Energy Independence or Interdependence
Initial ThoughtsHow to define Energy Security?
April 10, 20237
Examples: Brazil experienced a
domestic hydroelectric
shortage
But just a growing NG
insecurity with Bolivia.
Chile experiences a
NG crisis (import cuts).
Initial ThoughtsHow to define Energy Security?
April 10, 20238
Energy Security X Energy Nationalism
Real 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?
Dr. Edmilson Moutinho dos SantosAssociate Professor - [email protected]
Initial Thoughts on Energy SecurityHow to define energy security?
• The elusiveness of a concept• Some traditional definitions• Broader view of the concept• How to improve energy security?
Initial ThoughtsHow to define Energy Security?
April 10, 202310
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);
Initial ThoughtsHow to define Energy Security?
April 10, 202311
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.
Initial ThoughtsHow to define Energy Security?
April 10, 202312
“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).
An economic definition of Energy Security:
Initial ThoughtsHow to define Energy Security?
April 10, 202313
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.
An economic definition of Energy Security:
Dr. Edmilson Moutinho dos SantosAssociate Professor - [email protected]
Initial Thoughts on Energy SecurityHow to define energy security?
• The elusiveness of a concept• Some traditional definitions• Broader view of the concept• How to improve energy security?
April 10, 202315
Reduction of social tensions.
Social equality and wealth distribution.
Subsidies and long-term economic inefficiencies.
Social Security TECHNOLOGY
Some technologies require specific forms
of energy.
The final uses consideration.
Energy & Development
Diplomatic and trade.
Foreign investments and contracts.
Important part of national power.
Foreign PolicyDIMENSION
Initial ThoughtsHow to define Energy Security?
Energy Security embrasses different dimensions:
April 10, 202316
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.
Initial ThoughtsHow to define Energy Security?
Energy Security embrasses different dimensions:
April 10, 202317
Gas 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 Alliance
Initial ThoughtsHow to define Energy Security?
Energy Security embrasses different dimensions: Today :
High dependence upon Bolivian gas = Energy insecurity
April 10, 202318
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.
Initial ThoughtsHow 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.
April 10, 202319
Initial ThoughtsHow to define Energy Security?
The Environmental and Social dimension:
A secure source of energy must be Reliable, Affordable, Environmentally and Socially sound.
ENERGY SECURITYX
ENVIRONMENTAL SECURITY
Initial ThoughtsHow to define Energy Security?
April 10, 202320
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.
Dr. Edmilson Moutinho dos SantosAssociate Professor - [email protected]
Initial Thoughts on Energy SecurityHow to define energy security?
• The elusiveness of a concept• Some traditional definitions• Broader view of the concept• How to improve energy security?
Initial ThoughtsHow to improve Energy Security?
April 10, 202322
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?
April 10, 202323
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.
Initial ThoughtsHow to improve Energy Security?
April 10, 202324
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.
Initial ThoughtsHow to improve Energy Security?
April 10, 202325
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.
Initial ThoughtsHow to improve Energy Security?
April 10, 202326
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.
Initial ThoughtsHow to improve Energy Security?
April 10, 202327
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.
How to approach CHILE and BRAZIL inEnergy Security issues:
Initial ThoughtsHow to improve Energy Security?
