Ecuador: Environmental, Energy

and Sustainable Development

Update 2014

Presented by

Carlos Arregui

Xavier Flores

Andrey Gallegos

Environmental and Social Conflicts in

Ecuador

Presented by

Carlos Arregui

Ecuador’s Natural Resources

Marketed

– Soil quality

– Water - Hydropower

– Petroleum

– Minerals (gold, copper, silver,

molybdenum, iron, gypsum, zinc,

and lead)

– Gas

– Fisheries

– Timber

– Landscape

Non-Marketed

• Biodiversity

3

Ecuador’s Industries

• Petroleum

• Agriculture (e.g. Bananas, cacao, flowers, and coffee)

• Processed foods (e.g. fruit drinks and canned meats)

• Tourism

• Fishery

• Mining

• Car assembling

• Timber

• Construction – Cement

4

Environmental and Social Conflicts Related to the Natural

Resources Exploitation

• Examples of some environmental and social conflicts:

• Banana fields = Children’s labour

• Shrimp production = Mangrove depletion

• Oil production = Soil and water pollution

• Mining = Water pollution and soil desertification

• Timber = Soil desertification

• Fishery = Over fishing and ecological disruption

• Flower production = Overuse of chemicals

• Biodiversity loss is related to all the activities and industries

5

Sources of the Conflicts

• Illegal activities (timber industry in Esmeraldas, coastal shrimp farming,

shark fin fishing in Galapagos and mining activities)

• Lack of property rights (timber industry in Esmeraldas, mining industry)

• Market demand (overuse of chemicals in the high lands in the flower

industry)

• Administrative decisions to decrease the production costs (Texaco case)

• Diffuse legislation (mining sector before 2009)

• Lack of control (Banana/children’s labour)

• Inefficient bureaucracy

• Corruption

• Population growth and density pressure (The Anthropocene era)

6

Current Government Initiatives to Regulate

Extractives Activities 2006-2014

• Constitution of Ecuador 2008 – Nature is a subject

of rights

• The Wellbeing National Plan (Energy)

• Act 486 (Jul, 2007) – Shark fishing ban

• Act 1391 (Oct, 2008) - Shrimp farms

• Mining Law (Jan, 2009)

• Act 116 (Feb, 2013) – Ban of timber activities

7

Regulation Processes and Conflicts

• The regulation processes provides clear rules (the

boundaries were demarcated)

• The regulation processes generate conflicts between

stakeholders (winners and losers)

• Law enforcement and processes of command and

control demand the use of resources (money, fuel,

technicians, energy)

8

Mining Sector Example

Situation Previous 2009

• Extensive illegal activities

• Environmentally damaging

practices (mercury)

• Non-regulated activities (taxes)

• Worker exploitation

• Overuse of resources (water)

• Lack of property rights

• Small or medium scale mines

Current Situation

• Regulated activities

• Better environmental practices

• Better mining techniques

implementation

• Better situation of workers

rights

• Concession for Mega projects

– open pit mining

9

Should we decide what is the best option?1000 + of small – medium scale

projects5 or 10 mega projects

10

In certain areas there is a possibility to choose

a better option

11

Changing the energy production matrix

• In Ecuador, 96% of energy production, the equivalent of 90% of the total energy

supply, is concentrated in fossil fuels such as crude oil and natural gas, with

renewable sources of energy (such as hydroelectricity and biomass) barely

representing 4% of national energy production.

• In addition, more than 90% of energy imports – which amount to 10% of the total

energy supply – correspond to oil derivatives

• One of the strategies of the Wellbeing National Plan (WNP) seek to increase the

hydropower energy generation of the country through Mega projects such as Coca

Codo Sinclair.

12

Positive changes

• Changes that are considered as positive

(hydroelectric) also generate conflicts

• Every human intervention related to

natural resources creates conflict

• Institutionalism help to generate a better

environment for working and investment

13

Thanks

14

The Ecuadorian Energy Matrix :

Economic, social and political

analysis

-Improving the Ecuadorian Productive Matrix-

“There can be no sustainable development without

sustainable energy development” (Margot Wallstrom 2004)

Presented by

Andrey Gallegos

16

Outline

1. Context

– Economic, Politic and Social Situation

– The Well-being National Plan: Energy

Empirical

2. Energy Policy

– Energy Mix

– Energy Projects

3. Triple-bottom line analysis

05/12/2014

Ecuador: Context

• Population:

– 15,737,878.0

• 71.9% mestizo

• Currency:

– USD

• Urbanization

– 67.5%

• Upper middle-income

country:

– GDP per capita: $10 600

USD (growth 4.9%)

05/12/2014 17

Source: Google Maps (2014), The World Bank (2014).

Ecuador: Context

Share of main products of exportation in Ecuador by 2013

05/12/2014 18

Source: Modified from CEPAL (2014a).

Good Living National Plan: Energy

• 2007 – Rafael Correa

– “Citizen Revolution”

– National Plan of Development (NPD) Good

Living National Plan (GLNP)

– Constitution (2008)

• Productive matrix

• Social improvement, equity and equality.

• Energy Driver of the economy

• Local development

05/12/2014 19

Good Living National Plan: Energy

• Aims:

– Energy sovereignty

– Clean technologies

• Energy efficiency practices

• Renewable energies

“Energy is the lifeblood of the production system, so it is essential to

increase the share of energy obtained from renewable sources,

reinforcing the national non-renewable energy stock and adequately

managing energy demand, in order to achieve long-term sustainability

and minimize risk in the energy supply” (GNLP, 2013)

05/12/2014 20

GDP Growth (%)

• %

05/12/2014 21

4.15%

3.31%

GDP (Current USD) & GDP per capita

05/12/2014 22

2013: $5720.2

Dollarization

2000: $1462

x 2.44

x 1.6

Well-being indicators (Education & Health)

05/12/2014 23

2013: 737,207

2007: 1,509,161

50%

2000: 1.1%

2013: 2.9%

x2.63

Ecuador: Energy Mix

05/12/2014 24

0.00

50000.00

100000.00

150000.00

200000.00

250000.00

1970

1971

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Oil Natural Gas Hydropower Firewood Sugar Cane Biomass

Primary energy production in Ecuador

Source: CEPAL (2014).

West Texas Intermediate $/bbl.

05/12/2014 25

$85.83USD

$39.66USD

Source: EIA Database (2014)

Ecuador: Energy Mix

05/12/2014 26

0

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Electricity Liquified Petroleum Gas Gasoline/Alcohol Kerosene Diesel Oil Fuel Oil

Secondary energy production in Ecuador

Source: CEPAL (2014).

Total final consumption of energy in

Ecuador

05/12/2014 27

Industry Transport ResidentialCommercial andPublic Services

Agriculture/Forestry

Non-specified Non-energy use

Geothermal/Solar 2

Electricity 707 1 484 355 121

Biofuels & Waste 227 4 224

Oil Products 1422 5407 1045 16 117 131 503

0

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ou

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Source: IEA (2014).

Energy subsidies in Ecuador 2012

05/12/2014 28

6,603 million USD every year

Energy Subsidies: 58.5% Total Subsidies (Cash Transfer Programs: BDH)

12.7% of the Current Expenditure

3.19% GDP Ecuador (2.9% Education) Source: Bonilla (2013).

Energy Projects

• Objectives:

– Increase up to a 60% of the installed capacity

of renewable energies.

– Reach 76% of secondary energy sufficiency.

– Expanding the electric capacity to 8 741 MW

by 2017.

05/12/2014 29

Renewable conventional

energy projects

Alternative energy projects

Energy efficiency programs

Energy Projects

05/12/2014 30

Source: MEER (2014d), CONELEC (2014a@), McCaskie (2013), ERGAL (2014), CELEC (2014).

Electrification Master Plan 2013-2014

Energy Efficiency Projects

05/12/2014 31

Electric Policies

• “Renova Plan”

• substitute energy inefficient appliances

• “Inductive Stoves Program”

• Education

• 80 kWh/month 2018 (3.29USD)

• 36 months financing

ISO 50001

• Industrial & Public Sector

• Efficient Energy Practices

• 200 Companies

• 75 experts in EE Systems

• Potential:

• 5964 MWh (31%)

• 6501 tCO2

Source: EcuadorCambia (2014), MEER (2014), MIPRO (2014)

Ecuadorian Energy Policy: Triple-

bottom line analysis

• Economy

– Philosophy of saving and preserving scarce

economic resources

• Transition: NRE Renewable Energies

– Challenges:

• Financing

– Chinese loans oil-exchange contracts

– Reduce consistency of EE Policy.

05/12/2014 32

Ecuadorian Energy Policy: Triple-

bottom line analysis

• Environment

– Extraction of petroleum

• Pay loans Yasuni-ITT

– Payment for environmental services failure

– CO2 emissions equivalent to a billion barrels

– Hydropower plants

• Environmental pressures (downstream)

– Extractivist behavior:

• Infringe collective rights

05/12/2014 33

Ecuadorian Energy Policy: Triple-

bottom line analysis

• Social

– Constitution of 2008

• Rights indigenous, multi-nationalities and all

types of cultures

– Avoid:

• Complex impacts on minority groups

– Chevron-Texaco case in the Ecuadorian Amazon

• Conventional models of governance

– Deplete natural resources in the short-run

05/12/2014 34

Conclusions• Figures evidence an initial change of the energy mix of the country

– Coupled with the welfare improvements.

• Main energy programs:

– Hydropower generation and energy efficiency

• Economic investments

– Infrastructure, institutionalization and poverty reduction

– positioning human capital above financial capital

• Future scenarios – Energy Mix

– Reasonably promising since investing in long-life productive assets

represents a lever for development.

• Challenges – Energy Policy

– Financing, equity, cultural, climate change and conservation.

• Decisions and wills

– Required to promote a transformation in energy production and consumption

05/12/2014 35

3605/12/2014

37

References• Ministerio de Electricidad y Energías Renovables http://www.energia.gob.ec/

• Secretaría del Agua http://www.agua.gob.ec/

• Plan Nacional para el Buen Vivir http://plan.senplades.gob.ec/estrategia7

• Larrea, C 2013, ‘Extractivism, economic diversification and prospects for sustainable development in Ecuador’, Universidad

Andina Simón Bolívar, viewed 16 October 2014,

• <http://repositorio.uasb.edu.ec/handle/10644/3376>.

• La Presidencia http://www.presidencia.gob.ec/la-presidencia/

• The World Bank http://databank.worldbank.org/data/home.aspx

• International Energy Agency http://www.iea.org/

• U.S. Energy Information Administration http://www.eia.gov/

• Asamblea Constituyente 2008, ‘Constitución del Ecuador’, Documentos, Asamblea Nacional del Ecuador, viewed 17 October

2014, <http://www.asambleanacional.gov.ec/documentos/constitucion_de_bolsillo.pdf>.

• Banco Central del Ecuador 2014, ‘Estadisticas macroeconomicas: Sector coyuntural (Macroeconomic statistics: Conyuntural

sector’, Direccion Nacional de Sintesis Macroeconomicas, BCE, viewed 21 October 2014,

<http://www.bce.fin.ec/index.php/nuevas-publicaciones1>.

• Bonilla, MN 2013, ‘Sistemas de proteccion social en America Latina y el Caribe: Ecuador (Social protection systems in Latin

America and the Caribbean: Ecuador)’, CEPAL, viewed 22 October 2014,

<http://repositorio.cepal.org/bitstream/handle/11362/4097/S2013558_es.pdf?sequence=1>.

• Comision Economica para America Latina y El Caribe 2014b, ‘Produccion de Energia (Energy Production)’, CEPALSTAT-Base de

Datos, CEPAL, viewed 20 October 2014, <http://interwp.cepal.org/sisgen/ConsultaIntegrada.asp?idIndicador=2040&idioma=e>.

• Consejo Nacional de Electricidad 2014a, ‘Catálogo de proyectos Hidroeléctricos (Catalogue of hydroelectric projects’, CONELEC,

viewed 19 October 2014, <http://www.conelec.gob.ec/contenido.php?cd=1446&l=1>.

• Consejo Nacional de Electricidad 2013c, ‘Electrification master plan 2013-2022: Executive summary’, CONELEC, viewed 19

October 2014, <http://www.conelec.gob.ec/contenido.php?cd=10329&l=1>.

• Eras, AA 2012, ‘Estudio energético del sistema eléctrico en Ecuador. Impulso a la energía solar fotovoltaica (Energy study of the

electrical system in Ecuador. Boosting Solar PV)’, Master Thesis, Universidad Politecnica de Madrid.

05/12/2014

The exploitation of natural

resources: a way forward?

Presented by

Xavier Flores

• This analysis aims to examine the possible

effects of the exploitation of natural

resources in the light of the Ecuadorian

constitutional framework and the structural

conditions of the country.

05/12/2014 39

• Ecuador adopted a new Constitution in

2008. It establishes two key concepts: the

Well-Being (“el Buen Vivir”) and the

protection of the “rights of nature”.

05/12/2014 40

• What does the “Buen Vivir” implies? What

does the “rights of nature” implies? Is

there only one alternative to achieve those

goals? The discussion between

sustainable development and no

exploitation of natural resources.

05/12/2014 41

• The curse of the resources: is it

necessary, or is it subject to conditions?

Exceptions around the world: Botswana in

Africa, Bhutan in Asia, Norway in Europe,

Chile in America, and Australia in

Oceania.

05/12/2014 42

In order to the curse of the resources to exist,

some conditions should be met:

1. The misallocation of revenue deriving from

the exploitation of natural resources.

2. The increase in rent-seeking behaviour.

3. The level of investment in human capital.

4. The level of institutional quality.

5. The initial level of Human Development

dimensions.

05/12/2014 43

• The allocation of revenue deriving from the

exploitation of natural resources: where

does the money goes?

05/12/2014 44

• The increase in rent-seeking behaviour:

who benefits?

05/12/2014 45

• The level of investment in human capital:

the expenditure on education.

05/12/2014 46

• The level of institutional quality: constraint

on government powers, absence of

corruption, open government, fundamental

rights, order and security, regulatory

enforcement, civil justice, criminal justice.

05/12/2014 47

• The initial level of Human development

dimensions: how do we fare?

05/12/2014 48

• The case of the exploitation of the Yasuni:

the National Assembly resolution.

05/12/2014 49

Conclusion

• With adequate institutional arrangements,

the exploitation of natural resources may

be a way forward.

05/12/2014 50