Post -Copenhagen Thoughts

Since the 15th United Nations Conference on Climate Change, better known as the Copenhagen Summit, was concluded in December 2009, the results are being weighed in many parts of the world, including Chile. The expectations generated by this meeting, to which top world leaders concurred from developed countries as well as emerging nations, were very high. Governments and civil societies discussed, in the Danish capital, how to detain the effects of the growing anthropogenic climate change -that is, the effects caused by human beings -, generally produced by carbon dioxide emissions (CO2) or, more technically speaking, greenhouse gas emissions. This was absolutely necessary because the problem is real and the world must take action.

In general, the results of the Copenhagen summit left some questions open for our Group. This is due to the fact that clear signals were lacking, for both the short and long term, for the private sector. More analysis is necessary in regard to the real implications of this process for the business world, especially in the establishment of a global framework of action.
However, today there is a worldwide consensus for taking the actions necessary for keeping the increase in global temperature under 2°C by 2020. The goal is ambitious and requires that all nations in the world do their part.

Chile stood out once again. Our country voluntarily assumed a goal in front of the 190 nations meeting in Copenhagen. Thus, the Minister of Environment, Ana Lya Uriarte, announced that Chile is committed to reaching the year 2020 with a "significant deviation of up to 20% from the baseline of its greenhouse gas emissions". The country has been gaining a growing awareness about the matter, which has been reflected in successful public-private efforts that have an effect upon the subject, such as the initiatives that have been realized in the framework of Chile’s Energy Efficiency Program, initiated in 2005 and which in 2008 became the responsibility of the National Energy Commission.

To meet the goal of emission reduction proposed by the government means that the role that the generation of electric energy plays in said contribution needs to be approached now. We are a country that aspires to full development for the same date upon which it has assumed the goal of gas emission reductions: 2020. We want to grow and, at the same time, we want to do it in a sustainable manner. To achieve a rhythm of growth that will lead us to the standards of living of developed countries necessarily implies an increase in emissions. This is, in a significant proportion, the result of the use of fossil fuels for the generation of electricity necessary for laying the foundations for growth.

According to studies from the Universidad de Chile, the demand for electricity will grow 3.2 times in the next two decades, going from the current 7,500 MW to almost 22,000 MW, taking only the Central Interconnected System into consideration. The desirable development of non-conventional renewable energy and greater energy efficiency shall be necessary conditions, but not enough for technical and economic reasons, to supply this demand and curb the increase in greenhouse gas emissions.

According to the National Energy Commission’s Work Plan, the electricity sector currently generates 26% of the country’s total emissions. Towards 2020 this figure will grow to 35% of the total. If you add the fact that Chile’s population is practically no longer growing, the emissions per capita can only increase. The future facing Chile in this regard is a matter for concern, to say the least.

For this reason it is fundamental as a country to promote those clean energies that Chile has at hand now. As recently expressed by the Minister of Energy, Marcelo Tokman, in an opinion column, not to do so would imply “making our energy production more expensive, but, even worse, it would put our competiveness at risk”. The impact which the restrictions to international trade may have linked to the so-called carbon footprint is a reason for concern for a country with a purely exporting vocation such as ours.

Until now there have been two alternatives that have captured the attention of the debate in Chile. One is the development of nuclear power and the other is taking advantage of the country’s hydroelectric potential. Neither alternative generates greenhouse gas emissions into the atmosphere. I will paraphrase that stated by the Minister, in the sense that we can’t refuse alternatives such as nuclear energy for ideological reasons and then not take advantage of the abundant renewable natural resources such as water.

This said, it is important to point out that nuclear power could not constitute an operational contribution until nearly 2030. The studies that have been done on this subject until now, such as that carried out by the Universidad Adolfo Ibáñez entrusted by the National Energy Commission, state that the country could not have nuclear plants in operation before the year 2027. For this to occur, it will be necessary at least to a) fully study the technological and economical viability of its incorporation into the energy matrix; b) have specialized human capital nonexistent in Chile today; c) ensure the high investments and financing required by this type of plant; and d) to have the pertinent regulations that guarantee its safety in the long term. Here, there is undoubtedly a potential that could be exploited, especially in northern Chile, by innovative businessmen with a long term vision.

But, dear readers, we must soon continue making use of this great gift with which our territory has been blessed, a gift the ex-President Patricio Aylwin once referred to -in a speech at the Universidad de Concepción in 1993 – as our “renewable oil”; that is, our abundant water falls. There are other countries that have already taken decisions in this regard, such as Brazil, where there is more than 7,000 MW of hydroelectric energy in its civil works plan until 2014.

And returning to Chile, it has been calculated that there is 20,000 MW of potential hydric energy present in the entire country, most of which is found in the south, which can be developed more economically and be in operation as soon as the year 2017, on time to contribute to our goals assumed in Copenhagen. By doing this, we would take a big step towards satisfying the country’s needs in a sustainable manner.

Fortunately, Chile already has all the skills required. We have the experience and successful proven technologies. We have the professional talents and world class technicians. We have companies capable of undertaking these investments with serenity and vigor and, most importantly, we have –in public and private sectors- a leading international financial credibility in the region, allowing financing these important projects, and at costs of developed economies at 20 and 30 years. Among these projects, are those such as Hidroaysén, which would take advantage of one third of the 9,000 MW of electric power generation that exists in the eleventh region, and would be added to the 5,000 MW of successful hydroelectric operation already existing in the country. The above, undoubtedly, would be implemented under the most demanding and modern environmental standards.

When this project enters into full operation, it would be the equivalent to the production of seven thermoelectric plants and would avoid greenhouse gas emissions into the atmosphere similar to 25% of the total gas currently emitted by the country. Moreover, it would allow annual savings of approximately US$ 700 million in fossil fuels. Another important operational matter, although internal, is that, due to the regime of rainfall in the eleventh region, Hidroaysén would generate more energy in those seasons when the central zone is exposed to drier weather.

Today it is in our country’s hands to continue being a leader in social protection and cohesion, as well as in economic growth, by realizing an important contribution to the well-being of coming generations who will be proud of our leadership in the effort to curb the threat of climatic change.

Jorge Rosenblut
Chairman of the Board
Endesa Chile