- Email: [email protected]
A comparison of Latin American energy-related CO2 emissions from 1970 to 2001
ARTICLE IN PRESS
Energy Policy 35 (2007) 586–596 www.elsevier.com/locate/enpol
A comparison of Latin American energy-related CO2 emissions from 1970 to 2001 E. Kuntsi-Reunanen Finland Futures Research Centre, Turku School of Economics and Business Administration, Rehtorinpellonkatu 3, 20500 Turku, Finland Available online 28 February 2006
Abstract This study analyses CO2 emission flows and energy use in the Latin American countries of Argentina, Brazil, Colombia, Mexico and Venezuela from the years 1971–2001. Results for the selected Latin American countries reveal that the changes in CO2 intensities were quite similar in these countries. However, the energy use varied slightly, indicating differences in the energy utilization in the analysed countries. Examining the changes on energy use suggests that there were no significant changes in any of these countries’ energy utilization during that period, but the energy markets are growing quite rapidly in all of these Latin American countries. r 2006 Elsevier Ltd. All rights reserved. Keywords: CO2 intensity; Energy use; Latin America
1. Introduction The effective Kyoto Protocol does not have binding commitments for developing countries to reduce their greenhouse gas (GHG) emissions (UNFCCC, 1997). But, there is increasing pressure for developing countries to adopt some kind of target (UNFCCC, 1992). While their emissions presently constitute only a minor part of global GHG emissions, it is expected that within a number of decades, their emissions will outgrow those of the industrialized countries. Annual emissions of developing countries are growing so rapidly that even if industrialized countries meet their Kyoto targets, annual global emissions are projected to increase (IEA, 2002). Under the current climate negotiations, one of the key policy issues in the evolution of the Framework Convention on Climate Change (FCCC) is the involvement of developing countries (non-Annex I Parties). A key issue is what kind of potential future targets might be set for developing countries, and how these would be decided (see Halsnæs and Olhoff, 2005; Winkler et al., 2002). In this context, various options for climate targets, such as fixed, dynamic, non-binding and dual targets (Philibert Tel.: +358 2 4814338; fax: +358 2 4814630.
E-mail address: eeva.kuntsi@tukkk.fi. 0301-4215/$ - see front matter r 2006 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2006.01.003
and Pershing, 2001) have been introduced to meet the ultimate objective of the climate change convention by all countries. In addition, many approaches (Berk and den Elzen, 2001; den Elzen, 2002; den Elzen et al., 2005; Metz et al., 2002) have been proposed to distribute commitments with respect to climate mitigation over different countries (see Kuntsi-Reunanen and Luukkanen, 2006). As most developing countries are not currently in a position to make absolute emission reductions, the most immediate and realistic challenge is lowering the CO2 intensity of the economies. Thus, rather than measuring the absolute amount of a country’s emissions, the CO2 intensity indicator provides a more realistic and practical framework for participation by expressing the emissions than an economy generates per unit of output. This is an effective way to benchmark national progress on climate change. Carbon dioxide emission intensity of the economy describes as to how many tons of CO2 emissions are emitted per dollar of economic output of the nation measured as GDP (CO2/GDP). The changes in emission intensity are caused by technological changes in energy and production technology (e.g. changes in energy efficiency), changes in the shares of fuels used for energy (e.g. shift from coal to gas) and changes in the economic production structure (e.g. shift towards service economy). Decreasing
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
energy intensity indicates that less CO2 emissions are produced for the same economic output. In general, as Sun (2003) points out, the trend of energy intensity has risen in most developing countries due to increased industrialization, urbanization, a greater demand for the development of transport, infrastructure and the modernization of life styles. This study will carry out a comparative analysis of CO2 emissions and intensity developments for the Latin American countries of Argentina, Brazil, Colombia, Mexico and Venezuela. In addition, country level development of CO2 emissions and energy use will be analysed in these countries. The article deals with the internal dynamics of the development of energy sector in the light of CO2 emissions. The purpose of this paper is to evaluate the macroeconomic performances of the selected Latin American countries’ energy systems and therefore to contribute to the energy and climate policy discussion and the potential post-Kyoto commitment of these countries. The comparative information regarding the development of CO2 intensity effects in a country should help inform national energy policy makers of the relative weaknesses and possible areas of strategic emphasis in their planning processes. This kind of research is needed because as in many developing countries, Latin American energy markets are also growing. 2. Data and background information The data used for the analysis were taken from IEA statistics (IEA, 2003a, b, c). The GDP data have been compiled for individual countries at market prices in local currency and annual rates. The data have been scaled up or down to the price levels of 1995 and then converted to US dollars using the yearly average 1995 purchasing power parities. All the presented data are macroeconomic, country level data. The sectoral approach contains total CO2 emissions from fuel combustion as calculated using the IPCC sectoral approach. Emissions calculated using this approach include emissions, only when the fuel is
587
actually combusted. The reason to use only CO2 emissions in the calculations is the availability and reliability of the long-term time series. The main source of the 1971–2001 population data is from the OECD (IEA, 2003a). In Table 1, some basic information of the economic development, energy use and related CO2 emissions of the analysed countries in comparison with USA and Germany have been collected. In relation to the emissions reductions required by the UNFCCC and the common but differentiated responsibilities of the different countries (see UNFCCC, 1992; UNFCCC, 1997), it is important to compare the per capita emissions. Table 1 shows the per capita emissions in the selected Latin American countries compared to the USA and Germany as it gives a general view of the historical responsibility of the inhabitants of different countries from the equity point of view. In Figs. 1 and 2, the CO2 emissions from fossil-fuel combust and CO2 emissions per capita in the different Latin American countries from 1971 to 2001 are compared. In Fig. 1, an increasing trend in the CO2 emissions from the 1970s can be seen in all of the selected Latin American countries. The growth was most notable in Mexico and Brazil in contrast to Argentina and Colombia where the growth was quite moderate with a slight decrease in the last few years. Fig. 2 illustrates CO2 emissions per capita in the same countries. Emissions per capita have increased most notably in Mexico where the population growth has been the main factor in increasing emissions. From the 1970s until the end of 1990s, a slight increase can be noted in Brazil and Colombia, whereas in Argentina and Venezuela, clear trend cannot be seen as the emissions have been fluctuated the whole research period. In Fig. 3, changes in the CO2 intensity of the economies are compared. Analysing changes in a country’s intensities over time shows whether a country is getting less or more carbon intensive. Fig. 3 shows that the CO2 emission intensities fluctuated the whole research period without a clear trend in all the selected Latin American countries, with the exception of Mexico where the CO2 emission intensity increased in the
Table 1 Basic information of economics, energy use and related CO2 emissions of Latin American countries
Argentina Brazil Colombia Mexico Venezuela USA Germany
GDP71a
GDP01a
CO2/GDP71b
CO2/GDP01b
TPES71c
TPES01c
CO2 per capita 71d
CO2 per capita 01d
238 365 93 265 74 3583 989
386 1140 278 807 130 8978 1922
0.35 0.25 0.28 0.37 0.70 1.20 1.00
0.30 0.27 0.20 0.44 1.00 0.63 0.44
34 70 14 46 47 1593 308
58 185 29 152 82 2281 351
3.4 1.0 1.2 1.9 4.7 20.7 12.6
3.5 1.8 1.3 3.6 5.2 19.8 10.3
Source: Adapted from IEA (2003a). a Billions of 1995 US dollars. b Tons of CO2 per 1000 US dollars. c Million tons of oil equivalent (Mtoe). d Tons.
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
588
CO2 Emissions in Latin American countries 400 350 300 Argentina
Mton
250
Brazil Colombia
200
Mexico Venezuela
150 100 50 0 1971
1976
1981
1986
1991
1996
2001
Fig. 1. CO2 emissions in the Latin American countries from 1971 to 2001 (Source: IEA, 2003a).
CO2 Emissions per Capita in Latin America 7 6
ton CO2 /capita
5
Argentina Brazil
4
Colombia 3
Mexico Venezuela
2 1 0 1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
Fig. 2. Changes in the CO2 emissions per capita of the economies of the Latin American countries from 1971 to 2001 (Source: IEA, 2003a).
1970s and 1980s and then turned to decrease. Most countries—Argentina, Brazil, Mexico and Colombia— have fairly flat trajectories, maintaining a slightly increasing and slightly decreasing intensity over time, whereas Venezuela’s intensity has fluctuated rather dramatically over the whole research period. Overall, Venezuela’s CO2 emission intensity has increased from the 1970s. Low intensities in Argentina and Brazil are partly due to the wide-spread use of carbon-free hydroelectric power. In 1990s, Argentina has decreased the level of CO2 intensity effects, indicating improved efficiency in the production system. In Brazil, the total emissions of road transport have increased in the 1990s considerably due to the increase of transport volume. Also the industrial sector has increased the emissions in the 1990s, leading to increasing CO2 intensity (IEA, 2003a, c).
Fig. 3 points out that Venezuela has much higher intensities than other countries. The overall level of intensity may be an important factor in determining the ability of countries to alter historical trends. For example, improving from a high intensity level may require less effort and cost than improving from low carbon intensity. This and other factors such as differences in resource endowments, geography, and economic structures should also be taken account when trying to make meaningful cross-country comparisons. What is most important, however, is not international comparisons but assessing a country’s performance relative to itself, taking into account both absolute intensity levels and changes over time. This can be done by observing the trends across the 1971–2001 period for each country.
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
589
CO2 Emissions in Latin American countries
1.2
ton CO2 /kUSD
1
Argentina
0.8
Brazil Colombia
0.6
Mexico Venezuela 0.4
0.2
0
1971
1976
1981
1986
1991
1996
2001
Fig. 3. Changes in the CO2 intensity of the economies of Latin American countries from 1971 to 2001 (Source: IEA, 2003a).
CO2 emissions in Argentina 140 120
Mton
100 80 60 40 20 0 1971
1976
1981
1986
1991
1996
2001
Fig. 4. CO2 emissions in Argentina from 1971 to 2001 (Source: IEA, 2003a).
3. Country level analyses of CO2 emissions and energy use This section analyses the internal causes of the changes in the CO2 emissions and the energy use effects in the selected Latin American countries. Special attention is focused on the question of whether the changes in CO2 emissions were caused by fuel switching, or changes in energy efficiency as it is important question (Figs 4 and 5). In Argentina’s economy, there has been slight fuel switching towards less carbon intensive energy production system during the whole research period. In 1990s Argentina has decreased the level of both energy and CO2 intensity effects, indicating improved efficiency in the production system. (Luukkanen and Kaivo-oja, 2002). The slow growth of emissions in Argentina has been mainly due to moderate energy demand growth and an increased use of gas and renewables, which has replaced
some oil use. The very fast economic growth of Argentina in the 1990s led to energy use growth in industry and in the road transport, but the overall energy emission intensity decreased. The country has large potential for the development of renewable energy, but it has not been utilized so far to any large extent. Hydropower has been used to quite large extent in electricity production, but the increase in thermal power production has exceeded in the late 1990s (IEA, 2003a, c; Luukkanen et al., 2005) (Figs. 6 and 7). In the late 1970s and early 1980s, the CO2 emissions in Brazil decreased slightly, indicating that a fuel switch towards less carbon intensive production took place (IEA, 2003a, c). The country has witnessed a more intensive use of electric power in relation with industrial modernization and with the development of highly energy-intensive industries such as plants producing aluminium, ferroalloys,
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
590
Energy use in Argentina 60 50 Renewable Hydro
Mtoe
40
Nuclear
30
Oil Natural gas
20
Coal
10 0 1971
1980
1990
2001
Fig. 5. Primary energy use in Argentina from 1971 to 2001 (Source: IEA, 2003a, c).
CO2 emissions in Brazil 350 300
Mton
250 200 150 100 50 0 1971
1976
1981
1986
1991
1996
2001
Fig. 6. CO2 emissions in Brazil from 1971 to 2001 (Source: IEA, 2003a).
soda-chlorine, pulp and paper, and iron and steel. Important structural changes occurred; firstly, hydroelectricity obtained important shares of national energy market and, secondly, the use of firewood, charcoal and sugar-cane bagasse (the so-called non-commercial fuels) declined at a very fast rate. According to Focacci (2005), these important factors can help to explain the decreasing trend in emissions intensity. However, in the late 1980s, CO2 emissions started to increase indicating that there has been a constant fuel switching towards more carbon-intensive production. Emissions grew considerably in the 1990s due to the increased use of oil and coal. CO2 emissions from the use of coal in Brazil could be reduced through investments in cleaner technologies. The ethanol substitution for gasoline is one way of reducing the CO2 emissions. It is estimated that the annual reduction of emissions due to ethanol use and bagasse substitution for fuel oil is about 10 million
tons of carbon, which is approximately 15% of the total emissions (Luukkanen and Kaivo-oja, 2002). Although 70% increase in renewables from 1971 to 2001 was not able to lower emissions. Brazil’s energy crisis resulted from a severe drought—important in a country that generates 93% of its energy from hydroelectric sources—and consistent under-investment in the energy sector throughout the 1990s. Today, country’s emission intensity is still growing due to the increasing industrial sector and road transport volume (IEA, 2003a, c; Luukkanen et al., 2005) (Figs. 8 and 9). The indicators of energy use show that there has not been considerable fuel switching in Mexico after 1970s. Oil is very important to the Mexican economy and the petroleum sector has played a central role in both the economic and political development of the country. Since the 1970s, industrialization has increased the demand for oil and electricity. Although a large part of oil production
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
591
Energy use in Brazil 200 180 160
Renewable
140
Hydro
Mtoe
120
Nuclear
100
Oil
80
Natural gas
60
Coal
40 20 0 1971
1980
1990
2001
Fig. 7. Primary energy use in Brazil from 1971 to 2001 (Source: IEA, 2003a, c).
CO2 emissions in Mexico
400 350 300
Mton
250 200 150 100 50 0 1971
1976
1981
1986
1991
1996
2001
Fig. 8. CO2 emissions in Mexico from 1971 to 2001 (Source: IEA, 2003a).
Energy use in Mexico 160 140 Renewable
120
Hydro
Mtoe
100
Nuclear 80
Oil
60
Natural gas
40
Coal
20 0 1971
1980
1990
2001
Fig. 9. Primary energy use in Mexico from 1971 to 2001 (Source: IEA, 2003a, b).
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
592
CO2 emissions in Venezuela 160 140 120
Mton
100 80 60 40 20 0 1971
1976
1981
1986
1991
1996
2001
Fig. 10. CO2 emissions in Venezuela from 1971 to 2001 (Source: IEA, 2003a).
Energy use in Venezuela
60 50 Renewable Hydro
Mtoe
40
Nuclear 30
Oil Natural gas
20
Coal
10 0 1971
1980
1990
2001
Fig. 11. Primary energy use in Venezuela from 1971 to 2001 (Source: IEA, 2003a, c).
was exported, domestic consumption also increased (Boyd and Ibarrara´n, 2002). According to Aguayo and Gallagher (2005), Mexico is one of the more energy-intensive economies in the world. In accordance with United Nations Development Program, when measured in energy use per dollar in purchasing power parity terms for comparison purposes, Mexico’s energy intensity is 8.7 MJ/US$, whereas United States, Japan and China consume approximately 10 MJ/US$ (Aguayo and Gallagher, 2005). The increase of Mexican CO2 emissions in the 1970s and 1980s indicates industrialization of the economy and increasing importance of heavy forms of production in the economy took place. However, in the 1990s the increasing trend of CO2 emissions started to slow down, indicating that the production structure in Mexican economy has become lighter (Luukkanen and Kaivo-oja, 2002).
Over all, the CO2 emissions have steadily increased in Mexico due to the increased use of oil and gas. In the 1990s the main increases in emissions came from the electricity production sector and to some extent from transport sector, whereas the emissions from industrial sectors decreased in the 1990s (Luukkanen et al., 2005). The country is currently the 15th largest emitter of GHGs in the world, and by far, the largest source of such emissions in Latin America (Boyd and Ibarrara´n, 2002). The utilization of abundant domestic resources may easily lead to inefficiencies, and effective policy planning is needed in order to also take into account the environmental aspects of energy sector development (IEA, 2003a, b; Luukkanen et al., 2005) (Figs. 10 and 11). Per capita energy consumption and energy intensity in Venezuela are highly relative to its neighbours. The country heavily subsidizes most energy sources, and primary energy use is estimated by the IEA to be about
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
593
CO2 emissions in Colombia 70 60
Mton
50 40 30 20 10 0 1971
1976
1981
1986
1991
1996
2001
Fig. 12. CO2 emissions in Colombia from 1971 to 2001 (Source: IEA, 2003a).
Energy use in Colombia 30 25 Renewable
Mtoe
20
Hydro Nuclear
15
Oil Natural gas
10
Coal 5 0 1971
1980
1990
2001
Fig. 13. Primary energy use in Colombia from 1971 to 2001 (Source: IEA, 2003a, c).
25% higher than it would be without such subsidies. Prices for gasoline, natural gas and electricity in particular are well below world market prices (IEA, 2003a, c). Country’s energy sector is dominated by its upstream petroleum industry. About three-quarters of Venezuela’s annual total energy production is oil, which accounts for about 80% of Venezuela’s export revenues and about onethird of the GDP. Despite the country’s dominated petroleum industry, Venezuela has diverse and abundant energy resources. The total volume of proven energy reserves in last decade was 112.5 billion barrels of oil equivalent (BOE), of which natural gas represented 28% of the total, coal 8%, and hydroenergy 0.2%. The technical potential for renewable energies, including solar, wind, biomass, geothermal, and mini-hydro, has been conservatively estimated at more than 4 million BOE per day. Venezuelans are also the highest per capita users of electricity in Latin America. About 75% of country’s electricity generation comes from hydropower. This is the
country’s largest use of renewable sources. Further hydropower plant construction is anticipated in the next few years (IEA, 2003a, c; Luukkanen et al., 2005). Since the 1970s, the CO2 emissions in Venezuela have increased with a slight decrease in the end of 1990s. Emissions grew mainly due to the increased use of oil and gas. Venezuela’s economic growth led to energy use growth in industrial and transport sectors. Large cities in Venezuela have high vehicle densities and low fuel efficiency because of fleet age, poor maintenance, and high traffic volume (IEA, 2003a, c; Pereira et al., 1997) (Figs 12 and 13). Colombian CO2 emissions are relatively low compared to its Latin counterparts. Also, the country’s CO2 per capita and intensity emissions are among the modest in Latin America. In Colombia, the CO2 emissions have steadily increased in the last decades with a slight decrease in the last few years. Most of Colombia’s CO2 emissions are related to use of petroleum. Therefore, the constant
ARTICLE IN PRESS 594
E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
growth of emissions in Colombia has been mainly due to stable energy demand growth and an increased use of oil and gas, which has replaced some coal use (IEA, 2003a, c). Colombia is a country, which is rich in energy sources such as coal, gas and oil and also possesses abundant renewable sources such as hydro, biomass, solar and localized wind power. Colombia is more than self-sufficient at the present time. Most of the electricity in Colombia is generated from renewable sources, close to 70% of the generation is hydro-based. However, there are still large quantities of wood used in the countryside for cooking (IEA, 2003a, c; Ruiz and Rodrı´ quez-Padilla, 2006). 4. Reforming Latin American energy sector The energy sector, given its importance for the economy as a whole, has traditionally been a field of strong government involvement in developing countries. Governments act in the energy sector for variety of reasons and in several ways. Many instances and types of intervention are explicitly designed or intended to support energy policy goals and are specific to the energy production-supply industries or to the final use of energy (Focacci, 2005). Total or partial privatization of energy sub-sectors has proceeded quite fast in many countries in Latin America. During the 1990s, Latin America contributed to about 40% of the total value of energy privatizations worldwide (Lutz, 2001). However, results and efficiency of national energy policies are different. Energy reforms in Argentina in the 1990s were the deepest and most radical and were implemented under the least favourable conditions. To a large extent, the hurry and improvisation, which characterized the whole privatization process are to be attributed to the parlous state of most Argentinean state-owned enterprises. Most of them were poorly managed and plagued by corruption: tariffs were kept unrealistically low for political reasons. As a result, even potentially very competitive industries, such as gas industry, produced big deficit and acted as a drain for the state’s budget. In microeconomic terms, some of the energy services were successful, at least in the short to medium period as privatization created very profitable opportunities for the new entrepreneurs and led to a spurt of dynamism in many previously declining industrial sectors. The consortia pursued to maximize their advantages through vertical and horizontal integration and intersectoral diversification. Many public services such as gas and electricity increased prices. However, they also carried out new investments and introduced new technologies. Capital concentration intensified and the role of foreign operators increased. The macroeconomic impact of new investments in privatized industries, however, was quite modest (Gabriele, 2004). After 10 years of reform, the gas and electricity industries in Argentina still faced an array of problems. In the rapidly developing gas sector, the market was oligopolistic, dominated by a small number of vertically
integrated suppliers obtaining extraordinary benefits. In a long term, development-perspective, other problems might be implied by the present structure of the gas market, characterized by a complex form of oligopolistic competition. With deregulation and the progressive elimination of barriers to entry, the bargaining power of energy buyers and producers became more balanced, the degree of competition in the gas industry increased and so did the frequency of changes in the market configuration. The gas market can now be considered to be characterized by a medium level of competition and a high degree of concentration. Moreover, vertical integration prevailed between producers and main distributors (Gabriele, 2004). In Colombia, electricity markets were restructured and opened to competition, whereas reforms in Brazil were more cautious and gradual. Brazil managed to increase its electricity supply capacity by 500% in the last 50 years under the traditional public–monopoly regime. The electricity system was complex, formed by several state-based generation and distribution companies. It ran into trouble in the 1980s as the Ministry of Treasury imposed price caps on tariffs as a macroeconomic anti-inflationary tool. The creation of a truly competitive market for power generation in Brazil was bound to be extremely difficult, taking into account that over 90% of electricity is accounted for by hydropower (Gabriele, 2004). Hydropower technology, especially in a semi-industrialized country, implies production conditions characterized by huge economies of scale, and therefore a regime close to that of a natural monopoly. Nevertheless, privatization was a particularly attractive option in heavily debt-ridden Brazil. According to Gabriele (2004), privatized state-owned enterprises reduced employment but increased production, efficiency and profitability, and improved financial indicators. By early 2002, the government was proposing sweeping reforms that will heighten state regulation and intervention. In the long run, the task of the government in tackling the energy issue will be further complicated by the need to upgrade and reconvert power generation capacity, using technologies compatible with environmental-protection targets. The ethanol programme in Brazil is a good example of emission reduction possibilities. The programme has led to technological developments, both in agricultural production and sugarcane processing, leading to lower ethanol costs and the possibility of large surplus of biomass-based electricity. The effects of the programme on employment and urban air have also been positive (Luukkanen and Kaivo-Oja, 2002). Energy markets in Colombia turned even more uncertain than the worldwide liberalization trend would have suggested because the socio-political situation started to deteriorate. This had and still has a severe effect on the overall energy infrastructure, not only on the day-to-day reliability but also on how the system might develop in the longer term (Smith et al., 2005). As Smith et al. (2005) point out, new liberalized schemes have been introduced in Colombia. This has moved
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
companies from being state-owned enterprises to private companies, as well as allowing foreign investors either to acquire shares in, or outright ownership of energy companies. Independent regulatory agencies have been created to take care of issues like competition, charges for energy transportation, tariffs for regulated markets, and quality. Technology has changed, e.g. electricity generation has changed significantly, and more gas-fired plants are becoming available (Smith et al., 2005). The future of the energy system in Colombia is as uncertain as ever, with both potential threats and opportunities: the country faces some major challenges in the energy sector for the short term in addition to the longer term. According to Smith et al. (2005), contingency planning has become a major issue, moving attention away from longer-term development of the system. There are, increasingly, uncertainties and day-to-day problems with exporting oil and coal, the reliability of the gas supply to households and industrial customers, and with electricity supply for everyone, both in the cities and in remote areas of the country (Ruiz and Rodrı´ quez-Padilla, 2006; Smith et al., 2005). Venezuela has been considering partial reforms of gas and electricity sectors, while maintaining a strong role for state in designing and implementing a competitivenessenhancing and development-oriented energy strategy. The Venezuelan government currently is exploring options for using renewable energy sources to electrify the less than 10% of the population that is not hooked up to its extensive electric grid. There have been very few successful renewable energy projects in the country, although there is significant solar, photovoltaic, and wind power potential. The few successful projects have been sponsored by oil companies. In these projects, solar power has been used to electrify the remote areas where the companies explore for new oil sources (IEA, 2003a). In addition, according to Pereira et al. (1997), to accelerate improvements in fuel efficiency in the transport sector, the Venezuelan government developed an ambitious plan, focusing the effort initially on the public transport fleet. The government has initiated a promotion plan to switch vehicles from gasoline to natural gas in public transportation, taking into account that the gas price is significantly lower than gasoline. The plan included subsidies for motor conversion. Conversely, Mexico has not engaged so far in a radical reform of its state-owned energy sector, due among other factor to the specific enshrinement of public ownership on the energy sector in the Constitution (Gabriele, 2004). However, some of the Mexican technological changes in the most energy-intensive industries are indeed impressive. The pulp and paper and steel industries have benefited from the installation of new core technologies and energy combusting facilities, in addition to closing a number of older, less energy efficient plants. A strong element in the observed energy efficiency improvement is the reduced importance of some energy-intensive branches, particularly petrochemicals (Aguayo and Gallagher, 2005). Thus,
595
Mexican energy reductions are in the medium and long term a result of steady technology replacement of more efficient technologies. Gas and power sector reforms in Argentina and Brazil led to significant gains in terms of efficiency and productivity in the medium term. Distribution networks also expanded, favouring access to electricity on the part of previously excluded poor segments of the population. However, privatizations had a negative impact on income and wealth distribution. With respect to fiscal and external equilibria, and, more generally, to macroeconomic stability, the initial impact was positive, although the benefits for the investment rate were modest. Yet, in the longer term, net financial inflows were replaced by financial outflows. In Argentina and Brazil, this sequence of events is likely to have contributed to compensate and hide temporarily underlying macroeconomic imbalances, and eventually to exacerbate the magnitude of the crises, which erupted by the late 1990s to early 2000s (Gabriele, 2004). In general, the reforms were instrumental in facilitating two important structural developments, which profoundly changed the energy landscape in the region: the increase in the absolute and relative role of foreign investors and the surge of natural gas as a new, abundant energy source made particularly competitive by the availability of modern and relatively less capital-intensive technologies (Lutz, 2001). However, from one country to another, the reforms achieved uneven results with respect to the goals of increasing efficiency, boosting productivity, relieving public budgets and fostering capacity expansion. Especially in those countries where the privatization process has advanced the most, the structural contradiction caused by the attempt to promote competition in oligopolistic service-oriented sectors, where powerful transnational corporations often face weak national states and poorly organized consumers, has not withered out. Consequently, the tensions between private efficiency and profitability, on one hand, and public service and development goals, on the other hand, have not been fully overcome either (Gabriele, 2004). 5. Conclusion and discussion As far as developing countries are considered, the different characteristics are based on the structure of their energy economies. Primary energy requirements depend on factors such as level of industrialization, economic structure (e.g. presence of energy-intensive industries), level of motorization (car density), average climate (space-heating and -cooling demands) and domestic energy endowment (predominantly coal, hydro, etc.). The nature of the energy economy will strongly influence emissions per capita of GDP (Winkler et al., 2002). The increase in CO2 emissions in this study can be attributed partly to economic growth and to population growth. The structural shifts from a rural, and to
ARTICLE IN PRESS 596
E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
predominantly agricultural economic base, to a manufacturing one resulted in increasing energy demand. Since these developing countries will continue to emphasize their manufacturing sectors, CO2 emissions can be expected to increase unless energy efficiency is increased commensurably. While energy efficiency has slightly improved in these countries, the improvement is considerably lower than that of the OECD countries. The main drivers of change in developing country intensities can be policies and measures or external shocks that affect a country’s economic structure, energy efficiency, and fuel choices. Shifts in economic activity to lower or higher carbon sectors as well as technological progress also contribute to variations in intensity trends. However, the challenge for most developing countries is not to reduce absolute emission levels but to lower the CO2 intensity of their economies. Intensity indicator could be used as a measure for a country commitment under the Climate Convention of Kyoto Protocol. Such a commitment might represent an agreement to improve intensity levels relative to past performance. In other words, the commitment might take the form of lowering the country’s intensity indicator. Regardless, most developing countries should be expected to increase their emissions to meet human development needs at least in the next few decades. Acknowledgement The author acknowledges Academy of Finland for financial support of this study. References Aguayo, F., Gallagher, K.P., 2005. Economic reform, energy, and development: the case of Mexican manufacturing. Energy Policy 33, 829–837. Berk, M.M., den Elzen, M.G.J., 2001. Options for differentiation of future commitments in climate policy: how to realise timely participation to meet stringent climate goals? Climate Policy 1, 465–480. Boyd, R., Ibarrara´n, M.E., 2002. Costs of compliance with the Kyoto Protocol: a developing county perspective. Energy Economics 24, 21–39. den Elzen, M.G.J., 2002. Exploring Climate Regimes for Differentiation of Future Commitments to Stabilise Greenhouse Gas Concentrations. Integrated Assessment vol. 00, No. 0, 1–17. Netherlands National Institute of Public Health and the Environment, Bilthoven, Netherlands. den Elzen, M., Lucas, P., van Vuuren, D., 2005. Abatement costs of postKyoto climate regimes. Energy Policy 33, 2138–2151. Focacci, A., 2005. Empirical analysis of the environmental and energy policies in some developing countries using widely employed macro-
economic indicators: the cases of Brazil, China and India. Energy Policy 33, 543–554. Gabriele, A., 2004. Policy alternatives in reforming energy utilities in developing countries. Energy Policy 32, 1319–1337. Halsnæs, K., Olhoff, A., 2005. International markets for greenhouse gas emission reduction policies—possibilities for integrating developing countries. Energy Policy 33, 2313–2325. IEA, 2002. World Energy Outlook, Highlights. IEA, Paris. IEA, 2003a. CO2 Emissions from Fuel Combustion, 1971–2001. IEA Statistics, IEA, Paris. IEA, 2003b. Energy Balances of OECD Countries, 1960–2001. CD-ROM Data Base. IEA, 2003c. Energy Balances of Non-OECD Countries, 1971-2001. CDROM Data Base. Kuntsi-Reunanen, E., Luukkanen, J., 2006. Target options of burden sharing in developing countries: defining alternative models on global responsibility. International Journal of Environmental, Cultural, Economic and Social Sustainability, vol. II, available on April 2006. Lutz, W.F., 2001. Reformas del sector energe´tico, desafı´ os regulatorios y desarrollo sustentable en Europa y en Ame´rica Latina, Documento No.26, Serie recursos naturals e infraestructura. Proyecto CEPALComisio´n Europea ‘‘Promocio´n del uso eficiente de la energı´ a en Ame´rica Latina’’, Santiago de Chile. Luukkanen, J., Kaivo-oja, J., 2002. Meaninful participation in global climate policy? Comparative analysis of the energy and CO2 efficiency dynamics of key developing countries. Global Environmental Change 12, 117–126. Luukkanen, J., Vehmas, J., Kinnunen, V., Kuntsi-Reunanen, E., Kaivooja, J., 2005. Converging CO2 Emission to Equal per capita Levels. Mission Possible? FFRC-Publications 2/2005. Finland Futures Research Centre, Turku School of Economics and Business Administration Metz, B., Berk, M., den Elzen, M., de Vries, B., van Vuuren, D., 2002. Towards an equitable global climate change regime: compatibility with Article 2 of the Climate Change Convention and the link with sustainable development. Climate Policy 2, 211–227. Pereira, N., Bonduki, Y., Perdomo, M., 1997. Potential options to reduce GHG emissions in Venezuela. Applied Energy 56, 265–286. Philibert, C., Pershing, J., 2001. Considering the options: climate targets for all countries. Climate Policy 1, 211–227. Ruiz, B., J., Rodrı´ quez-Padilla, V., 2006. Renewable energy sources in the Colombian energy policy, analysis and perspectives. Energy Policy, available online 19 September 2005. Smith, A.R., Vesga, D.R.A., Cadena, A.I., Boman, U., Larsen, E., Dyner, I., 2005. Energy scenarios for Colombia: process and content. Futures 37, 1–17. Sun, J.W., 2003. Three types of decline in energy intensity—an explanation for the decline of energy intensity in some developing countries. Energy Policy 31, 519–526. UNFCCC, 1992. United Nations Framework Convention on Climate Change. UNFCCC Secretariat, Bonn. Available at http://unfccc.int/ resource/conv/index.html. UNFCCC, 1997. The Kyoto Protocol to the Convention on Climate Change. UNFCCC Secretariat, Bonn. Available at http://unfccc.int/ resource/docs/convkp/kpeng.html. Winkler, H., Spalding-Fecher, R., Tyani, L., 2002. Comparing developing countries under potential carbon allocation schemes. Climate Policy 2, 303–318.
Energy Policy 35 (2007) 586–596 www.elsevier.com/locate/enpol
A comparison of Latin American energy-related CO2 emissions from 1970 to 2001 E. Kuntsi-Reunanen Finland Futures Research Centre, Turku School of Economics and Business Administration, Rehtorinpellonkatu 3, 20500 Turku, Finland Available online 28 February 2006
Abstract This study analyses CO2 emission flows and energy use in the Latin American countries of Argentina, Brazil, Colombia, Mexico and Venezuela from the years 1971–2001. Results for the selected Latin American countries reveal that the changes in CO2 intensities were quite similar in these countries. However, the energy use varied slightly, indicating differences in the energy utilization in the analysed countries. Examining the changes on energy use suggests that there were no significant changes in any of these countries’ energy utilization during that period, but the energy markets are growing quite rapidly in all of these Latin American countries. r 2006 Elsevier Ltd. All rights reserved. Keywords: CO2 intensity; Energy use; Latin America
1. Introduction The effective Kyoto Protocol does not have binding commitments for developing countries to reduce their greenhouse gas (GHG) emissions (UNFCCC, 1997). But, there is increasing pressure for developing countries to adopt some kind of target (UNFCCC, 1992). While their emissions presently constitute only a minor part of global GHG emissions, it is expected that within a number of decades, their emissions will outgrow those of the industrialized countries. Annual emissions of developing countries are growing so rapidly that even if industrialized countries meet their Kyoto targets, annual global emissions are projected to increase (IEA, 2002). Under the current climate negotiations, one of the key policy issues in the evolution of the Framework Convention on Climate Change (FCCC) is the involvement of developing countries (non-Annex I Parties). A key issue is what kind of potential future targets might be set for developing countries, and how these would be decided (see Halsnæs and Olhoff, 2005; Winkler et al., 2002). In this context, various options for climate targets, such as fixed, dynamic, non-binding and dual targets (Philibert Tel.: +358 2 4814338; fax: +358 2 4814630.
E-mail address: eeva.kuntsi@tukkk.fi. 0301-4215/$ - see front matter r 2006 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2006.01.003
and Pershing, 2001) have been introduced to meet the ultimate objective of the climate change convention by all countries. In addition, many approaches (Berk and den Elzen, 2001; den Elzen, 2002; den Elzen et al., 2005; Metz et al., 2002) have been proposed to distribute commitments with respect to climate mitigation over different countries (see Kuntsi-Reunanen and Luukkanen, 2006). As most developing countries are not currently in a position to make absolute emission reductions, the most immediate and realistic challenge is lowering the CO2 intensity of the economies. Thus, rather than measuring the absolute amount of a country’s emissions, the CO2 intensity indicator provides a more realistic and practical framework for participation by expressing the emissions than an economy generates per unit of output. This is an effective way to benchmark national progress on climate change. Carbon dioxide emission intensity of the economy describes as to how many tons of CO2 emissions are emitted per dollar of economic output of the nation measured as GDP (CO2/GDP). The changes in emission intensity are caused by technological changes in energy and production technology (e.g. changes in energy efficiency), changes in the shares of fuels used for energy (e.g. shift from coal to gas) and changes in the economic production structure (e.g. shift towards service economy). Decreasing
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
energy intensity indicates that less CO2 emissions are produced for the same economic output. In general, as Sun (2003) points out, the trend of energy intensity has risen in most developing countries due to increased industrialization, urbanization, a greater demand for the development of transport, infrastructure and the modernization of life styles. This study will carry out a comparative analysis of CO2 emissions and intensity developments for the Latin American countries of Argentina, Brazil, Colombia, Mexico and Venezuela. In addition, country level development of CO2 emissions and energy use will be analysed in these countries. The article deals with the internal dynamics of the development of energy sector in the light of CO2 emissions. The purpose of this paper is to evaluate the macroeconomic performances of the selected Latin American countries’ energy systems and therefore to contribute to the energy and climate policy discussion and the potential post-Kyoto commitment of these countries. The comparative information regarding the development of CO2 intensity effects in a country should help inform national energy policy makers of the relative weaknesses and possible areas of strategic emphasis in their planning processes. This kind of research is needed because as in many developing countries, Latin American energy markets are also growing. 2. Data and background information The data used for the analysis were taken from IEA statistics (IEA, 2003a, b, c). The GDP data have been compiled for individual countries at market prices in local currency and annual rates. The data have been scaled up or down to the price levels of 1995 and then converted to US dollars using the yearly average 1995 purchasing power parities. All the presented data are macroeconomic, country level data. The sectoral approach contains total CO2 emissions from fuel combustion as calculated using the IPCC sectoral approach. Emissions calculated using this approach include emissions, only when the fuel is
587
actually combusted. The reason to use only CO2 emissions in the calculations is the availability and reliability of the long-term time series. The main source of the 1971–2001 population data is from the OECD (IEA, 2003a). In Table 1, some basic information of the economic development, energy use and related CO2 emissions of the analysed countries in comparison with USA and Germany have been collected. In relation to the emissions reductions required by the UNFCCC and the common but differentiated responsibilities of the different countries (see UNFCCC, 1992; UNFCCC, 1997), it is important to compare the per capita emissions. Table 1 shows the per capita emissions in the selected Latin American countries compared to the USA and Germany as it gives a general view of the historical responsibility of the inhabitants of different countries from the equity point of view. In Figs. 1 and 2, the CO2 emissions from fossil-fuel combust and CO2 emissions per capita in the different Latin American countries from 1971 to 2001 are compared. In Fig. 1, an increasing trend in the CO2 emissions from the 1970s can be seen in all of the selected Latin American countries. The growth was most notable in Mexico and Brazil in contrast to Argentina and Colombia where the growth was quite moderate with a slight decrease in the last few years. Fig. 2 illustrates CO2 emissions per capita in the same countries. Emissions per capita have increased most notably in Mexico where the population growth has been the main factor in increasing emissions. From the 1970s until the end of 1990s, a slight increase can be noted in Brazil and Colombia, whereas in Argentina and Venezuela, clear trend cannot be seen as the emissions have been fluctuated the whole research period. In Fig. 3, changes in the CO2 intensity of the economies are compared. Analysing changes in a country’s intensities over time shows whether a country is getting less or more carbon intensive. Fig. 3 shows that the CO2 emission intensities fluctuated the whole research period without a clear trend in all the selected Latin American countries, with the exception of Mexico where the CO2 emission intensity increased in the
Table 1 Basic information of economics, energy use and related CO2 emissions of Latin American countries
Argentina Brazil Colombia Mexico Venezuela USA Germany
GDP71a
GDP01a
CO2/GDP71b
CO2/GDP01b
TPES71c
TPES01c
CO2 per capita 71d
CO2 per capita 01d
238 365 93 265 74 3583 989
386 1140 278 807 130 8978 1922
0.35 0.25 0.28 0.37 0.70 1.20 1.00
0.30 0.27 0.20 0.44 1.00 0.63 0.44
34 70 14 46 47 1593 308
58 185 29 152 82 2281 351
3.4 1.0 1.2 1.9 4.7 20.7 12.6
3.5 1.8 1.3 3.6 5.2 19.8 10.3
Source: Adapted from IEA (2003a). a Billions of 1995 US dollars. b Tons of CO2 per 1000 US dollars. c Million tons of oil equivalent (Mtoe). d Tons.
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
588
CO2 Emissions in Latin American countries 400 350 300 Argentina
Mton
250
Brazil Colombia
200
Mexico Venezuela
150 100 50 0 1971
1976
1981
1986
1991
1996
2001
Fig. 1. CO2 emissions in the Latin American countries from 1971 to 2001 (Source: IEA, 2003a).
CO2 Emissions per Capita in Latin America 7 6
ton CO2 /capita
5
Argentina Brazil
4
Colombia 3
Mexico Venezuela
2 1 0 1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
Fig. 2. Changes in the CO2 emissions per capita of the economies of the Latin American countries from 1971 to 2001 (Source: IEA, 2003a).
1970s and 1980s and then turned to decrease. Most countries—Argentina, Brazil, Mexico and Colombia— have fairly flat trajectories, maintaining a slightly increasing and slightly decreasing intensity over time, whereas Venezuela’s intensity has fluctuated rather dramatically over the whole research period. Overall, Venezuela’s CO2 emission intensity has increased from the 1970s. Low intensities in Argentina and Brazil are partly due to the wide-spread use of carbon-free hydroelectric power. In 1990s, Argentina has decreased the level of CO2 intensity effects, indicating improved efficiency in the production system. In Brazil, the total emissions of road transport have increased in the 1990s considerably due to the increase of transport volume. Also the industrial sector has increased the emissions in the 1990s, leading to increasing CO2 intensity (IEA, 2003a, c).
Fig. 3 points out that Venezuela has much higher intensities than other countries. The overall level of intensity may be an important factor in determining the ability of countries to alter historical trends. For example, improving from a high intensity level may require less effort and cost than improving from low carbon intensity. This and other factors such as differences in resource endowments, geography, and economic structures should also be taken account when trying to make meaningful cross-country comparisons. What is most important, however, is not international comparisons but assessing a country’s performance relative to itself, taking into account both absolute intensity levels and changes over time. This can be done by observing the trends across the 1971–2001 period for each country.
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
589
CO2 Emissions in Latin American countries
1.2
ton CO2 /kUSD
1
Argentina
0.8
Brazil Colombia
0.6
Mexico Venezuela 0.4
0.2
0
1971
1976
1981
1986
1991
1996
2001
Fig. 3. Changes in the CO2 intensity of the economies of Latin American countries from 1971 to 2001 (Source: IEA, 2003a).
CO2 emissions in Argentina 140 120
Mton
100 80 60 40 20 0 1971
1976
1981
1986
1991
1996
2001
Fig. 4. CO2 emissions in Argentina from 1971 to 2001 (Source: IEA, 2003a).
3. Country level analyses of CO2 emissions and energy use This section analyses the internal causes of the changes in the CO2 emissions and the energy use effects in the selected Latin American countries. Special attention is focused on the question of whether the changes in CO2 emissions were caused by fuel switching, or changes in energy efficiency as it is important question (Figs 4 and 5). In Argentina’s economy, there has been slight fuel switching towards less carbon intensive energy production system during the whole research period. In 1990s Argentina has decreased the level of both energy and CO2 intensity effects, indicating improved efficiency in the production system. (Luukkanen and Kaivo-oja, 2002). The slow growth of emissions in Argentina has been mainly due to moderate energy demand growth and an increased use of gas and renewables, which has replaced
some oil use. The very fast economic growth of Argentina in the 1990s led to energy use growth in industry and in the road transport, but the overall energy emission intensity decreased. The country has large potential for the development of renewable energy, but it has not been utilized so far to any large extent. Hydropower has been used to quite large extent in electricity production, but the increase in thermal power production has exceeded in the late 1990s (IEA, 2003a, c; Luukkanen et al., 2005) (Figs. 6 and 7). In the late 1970s and early 1980s, the CO2 emissions in Brazil decreased slightly, indicating that a fuel switch towards less carbon intensive production took place (IEA, 2003a, c). The country has witnessed a more intensive use of electric power in relation with industrial modernization and with the development of highly energy-intensive industries such as plants producing aluminium, ferroalloys,
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
590
Energy use in Argentina 60 50 Renewable Hydro
Mtoe
40
Nuclear
30
Oil Natural gas
20
Coal
10 0 1971
1980
1990
2001
Fig. 5. Primary energy use in Argentina from 1971 to 2001 (Source: IEA, 2003a, c).
CO2 emissions in Brazil 350 300
Mton
250 200 150 100 50 0 1971
1976
1981
1986
1991
1996
2001
Fig. 6. CO2 emissions in Brazil from 1971 to 2001 (Source: IEA, 2003a).
soda-chlorine, pulp and paper, and iron and steel. Important structural changes occurred; firstly, hydroelectricity obtained important shares of national energy market and, secondly, the use of firewood, charcoal and sugar-cane bagasse (the so-called non-commercial fuels) declined at a very fast rate. According to Focacci (2005), these important factors can help to explain the decreasing trend in emissions intensity. However, in the late 1980s, CO2 emissions started to increase indicating that there has been a constant fuel switching towards more carbon-intensive production. Emissions grew considerably in the 1990s due to the increased use of oil and coal. CO2 emissions from the use of coal in Brazil could be reduced through investments in cleaner technologies. The ethanol substitution for gasoline is one way of reducing the CO2 emissions. It is estimated that the annual reduction of emissions due to ethanol use and bagasse substitution for fuel oil is about 10 million
tons of carbon, which is approximately 15% of the total emissions (Luukkanen and Kaivo-oja, 2002). Although 70% increase in renewables from 1971 to 2001 was not able to lower emissions. Brazil’s energy crisis resulted from a severe drought—important in a country that generates 93% of its energy from hydroelectric sources—and consistent under-investment in the energy sector throughout the 1990s. Today, country’s emission intensity is still growing due to the increasing industrial sector and road transport volume (IEA, 2003a, c; Luukkanen et al., 2005) (Figs. 8 and 9). The indicators of energy use show that there has not been considerable fuel switching in Mexico after 1970s. Oil is very important to the Mexican economy and the petroleum sector has played a central role in both the economic and political development of the country. Since the 1970s, industrialization has increased the demand for oil and electricity. Although a large part of oil production
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
591
Energy use in Brazil 200 180 160
Renewable
140
Hydro
Mtoe
120
Nuclear
100
Oil
80
Natural gas
60
Coal
40 20 0 1971
1980
1990
2001
Fig. 7. Primary energy use in Brazil from 1971 to 2001 (Source: IEA, 2003a, c).
CO2 emissions in Mexico
400 350 300
Mton
250 200 150 100 50 0 1971
1976
1981
1986
1991
1996
2001
Fig. 8. CO2 emissions in Mexico from 1971 to 2001 (Source: IEA, 2003a).
Energy use in Mexico 160 140 Renewable
120
Hydro
Mtoe
100
Nuclear 80
Oil
60
Natural gas
40
Coal
20 0 1971
1980
1990
2001
Fig. 9. Primary energy use in Mexico from 1971 to 2001 (Source: IEA, 2003a, b).
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
592
CO2 emissions in Venezuela 160 140 120
Mton
100 80 60 40 20 0 1971
1976
1981
1986
1991
1996
2001
Fig. 10. CO2 emissions in Venezuela from 1971 to 2001 (Source: IEA, 2003a).
Energy use in Venezuela
60 50 Renewable Hydro
Mtoe
40
Nuclear 30
Oil Natural gas
20
Coal
10 0 1971
1980
1990
2001
Fig. 11. Primary energy use in Venezuela from 1971 to 2001 (Source: IEA, 2003a, c).
was exported, domestic consumption also increased (Boyd and Ibarrara´n, 2002). According to Aguayo and Gallagher (2005), Mexico is one of the more energy-intensive economies in the world. In accordance with United Nations Development Program, when measured in energy use per dollar in purchasing power parity terms for comparison purposes, Mexico’s energy intensity is 8.7 MJ/US$, whereas United States, Japan and China consume approximately 10 MJ/US$ (Aguayo and Gallagher, 2005). The increase of Mexican CO2 emissions in the 1970s and 1980s indicates industrialization of the economy and increasing importance of heavy forms of production in the economy took place. However, in the 1990s the increasing trend of CO2 emissions started to slow down, indicating that the production structure in Mexican economy has become lighter (Luukkanen and Kaivo-oja, 2002).
Over all, the CO2 emissions have steadily increased in Mexico due to the increased use of oil and gas. In the 1990s the main increases in emissions came from the electricity production sector and to some extent from transport sector, whereas the emissions from industrial sectors decreased in the 1990s (Luukkanen et al., 2005). The country is currently the 15th largest emitter of GHGs in the world, and by far, the largest source of such emissions in Latin America (Boyd and Ibarrara´n, 2002). The utilization of abundant domestic resources may easily lead to inefficiencies, and effective policy planning is needed in order to also take into account the environmental aspects of energy sector development (IEA, 2003a, b; Luukkanen et al., 2005) (Figs. 10 and 11). Per capita energy consumption and energy intensity in Venezuela are highly relative to its neighbours. The country heavily subsidizes most energy sources, and primary energy use is estimated by the IEA to be about
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
593
CO2 emissions in Colombia 70 60
Mton
50 40 30 20 10 0 1971
1976
1981
1986
1991
1996
2001
Fig. 12. CO2 emissions in Colombia from 1971 to 2001 (Source: IEA, 2003a).
Energy use in Colombia 30 25 Renewable
Mtoe
20
Hydro Nuclear
15
Oil Natural gas
10
Coal 5 0 1971
1980
1990
2001
Fig. 13. Primary energy use in Colombia from 1971 to 2001 (Source: IEA, 2003a, c).
25% higher than it would be without such subsidies. Prices for gasoline, natural gas and electricity in particular are well below world market prices (IEA, 2003a, c). Country’s energy sector is dominated by its upstream petroleum industry. About three-quarters of Venezuela’s annual total energy production is oil, which accounts for about 80% of Venezuela’s export revenues and about onethird of the GDP. Despite the country’s dominated petroleum industry, Venezuela has diverse and abundant energy resources. The total volume of proven energy reserves in last decade was 112.5 billion barrels of oil equivalent (BOE), of which natural gas represented 28% of the total, coal 8%, and hydroenergy 0.2%. The technical potential for renewable energies, including solar, wind, biomass, geothermal, and mini-hydro, has been conservatively estimated at more than 4 million BOE per day. Venezuelans are also the highest per capita users of electricity in Latin America. About 75% of country’s electricity generation comes from hydropower. This is the
country’s largest use of renewable sources. Further hydropower plant construction is anticipated in the next few years (IEA, 2003a, c; Luukkanen et al., 2005). Since the 1970s, the CO2 emissions in Venezuela have increased with a slight decrease in the end of 1990s. Emissions grew mainly due to the increased use of oil and gas. Venezuela’s economic growth led to energy use growth in industrial and transport sectors. Large cities in Venezuela have high vehicle densities and low fuel efficiency because of fleet age, poor maintenance, and high traffic volume (IEA, 2003a, c; Pereira et al., 1997) (Figs 12 and 13). Colombian CO2 emissions are relatively low compared to its Latin counterparts. Also, the country’s CO2 per capita and intensity emissions are among the modest in Latin America. In Colombia, the CO2 emissions have steadily increased in the last decades with a slight decrease in the last few years. Most of Colombia’s CO2 emissions are related to use of petroleum. Therefore, the constant
ARTICLE IN PRESS 594
E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
growth of emissions in Colombia has been mainly due to stable energy demand growth and an increased use of oil and gas, which has replaced some coal use (IEA, 2003a, c). Colombia is a country, which is rich in energy sources such as coal, gas and oil and also possesses abundant renewable sources such as hydro, biomass, solar and localized wind power. Colombia is more than self-sufficient at the present time. Most of the electricity in Colombia is generated from renewable sources, close to 70% of the generation is hydro-based. However, there are still large quantities of wood used in the countryside for cooking (IEA, 2003a, c; Ruiz and Rodrı´ quez-Padilla, 2006). 4. Reforming Latin American energy sector The energy sector, given its importance for the economy as a whole, has traditionally been a field of strong government involvement in developing countries. Governments act in the energy sector for variety of reasons and in several ways. Many instances and types of intervention are explicitly designed or intended to support energy policy goals and are specific to the energy production-supply industries or to the final use of energy (Focacci, 2005). Total or partial privatization of energy sub-sectors has proceeded quite fast in many countries in Latin America. During the 1990s, Latin America contributed to about 40% of the total value of energy privatizations worldwide (Lutz, 2001). However, results and efficiency of national energy policies are different. Energy reforms in Argentina in the 1990s were the deepest and most radical and were implemented under the least favourable conditions. To a large extent, the hurry and improvisation, which characterized the whole privatization process are to be attributed to the parlous state of most Argentinean state-owned enterprises. Most of them were poorly managed and plagued by corruption: tariffs were kept unrealistically low for political reasons. As a result, even potentially very competitive industries, such as gas industry, produced big deficit and acted as a drain for the state’s budget. In microeconomic terms, some of the energy services were successful, at least in the short to medium period as privatization created very profitable opportunities for the new entrepreneurs and led to a spurt of dynamism in many previously declining industrial sectors. The consortia pursued to maximize their advantages through vertical and horizontal integration and intersectoral diversification. Many public services such as gas and electricity increased prices. However, they also carried out new investments and introduced new technologies. Capital concentration intensified and the role of foreign operators increased. The macroeconomic impact of new investments in privatized industries, however, was quite modest (Gabriele, 2004). After 10 years of reform, the gas and electricity industries in Argentina still faced an array of problems. In the rapidly developing gas sector, the market was oligopolistic, dominated by a small number of vertically
integrated suppliers obtaining extraordinary benefits. In a long term, development-perspective, other problems might be implied by the present structure of the gas market, characterized by a complex form of oligopolistic competition. With deregulation and the progressive elimination of barriers to entry, the bargaining power of energy buyers and producers became more balanced, the degree of competition in the gas industry increased and so did the frequency of changes in the market configuration. The gas market can now be considered to be characterized by a medium level of competition and a high degree of concentration. Moreover, vertical integration prevailed between producers and main distributors (Gabriele, 2004). In Colombia, electricity markets were restructured and opened to competition, whereas reforms in Brazil were more cautious and gradual. Brazil managed to increase its electricity supply capacity by 500% in the last 50 years under the traditional public–monopoly regime. The electricity system was complex, formed by several state-based generation and distribution companies. It ran into trouble in the 1980s as the Ministry of Treasury imposed price caps on tariffs as a macroeconomic anti-inflationary tool. The creation of a truly competitive market for power generation in Brazil was bound to be extremely difficult, taking into account that over 90% of electricity is accounted for by hydropower (Gabriele, 2004). Hydropower technology, especially in a semi-industrialized country, implies production conditions characterized by huge economies of scale, and therefore a regime close to that of a natural monopoly. Nevertheless, privatization was a particularly attractive option in heavily debt-ridden Brazil. According to Gabriele (2004), privatized state-owned enterprises reduced employment but increased production, efficiency and profitability, and improved financial indicators. By early 2002, the government was proposing sweeping reforms that will heighten state regulation and intervention. In the long run, the task of the government in tackling the energy issue will be further complicated by the need to upgrade and reconvert power generation capacity, using technologies compatible with environmental-protection targets. The ethanol programme in Brazil is a good example of emission reduction possibilities. The programme has led to technological developments, both in agricultural production and sugarcane processing, leading to lower ethanol costs and the possibility of large surplus of biomass-based electricity. The effects of the programme on employment and urban air have also been positive (Luukkanen and Kaivo-Oja, 2002). Energy markets in Colombia turned even more uncertain than the worldwide liberalization trend would have suggested because the socio-political situation started to deteriorate. This had and still has a severe effect on the overall energy infrastructure, not only on the day-to-day reliability but also on how the system might develop in the longer term (Smith et al., 2005). As Smith et al. (2005) point out, new liberalized schemes have been introduced in Colombia. This has moved
ARTICLE IN PRESS E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
companies from being state-owned enterprises to private companies, as well as allowing foreign investors either to acquire shares in, or outright ownership of energy companies. Independent regulatory agencies have been created to take care of issues like competition, charges for energy transportation, tariffs for regulated markets, and quality. Technology has changed, e.g. electricity generation has changed significantly, and more gas-fired plants are becoming available (Smith et al., 2005). The future of the energy system in Colombia is as uncertain as ever, with both potential threats and opportunities: the country faces some major challenges in the energy sector for the short term in addition to the longer term. According to Smith et al. (2005), contingency planning has become a major issue, moving attention away from longer-term development of the system. There are, increasingly, uncertainties and day-to-day problems with exporting oil and coal, the reliability of the gas supply to households and industrial customers, and with electricity supply for everyone, both in the cities and in remote areas of the country (Ruiz and Rodrı´ quez-Padilla, 2006; Smith et al., 2005). Venezuela has been considering partial reforms of gas and electricity sectors, while maintaining a strong role for state in designing and implementing a competitivenessenhancing and development-oriented energy strategy. The Venezuelan government currently is exploring options for using renewable energy sources to electrify the less than 10% of the population that is not hooked up to its extensive electric grid. There have been very few successful renewable energy projects in the country, although there is significant solar, photovoltaic, and wind power potential. The few successful projects have been sponsored by oil companies. In these projects, solar power has been used to electrify the remote areas where the companies explore for new oil sources (IEA, 2003a). In addition, according to Pereira et al. (1997), to accelerate improvements in fuel efficiency in the transport sector, the Venezuelan government developed an ambitious plan, focusing the effort initially on the public transport fleet. The government has initiated a promotion plan to switch vehicles from gasoline to natural gas in public transportation, taking into account that the gas price is significantly lower than gasoline. The plan included subsidies for motor conversion. Conversely, Mexico has not engaged so far in a radical reform of its state-owned energy sector, due among other factor to the specific enshrinement of public ownership on the energy sector in the Constitution (Gabriele, 2004). However, some of the Mexican technological changes in the most energy-intensive industries are indeed impressive. The pulp and paper and steel industries have benefited from the installation of new core technologies and energy combusting facilities, in addition to closing a number of older, less energy efficient plants. A strong element in the observed energy efficiency improvement is the reduced importance of some energy-intensive branches, particularly petrochemicals (Aguayo and Gallagher, 2005). Thus,
595
Mexican energy reductions are in the medium and long term a result of steady technology replacement of more efficient technologies. Gas and power sector reforms in Argentina and Brazil led to significant gains in terms of efficiency and productivity in the medium term. Distribution networks also expanded, favouring access to electricity on the part of previously excluded poor segments of the population. However, privatizations had a negative impact on income and wealth distribution. With respect to fiscal and external equilibria, and, more generally, to macroeconomic stability, the initial impact was positive, although the benefits for the investment rate were modest. Yet, in the longer term, net financial inflows were replaced by financial outflows. In Argentina and Brazil, this sequence of events is likely to have contributed to compensate and hide temporarily underlying macroeconomic imbalances, and eventually to exacerbate the magnitude of the crises, which erupted by the late 1990s to early 2000s (Gabriele, 2004). In general, the reforms were instrumental in facilitating two important structural developments, which profoundly changed the energy landscape in the region: the increase in the absolute and relative role of foreign investors and the surge of natural gas as a new, abundant energy source made particularly competitive by the availability of modern and relatively less capital-intensive technologies (Lutz, 2001). However, from one country to another, the reforms achieved uneven results with respect to the goals of increasing efficiency, boosting productivity, relieving public budgets and fostering capacity expansion. Especially in those countries where the privatization process has advanced the most, the structural contradiction caused by the attempt to promote competition in oligopolistic service-oriented sectors, where powerful transnational corporations often face weak national states and poorly organized consumers, has not withered out. Consequently, the tensions between private efficiency and profitability, on one hand, and public service and development goals, on the other hand, have not been fully overcome either (Gabriele, 2004). 5. Conclusion and discussion As far as developing countries are considered, the different characteristics are based on the structure of their energy economies. Primary energy requirements depend on factors such as level of industrialization, economic structure (e.g. presence of energy-intensive industries), level of motorization (car density), average climate (space-heating and -cooling demands) and domestic energy endowment (predominantly coal, hydro, etc.). The nature of the energy economy will strongly influence emissions per capita of GDP (Winkler et al., 2002). The increase in CO2 emissions in this study can be attributed partly to economic growth and to population growth. The structural shifts from a rural, and to
ARTICLE IN PRESS 596
E. Kuntsi-Reunanen / Energy Policy 35 (2007) 586–596
predominantly agricultural economic base, to a manufacturing one resulted in increasing energy demand. Since these developing countries will continue to emphasize their manufacturing sectors, CO2 emissions can be expected to increase unless energy efficiency is increased commensurably. While energy efficiency has slightly improved in these countries, the improvement is considerably lower than that of the OECD countries. The main drivers of change in developing country intensities can be policies and measures or external shocks that affect a country’s economic structure, energy efficiency, and fuel choices. Shifts in economic activity to lower or higher carbon sectors as well as technological progress also contribute to variations in intensity trends. However, the challenge for most developing countries is not to reduce absolute emission levels but to lower the CO2 intensity of their economies. Intensity indicator could be used as a measure for a country commitment under the Climate Convention of Kyoto Protocol. Such a commitment might represent an agreement to improve intensity levels relative to past performance. In other words, the commitment might take the form of lowering the country’s intensity indicator. Regardless, most developing countries should be expected to increase their emissions to meet human development needs at least in the next few decades. Acknowledgement The author acknowledges Academy of Finland for financial support of this study. References Aguayo, F., Gallagher, K.P., 2005. Economic reform, energy, and development: the case of Mexican manufacturing. Energy Policy 33, 829–837. Berk, M.M., den Elzen, M.G.J., 2001. Options for differentiation of future commitments in climate policy: how to realise timely participation to meet stringent climate goals? Climate Policy 1, 465–480. Boyd, R., Ibarrara´n, M.E., 2002. Costs of compliance with the Kyoto Protocol: a developing county perspective. Energy Economics 24, 21–39. den Elzen, M.G.J., 2002. Exploring Climate Regimes for Differentiation of Future Commitments to Stabilise Greenhouse Gas Concentrations. Integrated Assessment vol. 00, No. 0, 1–17. Netherlands National Institute of Public Health and the Environment, Bilthoven, Netherlands. den Elzen, M., Lucas, P., van Vuuren, D., 2005. Abatement costs of postKyoto climate regimes. Energy Policy 33, 2138–2151. Focacci, A., 2005. Empirical analysis of the environmental and energy policies in some developing countries using widely employed macro-
economic indicators: the cases of Brazil, China and India. Energy Policy 33, 543–554. Gabriele, A., 2004. Policy alternatives in reforming energy utilities in developing countries. Energy Policy 32, 1319–1337. Halsnæs, K., Olhoff, A., 2005. International markets for greenhouse gas emission reduction policies—possibilities for integrating developing countries. Energy Policy 33, 2313–2325. IEA, 2002. World Energy Outlook, Highlights. IEA, Paris. IEA, 2003a. CO2 Emissions from Fuel Combustion, 1971–2001. IEA Statistics, IEA, Paris. IEA, 2003b. Energy Balances of OECD Countries, 1960–2001. CD-ROM Data Base. IEA, 2003c. Energy Balances of Non-OECD Countries, 1971-2001. CDROM Data Base. Kuntsi-Reunanen, E., Luukkanen, J., 2006. Target options of burden sharing in developing countries: defining alternative models on global responsibility. International Journal of Environmental, Cultural, Economic and Social Sustainability, vol. II, available on April 2006. Lutz, W.F., 2001. Reformas del sector energe´tico, desafı´ os regulatorios y desarrollo sustentable en Europa y en Ame´rica Latina, Documento No.26, Serie recursos naturals e infraestructura. Proyecto CEPALComisio´n Europea ‘‘Promocio´n del uso eficiente de la energı´ a en Ame´rica Latina’’, Santiago de Chile. Luukkanen, J., Kaivo-oja, J., 2002. Meaninful participation in global climate policy? Comparative analysis of the energy and CO2 efficiency dynamics of key developing countries. Global Environmental Change 12, 117–126. Luukkanen, J., Vehmas, J., Kinnunen, V., Kuntsi-Reunanen, E., Kaivooja, J., 2005. Converging CO2 Emission to Equal per capita Levels. Mission Possible? FFRC-Publications 2/2005. Finland Futures Research Centre, Turku School of Economics and Business Administration Metz, B., Berk, M., den Elzen, M., de Vries, B., van Vuuren, D., 2002. Towards an equitable global climate change regime: compatibility with Article 2 of the Climate Change Convention and the link with sustainable development. Climate Policy 2, 211–227. Pereira, N., Bonduki, Y., Perdomo, M., 1997. Potential options to reduce GHG emissions in Venezuela. Applied Energy 56, 265–286. Philibert, C., Pershing, J., 2001. Considering the options: climate targets for all countries. Climate Policy 1, 211–227. Ruiz, B., J., Rodrı´ quez-Padilla, V., 2006. Renewable energy sources in the Colombian energy policy, analysis and perspectives. Energy Policy, available online 19 September 2005. Smith, A.R., Vesga, D.R.A., Cadena, A.I., Boman, U., Larsen, E., Dyner, I., 2005. Energy scenarios for Colombia: process and content. Futures 37, 1–17. Sun, J.W., 2003. Three types of decline in energy intensity—an explanation for the decline of energy intensity in some developing countries. Energy Policy 31, 519–526. UNFCCC, 1992. United Nations Framework Convention on Climate Change. UNFCCC Secretariat, Bonn. Available at http://unfccc.int/ resource/conv/index.html. UNFCCC, 1997. The Kyoto Protocol to the Convention on Climate Change. UNFCCC Secretariat, Bonn. Available at http://unfccc.int/ resource/docs/convkp/kpeng.html. Winkler, H., Spalding-Fecher, R., Tyani, L., 2002. Comparing developing countries under potential carbon allocation schemes. Climate Policy 2, 303–318.