Energy scenarios for Colombia: process and content

Futures 37 (2005) 1–17 www.elsevier.com/locate/futures

Energy scenarios for Colombia: process and content Ricardo A. Smitha,1, Daniel R.A. Vesgab,2, Angela I. Cadenac,3, Ulf Bomand,4, Erik Larsene,*, Isaac Dynerf a

Escuela de Geociencias y Medio Ambiente, Facultad de Minas, National University of Colombia, Apartado Ae´reo 1027 Medellı´n, Colombia b Unidad de Planeacio´n Minero Energe´tica, Avenida 40 A N8 13-09, piso 58, Bogota´, Colombia c School of Engineering, University of Los Andes, Carrera 1a. Calle 18 Bogota´, Colombia d Kairos Future AB, Box 804, SE-10136 Stockholm, Sweden e Cass Business School, 106 Bunhill Row, London EC1Y 8TZ, UK f Energy Institute, Univerisidad Nacional de Colombia, AA 1027 Medellı´n, Colombia Available online 13 July 2004

Abstract This paper presents the approach undertaken, and the four energy scenarios that have been developed, to support long term energy policy in Colombia. The scenarios were constructed with emphasis on maximum interaction between stakeholders in the Colombian energy sector. The process directly involved over 120 people. The scenarios were developed as strategic support tools for the Energy and Mining Planning Unit (UPME), which is the Colombian institution in charge of developing the country’s energy strategies and National Energy Policy. The methodology employed is presented, followed by a detailed description of each of the four scenarios. q 2004 Elsevier Ltd. All rights reserved.

* Corresponding author. Tel.: C44-20-7040-8374; fax: C44-20-7040-8328. E-mail addresses: [email protected] (R.A. Smith), [email protected] (D.R.A. Vesga), [email protected] (A.I. Cadena), [email protected] (U. Boman), [email protected] (E. Larsen), [email protected] (I. Dyner). 1 Tel.: C57-4-425-5100; fax: C57-4-234-1002. 2 Tel.: C57-1-2875334; fax: C57-1-2887419. 3 Tel.: C57-1-339-4949x2839. 4 Tel.: C46-8-54522515; fax: C46-8-54522501. 0016-3287/$ - see front matter q 2004 Elsevier Ltd. All rights reserved. doi:10.1016/j.futures.2004.03.015

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1. Introduction As markets are being deregulated, and commercial interest rather than central planning drives the energy industry, uncertainty has steadily increased [2]. This is true both at the national level, e.g. prices increasingly reflect supply and demand rather than being government determined, and also on a global scale, where we see an increasing internationalisation of energy markets, such as electricity and gas. A decade ago, these markets were seen as regional or national [7,10]. As a result of these fundamental changes, the dynamics of energy markets are becoming more unpredictable, but no less important for most countries. This paper focuses on the impact of these external and internal forces on the energy sector in Colombia. Energy markets in Colombia turned even more uncertain than the world-wide liberalisation 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. The disruptions are not only due to direct sabotage of the energy infrastructure but also to the general level of violence in the society. This has created large displacements of people (more than 2 million) among many other issues slowly disintegrating the fabric of Colombian society. The levels of violence and sabotage in the society in general have exceeded all previous expectations. At the same time, new liberalised schemes have been introduced in Colombia [5,8]. This has moved 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 (CCGT) are becoming available. The future of the energy system in Colombia is as uncertain as ever, with both potential threats as well as opportunities. On the one hand, a potential economic collapse might trigger a set of negative factors, such as an even greater escalation of the conflict, or continuous opposition against globalisation policies leading to a reduction of foreign investment. On the other hand, there might be an increasing willingness of the industrialised countries to help Colombia to solve its internal problems by providing both financial and military help and, in particular, help in direct negotiation with the guerrillas. Given this background, it is clear that Colombia faces some major challenges in the energy sector (as well as in other sectors) for the short-term in addition to the long term. 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 the electricity supply for everyone both in the cities and in remote areas of the country [5]. Colombia has a long tradition of well-trained engineers in methods and techniques relating to forecasting, simulation, optimisation and assessing alternative arrangements for the energy industry. However, under these circumstances the traditional tools have failed to provide sufficient support to both government and industry. The strategic development

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of the energy sector can not be anticipated by using these classical tools due to the increased uncertainty [2]. Furthermore, the issue is made more critical as the potential lack of energy supply might contribute significantly to the possible further deterioration of the Colombian economy. Given this background, the policy makers in the Planning Office of the Ministry of Mines and Energy (UPME) initiated a scenario-building exercise with the support of the World Bank. A group of experts coordinated by the National University of Colombia were brought together to create a set of possible scenarios for the energy sector in Colombia and thereby help to create a better understanding of how the energy system might evolve into the future. The energy scenarios for Colombia seek to define possible energy futures for the country, in such a way that a wide discussion can be initiated on how the country should face, from the energy point of view, each of the envisioned outcomes. It tries to identify the main events that could affect the energy sector and to describe their consequences. The energy scenarios presented here were developed to support the strategic work of UPME, which is the Colombian institution in charge of developing the country’s energy strategies and the National Energy Policy. The process that was followed in the construction of the energy scenarios involved a large number of people (around 120) all of them considered to be energy sector stakeholders. The paper is organised as follows. Section 2 outlines the process used to develop the scenarios, followed by a general description of the scenarios as well as a detailed description of their implications for the energy sector. Finally, we try to evaluate the process and generalise the lessons to be learned from the project. 2. Design of the scenario process Scenario techniques have long been used as a method for visualising alternative futures when the environment is highly uncertain [12]. Under such circumstances, scenarios create an ideal basis for strategy development and strategic discussions in organisations [6,18]. Scenarios also have a long tradition in the energy industries, partly based on the seminal work conducted at Shell thirty years ago [19,20]. More recently, studies of the global energy market were carried out by the European Union [3] as well as by other agencies such as IIASA [9] and independent organisations [1,11,21]. The importance of the future of energy in Colombia and the uncertainties it faces, as discussed in Section 1, present a situation where scenario analysis is appropriate as a way of understanding future problems and opportunities. We will not discuss the advantages and disadvantages of using scenarios here. However, it is important to understand the complete scenario process and how the project described here fit into the process. The Scenario process involved three phases. (i) Scenario building Creating the different scenarios, developing the stories, etc. This is the focus of the present paper. (ii) Policy testing Using the scenarios to test policies and strategies, to find their weaknesses. This article does not deal with this aspect of the process, which was carried out by UPME after the scenarios has been developed.

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Fig. 1. Organisation of the scenario project.

(iii) Environmental awareness Identify the ‘sign posts’ in the environment, indicating which of the foreseen directions is being taken. For a detailed discussion of the scenario technique and examples of its use see, among others, van der Heijden [18], Lindgren and Bandhold [6], Schwartz [15] Schipper and Meyers [13] and Schoemaker [14]. In the remainder of this section, we outline the process followed in building the scenarios for the Colombian energy sector. The rationale behind the design of the exercise was to obtain as much interaction as possible, with as many of the stakeholders as possible. To achieve this aim, three workshops were designed with a relatively large and diverse group of participants. The organisation of the project can be seen in Fig. 1. There was a project management team consisting of three people, a project team (including facilitators) of a further six people, and a group of workshop participants varying between 25 and 35 for the three workshops, and finally 6 ‘oracles’. The project team was a combination of facilitators, energy experts, and scenario experts, Colombian as well as foreign, while the participants were drawn from a diverse group including, among others, energy industry representatives (oil, gas, coal, and electricity), industry, consumers, politicians, NGOs (e.g. environmental, social), academics and representatives of the relevant ministries (Ministry of Energy and Mines, Ministry of the Environment). Furthermore, a large (and even more diverse) group of people were interviewed before the first workshop. In total, more than 40 interviews were conducted. These were undertaken to ensure that a large number of aspects and opinions were covered and would be introduced into the process. Finally, an advisory group with senior representatives from the Ministry of Energy and Mines and other selected members was established to follow the project. The planning of the project was conducted by the project team, both initially as well as on an ongoing basis throughout its duration. The first planning meeting was used to set out the details for the subsequent workshops, as well as creating a shared understanding within the project team for the process and the deliverables of the project. Throughout the project, meetings between the project team and subgroups of the project team took place. Fig. 2 shows the structure of the project with the initial planning meeting, followed by a series of interviews, three three-days workshops and a final writing-up workshop attended by the project team. The three workshops involved the same set of participants each time.

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Fig. 2. Overview of the scenario process.

In the following paragraphs, we will outline briefly the ideas, ‘inputs’ and ‘outputs’ from the various workshops as shown in Fig. 2. After the results of the interviews were analysed and grouped into a series of clusters, where each cluster consisted of related issues, problems and possible solutions, a short report was written and a presentation prepared for the first workshop. The aim of the first workshop was to open up the issues and challenge the participants’ perceptions of the future of energy in Colombia. This was conducted through a series of interactive sessions with presentations in between. The workshop outlined the aims and objectives of the project and presented the process. The first substantial issue discussed was the world-wide trends in energy, and the group work that followed was on the general implications of these trends for Colombia and particularly over the whole Colombian energy sector. The second substantial issue was around deregulation of energy markets: the lessons from deregulation; and the limits to deregulation. This presentation was again followed by facilitated group work. The workshop design managed to create an atmosphere of openness and trust among the participants and achieved its main goal of providing a broad discussion among the diverse group. A summary of the discussion from the first workshop was written up and distributed to all participants before the second workshop. The second workshop had two main themes. The first part was around environmental issues and their likely impact on the future of energy, including issues like the effect of the Kyoto agreement on its implementation in Colombia, the future of oil etc. This included a mixture of presentations and group work focusing on the implications for Colombia. The second part of the workshop was devoted to identifying trends and factors in the contextual environment (i.e. outside the Colombian energy sector) that could have implications for the sustainable development of the energy sector in Colombia. The development of each of the identified trends/factors was considered to be either certain or uncertain within the time frame of the study, i.e. until 2020, and in relation to the Colombian energy sector. Table 1 shows the final outcome from a number of parallel

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Table 1 Certainties and uncertainties identified in the project Certainties

Uncertainties

National and international awareness about energy and environmental quality Changes will occur in energy consumption due to an increased conscience and international pressure on environmental issues. Sustainability of the market mechanisms The energy sector will see further deregulation. Privatisation will continue and there will be no government investment in the energy sector. Change in consumption patterns Changes in the patterns of consumption resulting in a new balance in energy supply and demand. This certainty is tied to the one mentioned above. Oil reactivation, consolidation of natural gas, coal exports, and increasing electric development In the short term natural gas will be an important actor. On the other hand, the international pressures might favour an increasing export of Colombian coal (less polluting). Incentives are given in order to increase oil exploration and exploitation.

Different ways to solve the armed conflict There are several ways to put an end to the Colombian armed conflict, each having different impacts on the energy sector and the time it will take to solve it. Impact of technological changes It is uncertain which and when new technological developments will be introduced in Colombia and what impact they will have in the energy sector. Implementation of the Kyoto Protocol (KP) Depending on the status of the KP there will be different opportunities for the Colombian energy sector. Learning to live in an international world Globalisation is a fact. The uncertainty is how Colombia will decide to be integrated. To learn how to live in an international world requires among other things, to follow international rules, to accept cultural homogenisation, and international commitments and treaties. Economic performance The country is at the moment in recession. The uncertainty is the future economic growth: how long will the low growth continue, before there is a return to another upturn in the economy. Regions and decentralisation of Colombia The process of regionalisation and decentralisation of the country continues. The uncertainty resides in the degree and the speed of that process. Future earnings from the energy sector Will the energy sector continue to be an important source of foreign currencies? What is the possible impact of quotas of reduction of emissions. Market integration for isolated areas-using energy solutions that lead to an improvement of the quality of life The development of isolated areas and the role of the energy market in this. Connected to the effects of the social and armed conflict and the degree of the regionalisation and decentralisation process.

Globalisation and economic opening Globalisation is a fact-trade in all areas is increasing. The economic opening and the globalisation process will continue to govern the international trade and investment. Solution to the armed conflict Colombia has no future if the armed conflict is not solved. Peace is certain, how to achieve it is uncertain. Increase of the social conflict This is a certain trend in the short term. In the short term the internal crises force a large number of people into the urban areas. Acceptance of new theoretical paradigms and new visions of the society Radical changes based on a new paradigm will be present in the social structures of the country. It is not known which paradigms will be adopted, it is only assumed that it will happen. A new paradigm of society defines a new paradigm for the energy sector.

and sequential workshops where the initial number of trends (uncertainties and certainties) were reduced from around 70 to 18. The final outcome constitutes the consensus of the participants in the workshop. Table 1 also contains a short explanatory text for each trend or factor.

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We will here only highlight the most relevant issues from the set of certainties and uncertainties. One interesting observation is that there was a broad agreement that the armed conflict in Colombia would be solved over the next 20 years. However, it was not possible to establish in which way (e.g. through negotiation or military solution) and this is why the conflict is seen both as a certainty (i.e. that it will be solved) as well as an uncertainty (i.e. what solution). The agreed set of certainties and uncertainties was the main input to the third and last workshop with the participants. The first part of this workshop was a cross-impact analysis using the certainties and uncertainties identified in the previous workshop. Cross-impact analysis is a systems analysis approach to identify the relationships between important factors in a system, such as trends and uncertainties. The cross-impact analysis helped to cluster the factors shown in Table 1 into four groups: driving, links, driven, and autonomous. This was implemented through a grading of the causal relationship between the variables. For a detailed description of the use of cross impact analysis, see for example Lindgren and Bandhold [6] or Godet [4]. The result from the cross-impact analysis was presented in a casual loop diagram, showing the most important relations between the factors, see Fig. 3. An arrow between two variables indicates that a variable has a strong influence on the other variable in the direction of the arrow. The outcome of this exercise was the identification of the main driving forces among the certainties and uncertainties. After some further discussion in

Fig. 3. Causal loop diagram (influence diagram) representing the strongest influences between the variables in the cross-impact analysis.

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a plenary session, it was agreed that there were two sets of variables, so called strategic uncertainties, from which the desired scenarios could be built. Two groups worked on each set of variables to develop the preliminary logic for the scenarios, given the chosen strategic uncertainties. When the preliminary scenario logic was presented to the workshop participants, it emerged that two sets of uncertainties could be merged into one. In this way, the workshop ended with an agreed scenario skeleton and a preliminary logic for these scenarios. Although it was very preliminary at that time, it did present a completely coherent story for how each scenario would develop. All the elements for writing the stories behind each scenario had been collected: the basic framework, the certainties that should be present in most if not all scenarios, and the main uncertainties that might be included in some scenarios. This also ended the direct involvement of the workshop participants. The project team had one further (five-day) workshop to draft the scenario logic in some detail as well as for the purpose of writing a preliminary coherent story for each of the scenarios. This was undertaken in groups, with plenary discussions aiming to obtain coherent scenarios and clear stories, and with the purpose of keeping the ‘natural’ overlaps between them. Further refinements and developments were conducted after the workshop, including adding some further implications that the scenarios would have for the energy sector. The first draft of the scenarios was then scrutinised by a number of workshop participants, as well as by other people involved in the process, to examine whether this was a fair interpretation of the main conclusions of the workshops and also to examine its coherence and completeness. As most readers and users of the scenarios were going to be people who had not participated in the workshop it was important to elicit the view from non-workshop participants in addition to ensuring that the scenarios made sense to people who had not been involved in the development process. After further editing, the scenarios were included in two books: a ‘complete and comprehensive’ version including introduction and appendices of more than 160 pages, and a ‘summary’ version of 40 pages. The scenarios were also distributed on a CD. Finally, the scenarios were publicly presented at an event in Bogota.

3. The scenarios: the general framework This section briefly describes the scenarios, laying out the logic and connection between them. The outcome of the process described in Section 2 is based around two strategic uncertainties, which create the skeleton for the scenarios. The first one represents the way in which the Colombian conflict is resolved. As can be observed in Table 1, it is regarded as a certainty that the internal conflict will have ended by 2020, however, the uncertainty is how the solution will have been reached. The two possible solutions are either achieving peace by negotiating some concessions to the guerrilla forces or by inflicting military defeat on them. The second axis concerns how Colombia will integrate into the globalisation process now taking place worldwide. At one extreme, Colombia will choose to avoid integration as much as possible, by either keeping high taxes on imports (protecting its own local industry, and avoiding

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Fig. 4. The scenarios developed in the project.

international organisations that promote international trade (i.e. WTO)), or by aiming to become self-sufficient (which might be at least implicitly seen as the goal of some of the guerrilla forces). At the other extreme Colombia chooses a total integration in the globalisation process, consolidating the Andean Union and possibly merging with MERCOSUR (the South American trade organisation), ultimately aiming to join NAFTA, etc. Fig. 4 shows the two axes and the four scenarios which arise from them. The four different scenarios generated by these two axes give rise to four very different possible future worlds for Colombia. Each of these scenarios is briefly described in Table 2. It is worth remembering before we discuss the scenarios that no probability is assigned to any of them, i.e. they are assumed equally likely to happen. However, it is also clear from the above description that Colombia in the year 2020 will be very different under the four scenarios. At the one extreme lies the westernised version of Colombia, which is the outcome of the Wizard of Oz scenario where market mechanisms are the dominating factors in the society. There are two different ‘middle-ground’ scenarios, where major social and economic problems are manifested, although for different reasons in each of them, and in both cases there is very little decentralisation of government. Finally, the last scenario, The Titanic, is a scenario where the internal conflict lingers on over the years with no clear and definite winner, although it is assumed that the government wins this war of attrition in the end. Although the scenarios above formed part of the core activity of the project, the focus was to understand how the energy sector will develop within these four different scenarios. In Section 4, we will discuss this development given the background provided in this section.

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Table 2 Brief outline of the scenarios Scenario

Description

The wizard of Oz

Local victories over the guerrillas leads to a negotiated peace where the government has the most influence in the design of the future, creating an open and democratic government where: There is a fast economic recovery Integration in the international economy and following from this a sharp increase in foreign direct investments Increasing welfare and less social tension Economy dominated by market mechanisms Negotiated peace where the guerrillas have major influence on the design of the future state. This leads to a situation where there is strong state presence in all institutions but still a democratic society: Difficult recovery for the economy Minimal integration into the international economy and limited foreign direct investment Social tension stabilises but problems due to lack of resources Social participation Move toward marked mechanisms stopped The conflict lingers on and is only solved towards the end of the period by international intervention. This leads to a situation with a fragile democracy with a high degree of state intervention: Very difficult recovery of the economy if at all Minimal integration into the international economy and very limited foreign direct investment Strong regional emphasis due to relatively weak central government No further move toward market mechanisms The government wins the conflict helped by international support. This leads to a heavy centralised, but democratic government due to the need to prevent any return to previous situation. Difficult, but steady economic recovery Slow integration into the international economy, with some foreign direct investments Social tension stabilises but unlikely to diminish Some market mechanism will be encouraged

In search of lost time

The Titanic

War and peace

4. The scenarios: energy implications Section 3 provides a general outline of the developed scenarios. In this section, we will discuss the energy implications of these scenarios, that being the focus of the exercise. Before describing the energy implications of the scenarios, it is worth noting the energy situation of Colombia with respect to energy resources and consumption. Colombia is a country, which is rich in energy sources (coal, gas and oil) and also possesses abundant renewable sources (hydro, biomass, solar and localised wind). Table 3 provides an overview of the primary energy sources. As we can observe, 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. Furthermore, there are still large quantities of wood used in the countryside for cooking.

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Table 3 Production and consumption of primary energy sources in Colombia (1999) (US Department of Energy, 2002) Energy source

Production

Consumption

Oil (Thousand b/d) Gas (TCF) Coal (Mill short tons)

816 18 36.11

277 18.3 4.38

What are the energy implications of the scenarios described above? The summary of this can be found in Table 4. We will here discuss them in more detail although to get the full understanding it is necessary to look at the scenario handbook [16]. Where Table 4 provides an overview of the different attributes across the four scenarios we will here try to summarise the individual scenarios and the corresponding energy sector in each of them. This is a relatively short version of the main events, intended to catch the main features of the energy sector in each scenario, without trying in any sense, to be comprehensive. In the first scenario—wizard of Oz— there is economic recovery based on free markets and fast economic growth. This is also reflected in the energy sector where there is increasing deregulation, the main principle being to pursue complete deregulation of energy (i.e. maintain free markets and competition). This increases foreign investment in the oil and gas sectors, where there is a constant growth in exploration and exploitation of new oil and gas fields, especially after peace is reached, as it becomes safer and the problems of sabotage of pipelines ends. While there is no further development of large hydro projects for electricity generation there is an increase of gas-fired generation plant, taking advantage of the natural gas fields that are being exploited. These developments make electricity less dependent on climate variability as well as on climate change (i.e. strong variations in precipitation) and create the possibility for exports to neighbouring countries. Accomplishing peace and economic growth does increase demand for energy from both the industrial and the domestic sectors. However, Colombia remains committed to the international environmental agreements, such as the Kyoto Protocol, and begins to introduce other renewable energy sources apart from hydro, such as wind power and solar energy. In the second scenario—in search of lost time—the peace process drags out over a number of years and this is manifested, in the energy sector, by a slowdown in energy demand. First, half way through the period, when peace is negotiated, demand is reactivated at a relatively slow rate. As a result of agreement reached, market-based systems are scaled-down or abolished; this in turn creates political uncertainty, drying up private project financing, which forces government and regional authorities increasingly to finance infrastructure projects. All new electricity generation is gas fired, creating social unrest in the mining areas due to lack of demand for coal. The national oil company preserves a monopoly on oil exploration and exploitation but, due to the economic situation, can only invest relatively limited amounts of resources in its major activities. Government is forced to finance transportation as well as other infrastructure investments and can only make minor investments in social improvements, creating a new wave of social tension. There is an increased use of alternative energy in isolated areas, and much more emphasis on demand side management.

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Table 4 Implications of the scenarios for aspects of the energy sector Issues

The wizard of Oz

In search of lost time

The Titanic

War and peace

Markets

Markets created in all energy sources

Central control, no markets, (selected) subsidies

Markets disappear. Isolated regional systems.

Regulation

Minimal, only what is seen to be necessary Increases

Centralised

Adapted to the war

Slowly increases

Run out

Slowly increase in market based approach across all energy sources Facilitates the entrance of new investors Increases

Difficulties, possible rationing.

Rationing

Only expansions of the actual capability In rural areas, government support As a social strategy

No

Difficulties at the beginning, full supply. A private refinery

Where it can be used

In the rural areas, limited use

By convenience

Few uses

Depending on availability, rationing No

Natural Gas

Where it can be used Almost nothing Deteriorates, almost disappears

No

Oil and gas reserves Gasoline supply

Refineries

LNG (liquid natural gas) Coal

Electric power generation

Substitution, efficiency, full supply. A private refinery

In the rural areas, it competes with alternative sources New opportunities with increase in efficiency Natural gas

Hydropower (medium to large sizes)

No

Coal for power generation Renewable Transmission

Limited developments Isolated zones Monopoly operation, several investors Partially continued

Subsidies

Varied

Only one multipurpose project as an economic reactivation As a social strategy Wood by GLP Central system

The Environment

International agreements are applied

Coverage

Increase

They are maintained Limited application of agreements, NGO pressure Slowly increases

Ground transportation Technology penetration

Massive and gas fuel Fast

No important modifications Slow

They are maintained Not important

Deteriorates Restricted No

No

Not relevant Monopoly operation, new investors are favoured They are discontinued Lose importance

With economic efficiency criterion Gas fuel Fast (continued on next page)

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Table 4 (continued) Issues

The wizard of Oz

In search of lost time

The Titanic

War and peace

Public investment

Decrease

Almost everything

Very little

Private investment

Almost everything

Little

The only investments Nothing

Almost everything

In the third scenario—the Titanic—war continues with a solution only at the very end of the timeframe of the scenarios. Energy markets become less efficient over time and corruption takes over; industry becomes more dependent on oil and coal. However, overall pollution decreases in the short-term due to a fall in industrial production. The electricity market is dismantled, with a return to centralised planning. Most energy policy focuses on self-sufficiency within the different regions of the country with only limited interconnections between them, due to the continuing attacks on the transmission infrastructure. The oil situation remains unchanged as Ecopetrol continues being the dominant producer, and there is no development of alternative energy sources. Fuel shortages occur with increasing frequency and there is little or no interest in environmental issues. In the final scenario—war and peace—there is a severe shortage of energy due to the war, which destroys large parts of the energy infrastructure, leading to higher energy prices and frequent shortages of energy. The oil and gas activity remains at the levels of 2000 but there is no development of alternative energy sources during the war period. When peace is finally reached there is an aggressive government policy aiming for privatisation but this turns out to be a very slow process given the run-down conditions of infrastructure. The oil industry is also moved to market conditions as Ecopetrol and Ecogas are privatised and obtain financial investments from abroad. Market mechanisms are also re-introduced into the electricity system seeking new investments in the sector.

5. Discussion and conclusion We will emphasise two aspects of our learning through this process. (i) The process of building this type of scenarios, its value for understanding the energy futures, and what could have been done differently given what we learned from the project. (ii) What we have learned about the robustness and future of the energy sector in Colombia.

5.1. Insight from the process We believe, and it was also the predominant belief among the participants, that it was an extremely useful and rewarding process. It opened up wide-ranging and detailed

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discussions on the future of the energy sector in Colombia and, due to the mix of participants the different perspectives brought up were often directly opposed to the starting point. Differences between the ‘academic’ and the ‘practical’ point of view often turned out to be much less significant than initially anticipated. It was clear that the mix of presentations, group work/discussions and reports back to the whole group, created an open and engaging environment which allowed all viewpoints to be brought up, compared, discussed and incorporated into the evolving consensus of the group. The participants and the facilitators were open to new ideas, and the structured workshops turned out to create an environment that allowed the participants to have an open and constructive discussion of the issues. In some cases, the project team decided the composition of the groups, thereby intentionally creating groups with very different opinions on the issue discussed. The group dynamics was, in our opinion, one of the highlights of the project. These discussions added enormous value to the generation, understanding and evaluation of ideas in the project. The mix of people involved in this project also created a new network in the energy sector, a network that had not existed before. The fact that a number of independent consultants worked as facilitators, in addition to there being representatives from many of the largest energy companies in Colombia, created a visibility and understanding of the scenario technique that did not exist before the project. Following the project, a number of companies have taken up the use of scenarios, some helped by the facilitators from the project. In this way, the project was successful in transferring the knowledge and techniques to Colombia, and has been much more successful in this respect than most ‘traditional’ consulting. We did, however, also discover a number of ways in which the process and organisation of the project could have been done differently, better or more efficiently. One of the main questions is whether the process could have been faster (or shorter). The answer to this depends on the purpose of the whole project. If the main purpose is to include as many people as possible in order to get a broad understanding and commitment to the results, the analysis will suffer in sharpness. If, on the other hand, the sharp analysis was the main focus, the broad understanding and commitment would suffer. The problem is that there is no shortcut directly to create sharp analysis as well as broad understanding and participation. This dilemma is shown in Fig. 5. As the project was planned, there was a need for both sharp analysis and broad participation. Thus, a great amount of time was needed. But how much time? We could possibly have used one less workshop, i.e. two rather than three. It would have saved the participants for taking three trips, in addition to having saved money overall for the project. This would have needed a stronger focus on the relevant issues, giving a less broad perspective on different factors that could affect the futures of the energy sector. Along the same lines, the planning of the project was extensive, and in many ways did work efficiently. However, with parts of the project team in Europe in-between the workshops, there was undoubtedly some problems in communication. Possibly, we could have progressed the planning faster by having had a more structured communications process than the one followed.

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Fig. 5. It is not possible to achieve sharp analysis and broad participation at the same time. There has to be an exchange between the two foci.

5.2. Energy insights from the scenarios What kind of new and surprising insights into the energy sector did the project generate? We believe that there were a number of important ‘discoveries’ or rather ‘rediscoveries’, i.e. new perspectives on the importance and centrality of problems and opportunities in the Colombian energy sector. As pointed out previously, the purpose of this exercise was not to create a forecast of what the energy situation would be in Colombia over the next 20 years, but rather to build a set of plausible futures against which the Ministry of Energy and Mines in Colombia could benchmark their plans. However, this does not mean that we did not gain any insight into the energy situation in Colombia. The exercise highlighted a number of issues that are important for the future of energy in Colombia. The most important of these issues are captured in Table 1. In particular, the project highlighted as issues the certainties that will shape the next twenty years in the Colombian energy sector. As can be seen, these issues are a mix of energy-specific issues combined with broader social and political issues. We will highlight a couple of these. The fact that globalisation was chosen as one of the axes for the scenarios makes it clear how important this dimension is, not only for Colombia as a whole, but particularly for the energy sector. Where there had been relatively limited discussion about the connection between energy and globalisation, the scenario project opened up this discussion. It was agreed that the globalisation process would continue outside Colombia, possibly with greater speed than is currently the case. The ambiguity is how and to what extent Colombia will participate in this process. If Colombia chooses to participate fully in the process, this will have a number of implications on how fast the energy sector will develop. A rapid development of the sector depends on investments both by Colombian as well as foreign firms and international institutions. Whether this is possible, or in-deed desirable, will largely be determined by how the internal conflict is resolved.

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It has been clear for a while that the internal conflict has played a significant role in the development of the energy sector, and the project emphasised this even more. As we can see in Table 1, it is taken as a certainty that the conflict will be solved within the twenty-year time frame; however, it is not clear yet exactly how the conflict might be solved, and this will be one of the driving forces that could shape the future of the energy sector in Colombia. The internal conflict has played an even more significant role over the last couple of years, as there have been periods of almost continuous attacks on the electricity infrastructure. It is also clear that foreign investment in the energy sector has been severely limited by the continuing uncertainty that this generates. 5.3. Application of the scenarios The scenarios were presented to representatives from the Ministry of Energy and Mines, the participants in the workshops, other energy stakeholders and the press. They were positively received and have created a broad interest in the energy sector. UPME, the office for planning in the Ministry of Energy, has used them as input to the planning process [17], which signals an effective conclusion of the project and raises confidence that energy planning in Colombia will make the best use of the collective insights generated from the project.

Acknowledgements The World Bank and The Colombian Ministry of Energy and Mines supported this project. The facility team included F. Betancourt, J.P. Bonilla, G. Corredor, C. Fonseca, F. Knecht, and J. Pinto.

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