How interest in gas slows down Chile’s clean energy transition

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Rio de Janeiro – Chile has established itself as a global leader in climate change. About 22% of Chile’s electricity is generated by solar and wind farms, putting it far ahead of both the global average of 10% and the United States of 13%. It is one of the first countries to announce the goal of renewable energy in 2008.

Although solar farms have spread to the north and center of the long, narrow country, imported natural gas, a polluting fossil fuel, has been able to set aside the clean electricity they supply for a sweet deal won by the government.

Marcelo Mena saw the waste of clean energy before taking the lead in the new global methane hub, a nonprofit that aims to reduce global methane emissions. He is the former Minister of Environment of Chile. Natural gas is basically methane.

“They’re actually blocking the energy that we can get from renewable energy,” Mena said of her experience with natural gas in an interview with the Associated Press. “It is more opposed to the 100% renewable goal.”

Mena is disappointed to see renewable energy being pushed by fossil fuels in the north of the country.

“At the same time, in southern Chile, there is a severe shortage of natural gas for heating and people are heating themselves with wood and holding their breath. It was such a big conflict, “said Mena. “It’s my personal journey.”

Chile offers a glimpse into the way fossil fuel companies operate at the top, even under governments that seek to pursue clean energy.

The shock led to a power shift in Chile in the mid-2000s, when Argentina drastically reduced gas exports to Chile to focus on its domestic market. The Chileans faced severe power rationing and regular blackouts.

After shaking up to come up with an alternative, the nation saw an opportunity.

Chile receives the strongest and most consistent sunlight on the planet, especially in the northern Atacama Desert. So it was natural for the country to seek investment in solar and wind projects through public auctions and quotas so that the power companies had to provide a minimum amount of renewable energy.

Investors have heard their call. Developers have built hundreds of solar, wind and geothermal plants across the country, stretching 4,300 km (2,700 miles) from north to south.

But the devil was detailed. To provide electricity when the sun was not shining, the government also invested heavily in fossil fuel infrastructure.

Natural gas importers and gas-fired plant owners have successfully argued that in order to secure a long-term contract for gas, they need a guarantee that Chile’s power grid will receive their gas-powered electricity even when other, green generators are generating a lot of power.

Chile’s power generator Colbun, a major consumer of natural gas, says international agreements weaken the sector, including a lack of savings, whether LNG importers have to pay for gas or not.

“It is important that the regulations recognize that there is sufficient natural gas in the electricity market to ensure system safety and competitiveness,” the company said in an emailed response to the AP.

The government has allowed them to declare electricity from LNG imports as “forced gas”, meaning gas-powered electricity was given priority in the power market, which is otherwise in favor of renewability.

“Any situation in the electricity market that dominates fossil fuels, moving away from renewables, is detrimental to the environment and to energy conversions,” said Anna Leah Rojas, who heads the Chilean Association of Renewable Energy and Storage.

Another consequence of forcing gas-powered electricity on the market is that it has reduced the price of electricity for all providers, which means they have received lower wages, says Alfredo Solar, a solar plant manager with more than 20 years of experience.

“I worked on solar plants that, for example, were in default because the market value was much lower than what was estimated,” said Solar, adding that renewable energy providers operate without contract and rely on that revenue.

Emissions from fuel gas, oil and coal for electricity, transportation and other uses are major drivers of climate change. Last year, researchers calculated that about 60% of the world’s oil and gas reserves and 90% of its coal reserves would be underground by 2050 in order to meet the Paris Climate Agreement.

Natural gas or methane is a powerful greenhouse gas that has a stronger effect on the environment than carbon dioxide in the short term. Methane retains heat 84 times more efficiently than carbon dioxide over a 20-year period, making methane depletion one of the fastest ways to reduce global warming, experts say.

In November, during a UN climate conference in Glasgow, Scotland, the Biden administration, the European Union and dozens of other countries pledged to reduce global methane emissions by 30% by 2030.

Last year, the Chilean government reduced the benefits offered to natural gas power providers. Their energy still enters the grid at low prices, but not to displace renewables. Yet the concept of “forced gas” still exists, and Chile’s renewable lawyers say the changes are not enough.

In other countries, battery storage is rapidly replacing new gas-powered power plants because they can supply electricity to the grid when the sun is setting or the wind is not blowing. In the United States, such stored electricity has increased by 1200% in five years. In 2021, the three nuclear power plants could supply the same amount. Which was double the previous year.

But large-scale battery storage is still too expensive to use widely in Chile, says Daniel Salazar, former executive director of Chile’s Northern Power Grid, now with consulting firm EnergiE. “Chile has a number of projects, but they are still high-cost solutions that do not compete with other options,” Salazar said.

Even Rojas, Chile’s renewable energy agency, supported the role of natural gas. “Natural gas is the fuel for energy change, technology that allows us to make those adjustments, unless it takes place from renewable,” he said.

In many other countries, the concept of natural gas as a fuel that enables energy transfer is fading. This is because the fuel is more climate friendly than coal if it does not leak and is not intentionally released from the infrastructure on the way to the wells and power plants. But studies and satellite images show that two things happen.

According to the Association of Power Generators, by 2030, solar energy should account for 30% of the total electricity installed in Chile. This will make it the largest energy source in the country.

Mena, a former environment minister, said established energy agencies had told him that fossil fuels would take a long time to run out. Five years ago, he said, people told him the price of solar could never go down. But it did. “The message to take home is that change comes from irrational people,” he said, referring to Chile’s large and growing clean energy sector, which is unimaginable. “We need irrational people for that change.”

The Associated Press gets support from a variety of individual foundations for climate and environmental coverage. See more about AP’s climate initiatives here. AP is solely responsible for all content.

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