The Economist predicts that ‘Latin America is set to become a leader in alternative energy.’ This, the influential publication sustains, would be particularly the case for Chile with its favourable business environment. But the entire continent’s natural environment is clearly also conducive to renewable energy production.
Take Chile, whose sun is scorching in the vast deserts of the North, while heavy winds blow in the South. Furthermore, the country’s long coast invites literally cries out for offshore wind parks and tidal power plants.
Renewables won’t boom overnight, though. As of yet, technological constraints prohibit alternative energy being stored or even shipped to the degree possible for conventional energy. While renewables under the right weather conditions produce rapidly a lot of energy, output falls as quickly in reverse conditions. As energy is the lifeblood of any economy, a fully green economy remains illusory at this time. To guarantee social and economic stability, then, conventional energy has to occupy a significant chunk of the mix. In Chile, conventional energy comes mainly from coal, for most other countries from gas.
The Economist is right to point to the accommodating business environment, but misses to point out the foreign and domestic political consequences that every technological change brings. Chilean policy-makers, the good neoliberals they are, seem to make the same mistake. They don’t have a plan that reconciles Chile’s commitment to combat climate change with the state’s social obligation to utilise its natural resources for wealth creation; they conveniently omit the importance of conventional energy for Chile’s future. This spares the government as well as the immutable campaigners from the opposition to state that either coal production or gas imports need to go up. Emphasising the former could damage the green image, defer investment, and condemn its crowded yet growing cities to an even longer period of breathing toxic air.
If, on the other hand, gas gets preference Bolivia’s status will elevate, and La Paz will remain on top at least as long as the continent’s transition to stand-alone renewable energy is underway. Thus, if Bolivian interests aren’t channelled in waters Chile can navigate, La Paz’s attacks will grow more brazen. The strategic importance of gas could have a similar effect on Argentina’s position, which would compound its regained influence even more. Admittedly, Chilean-Argentine relations are much better than Chilean-Bolivian relations, but even so, one day Argentina will be tempted to use its advantage and pressure Chile on matters it deems geostrategically important. Assurance goes only so far in an anarchic world and one never knows when the tables turn, especially in Latin America.
Venezuela is another problem. Although the country sits on tremendous oil reserves, the Maduro administration has basically stopped any production. But whoever follows Mr. Maduro, will have to resurrect the oil industry to help rebuild the shattered country at least as long as the world economy is still running on oil. Therefore, Venezuela might turn hostile to the green economy, making it an ideal bedfellow for the Trump administration. (Anglo-Saxon economics likely rules in post-Maduro Venezuela, as it established a firm, yet covert presence already.) To avoid re-imposing oil as prime export commodity, the continent would need something like a fund that helps countries like Venezuela to transition smoothly. Otherwise they will hold off renewables, which would stifle innovation and asphyxiate the continent’s future potential.
That would amount to history repeating itself as farçe. In the early 1960s and 1970s, when the liberal order consolidated in Europe and North America, the US alone had been able to segregate Latin America by exploiting class divisions. This way, every country, either voluntarily or by force, had to accommodate US interests. In the twenty-first century one, perhaps two more actors have greater capacity to compete for influence than they had back then. They certainly will aim to impose themselves in a strategic region and leave as little as possible to their competitor. A weak and divided Latin America might well become another battleground of the great powers. Therefore, leaders should aim to greatly reduce the still existing huge inequalities between and within Latin countries. A strong region will house strong actors.
Whichever way you turn it, regional integration is of utmost importance, or inequalities and hostilities among Latin countries will deepen, and waste unprecedented economic and geostrategic potential.
That’s a challenging task but there’s much gain. No region on Earth has the same potential to harness the inevitable transition to a green global economy. Chile is currently well positioned to push this transition technologically, but it lacks influence to enthuse its neighbours for a comprehensive grand energy strategy. Santiago should therefore make renewable energy a pillar not only of its domestic economic policy, but also of its regional relations. After all, if done right, the new economy will make Chile a richer nation on a richer continent.