Development & Aid, Environment, Headlines, Latin America & the Caribbean

ENERGY-CHILE: Environmentalists Demand Changes as Crisis Looms

Daniela Estrada

SANTIAGO, Apr 26 2006 (IPS) - Chile’s new government is attempting to forestall a possible energy deficit caused by cuts in the supply of natural gas from Argentina, sky-high oil prices and low rainfall forecasts for this year. But environmentalists are critical of the strategy being adopted.

To alleviate the coming crisis, environmentalist Sara Larraín, director of the non-governmental Sustainable Chile Programme, proposes that in the short term, two or three power stations should be built, fuelled by coal (using the latest technology to minimise pollution), oil, natural gas or geothermal energy.

At the same time, energy sources and power companies should be diversified, and the country should embark on a major programme of energy savings, she explained in an interview with IPS.

“We are in a highly vulnerable situation, due to the unfavourable energy planning legacy of the Ricardo Lagos administration,” she said. “In Chile, the private sector has the initiative in energy matters, and it always prefers the cheapest fuel of the day,” she added.

However, Larraín praised some laws enacted by the Lagos government, which promote efficient energy use and allow unconventional renewable sources, such as solar, wind and geothermal energy, to be used, even though these have not yet been fully regulated.

President Michelle Bachelet requested a report from the National Energy Commission (CNE) as soon as she took office on Mar. 11, and met last week with her minister of Mining and Energy, Karen Poniachik, the manager of the state National Petroleum Corporation (ENAP), Enrique Dávila, and the executive secretary of CNE, Pablo Serra, to analyse different possible scenarios.

Their conclusions were not very promising, although Bachelet did receive some good news: the discovery of large natural gas reserves in the Lake Mercedes basin, in the Magallanes region of Tierra del Fuego in the far south, which could supply the area for 20 years.

At present, the Central Grid System (SIC) which supplies nine out of the 13 regions of the country, and serves 93 percent of the total population of 15 million, is mainly fed by hydroelectric power (59 percent), followed by natural gas (24 percent), coal (12 percent), oil and biomass.

Hydroelectric power is at the heart of the controversy at the moment, because Endesa Chile, a subsidiary of the Spanish transnational corporation of the same name, plans to build four large hydropower stations in Patagonia, 2,000 kilometres south of Santiago. The Aysén Hydroelectric Project would involve a three billion dollar investment and the construction of dams on the Baker River – which has the largest water flow of any river in Chile – and the Pascua River. Some 10,000 hectares of pristine wilderness would be flooded, destroying a number of wetlands and having a negative impact on the habitats of endangered species.

“We are opposed to the Endesa project for several reasons: because of the potentially devastating local impact, because it means continuing our country’s terrible energy policy, and because it’s simply more of the same in terms of the development model,” Juan Pablo Orrego, director of Ecosistemas, a local environmental group, told IPS.

“We are stuck in the production of raw materials: copper, fishmeal, and pine and eucalyptus chips. These are the most polluting industries, and the most intensive in terms of water and energy consumption,” said the environmentalist, who is one of the leaders of the coalition seeking to block the Endesa project.

For her part, Larraín said she hopes “that the Bachelet administration will identify the real needs of the country, and not let itself be carried away by the marketing and publicity of companies like Endesa, which has the whole country talking about a project that hasn’t even been formally presented to the authorities yet.”

Orrego and Larraín believe that giant hydropower stations do not present a sustainable in-depth solution to the country’s energy needs. On the contrary, they argue that if the Endesa project is carried out, it will glut the market for years, suppressing the development of other energy sources that are beginning to make an appearance on the local market.

In November 2001, the first wind park was installed in Aysén, with three windmills generating 660 kilowatts each. Meanwhile, prospecting to exploit geothermal energy is being carried out around Chile.

As for the government, its hopes are pinned on the Liquefied Natural Gas (LNG) project that ENAP has backed since 2004.

The project is being developed by the transnational British Gas, and envisages building the necessary infrastructure to import LNG from different countries and distribute it in Chile in gas form, from 2008. The investment required is 400 million dollars. First, ENAP sought out a “pool of consumers” that would ensure sufficient demand to make the project economically viable. Among them were Endesa and the local companies Metrogas, AES Gener and Colbún, but the last two have opted out of the project in order to invest in thermal and hydroelectric power stations, respectively.

In fact, Colbún, owned by the powerful Matte family, is negotiating a possible partnership with Endesa Chile to build the four power stations in Patagonia.

“Some people are saying that Endesa is striking a deal: it will participate in the LNG project in exchange for the government facilitating Endesa’s hydroelectric power stations in Aysén, a business project that is 10 times bigger, of 3,000 to 4,000 megawatts,” Francisco Aguirre, a partner at Electroconsultores and former director of the SIC’s Economic Load Dispatch Centre, told the local newspaper El Mercurio.

Orrego also sees murky connections between the public and private sectors in the energy business.

“Jaime Estévez, minister of Public Works in the Lagos administration, was named director of Endesa by the pension fund companies (AFP), who are one of the main shareholders. It took only six days for this gentleman, who had access to privileged government information, to find a position in the private sector” after Lagos’ term came to an end, the environmentalist said.

“And we could go on and on. Eugenio Tironi, a communications adviser to the former government, is now head of marketing at Endesa, and Jorge Rosenblut, the present chairman of Chilectra (also owned by Endesa), was fundraiser for Bachelet’s presidential campaign,” he added.

“As Chile has no clearly defined lobbying laws, a short-circuit is occurring between public and private interests. An influence-peddling system is being set up, which is very dangerous for the future of this country,” Orrego said.

Experts also say that a strong energy efficiency programme is essential. “Chile can maintain its level of development and quality of life using the same amount of energy, by managing demand and creating a culture of energy savings in homes and businesses,” Larraín said.

Nicola Borregaard, the head of the Energy Efficiency Programme which was created in 2005 under the jurisdiction of the ministry of Economy, acknowledged at a seminar on Apr. 11 that Chile needs to catch up and learn to use energy efficiently in every sector: residential, commercial, transport, industrial and mining.

“The country has not managed to uncouple economic growth from energy consumption,” she said.

The problem is a global one. In Spain, for example, a technical code of building regulations, which will enter into force in October, will make the installation of solar panels obligatory on new and reconditioned buildings, to provide hot water and to heat swimming pools.

Solar panels will also be mandatory for hypermarkets, malls, administrative buildings, hotels, hospitals and covered markets, if they exceed 3,000 square metres in area. The projected savings on Spain’s energy bill through the use of solar energy is estimated at 40 percent.