What do I think, What can I do?

Posts tagged ‘repsol’

Another small energy battle, this time in Bolivia

Two weeks ago Agentinian government decided to expropiate YPF, causing a bitter diplomatic dispute and showing once again the importance of fossil fuel control in current politics. This week another example, smaller but with some common points, was published: Bolivian government expropiated TDE, electrical distribution company owned by spanish REE. REE is the Spanish electrical distribution company, partially public and offers very detailed data about production and consumption of electricity. The difference with Argentinian case is fundamentally the size,  Repsol and YPF are the biggest companies in their countries while REE and TDE not; the calculated values of the assets is 100 times smaller for the later. And the attitudes between the governments not very aggressive. Besides, it is not the first case of expropriation from Evo Morales and at the same time it has assured Repsols position in Bolivia to sell gas to Argentina, closing this funny circle. The common ground is the claim from Bolivian government for more investment in the poor Bolivian electricity distribution.

Bolivia is a poor country, but rich in some resources as gas and lithium for batteries. I spent one summer there and remember that electricity was not found in every house. Bolivia was quite active in Durban talks asking for a stronger commitment by rich countries towards CO2 emission reduction, whereas Bolivian electricity production was %48 hydroelectric and the other %52 from fossil fuels in last year. It can be said that half of its electricity is renewable but it is also true that their effort in wind or solar energy has been null. Nevertheless, the important data is the CO2 per capita emissions, and Bolivia has a very low value: 1.4 tons per capita in 2008. It is also a gas seller, getting a very important income for the national economy.

So, once again I do not have a clear opinion about the fact and I do not intend to, however I have some thoughts about the context:

  • Bolivia is poor and has the right to improve its weak energy services. At the same time it is vulnerable to climate change and has the right to ask the main emitters for a strong commitment for CO2 reduction.
  • But at the same time Bolivia also has the great opportunity to built a low Carbon economy from the beginning and get a moral bonus this way. The straightforward use of their great fossil fuel resources is very tempting and will have to be done to some extent but a wise combination with renewables will be more reasonable in the long-term in spite of short-term higher costs, even more remembering the great amount of lithium in the Salar de Uyuni. Electric car industry is waiting for it.
  • I think that all have to make some effort, not the same, I agree. We do not have to remember climate change only in the great meetings;  Bolivian new energy strategy may be a good example of that, it is in their hands now.
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Argentina wants to recover the control of its fossil fuels, another energy war

Argentinian map in South America, from wikipedia

The news was specially important in Spain and Argentina. Argentinian president, Cristina Fernández de Kirchner , announced the expropiation of YPF, Argentinian oil company, the biggest company in the country, controlled up to this week by Spanish company Repsol. The diplomatic conflict is served, with several strong words from the presidents, company CEO, YPF former leaders firing in Hollywood style, etc…

I am not going to comment the economic, ethic, moral or juridical aspects of this issue. Surely there are many other better sources for it. I just want to emphasize the huge impact fossil fuels have had, and still have,  in our economy. Two data:

  • The finding of great oil resources in vaca muerta has been mentioned by all parts in this conflict, so the perspective of new oil reserves itself is enough to provoke huge impact.
  • Both Repsol and YPF are the greatest companies in their country.

Consequently, the problem is created, too much power and money is concentrated in a sole resource. And this has been present in the whole history of oil industry and XX century industrial society. How many oil wars have the world suffered in XXth century?

Nevertheless, energy in Argentina is a complex issue, as in most of the world. In spite of having this important resource Argentina is suffering in the last years a kind of energetic crisis, it needs more oil than it produces, it has difficulties to meet the raising electricity demand (1 GWh more per year) and both fuel and electricity prices have increased dramatically (yes, this is possible even without renewables). Whereas, as explained in the 30th page of this magazine, Argentinian renewable investment has been low, very far from the modest 8% electricity target, in spite of having very abundant resources of wind, rivers and sun too.

Growing prices of fuel and electricity have been one of the main arguments for the expropriation, considering YPF was not making enough effort to invest in new wells (A fresh opinion in this sense came from GreenPeace), not so different from USA drill-baby-drill. I think this is a wrong approach. Energy costs are increasing in different parts of the world because all possibilities are getting more expensive, fossil fuels, renewables and, of course, nuclear. Pretending there is a magic solution for that is not only unrealistic, it is counteracting, because it creates false expectations in public opinion. And, even more, the more we trust in fossil fuels the more get in trouble as a society, because climate change is starting to show consequences, and will show more of them and more expensive ones. So it does not seem cheap in the long-term.

Three final small thoughts:

  • Energy resources, companies,… are never fully private, there is always a government interacting with them. It is logical as this is a key service in any modern society, but it is frequently forgotten.  This case is a clear example. So public participation in climate change policies and subsidies is not so different to public participation in many other energy related issues.
  • Many Argentinian are saying that Argentinian oil should be owned by Argentinians. It is an interesting argument, going a little further we could ask if the oil should only belong to this generation Argentinians or should they remember the future inhabitants too? And leave some oil for them?
  • In the media discussion about the price os the stocks to be paid by the government to Repsol, Argentinian government argued that the environmental negative consequences should be accounted and taken out from the price. So they want to discount the externalities. Perfect, but why not do it regularly, next year, and next, and next? And include it in the electrical bill? Or in the cost comparison with renewables (in this case the relative costs would change clearly)? And the last, why now and not last year?

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