Venezuela: Climate change mitigation?

By Andrés Urquiola

Context

Venezuela is well known in the world for having oil, and a lot. Actually, this country has the largest oil proved reserves of the world.

By the other side, the oil production has been decreasing in the last years.

However, is important to say that this oil is very heavy by international standards, and as a result much of it must be processed by specialized domestic and international refineries

Thinking logically, having a lot of hydrocarbons should be an advantage, almost a blessing, looking forward to the development of the economy. With the incomes of the exportation, expenditures on sustainable development, and especially in other forms of renewable energies, would be a smart policy.

On the other side, to Venezuela and other countries that produce oil, the clean energies present challenges in the future, because when the world accomplish the renewable energies as a prime source, the oil and others contaminating resources will be obsolete. No one is going to buy it.

Many nations that produce oil already have invested in other sectors of economy, making the country independent of the oil, like Norway, UAE, Qatar and others. Sadly, after almost a century of oil in Venezuela, its economy depends in a 100% today on the price of the oil.

And if your economy and political security depend of oil, surely you won’t be looking to accelerate the process of finding oil substitutes

The question is: How can the country will contribute to the achievement of …

I only remarked the previews SDGs because are the ones related to the clean energies and oil paradigm change

Hydroelectric energyThe country already has several hydroelectric centers that use the flow of the rivers Caroni and Orinoco to provide electric and clean energy to the country.

Simón Bolívar

Antonio José de SucreFrancisco de

Miranda

In a smaller way, there are also wind power centers in the country

Wind Power

Guajira Wind Power Park

Paraguaná Wind Power Park

The problem is that, beside the fact of the wind power and the hydroelectric energy, the pollution of the cars is critical. The subsidies policies make the gasoline in Venezuela the cheapest in the world.So how can we move from fuel to electric?

Dollars per liter of gasoline

Let’s be realistic. Maybe it can take 100 years to change the majority of the fuel motor cars in the world, and maybe it can take 200 years in an underdeveloped country. But sooner or later it will occur. So the public and private organizations need to cooperate to accomplish that. But how can the international finance can help?

Challenge

ODA

Concessional loans

GrantsLoans

Guarantees

Private Sector

Public Sector

Public Universities Energy

Industry

Government

Foreign Direct Investment

Grants

Public-Private Associations

Most of the ODA that enter Venezuela came from the IDB, reaching almost 2000 million of dollars of debt from 2009 to 2012. In contrast, the country didn’t get money from the WBG. From OECD Venezuela obtained almost 40 million dollars, which only represent the 0.01 percent of the GNI.

Financing context

1-The WBG only gives loans to the public sector. Knowing that the country is a middle income country, the conventional loan at market interest rates should work well.

2-With that loans, the government can make investments to research fuel substitutes, and also gives grants to the universities to research and development of more cleaner energies to the transporting sector.

3-The MDB such as CAF and IDB (which are the most active moneylenders of Venezuela) should give assistance through concessional loans, grants and guarantees to boost to the private sector, specifically the SME, which are the more common type of entities in the nation.

Solutions

4-The green bonds are new tendency in the world market and can be a great leverage option to provide resources to both public and private sector. This bonds must be not only in the international market, but also in the domestic market.

5-The government must compromise to create a adequate invest environment to attract FDI, that in my opinion is the key in the development process

6-And finally, to conquer this invest environment, the PPP are the most efficient path, an also the quickest, to reach a total cooperation of all parties in the fight of climate adaption and mitigation.

Solutions

http://ariannyhablemosdeenergiaelectrica.blogspot.com/2009/12/centrales-hidroelectricas-en-venezuela.html

http://www.renewableenergyworld.com/articles/2011/02/wind-power-development-stalled-in-venezuela.html

http://venezuelanalysis.com/news/7124 http://www.brighthub.com/environment/renewable-energy/articles/

9710.aspx http://www.avn.info.ve/contenido/venezuela-desarrolla-energ%C3%

ADas-alternativas-para-preservar-medio-ambiente

Resources