How gas interests have slowed Chile's clean energy transition

How gas interests have slowed Chile’s clean energy transition

RIO DE JANEIRO (Associated Press) – Chile positions itself as a global leader in climate change. Roughly 22% of Chile’s electricity is generated by solar and wind farms, putting it far ahead of the global average, at 10%, and the United States, at 13%. It was one of the first countries to announce a renewable energy target in 2008.

Yet even with solar farms scattered across the north and center of the long narrow country, imported natural gas, a polluting fossil fuel, has been able to sideline the clean electricity it provides thanks to a sweet deal the government won.


Marcelo Mena, Chile’s former environment minister, witnessed the waste of clean energy before he took over the presidency of the New Global Methane Center, a nonprofit organization that aims to reduce global methane emissions. Natural gas is essentially methane.

“They’re actually holding back the energy we can deliver from renewables,” Mina said of his experience with natural gas in an interview with The Associated Press. “It was more than opposed to a 100% renewable target.”

Mina was disappointed to see renewable energy driven by fossil fuels in the north of the country, where the sun’s rays abound.

“At the same time, in southern Chile, there is a huge shortage of natural gas for heating and people are heating themselves with wood and choking on it. It was a huge contradiction,” Mina said. “This is my personal journey.”

Chile offers a look at how fossil fuel companies can stay on top, even as governments try to pursue clean energy.

The shock of Chile’s energy transition came in the mid-2000s, when Argentina drastically reduced gas exports to Chile to focus on its home market. The Chileans faced strict power rationing and regular blackouts.

Having struggled to find a replacement, the nation found an opportunity.

Chile receives some of the strongest and most consistent sunlight on the planet, especially in the Atacama Desert, in the north. So it was only natural that the country would seek to invest in solar and wind energy projects through public auctions and quotas that require electricity companies to provide a minimum amount of renewable energy.

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

But the devil was in the details. To save energy when the sun isn’t shining, the government has also invested heavily in fossil fuel infrastructure.

Natural gas importers and gas-fired plant owners successfully argued that in order to secure long-term contracts for gas, they needed to ensure that the Chilean power grid would consume gas-fired electricity even when other, greener generators were producing a lot of power.

Chilean energy generator Colbon, a large consumer of natural gas, said international contracts in which LNG importers have to pay for gas whether they need it or not, along with a lack of storage, make the sector vulnerable.

“It is important that regulations recognize this requirement so that the electricity market has enough natural gas to ensure the integrity and competitiveness of the system,” the company said in an email response to the Associated Press.

The government allowed them to declare electricity from LNG imports as “forced gas,” meaning that gas-fired electricity was given priority in the energy market, which favors renewables.

“Any situation in the electricity market that favors fossil fuels, and takes space away from renewables, is a loss to the environment and the energy transition,” said Ana Lea Rojas, who leads the Chilean Association of Renewable Energy and Storage.

Another consequence of forcing gas-powered electricity into the market is that electricity prices for all service providers are lowered, which means they get paid less, said Alfredo Solar, a solar power plant manager with more than 20 years of experience.

“I worked on solar plants that were, for example, in default because the market price was much lower than expected,” Solar said, stressing that renewable energy providers operate without contracts and depend on that revenue.

Emissions from burning gas, oil, and coal for electricity, transportation, and other uses are the main driver of climate change. Last year, researchers estimated that nearly 60% of the world’s oil and gas reserves and 90% of coal reserves would need to stay underground by 2050 in order to meet the goals of the Paris climate agreement.

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

In November, during the United Nations climate summit in Glasgow, Scotland, the Biden administration, the European Union and dozens of other countries pledged to reduce total methane emissions worldwide by 30% by 2030.

Last year, the Chilean government reduced the advantage given to natural gas energy providers. Their power still enters the grid at a discount, but it’s not meant to replace renewables. However, the concept of “forced gas” still exists, and Chile’s renewable energy advocates say the changes aren’t enough.

In other countries, battery storage is rapidly replacing new gas-fired power plants because they can provide electricity to the grid when the sun goes down or the wind isn’t blowing. In the United States, this type of stored electricity increased 1,200% in five years. An amount equivalent to what could be saved by three nuclear plants was installed in 2021. This was double the previous year.

Large-scale battery storage is still too costly to be used on a large scale in Chile, said Daniel Salazar, former CEO of Chile’s Northern Energy Network, now with consultancy EnergiE. “Chile has many projects, but they are still high-cost solutions and do not compete with other options,” Salazar said.

Even Rojas, of the Chilean Renewable Energy Association, has backed the role of natural gas. “Natural gas is the fuel for the energy transition, the technology that will allow us to make those adjustments, as long as it doesn’t take up space away from renewables,” she said.

In many other countries, the idea of ​​natural gas as the fuel that enables the energy transition is fading away. This is because the fuel is more climate-friendly than coal if it does not leak and is not intentionally released from wells and infrastructure along its way to the power plant. But studies and satellite imagery show that both things happen.

By 2030, solar power should account for 30% of Chile’s total installed electricity capacity, according to the Power Generators Association. This will make it the largest source of power in the country.

Mina, the former environment minister, said established energy companies were telling him it was taking too long to phase out fossil fuels. Five years ago, he said, people were telling him that the price of solar energy could never go down. But she did. “My message is that change comes from irrational people,” he said, “willing to face what is supposed to be impossible,” referring to Chile’s large and growing clean energy sector. “We need unreasonable people to make this change.”

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The Associated Press’s climate and environmental coverage receives support from several private foundations. Learn more about the AP’s Climate Initiative here. AP is solely responsible for all content.

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