Friday, August 8, 2014

Chile searches for vision


In Chile, presidents are unable to run for consecutive terms and their administrations change every four years. It is an extreme form of democracy that safeguards against any one person or system from hijacking a government, a clear reaction to the 1973-1990 dictatorship.

While Chile is a relatively healthy democracy and should be congratulated for the social and economic advances it has made in the past two and a half decades, such quick successive change can hinder long-term planning, which in areas such as infrastructure, energy, and education is essential to the building of a modern nation state.

The lack of a coherent and proven long-term vision – to ensure projects will go ahead, companies will not be nationalized and rules will be respected – can also hamper investment and investor appetite.

For this reason I applaud the Chilean energy ministry's launch of Energía 2050, an energy policy initiative that calls on experts and the public to develop a vision for the country – all the way through to 2050.

"As the president has stated, we want to move from a reactive energy policy to a long-term strategy," energy minister Máximo Pacheco said.

Like most countries in the region, Chile follows an energy model developed in the 1980s that prioritizes the market and works more or less without any role from the state. While it has generally served as a model for other nations to follow, this lack of vision and foresight has led Chile to where it is now: a country that finds it nearly impossible to develop new projects and faces rising energy prices, a congested transmission system, and an overall sense of disorder in the industry.

"Every four years, a new government arrives that understandably has its own vision for the country's development," says Rene Muga, head of Chile's generators association. "If we can't create a plan that transcends administration changes, I don't think we'll be looking at a stable future for investment in the sector."

To change this, Chile and other countries need to think beyond the current government, even beyond the next administration, to take a look at where they are going.

What kind of grid do we want in 30, or 40 years? How can a modern, competitive energy system be developed that is both clean and affordable? How do we involve the citizenry in energy decision-making? How can we take advantage of local energy resources while not harming local communities? What can we do to curb climate emissions and limit the global temperature increase to 2°C by 2050? What kind of world do we want our children to live in? These are questions that must be addressed today in order for solutions and policy to be developed accordingly.

Long-term initiatives might also, I suggest, determine whether Chile reaches the much discussed 'developed country' stage.

Of course, these sorts of initiatives have been developed before, only to be stymied by politics. Energía 2050 is a nice first step, but will the next government carry on with the plan?

August 04, 2014

BN Americas