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Can President Petro crack Colombia's reliance on oil and coal?

Colombian miners work in a 150-year-old coal mine in Argelia
explainer

Colombian miners work in a 150-year-old coal mine in Argelia, northwest Colombia, March 27, 2006. REUTERS/Albeiro Lopera

What’s the context?

A new president plans an unprecedented shift from fossil fuels to a greener economy. Experts warn it could take decades to achieve.

  • President Gustavo Petro pledges sustainable energy transition
  • Oil and mining provides up to 8% of Colombia's GDP
  • Rising energy costs and inflation add to challenges

BOGOTA - Indigenous leader Antonio Matapi hopes the election of Gustavo Petro as Colombia's new president marks a historic shift towards a better future for the Amazon rainforest he calls home.

Petro takes office on Sunday as the country's first leftist president, with a bold vision to transform the country's hydrocarbon-dependent economy into a greener and fairer society.

He has been cheered by environmental champions such as Matapi - but economic analysts warn it will be a tough battle to wean the country off hydrocarbons, especially as rising inflation and oil prices fuel recession risks worldwide.

"Indigenous peoples living in the Amazon protect the forest and understand the importance of conserving it," said Matapi, who lives in Colombia's remote southeast Amazonas province.

"We support Petro because he's committed to protecting the planet and we're hopeful that he will."

Petro, a former member of the now-defunct M-19 guerrilla movement, and Francia Marquez - Colombia's first black vice president and a leading environmentalist - have promised a focus their government on peace, social justice, and the environment.

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Currently, oil and mining provide up to 8% of the economy's total value and more than half of its monthly exports, according to government data.

Petro aims to reduce Colombia's reliance on oil and coal exports through a gradual transition to solar and wind energy, while promoting agriculture, food production and tourism to boost the economy.

Rural development in poor regions has been stifled for decades due to Colombia's conflict, security problems, and drug trafficking, as have road building programs that would connect farmers with buyers for their produce in cities.

Petro has pledged to stop all new oil exploration and construction of new large-scale open-pit mines, and to halt fracking pilot studies and the development of offshore oil and gas projects, saying it's what "science tells us."

No other oil-producing country in Latin America and the Caribbean has considered banning new oil exploration.

The government plans to include environmental goals in rural development plans, and mark off and protect areas highly vulnerable to the impacts of climate change.

It also says it will crack down on illegal deforestation in the Amazon, and increase security for environmental defenders. The country suffered a record 65 recorded deaths in 2020, leading it to be named the world's most dangerous country for such activists.

To provide new energy sources, Petro intends to step up use of abundant and largely untapped wind and solar energy, and wants state-owned oil company Ecopetrol to focus on "new ways of clean energy generation," including green hydrogen.

Energy challenges

But moving away from oil presents a "major challenge" for Colombia, with hydrocarbons accounting for a significant share of government revenues, exports, and gross domestic product (GDP), said energy expert Nate Graham.

Meanwhile, the impact of the COVID-19 pandemic has pushed up government debt while rising global energy prices, largely driven by the Ukraine war, are fueling recession fears and making it harder to argue for cuts in oil production, he said.

"The threat of future oil shocks like the war in Ukraine can make it appear unattractive to cut back on domestic oil production and risk energy self-sufficiency," said Graham, the energy program manager at the Inter-American Dialogue, a U.S.-based think-tank.

Inflation has also led to pressure on governments across the region, including Colombia, to launch or maintain petrol subsidies that can be politically challenging to remove once enacted, he said.

In Colombia, electric cars are a rare sight and while some city bus fleets are electric, trucks and public transport still largely run on petrol, which is subsidized by the government.

Colombia is a major global exporter of coal. This year it increased exports to countries including the Netherlands, Spain and Canada, filling energy voids as Russia reduces gas supplies in retaliation for sanctions over its invasion of Ukraine.    

According to the Colombian Mining Association (ACM), Colombia would have to grow its agricultural sector six times to match the economic contribution of mining.

Any transition away from fossil fuels must go hand in hand with a reduction in domestic demand to avoid the risk of costly imports in the future, said economist Juan Pablo Ruiz, a professor at the Externado and Del Rosario universities.

"A proposal to suspend exploration for hydrocarbons is only valid to the extent that steps are taken to modify the demand," Ruiz told the Thomson Reuters Foundation.

Energy efficiency efforts and more reliance on renewable energy could help in cutting fossil fuel demand, analysts say.

Energy expert Francisco Monaldi said a "full transformation" to a decarbonized economy in developing countries would likely take up to 30 years, including government policies and financial incentives to promote the use of renewable energy.

"He (Petro) is in a way lucky," said Monaldi, director of the Latin America energy program at the Center for Energy Studies at Rice University's Baker Institute for Public Policy in Texas.

"He is coming in with prices of oil at a high level, so even if production continues to decline, he will continue to have very significant revenues."

Climate change leader?

As Petro prepares to push through his climate policies, he is already shifting foreign policy in an effort to build alliances as a regional leader on global warming and efforts to protect the Amazon rainforest.

Incoming vice president Marquez said the government will collaborate on tackling climate change with Chile, where recently-elected President Gabriel Boric has also pledged a firm stance on protecting the environment.

Relations with the United States - which regards Colombia as its main ally in Latin America - have traditionally focused on the U.S. providing billions of dollars of largely military aid to anti-drug and counter-insurgency initiatives.

Petro has said he wants to shift Colombia's foreign policy relationships away from the war on drugs and toward the battle against climate change, which will mark a significant shift, especially for its partnership with the United States.

"I propose to the government of the United States and to all governments of the Americas that we sit down and talk to establish the steps of an energy transition," said Petro during his acceptance speech after winning the presidential election in June.

When a U.S. delegation visited Petro's team in Bogota last month they discussed climate change and economic development along with counter-narcotics.

The issue is also set to be a focus in relations with China, with Petro telling Chinese President Xi Jinping that he looks forward to a "productive relationship" on building fair and decarbonized economies and "overcoming the climate crisis."

While some critics and conservative opposition politicians question Petro's path ahead, saying it would imperil Colombia's economy and energy self-sufficiency, the new president is adamant there is no other option to secure the future.

"The existence of humanity is at high risk due to the climate crisis ... Colombia wins immensely in the transition to clean energy," Petro tweeted earlier this year.


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