Regional Faces of the Energy Transition: Global North versus the Global South

The energy transition is affected by many factors, including natural and financial resources, infrastructure, technology, political will and public policy.

These topics shape the agenda at the 2024 AAPG Latin America and Caribbean Energy Summit, an event convening decisionmakers tasked with developing strategies to meet energy demand while guaranteeing energy sovereignty and lowering emissions.

The program includes three strategic panel sessions featuring executives from regulatory agencies and national oil companies working in Argentina, Brazil, Colombia, Suriname and Uruguay.

Both the topics and the speakers are familiar to Carlos Garibaldi, executive secretary of the Association of Oil, Gas and Renewable Energy Companies Latin America and the Caribbean (Arpel), a supporting organization of the Energy Summit.

Arpel is a non-profit association that serves as a vehicle of cooperation and reciprocal assistance for companies in the region’s energy sector, promoting integration, competitive growth and sustainable development.

Garibaldi noted that Arpel members share concerns and a sense of urgency in addressing energy transition solutions.

“Our companies are evolving in acknowledgement of a new reality. They pursue two paths in parallel: (1) the decarbonization of their operations, processes and facilities via improving energy efficiencies and abating methane leaks and any routine venting and flaring; and (2) diversifying their energy product portfolios by venturing into lithium mining, biofuels, geothermal, solar, wind and hydrogen.”

No One-Size-Fits-All Solution

Garibaldi acknowledged that, while the region is making great strides to diversify energy sources, both progress and solutions vary widely by country.

“For countries such as Uruguay, Chile and Costa Rica, being hydrocarbon importers, well-developed and with lower incidence of poverty as compared to the regional average, it makes a lot of sense to wean from commodities with volatile prices and rely mor heavily on home-grown, renewable energy,” he said.

“However, countries in which O&G production weighs heavily in their economies, should have the right to develop and monetize their country’s resources to preserve their energy security and sovereignty, and to export their surpluses. Nevertheless, Brazil – by far the top oil producing in the region – manages to do both things right, simultaneously. Another good example is Trinidad and Tobago.”

Garibaldi credited the region’s national oil companies for meeting their countries’ demands while implementing lower carbon solutions.

Image Caption

Panel discussion, “Exploration, Development and Decarbonization: How Guyana and Suriname Fit into the Big Picture” held during the AAPG/SPE symposium in Paramaribo in January. From left: Tim Chapman, Hess; Paul Riley, ExxonMobil, Nikki Morris, TotalEnergies; Andrew Hepburn, Shell; Zamri Baseri, Petronas.

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The energy transition is affected by many factors, including natural and financial resources, infrastructure, technology, political will and public policy.

These topics shape the agenda at the 2024 AAPG Latin America and Caribbean Energy Summit, an event convening decisionmakers tasked with developing strategies to meet energy demand while guaranteeing energy sovereignty and lowering emissions.

The program includes three strategic panel sessions featuring executives from regulatory agencies and national oil companies working in Argentina, Brazil, Colombia, Suriname and Uruguay.

Both the topics and the speakers are familiar to Carlos Garibaldi, executive secretary of the Association of Oil, Gas and Renewable Energy Companies Latin America and the Caribbean (Arpel), a supporting organization of the Energy Summit.

Arpel is a non-profit association that serves as a vehicle of cooperation and reciprocal assistance for companies in the region’s energy sector, promoting integration, competitive growth and sustainable development.

Garibaldi noted that Arpel members share concerns and a sense of urgency in addressing energy transition solutions.

“Our companies are evolving in acknowledgement of a new reality. They pursue two paths in parallel: (1) the decarbonization of their operations, processes and facilities via improving energy efficiencies and abating methane leaks and any routine venting and flaring; and (2) diversifying their energy product portfolios by venturing into lithium mining, biofuels, geothermal, solar, wind and hydrogen.”

No One-Size-Fits-All Solution

Garibaldi acknowledged that, while the region is making great strides to diversify energy sources, both progress and solutions vary widely by country.

“For countries such as Uruguay, Chile and Costa Rica, being hydrocarbon importers, well-developed and with lower incidence of poverty as compared to the regional average, it makes a lot of sense to wean from commodities with volatile prices and rely mor heavily on home-grown, renewable energy,” he said.

“However, countries in which O&G production weighs heavily in their economies, should have the right to develop and monetize their country’s resources to preserve their energy security and sovereignty, and to export their surpluses. Nevertheless, Brazil – by far the top oil producing in the region – manages to do both things right, simultaneously. Another good example is Trinidad and Tobago.”

Garibaldi credited the region’s national oil companies for meeting their countries’ demands while implementing lower carbon solutions.

“The leaders are NOCs such as Ecopetrol, Petrobras and YPF – companies aggressively decarbonizing themselves and diversifying their energy product portfolios with renewable energies,” he said.

The Role of Natural Gas

For Nikki Morris, executive director of the Ralph Lowe Energy Institute, Neeley School of Business at Texas Christan University, oil and gas industry involvement in the energy transition is a requirement, not an option.

“The energy transition will not occur without O&G given the profit generation that can be leveraged for the other greener energy solutions,” she said. “Natural gas is the fuel of the future and should not be overlooked.”

Morris will chair the session, “Natural Gas: Providing Energy Security while Fueling the Energy Transition,” a panel including presentations and moderated discussions with exploration executives representing NOCs.

Before joining TCU, Morris worked with TotalEnergies, a company she credits with implementing a correct strategy for financing transitional energies.

“TotalEnergies, is the frontrunner and has matched their global strategy with (capital expenditures) to allow growth in both domains while supporting research and innovation globally to elevate profits from the newer energy sources.”

Comparing Latin America to the U.S., Western Europe

Garibaldi noted that energy transition policy discussions in the Latin America and Caribbean Region inevitably lead to comparisons with Western Europe and the United States and Canada, where legislation and fiscal incentives provide standards for other regions.

Garibaldi places the Region “mid-point” between Western Europe and the United States.

“Western Europe is a net hydrocarbon importer, homogeneously developed and integrated in its infrastructure, with ample middle classes and essentially no structural or energy poverty,” he said. “Except from being the top oil producer and a significant LNG exporter, the U.S. is similar to Western Europe in the rest of the factors mentioned.”

The difference between the regions, for Garibaldi, lies in their commitment.

“While Western Europe is aggressively committed to transitioning, the U.S. is lagging. Biden’s (Inflation Reduction Act) legislation incentives are a step in the right direction, but as the November presidential election seems like a toss-up, environmental and energy policy continuation is uncertain,” he said.

Garibaldi said that the Latin America and Caribbean region has marked differences between its counterparts in Western Europe and the United States.

“LAC is a heterogeneous region with respect to levels of development, energy matrices, hydrocarbon resources and exposure to the effects of climate change,” he said. “The region also has significant social liabilities in infrastructure, access to education and health care, and poverty.”

He cited a 2023 report from the Economic Commission for Latin America and the Caribbean affirming that 33 percent of the region’s population lives below the poverty line, with 13 percent in indigence.

Limited access to energy is another key factor affecting parts of the region.

“Three percent of the region’s population lacks access to electricity, while 15 percent lacks access to clean fuels for cooking,” he said.

Just Energy Transitions

Garibaldi will serve as moderator for the Energy Summit “Regulator Panel: Strategies for Achieving Energy Sovereignty and Just Energy Transitions,” which will feature a discussion with the presidents of ANCAP, Colombia’s National Hydrocarbon Agency and the CEO of the Petroleum Commission of Ghana.

The discussion will examine the role of the oil and gas industry in the energy transition and will support the thesis that transitions in LAC and in Africa, parts of what some call the “Global South,” cannot be compared to transitions in the United States and Canada or Western Europe.

“The ‘Western European Model’ is not applicable, and neither can there be applicable a singular ‘LAC Model.’ That’s why in LAC we advocate for plural, just and inclusive energy transitions,” he said.  

Garibaldi also hopes to highlight another area of consideration voiced by leaders of developing economies, the struggle to follow standards imposed by the Organisation for Economic Co-operation and Development countries who grew their transportation, communication and infrastructure sectors without restraint and still contribute quite significantly to global greenhouse emissions.

“The ‘Global North’ – 13 developed countries excluding China – with 14 percent of the world’s population, contributes 24 percent of global greenhouse gas emissions, 67-percent more per capita than the global average, and it is estimated that it has contributed 43 percent of all emissions since 1850,” he said.

“It wouldn’t be ‘just’ if many of LAC countries, with very modest contributions to global cumulative greenhouse gas emissions, had to relegate their development because of the externalities created by the ‘Global North’ in its successful development.”

Despite the challenges, Garibaldi said, the LAC energy transition is moving forward, and it is led by industry.

“Industry is decarbonizing its operations, processes and facilities and at the same time diversifying its energy product portfolios by venturing into renewable energies. For example, CCUS, biofuels, geothermal, offshore wind, hydrogen, lithium mining and installing EV chargers in gas stations, are only natural extensions of our industry’s legacy competences,” he said.

“Led by NOCs such as Ecopetrol, Petrobras, YPF, ENAP and ANCAP by IOCs such as Shell, Chevron, TotalEnergies, BP and Equinor active in the region, and by regional independents such as Pan American Energy, Tecpetrol, GeoPark and Pluspetrol, to name a few, our regional O&G industry is making strides at a more aggressive pace than that of domestic U.S. independents.”

Long-term Strategy to Promote Investment

For Garibaldi, the renewable energy economy, as well as the mining for metals and critical minerals that it requires, has the same requirements as the hydrocarbon economy: infrastructure, contractual stability and a healthy investment climate.

“To attract the major investments required we need policies of state that see beyond electoral cycles and ideological swings. We also need sound regulations that expedite our permits, as well as those required by the mining sector and by renewable energies. And to achieve or improve integration, even along subregional blocks, we need to improve coordination among our governments, harmonizing infrastructures, planning, regulations, and tax and customs policies.”

From Politics to Policy

Morris’s experience with TotalEnergies showed her the importance of policy decisions in making exploration projects successful.

“‘Permitting, Permitting, Permitting’ is key in sustainable energy growth to execute on time and budget. The conversation needs to change from energy politics to energy policy,” she said.

A passion for policy and leadership led Morris to her current position with the Ralph Lowe Energy Institute, whose MBA and certification programs are designed to form energy sector leaders.

It also motivated her to be involved with the Energy Summit, an event designed to facilitate connection and collaboration between decision-makers.

“Energy touches everything in our lives and we need global leaders to partner together to solve the future challenges of bringing sustainable and affordable energy to all,” she said. “It’s my passion to give back to a university to help drive awareness on the instrumental role energy plays in our society while building global energy leaders.”

The Energy Summit takes place in Punta del Este, Uruguay from Nov. 19-21. See the program at EnergySummit.AAPG.org.

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