Finito: Colombia halts new gas, oil and coal exploitation

President Gustavo Petro, Colombia’s first-ever progressive leader, wants to help slow global climate change, protect regional biodiversity and bolster Indigenous people’s rights by decoupling the nation’s economy from fossil fuels, starting with a ban on new oil and coal exploration permits. The contentious policy change for the long fossil fuel dependent nation comes on the back of a bonanza year for the industry, which enjoyed a record-setting $22 billion in export revenues. Making good on his campaign promises, in early February Petro presented a $247.1 billion four-year development plan to lawmakers full of sweeping social and economic changes. Lead blogger and podcaster Michael Buchsbaum reviews the evolving situation in this installment of the Colombian Conundrum series.

Cerrejón mine in Colombia. Credits: Hour.poing, Wikimedia, CC BY-SA 3.0.

Stunner at Davos

“We have decided not to award new oil and gas exploration contracts,” said Colombia’s minister for mining and energy, Irene Veléz, during a panel at the most recent World Economic Forum in Davos.

While this controversial decision will not affect exploration contracts that have already been signed, “It’s a clear sign of our commitment in the fight against climate change,” Valéz continued.

A sharp change of pace for this South American country’s energy transition, Valéz deemed it “a planetary decision,” reflective of a crisis that is “absolutely urgent and requires immediate attention.”

Colombia’s President Gustavo Petro elaborated further during a speech of his own at Davos, saying that “We are convinced that strong investment in tourism, given the beauty of the country, and the capacity and potential that the country has to generate clean energy, could, in the short term, perfectly fill the void left by fossil fuels.”

Climate change threatens to extinguish humanity, and the sooner the world realizes that it needs to stop using fossil fuels, the better chance people have to make a change before the “point of no return,” continued Petro at Davos.

The decision builds upon Petro’s conviction, amplified by his speech at 2022’s COP 27 in Sharm El Sheikh, Egypt, that “the market is not the main mechanism for overcoming the climate crisis. It was the market, through the accumulation of capital, that caused it. And it will never be the solution. The climate crisis can only be overcome if we stop consuming fossil fuels.”

Clean Ambitions

In office since June 2022, Petro wants to replace Colombia’s fossil fuel export revenues with new income from tourism, diversified agriculture, and a robust renewable energy rollout.

However, for the past four decades, the country has been heavily reliant on income from fossil fuel exports, which remain central to its economy.

In 2020, crude oil was the most exported commodity from the country, generating some 6.9 billion euros, primarily in trade with the United States and it was the continent’s second-largest petroleum producer after Brazil prior to Russia’s invasion of Ukraine.

And Colombia is also Latin America’s largest coal producer, almost all of which is sent into the export market.

Though those numbers were declining as nations elected not to import Colombian coal due to its known connections to human rights abuses and other risks (see here and here),

in the wake of Russia’s war of aggression in Ukraine, European importers, including Germany, have returned to burning it.

According to Reuters, Colombia’s mining royalties enjoyed a proverbial bonanza, raking in over $1.32 billion in 2022 as coal production rose some 10% higher.

Swiss-owned mining conglomerate, Glencore, owner of the “monster” Cerrojon mine, increased their coal production across Colombia over 6%, extracting some 110 million tonnes, a figure it intends to hold to through 2023.

Enough production to ensure domestic needs

But does the nation need its buried hydrocarbons?

Currently 60% of Colombia’s electricity needs are supplied by renewables, primarily hydroelectric, but an increasing amount of wind and solar too (see here).

According to a government report, current exploration and production contracts in Colombia guarantee self-sufficiency in natural gas for the next 15 years.

Moreover, since existing global and domestic climate commitments mean that today’s coal importers will soon reduce their purchases, an alternative economy must be created, said director of mining regulator ANM, Álvaro Pardo, recently.

Additionally, he said, the phasing in of the new Escazú agreement protecting both environmental and Indigenous peoples’ rights combined with the implementation of new mining codes will constrict the industry.

Pardo added that the government will also soon require mining companies operating in Colombia to comply with social, environmental and economic obligations.

Post-Davos Renewables bump

Days after Davos concluded, Minister Vélez inaugurated three new large solar plants in the Tolima Department with enough capacity to supply electricity to 40,000 homes.

The PV plants are part of a group of projects that will produce a total of 69 GWh per year of renewable electricity.

This follows a January statement from Colombian-state owned Ecopetrol announcing a new joint venture with Total Eren to build a new 100MW PV farm in Meta province with operations coming online in early 2024.

With more than 18,000 employees, Ecopetrol is the largest company in Colombia and is responsible today for more than 60% of its total hydrocarbon production.

But with a new emphasis on clean energy production, all the electricity the new PV farm will generate has already been sold to Ecopetrol under a 17-year power purchase agreement (PPA) as part of the group’s decarbonisation strategy and efforts to expedite Colombia’s energy transition.

Longer term, by 2025, Ecopetrol plans “to incorporate 900MW of renewable energies that help us face climate change,” said company president, Felipe Bayón Pardo.

Colombia first recipient of new $300 million global Climate Investment Fund

According to Climate Home News, in early February, Colombia became the first nation to benefit from the new $300 million Climate Investment Fund aimed at stimulating the roll-out of renewable energy across the world.

Intended for infrastructure development, like the construction of new transmission lines to get renewable electricity to rural communities and businesses, Colombia’s $70 million slice will also be used to install large battery storage systems.

Coming from a pot made up of one-off donations from the governments of the United Kingdom, Netherlands and Switzerland, other countries set to benefit with up to $70 million each include Kenya, Mali, Fiji and Ukraine.

Petro’s sweeping new National Development Plan

Announced in early February 2023, Petro’s nearly $250 billion National Development Plan (Plan Nacional de Desarrollo), aims to cut the percentage of the population living in extreme poverty to just single digits. He also wants the government to use the financial surpluses from coal and oil revenues to pay for the transition to clean energy.

By a vote of 120 to 12, in early May, the lower house of Colombia’s Congress in Bogota approved the plan following previous passage by Colombia’s Senate.

The new powers granted to Petro include the ability to regulate or restructure majority state-owned electric companies, like Ecopetrol as well as conduct unprecedented land reform, authorizing the redistribution of millions of hectares to poor farmers to increase agricultural production.

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L. Michael Buchsbaum is an energy and mining journalist and industrial photographer based in Germany. Since the mid-1990s, he has covered the social, environmental, economic and political impacts of the transition from fossil fuels towards renewables for dozens of industry magazines, journals, institutions and corporate clients. Born in the U.S., he emigrated to Germany and Europe to better document the Energiewende. He is also the host of The Global Energy Transition Podcast.

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