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LatAm-China energy ties lurk for next US leader
LatAm-China energy ties lurk for next US leader
Sao Paulo, 30 October (Argus) — China's growing economic reach into Latin America's energy and commodities has figured little in the latest US presidential campaign, but either Kamala Harris or Donald Trump may eventually have to face the topic. China began formally trying to increase its reach into Latin America in 2018, when it invited the region to be a "natural extension" of its Belt and Road Initiative (BRI). The effort has brought mixed results. So far, 22 countries in Latin America and the Caribbean have joined the massive Chinese infrastructure initiative, but hydrocarbons producers such as Colombia and regional powerhouse Brazil have not. The latter wants to "take the relationship with China to a new level without having to sign an accession contract," the Brazilian special presidential adviser for international affairs Celso Amorim said on 28 October. This came after agriculture minister Carlos Favaro said earlier that joining the BIR would be "positive" for the country. "There are projects that Brazil has defined as a priority and that may or may not be accepted [by Beijing]," Amorim said. Still, China has found other ways of increasing its grasp in Brazil, such as increasing exports of electric vehicles — with automaker BYD setting a R5.5bn ($1.1bn) investment plan in the country — and crude . But China is a major trade partner for all of Latin America. Exports of all goods from Latin America and the Caribbean to China reached a record $208bn in 2023, with Chinese imports into those regions hitting $242bn, according to Boston University Global Development Policy Center. Around 70pc of those exports are of copper, soybeans and crude — the two latter mainly coming from Brazil — while another 20pc comprise of beef and livestock. With or without the BRI, China's larger grasp in Latin America is seen as problematic in the US by both sides of the political spectrum. "The discourse of competition between the US and China has crossed party lines," according to Conrado Baggio, an international relations professor in Cruzeiro do Sul University. "Any candidate for president needs to present a firm and combative rhetoric towards Beijing." Chinese efforts de-dollarize the world economy also concern Washington, but mildly. China along with the other Brics countries — Brazil, Russia, India and South Africa — have led efforts to reduce the world's economy dependence on the US dollar and are working on an independent crossborder payment settlement platform to "minimize trade barriers." But results have been mixed as well. For instance, the Chinese yuan surpassed the dollar as the main currency in bilateral trades between Brazil and China in April-June 2023. But the American currency is still the main coin on over 80pc of Brazilian trade with other countries. "De-dollarization initiatives have hardly gone beyond rhetoric," Baggio said. Harris and Trump have opposing views on many topics and their approach to China is no different. Trump is likely to take a more confrontational stance on China, including higher tariffs and sanctions. That could naturally increase trade between Latin America and China, according to Fernando Galvao, a Brazilian economic analyst. On the other side of the aisle, Harris might choose a more diplomatic strategy. "Harris may prioritize rebuilding international alliances and strengthening multilateral institutions," Galvao added. Still, a Harris administration is more likely to emphasize environmental and human rights issues, which could pressure Latin America to adopt more sustainable policies. Failure to do so could lead to more trade with China, he added. But although the US will certainly keep an eye on China's relationship with Latin America, that is hardly the main concern within the US' foreign relations scope. "Given Washington's increasing involvement in Europe, with Russia and Ukraine, and in the Middle East, with Iran and Israel, Latin America may occupy a secondary position within the US' concerns," according to Baggio. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Central America, Caribbean lag behind renewable targets
Central America, Caribbean lag behind renewable targets
New York, 29 October (Argus) — Central America and the Caribbean are falling behind global renewable goals for 2030, international renewable energy agency Irena said. The next five years "will be crucial for making the necessary investments and implementing concrete political measures," the agency said in a report ahead of the UN's Cop 29 climate conference in Baku, Azerbaijan, next month. Renewable sources accounted for 38.7pc of Central America and the Caribbean's power capacity in 2023, lifted by a year on year installed capacity growth of 5.2pc, or 900MW of new renewable projects. But to achieve the global goal of tripling renewable energy capacity by 2030, the region needs an average annual growth rate of renewables of 16.4pc, Irena said. Some countries have been doing better than others at installing renewable capacity, the report said. Costa Rica, Guatemala and Panama have been expanding renewable capacity, while Trinidad, Dominican Republic and Jamaica are seeking investments. But cost is a problem for small countries attempting to transition from their high dependence on fossil fuels. Some hurdles for small countries can be overcome by tax credits, levies and duty exemptions on key materials and components, Irena suggested. Revenues from fossil fuel taxes could also be used, it said. By Canute James Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil fossil fuel subsidies outpace renewables: Study
Brazil fossil fuel subsidies outpace renewables: Study
Sao Paulo, 29 October (Argus) — Brazil's spending on fossil fuels subsidies in 2023 was around 4.5 times larger than its spending on renewables subsidies, according to a study published by the institute of socioeconomic studies Inesc. The country spent R99.8bn ($17.49bn) in subsidies for both fossil fuels and renewables in 2023, a 3.6pc increase from 2022, the study said. Of the total, R81.74bn were related to fossil fuels — a 0.5pc decrease from a year prior — while R18.06bn went to renewable sources, a near 27pc hike from 2022. The slight fossil fuel subsidies reduction was due to the return of taxes on gasoline, such as the VAT-like PIS/Confins, the study said. "The government lost the chance of providing greater relief for public coffers as it decided to maintain exemptions for diesel," it added. But while incentives to fossil fuel consumption decreased, those for exploration and production activities increased by R5.55bn. Cassio Carvalho, a co-author of the study for Inesc, said the fossil fuels subsidies will harm Brazil's energy transition. "The study indicates that consumers are bearing the subsidies for renewables through electricity bills, while the oil and natural gas industry remains untouched," Carvalho said. Ending subsidies to fossil fuels is an "unavoidable global commitment" laid out in the UN Cop 28 climate summit in Dubai, said Alessandra Cardoso, the other co-authored of the study. "What is expected of the Brazilian government is that it recognizes the problem of production subsidies as a domestic problem, the solution to which involves global reform," she said. "Brazil needs to take on this agenda as part of its leading role in the global climate scenario, especially as it will host Cop 30." Brazil will host Cop 30 in 2025 in Para's state capital Belem, on the edge of the Amazon forest. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Power integration crucial for Latin America
Power integration crucial for Latin America
Asuncion, 29 October (Argus) — Latin America expects a significant increase in regional electricity integration in 2025, with countries from the Andean region starting the approval process to integrate their grids. The four countries that form the Andean Community (CAN) — Bolivia, Colombia, Ecuador and Peru — began working on integration seven years ago, finalizing agreements last May. The member countries have 24 months to incorporate commercial and regulatory rules to integrate grids into national legislation. CAN secretary general Gonzalo Gutierrez said he was confident that the integrated system would be ready quickly. The next big piece — and one Gutierrez said is central to the region — is getting Chile to join the integrated system. "The incorporation of Chile into the Andean integrated system is crucial," Gutierrez said at the annual meeting of the Latin American Energy Organization (Olade) in Asuncion, Paraguay. The CAN integration is the third in the region after Central America, which includes six countries, and the Southern Cone Common Market (Mercosur) that includes Argentina, Brazil, Paraguay and Uruguay. Bolivia joined earlier this year but is not fully integrated into Mercosur systems. Chile, if it were to join the Andean system, could serve as a link to Mercosur in the south. The Andean system, once operating, could connect to the Central America system through a Colombia-Panama link. Authorities say that if an integrated system were in place already, it would have helped Ecuador avoid electricity rationing this year. Andres Rebolledo, Olade executive secretary, said the region needs to focus on integration, infrastructure and diversification of grids for the energy transition and climate change. "Ecuador is facing supply problems, but this year there have been six countries with some level of rationing. The interconnection and diversification of grids are the first solution," he said. To the south, Uruguay's deputy industry minister Walter Verri said regional energy integration helped his country avoid rationing during the 2022-2023 drought. "We had a drought that required us to import electricity [from Brazil]. Integration was essential," he said. Verri said that while the Mercosur countries were integrated, lack of a regional vision hurts Latin America. "Latin America has excess power and we are under-utilizing our resources. We need to install infrastructure, but it is costly," he said. Verri and Paraguay's deputy mining and energy minister, Mauricio Bejarano, also focused on Chile, saying that Mercosur needs to build power infrastructure that links it with Chile. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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