Petro’s climate ambitions clash with reality

Colombian president Gustavo Petro's strong climate ambitions have clashed with reality as the country's heavy reliance on fossil fuels, combined with permitting issues in the renewables sector, challenge these goals.

With slightly fewer than two more years left in his administration, Petro is yet to unveil a clear and reliable energy transition strategy to reach Colombia's 2050 net zero carbon emissions target and explain what revenue sources could replace the hydrocarbons industry, which accounts for 15-20pc of government revenues.

National oil company Ecopetrol contributes 4pc of the country's GDP, 1.5 times the national budget for healthcare and 4 times what the country spends on education, according to credit rating agency Fitch Ratings.

Despite this strong dependency, Petro's first decision was to stop awarding new exploration and production (E&P) contracts, one that could have been seen as bold and impactful for the climate but analyst argue it will not reduce hydrocarbon production.

"Most of these [oil and gas] companies have an inventory of licenses that lasts around seven years, so maybe right now the oil companies have still 3-4 years of E&P in their plans," said Adriana Eraso, director of Latin American Corporates at Fitch.

An impact on production in the longer-term would depend on the results of the next general elections.

Halting new E&P contracts hurts the country's opportunity to ramp up natural gas, which is considered a key transition fuel in the region in the shift toward cleaner energy.

"Even if Colombia is not going to be an exporter of gas at least it could be self-sufficient," Eraso said. "Right now, Colombia is facing a very dire situation when it comes to gas as there is a shortage that is probably not going to be fulfilled with current internal exploration and production of gas in 2025, 2026 and 2027 at least," she added.

Despite Petro's constant vows to phase out production of hydrocarbons, Ecopetrol is already regarded as a leader among regional national oil companies for its approach to funding the energy transition. It has diversified its business into green and alternative energies over the last 10 years while investing in researching offshore gas reserves to stave off the projected gas deficit.

Stuck renewable ambitions

Latin America accounts for around 8pc of greenhouse gas (GHG) emissions produced globally because of its use of its vast renewable resources.

Colombia's electricity sector is over 70pc clean because of its large hydropower capacity. But intense droughts because of the El Nino weather phenomenon have made it urgent to diversify its electricity matrix by adding more non-conventional renewable (NCRE) generation and gas-fired plants.

Solar power may start ramping up with renewables association SER forecasting 1.2GW of new capacity this year, but the growth of wind power plants in the wind-rich northern region of La Guajira has stalled. Lengthy consultation processes with indigenous communities in the area have led to delays, rising costs and cancellation of projects. Local communities have also slowed the development of key infrastructure to guarantee the delivery of wind electricity. High interest rates, exchange rate volatility and the government's decision to increase a tax on the sales of renewable electricity have further limited Colombia's ability to meet its goals.

Failing to put forward transition plans that benefit its economy, as well as communities, risks undermining the climate credibility of Colombia, which is also hosting the UN's Cop 16 Biodiversity Conference this year. The country, which emerged as an advocate for developing countries and emerging economies during the UN Cop 28 summit last year, is key to attract international finance flows and will continue to push for it at Cop 29 in Baku.

By Jacqueline Echevarria