For the purpose of decarbonisation, objectivity is crucial, Trinidad Castro Crichton, executive director of the World Energy Council’s Chilean member committee, believes. The past few years have seen her country embark on an ambitious energy programme spearheaded by renewables, which Chile hopes will lead it to become a top producer and global supplier of green hydrogen.

But while the ultimate goal of net-zero emissions is something all energy sectors should strive for, decarbonisation needs to happen step by careful step, taking into consideration each country’s resources, otherwise the remedy, such as a badly planned switch away from a fossil fuel, can be worse than the disease, Castro says in this interview with LNG Business Review.

The human factor

Castro, who studied in business and economics, has a degree in public policy and relational mindfulness, and whose career has involved working in management for non-profit organisations and teaching at university, only entered the energy sector a few years ago.

“I never worked in something related to energy, but my experience working for different causes involving vulnerable people is what led to my being recruited by WEC,” says Castro. “This is because the organisation’s goal is to promote a sustainable energy system centred on the wellbeing of people, now and for future generations – to put a name and face in this process we’re going through, which is something I feel strongly about. Our main goal at WEC is to humanise the energy transition, put people in the centre of the problem”.

A big component of Castro’s role is to meet with representatives of all aspects of the energy sector and “get them together around a table to create dialogue, make commitments to each other. They all have their personal and individual interests, but at this table the aim is to work towards the same purpose, which is to build together a more sustainable energy system,” she says. “It is a big purpose that keeps me mobilised”.

Castro admits that, initially, she was concerned that her lack of experience in energy would be a hindrance to her new role with WEC. “I’m not a technician. I didn’t know about energy, gas, renewables or green hydrogen, so I was worried. But on my first week, Angela Wilkinson, WEC’s secretary general – an extraordinary woman – called me from London and said that, because I don’t come from the oil, gas, coal or renewables sectors, we can be neutral in our effort to bring experts from these fields, who have their own interests and sometimes fight with each other, together and make them commit towards the same goal. She reminded me that behind the politics and decision makers you find people, and what matters is to create a sincere, confident dialogue where you can find solutions to what you’re doing and generate a virtuous circle”.

According to Castro, “if you’re neutral, objective, you can pressure people to act no matter what they represent and challenge their prejudices. We need a neutral table that enables you to go where this neutrality takes you”.

But just as Castro took up her new role, the Covid-19 pandemic hit, presenting a challenge for the WEC, which seeks to always physically gather energy industry experts around the table.

“We were afraid that WEC would suffer because physical meetings are at the core of our work, but online platforms helped us out in the end and we made it happen. We have exchanged so many crucial ideas during the past 18 months, a time when the decarbonisation and social matters discussion has picked up and so many people seem to have finally woken up to the gravity of the situation”.

Energy revolution

Born and bred in Chile, Castro says that her country is going through an “energy revolution”. But while the shift in Chile’s environmental and energy strategy has been public-led, it has benefited from new politics, policies and regulations, she highlights.

“The government takes the energy transition seriously. You can be a country that has everything in respect to natural resources, such as natural gas, which Chile itself does not have, and be home to a lot of knowledgeable people prepared to do the work to exploit them properly, but the government can’t handle this alone. The energy system does not depend on governments or the state, but must relate to everyone, in the public and private sectors.

According to Castro, Chile’s energy revolution, which she believes has been “an inspiration for other countries,” is being driven by a series of new fundamentals. To begin, the country has completed its power interconnection, both within the country and internationally, with, for example, its Sistema Interconectado Central (SIC) and Sistema Interconectado del Norte Grande (SING) power systems finally linked up in 2017.

“It’s one of the largest electricity systems in the world: 3,100 km of a single interconnected system,” explains Castro. “This interconnection allows for the more efficient use of energy and the integration of renewables in different areas of the country”.

Secondly, the country developed and consolidated an institutional framework of the energy sector, starting with the creation of a ministry of energy in 2010, currently headed by Juan Carlos Jobet. It promotes the development of policies and regulations “that are strictly focused on the proper function of the sector and provides advice to the central government in the energy sector,” says Castro. “Also, in the last decade, the National Electricity Coordinator, CEN, was founded, which is the legal coordinator of Chile’s energy framework”.

Chile’s energy regulation has created certainty for big, long-term investments, Castro says. Notably, 42% of foreign direct investment (FDI) in Chile went to the renewables sector in 2020, attracting players from Spain, Italy, Irela1.nd and Norway.

“Without a framework, you’d be afraid to invest in a country where you don’t know what will happen. Here in Chile, you know what’s going to happen, because you have laws, the ministry, institutions, the electric coordinator, the commission of national energy. Putting this framework in place was a big driver for Chile’s energy revolution”.

Thirdly, a fundamental role in Chile’s energy transition is played by the massive incorporation of power generation from solar, wind, biomass and geothermal resources “in a competitive manner,” allied to the plan to convert coal-fired power plants to natural gas or biomass, she says.

Climate horrors

Castro is keen to contrast her country’s “real commitment” to decarbonisation with the fact that, when it comes to emissions, Chile “only causes 1% of the problem”. What underpins its commitment is its exposure to natural disasters and the impact they have on lives.

“In Chile, we’ve been talking a lot about climate change for 15 years, as our geographic position – a narrow country between the Andes and Pacific Ocean – makes us aware of the impact the earth and environment can have. On the one hand we have very damaging earthquakes and tsunamis, which we can’t control, but we also have floods, landslides and droughts. Chileans may be resilient, but climate change could vanish us”.

While Chileans have been watching with horror at the catastrophic flash floods in China, the US and northern Europe, and the fires in the Mediterranean region this past summer, parts of Chile have recently been severely impacted by drought, Castro says.

“We’re having to deal without water, which is impacting the energy sector, particularly hydroelectricity, but also human consumption. We’ve gone from a country that is accustomed to a lot of rain to, suddenly, not having any. The speed of climate change and frequency of these events is critical. This is why Chile is working hard to make its energy sector robust to mitigate the risks”.

It is, however, on the share fossil fuels still have in Chile’s power mix where the need for objectivity comes to play, Castro says. In coal’s case, the country’s consumption rose sharply in the mid-2000s, caused by the 2004 Argentinian energy crisis, which restricted natural gas flows from Argentina to Chile. According to CNE data, coal consumption in power generation grew from 5.9 mt in 2011 to nearly 10 mt in 2020 – a 70% growth. Chile is home to many anti-coal organisations, stresses Castro, but removing it from the country’s power matrix overnight could result in it being substituted by something more harmful, she warns.

“Nobody likes coal; Coal was a great way to impulse the progress of economies, but we know now its consequences in terms of carbon emissions, and it is not a good way of energising anything. The energy transition is a continued and permanent process, to be carried out with commitment, but also with care, it can’t be rushed. Even with coal, we need to be ready, based on our reality, to switch away from it and have something better available to substitute it”.

Chile has pledged to end coal-fired power generation by 2040 – the same year as France and two years after Germany. However, a handful of coal-fired capacity operators, including Enel Chile, AES Andes and Engie have announced the early retirement of units, which means that by 2025, Chile’s coal-fired capacity will be reduced from 5.5 GW currently to 1.9 GW.

Asked if more early retirements could follow before 2040, Castro responds that it is impossible to predict, “but what I can says is that Chile’s carbon neutrality commitment has a special component, which is not used or seen in another countries: it is voluntary. The whole sector is in agreement, and legitimate interests are aligned, towards a common cause”.

As far as natural gas is concerned – Chile imported 1.92 mt of LNG in H1 ‘21, second in the Americas to Brazil’s 2.77 mt – it continues to have a “fundamental role” in her country, Castro says, as it can help it move away from fuels with higher CO2 emissions to solutions that do not generate emissions, or create local pollution.

“Natural gas can, at the moment, help us not only focus on the energy transition, but also on the greater wellbeing of people. Tens of millions live without access to energy globally. Natural gas presents a transition element for excellence, as it is an accessible, versatile, abundant and low-emission fuel. Later in the future it may no longer exist, but if it does, it will be in minor portions. The end-goal is renewable”.

Breath of fresh air

Meanwhile, the growth of renewables may have faced resistance in Chile two decades ago, but is now attracting global headlines. According to Latin American intelligence platform BNAmericas, the country added 2.5 GW of new renewable capacity in the first half of this year, 1 GW more than what was added during the whole of 2020. CNE anticipates 4 GW of renewable capacity to go online in 2021.

“In the beginning, the development of renewables had all the elements of a new economy: there was resistance to change, people were afraid that there’d be little or no demand for solar and wind, there were high entry costs – a lot of scepticism”, Castro recalls.

“Older engineers were saying it’s a hippy solution. Even a member of my family, who’s been a big figure in energy in Chile was shaking his head, saying renewables would never catch on. But the government’s long-term vision, the private commitment, the social pressures, the accelerated emergence of a diversity of solutions, has helped create an anergy matrix that makes it necessary to have renewables, offers direct incentives for investment and constantly supports the development of technologies that make them accessible and low-cost. Today in Chile we have 24% of energy used coming from renewables. It’s a breath of fresh air”.

Crucially, renewables help Chile be more self-sufficient when it comes to energy, says Castro, “as we rely so much on energy imports and developments outside our borders we cannot control”.

Looking ahead, Castro is confident that Chile can make a success story of its aim to become a leader in the production and global supply of low-cost green hydrogen derived from renewables.

“At WEC we say that green hydrogen is either a hype or our biggest hope. For its part, Chile has the capacity and conditions to produce 70 times the hydrogen it requires and it can done at the lowest cost on the planet. For this reason, the government launched its green hydrogen strategy in 2020, which includes regulatory changes, new forms of incentives and a strategic vision that leverages the creation of this new economy”.

Chile already has demand for a hydrogen-based economy, Castro notes, which can support its energy intensive industries, such as copper, mining, the wine industry, agriculture and tourism. In mining, which uses 30% of Chile’s energy, “we’re already implementing industrial works with a hydrogen focus. Only recently, President Pinera inaugurated Chile’s first hydrogen cell operation for large scale mining in the country. So, it is a reality”.

But Castro in keen to add that, though green hydrogen is “a highly effective and efficient energy resource,” it is only part of the solution for a net-zero future.

“For energy efficiency and the creation of new energy systems, we need a lot solutions – it would be infantile to say that we just need one. No superman will fly in and singlehandedly save the world. Every country and territory has its energy needs and way of doing things, will form its own decarbonisation path, but we have a big commitment to honour and must all contribute in whichever way we can. Energy is at the heart of our lives and there is an urgent mandate to build a better future and a better common house to live in. We are all responsible, we are all energy”.

Author: Kostya Tsolakis
k.tsolakis@gasstrategies.com