A Colombian vitality firm’s daring guess on sustainability

When Juan Ricardo Ortega was appointed president of Grupo Energía Bogotá (GEB), Colombia’s largest pure fuel transporter and second-largest vitality transmitter, in July 2020, he introduced a singular set of abilities and experiences to the position. Ortega was skilled in economics, finance, and arithmetic on the College of the Andes after which at Yale (the place, at age 54, he’ll quickly full a Ph.D. in financial growth). He started his profession as chief economist at multinational banking firm BBVA in Bogotá within the Nineteen Eighties however later transitioned to the general public sector, when he was appointed financial advisor to then Colombian President Andrés Pastrana.

Ortega went on to carry different high-level public positions, comparable to vice minister of finance and commerce and secretary of finance for the Metropolis of Bogotá, in addition to professorships at Colombian universities. From 2014 to 2020, he labored as an advisor to the Inter-American Growth Financial institution in Washington, DC, however returned to Colombia when he was appointed president of GEB. He joined at a crucial second, because the 125-year-old firm expands its portfolio to incorporate nonconventional renewable vitality and will increase its presence in Latin America. For instance, in June 2021, GEB introduced an settlement with the Italy-based vitality multinational Enel to create Enel Colombia, a subsidiary that can embody further fairness worth of US$1.4 billion in renewable vitality property situated in Colombia, Panama, Costa Rica, and Guatemala.

GEB is nicely positioned to make these strikes. It stands out amongst different Colombian public utilities due to its shareholder construction—though the Metropolis of Bogotá owns the vast majority of its shares (65.7%), near 35% are privately held—which helps it keep above the political fray. GEB’s internet earnings rose by 36% in 2020, and it’ll distribute $437 million in dividends this 12 months. In a latest video interview with technique+enterprise, Ortega shared his ideas on the way forward for the vitality sector in Colombia, because the nation strikes past hydropower to embrace different renewables.

S+B: Waiting for the subsequent few many years, how do you see your online business remodeling to fulfill vitality wants in Colombia and, extra broadly, in Latin America?

The local weather change and vitality transition agenda is central for Colombia, a rustic the place 70% of electrical energy already comes from renewables [the majority from hydropower]. Colombia’s authorities has set a aim of lowering internet carbon emissions by 51% by 2030. That may be a very aggressive aim.

On the similar time, I believe it will be unreasonable for a rustic like Colombia to decide to zero internet emissions for the subsequent ten to twenty years. Colombia contributes round 92.5 million tons of carbon a 12 months. The world’s whole determine is round 39 billion tons, which suggests Colombia’s carbon emissions are .25% of the worldwide share. Due to this fact, if we decide to a zero internet emissions technique, it will hinder Colombia’s capability to compete with different nations and to spice up its financial system, particularly as a result of the nation has a number of potential in fuel.

I believe there are very stable arguments to defend fuel as a transition vitality supply in Colombia. It may help development and employment and assist Colombia turn out to be an more and more aggressive financial system. If the heavy cargo business, specifically, makes the transition [from oil] to fuel, it will assist to scale back particulate matter.

I additionally imagine essentially the most wise determination is to change industrial automobiles to run on electrical energy. That’s why our guess is on electrical energy. We imagine it will likely be one of many massive winners within the subsequent 20 years. There’s additionally an enormous alternative within the area because the transmission infrastructure from Mexico to Chile is built-in to allow a extra environment friendly supply of electrical energy from vegetation to prospects. Colombia can significantly profit from this course of. We’ve the businesses, the contractors, the worth chains, and the experience to assist generate extra resilient transmission networks all through the area.

There are vital development alternatives on this matter, and that’s the reason we’re investing in Peru, Brazil, Guatemala, and Colombia—nations the place we’ve got a big transmission community, with 1000’s of kilometers of strains in operation. For instance, in Peru we’re leaders with ISA REP and ISA Transmantaro [energy transmission companies], and in Guatemala, we’re engaged on an vital vitality transmission challenge. We need to place the corporate in order that sooner or later we are able to take advantage of out of this built-in infrastructure and maximize development.

S+B: What renewable sources will play a job in Colombia’s vitality transition?

Colombia has monumental wind and solar energy potential in La Guajira. [Located at the northern tip of the country along the Caribbean Sea, the region gets abundant sunlight, and its average wind speed is more than double the world’s average.] Vichada, on the jap plains, has nice photo voltaic depth, and southern Galerazamba, towards the north of the nation, additionally has robust winds. There’s additionally a possibility for biomass vitality. Colombia is already making an attempt to make sugarcane right into a supply vitality, and I believe it could possibly produce vitality from methane emissions from landfills.

I’ve little question that hydrogen will likely be a viable supply of energy inside the subsequent ten to fifteen years. We try to be taught from Chile about hydrogen’s potential. Chile already has an extra of unconventional renewables in Atacama. In addition they have a mining business that calls for ammonia and warmth, and, in that sense, hydrogen comes nearly naturally to them.

In Colombia, hydrogen’s potential is just not so apparent. To make it possible, we first want vitality out there at a really low value. For that, we have to develop our photo voltaic and wind farms within the subsequent few years. We then must do issues like improve our fuel pipelines to verify they’re much less liable to corrosion. [Hydrogen, through a deterioration process called hydrogen embrittlement, can lead to corrosion and cracking in metals.] I don’t see this transformation taking place but. The price of storing hydrogen and of transporting it has made that troublesome. Nonetheless, you already see nations like Germany with hydrogen stations and automobiles. And that’s the reason I believe this can be a supply of vitality we have to pay shut consideration to. We have to examine learn how to get there.

Lastly, our latest settlement with Enel will permit us to have a share within the nonconventional renewable vitality market. A brand new, worldwide firm is being fashioned from the merger of Emgesa, Codensa, and Enel Inexperienced Energy. The brand new firm could have a presence in Colombia, Panama, Costa Rica, and Guatemala, and could have an put in capability of 5,470 megawatts by 2025, with a major give attention to renewable vitality.

S+B: In addition to investing in renewables, what’s GEB doing to scale back its environmental affect?

Sixty % of Colombia’s emissions are the product of deforestation, which, in flip, comes from agriculture, livestock, and comparable sorts of land use. Somewhat than give attention to a zero internet emissions technique, a extra environment friendly solution to cut back our environmental affect could be to deal with deforestation and unsustainable cattle ranching. I believe that’s the place the actual drawback is.

With this in thoughts, our firm’s technique relies on restoring native forests. Now, this isn’t about planting timber. What biologists have really useful is for us to give attention to the restoration of ecosystems. We’re utilizing our electrical and fuel infrastructure to create corridors that interconnect pure parks and ecosystems. This fashion we are able to broaden areas that assist to protect biodiversity and native species. We’ve profitable examples of this, particularly in southern Colombia with the preservation of two species of native fauna—the mountain tapir and the spectacled bear.

In one other instance from southern Colombia, in Putumayo, our native department has executed an incredible job restoring all the infrastructure that was destroyed within the landslides that hit Mocoa, Putumayo’s capital, in 2017. We’ve discovered to construct with little or no affect on nature. We now make towers which might be very lean and tall. They stand in small areas and due to this fact don’t require us to chop down numerous surrounding timber. We not use bulldozers to put in cables. As a substitute we use drones and really small paths.

S+B: What do you imagine are the best challenges in pursuing a sustainability technique?

Many Colombians don’t but totally perceive the magnitude of environmental threats. We preserve considering that local weather change is a topic for others to debate. However we’re already seeing local weather change phenomena in Colombia, like El Niño, La Niña, and extended droughts. Climate projections say that for as much as 30% of the 12 months, La Guajira may have temperatures of fifty to 60 levels Celsius. That will make this area uninhabitable.

The best problem we’ve got is communication. False tales have unfold on social media that we have to combat in opposition to, for instance, that cows produce inexperienced milk as a consequence of being close to our towers, or that the towers have precipitated leukemia in kids. It makes folks imagine {that electrical} infrastructure is a menace to the atmosphere and communities, when the truth is, it helps them. For instance, cooking with charcoal and firewood has led to horrible lung illnesses.

The empirical details, sadly, are usually not being communicated. And it’s so onerous for us to refute these concepts, to persuade those that this infrastructure is just not a menace. We face a really nice problem in Colombia in incomes credibility and the belief of the folks. However it’s our obligation to attempt to earn that belief. And that’s, partially, why we’ve got a method to regenerate ecosystems. We imagine it could possibly assist us construct relationships with communities. By means of optimistic outcomes, we are able to present them that preserving nature is appropriate with our infrastructure.

S+B: What do you imagine authorities can do to assist?

 The federal government wants to assist tackle the misinformation drawback. It ought to give attention to schooling, to verify everybody has a fundamental stage of information about local weather change threats.

It’s our obligation to attempt to earn [people’s] belief. By means of optimistic outcomes, we are able to present them that preserving nature is appropriate with our infrastructure.”

There’s additionally the necessity for higher laws to allow the vitality transition. Carbon taxes are, in my view, important. And we should talk about, as a society, the prices of externalities. The worldwide common tax for a ton of carbon is round [US]$60 to $70. In Colombia, it’s simply $5. That sends a weak message. We will’t change this in a single day, however we do must take steps so that folks begin migrating from diesel, gasoline, and coal.

This may be executed step by step. For instance, I imagine the house owners of all these luxurious four-wheel-drive automobiles may pay a carbon tax that compensates for the affect of their automobiles. Once they start to see what it prices to personal these automobiles, they may begin to migrate to electrical automobiles. And in Colombia, we additionally must have a dialog in regards to the type of hybrid automobiles we’ve got. A lot of what’s known as a hybrid in Colombia isn’t actually hybrid. They’re automobiles which have miniature batteries—folks purchase them to get round circulation restrictions, comparable to pico y placa, which restricts visitors throughout rush hours in a number of Colombian cities.

Furthermore, nations which might be implementing these measures—taking ample steps, imposing taxes, and assuming all the prices of defending the atmosphere—ought to be capable to defend themselves in opposition to nations that aren’t, and are thus unfair opponents. For instance, the US is already fascinated by this, by making sure calls for on overseas corporations that need to entry its market.

The federal government and the vitality sector even have to consider what will occur with sure industries that can disappear, just like the coal business. They make use of lots of people. So how are we going to make use of all of those that might be jobless sooner or later? And the way are we going to cope with the infrastructure that can turn out to be out of date? These are very uncomfortable and troublesome debates, however they’re imminent.

S+B: For Colombia, particularly, what authorities investments do you suppose would have the best affect?

We imagine La Guajira deserves a nationwide dialogue. We have to perceive how the native financial system of the Wayuu ethnic neighborhood, which lives in La Guajira and may be very poor and susceptible, can turn out to be viable.

One factor we are able to do is to create good-paying jobs for 20, 30, and even 40 years. And we are able to generate analysis and growth in a area that has an immense potential if solely the best infrastructure is constructed there. For that, nevertheless, we have to acknowledge that for hundreds of years this area has suffered from complicated crime issues and a scarcity of state presence.

I imagine corporations like ours can assist by pushing for an vital a part of our taxes to be mixed with social duty packages. That means we can assist rework La Guajira. However we are able to’t do this alone. We’d like a state that may present the providers and advantages that solely governments can present. Particularly, the state must strengthen its justice system and its capability to conduct felony investigations.

S+B: What’s the position of digital transformation in GEB’s evolution?

Our funding in a digital agenda has helped us, significantly with our managerial efforts—our skill to know what we want and to hint what’s taking place. For instance, we found in the course of the pandemic that we had large investments in gear and applied sciences that had been underutilized. We’ve additionally began to embrace automation.

In fact, some folks really feel threatened by automation. They fear that they may turn out to be irrelevant or that they may lose their job. However automation truly facilitates development. It permits us to relocate folks to roles the place they’re actually wanted or the place they might be extra productive. And computer systems don’t mechanically remedy administration issues. Ideally, automated methods make life simpler for folks and permit for accountability. However all that requires nice help from a stable and mature group. In any other case, these methods received’t flourish.

S+B: How is digitization enabling your organization’s sustainability targets?

Colombia is at the moment debating introducing AMI [advanced metering infrastructure], or good meters, for vitality consumption. This expertise is just not but extensively out there in growing nations like Colombia as a result of it’s too costly. However as the worth drops, good meters will turn out to be out there and can permit us to cost for vitality at a mean value relative to a timeframe. For instance, if you wish to bake a cake late at night time when fewer persons are consuming vitality, you’re going to pay lower than for those who baked it at dinnertime. Our capability to transition into electrical automobiles additionally is dependent upon the benefit of charging automobiles [at hours] when vitality is cheaper. With this method, folks may use vitality 24 hours a day and in a way more environment friendly means.

This sort of innovation may also assist folks perceive which home equipment find yourself being costlier as a result of they use extra vitality. For instance, folks would notice how a lot it prices to have an outdated fridge. And, going additional, we may even supply incentives, like credit score, so that folks can change these inefficient fridges. In the long run, that funding pays for itself as a result of folks will get monetary savings on vitality.

Clearly, we have to deal with this type of knowledge with care, and we have to have guidelines that defend customers’ identities. As soon as we do this, providing these new sorts of merchandise will make folks’s lives a lot simpler and generate monumental worth for them.

S+B: When it comes to defending knowledge, what measures are you taking in opposition to cyber threats?

Final 12 months, we had a cyberattack, despite the fact that we had purchased all of the safety software program wanted to mitigate the danger of our workers working from house. It occurred whereas we had been making an attempt to implement our new protection system, and our employees was not totally skilled but. They recognized the assault a bit late. Luckily, we managed to defend ourselves by shutting down the servers earlier than the attackers accessed delicate databases. In the long run, we had an operational drawback of only some hours. However this was a wake-up name for us, as we realized it was an try and extort us.

After that assault, we’ve got targeted on coaching our employees in opposition to cyber threats. We realized that we are going to not be protected till each worker is skilled, till everybody is part of our firm’s safety. Digital innovation has additionally made the electrical energy sector extra susceptible, as we noticed in Ukraine in 2015, when Russian hackers left thousands and thousands with out energy for greater than 24 hours. It’s a must to be on high of cybersecurity daily, and bear in mind that it is best to go the additional mile to guard your organization.

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