Climate change has a negative impact on Latin America and the Caribbean (LAC), putting its population at risk and causing imbalances and disasters in its ecosystems. It also generates economic and social inequalities that suffer and impact the most vulnerable to a greater extent. However, the region has the opportunity to transition to carbon-free and climate-resilient economies. An IDB and ILO study argues that the path to carbon neutrality could create 15 million net new jobs in LAC by 2030, in areas such as plant-based food production, renewable energy, construction and manufacturing. Moving towards an emission-free economy brings economic benefits – through cheaper technologies such as renewable energies and electric vehicles and by reducing costs such as those associated with congestion or air pollution.
Towards a just and equitable energy transition: The case of Colombia
Latin America is the region with the cleanest energy matrix in the world and it is expected that by 2030 70% of electricity consumption will come from renewable energies. Colombia is one of the countries with the most recent dynamics in the development of renewable energy generation projects, being a regional leader in Energy Transition. It is expected that non-conventional renewable generation will represent 17% of the generation capacity by 2027, thanks to more than 3 GW of solar and wind generation capacity under development to come into operation in the coming years.
Regarding the Paris Agreement, Colombia included concepts such as Energy Transformation and Just Transition in its national contribution (NDC). The Energy Transition is a fundamental pillar of the National Government’s policies for decarbonizing the productive and energy-consuming sectors.
Colombia also has a legal and regulatory framework that promotes the integration of Non-Conventional Renewable Energy Sources (NCRE), offering incentives and guarantees to local and foreign investors. However, the country faces significant challenges to achieve the adequate integration of NCRE and meet the objectives of the energy transition:
(i) there are limitations in the transmission infrastructure to bring energy from new projects to the centers of highest consumption; (ii) limited sources of financing for new technology projects such as electric mobility, electric storage and green hydrogen, among others; (iii) lack of incentives for the implementation of demand management measures;
A key partnership and a new program that promotes the integration of renewable energies
The challenges and opportunities presented by Colombia concerning the integration of renewable energies led the board of the Climate Investment Funds (CIF) to approve the Investment Plan formulated by the country for the implementation of its Renewable Energy Integration Program (REI Program) with a package of up to US$70 million. The plan was developed by the Government of Colombia under the leadership of the Ministry of Mines and Energy and will be implemented with the support of the Inter-American Development Bank (IDB).
The REI aims to help low- and middle-income countries develop more flexible and resilient energy systems through solutions that can accelerate the adoption of the best technology mixes to drive the energy transition. Colombia was one of five countries chosen to participate in the first phase of the Program from among 54 applicants that expressed interest in 2021 and is the first to receive approval for its Investment Plan from the IFC.
Colombia’s REI Program expects to leverage between US$ 280 and US$ 560 million to meet its goals scheduled of indirectly integrating more than 100 MW of solar and wind capacity, benefiting more than 345,000 users located in both the National Interconnected System (SIN) and the Non-Interconnected Zones (ZNI), and developing green hydrogen production capacities in the order of 1kT/year while contributing to the goal of integrating more than 600,000 electric vehicles by 2030. Thus, the Government of Colombia seeks to achieve a transformational change that begins with the reduction of Greenhouse Gas (GHG) emissions, with a contribution in the order of 110 kt CO2eq/year towards compliance with the NDC and goes through offering conditions that promote gender equity in access to quality job opportunities within the projects implemented.
Through these investments, Colombia expects to achieve emission reductions of 1.6 Mt CO2eq while providing nearly 20,000 households with greater access to clean energy and reducing the electricity system’s total costs.
The Program also incorporates actions to promote social inclusion and gender equity through activities such as (i) the development and implementation of gender and diversity action plans within the implementing entities and project operators, (ii) training activities to increase women’s knowledge in technical areas such as clean energy, hydrogen production and conversion, hydrogen technologies, storage, sustainability and financial market opportunities, (iii) the promotion of female and disabled labor participation in non-traditional sectors through technical training, leadership skills development and the promotion of procurement and human resources policies that prioritize gender equity, and (iv) awareness-raising workshops aimed at empowering women and people with disabilities.
On behalf of the Government of Colombia, the IDB will work with the Ministry of Mines and Energy and national development banks as implementing entities of the concessional resources to select and finance eligible projects with CIF resources. It will also work with the Non-Conventional Energy and Efficient Energy Management Fund (FENOGE) with technical assistance resources specifically to support studies and pilot initiatives in green hydrogen.
The IDB is a strategic partner of Colombia that supports the country in building an increasingly resilient and inclusive energy system through the development of energy access projects, the promotion of smart grids and distributed generation, regional electricity integration, and the development of institutional capacities to facilitate the integration of NCREFs. In recent years, the Bank supported the development of the Energy Transformation Mission, as well as the Hydrogen Roadmap for Colombia, financed with resources from the Sustainable Infrastructure Program with the United Kingdom (UK SIP), studies for the creation of a regulatory sandbox for hydrogen projects and for the deployment of electric vehicle charging infrastructure.
This new program will open up opportunities to generate enabling conditions to facilitate the integration of new renewable generation planned for the coming years. It will also create employment opportunities with a focus on gender inclusion and diversity and assist those who must migrate from jobs that will be replaced by those linked to new technologies that are part of the Energy Transition. Most importantly, it is helping the country to meet its climate change mitigation commitments under its NDCs.
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