Digging Deeper: Exploring Opportunities in Energy NAMAs in Peru

Many Latin American countries have made significant efforts to transition to clean energy. For example, a number of South and Central America states have tapped the potential of their abundant waterways to produce large amount of low-to-no-carbon hydroelectricity, and climate leaders like Costa Rica have implemented programs that obtain over 90 percent of their electricity from renewable sources. However, over 30 percent of the region’s power still comes from fossil fuels, generating around 1.4 billion metric tons of CO2 per year and heavy industry continues to produce significant emissions. Although there is significant potential for mitigation and sustainable development throughout Latin America, many of these countries face social, economic and financial challenges associated with a growing energy demand.

In July 2013, CCAP hosted a sectoral workshop on developing Nationally Appropriate Mitigation Actions (NAMAs) in the energy sector during the Fifth Latin American Regional Dialogue of the Mitigation Action Implementation Network (MAIN) in Lima, Peru. The event boasted a variety of experts who showed that mitigation actions in the energy sector can be effective and affordable, especially when considered as part of a broader energy strategy: University of California Berkeley’s Dr. Daniel Kammen discussed California’s experience in clean energy, and how Marginal Abatement Curves and economic modeling could be employed at levels from the local to the national to find cost-effective mitigation policies; Dr. Fernando Tudela, formerly of Mexico’s environment industry, discussed his country’s integrated approach of complementary policies in the energy sector; Dr. Miriam Ott explained Germany’s feed-in Tariff.

At the July dialogue, CCAP also gave participants the opportunity to use what they had learned to outline a NAMA for Peru’s energy sector.  Peru was chosen as an example because the country’s energy sector faces a number of common opportunities and challenges: the country boasts significant renewable resources, but also fast-growing natural gas production, which is increasingly being called on to meet burgeoning electricity demand; there has been vocal opposition to new large hydro projects; and the electricity sector is subject to significant regulation. Discussion at the event was boosted by the presence of a former vice minister of energy, as well as a number of experts from various parts of the energy field.  They looked at the potential to increase the ambition of Peru’s 5 percent Renewable Energy goal, cost reduction in renewable energy, the market effects of cheap natural gas, reducing energy intensity in industry, and increasing reliability and access. This session helped generate interest among Peruvian government officials and outside groups in pursuing an energy NAMA, while giving the rest of the participants an opportunity to participate in a real-world exercise on energy system challenges.

Since the dialogue, CCAP has continued to engage with Peruvian officials, to work toward an energy NAMA that reduces emissions, and helps the country move toward sustainable development. Peru has shown their commitment to promoting a clean energy matrix, making use of forward-thinking to reduce price uncertainty in bringing renewable energy projects online. The current goal for renewable energy as a share of the electricity matrix is 5%, and is due for revision this year by the Ministry of Energy and Mines. Developing a NAMA can provide the opportunity to expand the ambition of plans to make Peru run on clean energy.

Digging deeper in the energy industry to develop a NAMA can reveal the complexity of the sector’s interconnected elements which can help or hinder mitigation policy development. To make transformative change, countries must be willing to take a serious and holistic look at the unique technical, structural, policy, and political elements of their energy system, and determine how to best pursue mitigation actions in conjunction with other national energy sector priorities. Globally, there is a long history of promoting renewable energy and energy efficiency through government policy, and countries that are still forming their renewable promotion can benefit from the lessons learned from other countries’ experiences. Likewise, the potential for NAMA financing presents developing countries with the opportunity to reevaluate the ambition, structure, and goals of the policies they have in place, to ensure we transition to a low-carbon global economy as quickly as possible.

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