Colombia faces a "triple jeopardy" in the context of the global energy transition. Is it ready to take on the challenge?
Colombia's triple jeopardy
Colombia faces what academics have called a "triple jeopardy":
- Dependence on coal and oil exports.
- Significant proportion of tax revenues from royalties and fossil fuel sales.
- High economic dependence on oil, which puts financial stability at risk in the face of global changes.
This scenario poses an enormous challenge in which the government will have a key role to play.
How prepared is Colombia?
The energy transition is already a reality. At the last COP, countries committed to:
- Tripling renewable energy production by 2030.
- Eliminate inefficient fossil fuel subsidies.
- Transitioning to a post-fossil fuel era.
Multilateral agencies are mobilizing resources to support this transformation. But where does Colombia stand?
A report by the International Monetary Fund (IMF) states:
- Colombian oil is expensive to extract. In a low demand scenario, it would be uncompetitive.
- The Colombian economy is not diversified. A drop in international oil demand would be devastating.
- The carbon footprint of Colombian oil is low. This could be an advantage in future markets that prioritize low emissions.
Are there opportunities in the energy transition?
According to the Transforma report, Latin America has great potential thanks to its reserves of critical minerals (lithium, cobalt, copper, nickel, among others). However, Colombia does not lead in this field: countries such as Bolivia, Argentina and Chile concentrate most of the reserves.
Colombia has taken regulatory steps towards the transition, but lacks a strategic competitive advantage in clean energy minerals.
What role will climate justice play?
The Just Energy Transition seeks to prevent vulnerable countries from being the main losers in the global transition.
Colombia has signed the Fossil Fuels Non-Proliferation Treaty, hoping that an international agreement will be reached where the economies most responsible for the crisis will support the less privileged ones.
The success of this effort, however, is uncertain.
Conclusion
Colombia is at a critical point: its dependence on oil exposes it to great risks in the energy transition. Without clear economic diversification strategies and effective international cooperation, the country could be left behind in the new world energy order.
