A Colombian vitality firm’s daring wager 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 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, reminiscent of 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 Improvement Financial institution in Washington, DC, however returned to Colombia when he was appointed president of GEB. He joined at a essential 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 may embrace further fairness worth of US$1.4 billion in renewable vitality belongings situated in Colombia, Panama, Costa Rica, and Guatemala.

GEB is effectively 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{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942}), near 35{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} are privately held—which helps it keep above the political fray. GEB’s internet earnings rose by 36{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} in 2020, and it’ll distribute $437 million in dividends this yr. 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: Looking forward to the subsequent few a long time, how do you see your corporation reworking to fulfill vitality wants in Colombia and, extra broadly, in Latin America?

ORTEGA: The local weather change and vitality transition agenda is central for Colombia, a rustic the place 70{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} 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{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} by 2030. That could be a very aggressive aim.

On the identical time, I feel it could 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 yr. The world’s complete determine is round 39 billion tons, which suggests Colombia’s carbon emissions are .25{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} of the worldwide share. Due to this fact, if we decide to a zero internet emissions technique, it could hinder Colombia’s capability to compete with different nations and to spice up its economic system, particularly as a result of the nation has a whole lot of potential in fuel.

I feel there are very stable arguments to defend fuel as a transition vitality supply in Colombia. It could assist progress and employment and assist Colombia turn into an more and more aggressive economic system. If the heavy cargo trade, particularly, makes the transition [from oil] to fuel, it could assist to scale back particulate matter.

I additionally consider essentially the most smart resolution is to change industrial autos to run on electrical energy. That’s why our wager is on electrical energy. We consider will probably be one of many huge 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 crops to prospects. Colombia can significantly profit from this course of. We now have the businesses, the contractors, the worth chains, and the experience to assist generate extra resilient transmission networks all through the area.

There are vital progress alternatives on this matter, and that’s the reason we’re investing in Peru, Brazil, Guatemala, and Colombia—nations the place we now have a big transmission community, with 1000’s of kilometers of traces 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 mission. We need to place the corporate in order that sooner or later we will take advantage of out of this built-in infrastructure and maximize progress.

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

ORTEGA: 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 japanese plains, has nice photo voltaic depth, and southern Galerazamba, towards the north of the nation, additionally has sturdy winds. There’s additionally a chance for biomass vitality. Colombia is already making an attempt to make sugarcane right into a supply vitality, and I feel it could produce vitality from methane emissions from landfills.

I’ve little doubt that hydrogen will probably 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. Additionally they have a mining trade that calls for ammonia and warmth, and, in that sense, hydrogen comes virtually naturally to them.

In Colombia, hydrogen’s potential will not be 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 have to do issues like improve our fuel pipelines to ensure they’re much less vulnerable 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 autos. And that’s the reason I feel it is a supply of vitality we have to pay shut consideration to. We have to research tips on 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 can have a presence in Colombia, Panama, Costa Rica, and Guatemala, and can have an put in capability of 5,470 megawatts by 2025, with a major deal with renewable vitality.

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

ORTEGA: Sixty {bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} of Colombia’s emissions are the product of deforestation, which, in flip, comes from agriculture, livestock, and comparable sorts of land use. Fairly than deal with a zero internet emissions technique, a extra environment friendly method to cut back our environmental affect can be to deal with deforestation and unsustainable cattle ranching. I feel 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 bushes. What biologists have beneficial is for us to deal with the restoration of ecosystems. We’re utilizing our electrical and fuel infrastructure to create corridors that interconnect pure parks and ecosystems. This fashion we will increase areas that assist to protect biodiversity and native species. We now have 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 a tremendous job restoring the entire infrastructure that was destroyed within the landslides that hit Mocoa, Putumayo’s capital, in 2017. We now have realized to construct with little or no affect on nature. We now make towers which can be very lean and tall. They stand in small areas and due to this fact don’t require us to chop down numerous surrounding bushes. We now not use bulldozers to put in cables. As a substitute we use drones and really small paths.

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

ORTEGA: Many Colombians don’t but absolutely perceive the magnitude of environmental threats. We maintain pondering 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{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} of the yr, La Guajira might have temperatures of fifty to 60 levels Celsius. That will make this area uninhabitable.

The best problem we now have is communication. False tales have unfold on social media that we have to battle towards, for instance, that cows produce inexperienced milk as a consequence of being close to our towers, or that the towers have induced leukemia in youngsters. It makes individuals consider {that electrical} infrastructure is a menace to the surroundings and communities, when in truth, it helps them. For instance, cooking with charcoal and firewood has led to horrible lung ailments.

The empirical details, sadly, will not be being communicated. And it’s so exhausting for us to refute these concepts, to persuade those who this infrastructure will not be a menace. We face a really nice problem in Colombia in incomes credibility and the belief of the individuals. However it’s our responsibility to attempt to earn that belief. And that’s, partially, why we now have a technique to regenerate ecosystems. We consider it could assist us construct relationships with communities. Via constructive outcomes, we will present them that preserving nature is appropriate with our infrastructure.

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

ORTEGA: The federal government wants to assist tackle the misinformation drawback. It ought to deal with training, to ensure everybody has a fundamental degree of information about local weather change threats.

There’s additionally the necessity for higher laws to allow the vitality transition. Carbon taxes are, in my view, important. And we should focus on, 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 are able to’t change this in a single day, however we do have to take steps so that folks begin migrating from diesel, gasoline, and coal.

This may be executed progressively. For instance, I consider the house owners of all these luxurious four-wheel-drive vehicles might pay a carbon tax that compensates for the affect of their autos. After they start to see what it prices to personal these vehicles, they are going to begin to migrate to electrical autos. And in Colombia, we additionally have to have a dialog in regards to the sort of hybrid autos we now have. A lot of what’s known as a hybrid in Colombia isn’t actually hybrid. They’re vehicles which have miniature batteries—individuals purchase them to get round circulation restrictions, reminiscent of pico y placa, which restricts site visitors throughout rush hours in a number of Colombian cities.

Furthermore, nations which can be implementing these measures—taking satisfactory steps, imposing taxes, and assuming all the prices of defending the surroundings—ought to be capable to defend themselves towards nations that aren’t, and are thus unfair opponents. For instance, the USA is already eager about this, by guaranteeing calls for on overseas firms that need to entry its market.

The federal government and the vitality sector even have to consider what’s going to occur with sure industries that may disappear, just like the coal trade. They make use of lots of people. So how are we going to make use of all of those that may very well be jobless sooner or later? And the way are we going to take care of the infrastructure that may turn into 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?

ORTEGA: We consider La Guajira deserves a nationwide dialogue. We have to perceive how the native economic system of the Wayuu ethnic neighborhood, which lives in La Guajira and could be very poor and weak, can turn into viable.

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

I consider firms like ours will help by pushing for an vital a part of our taxes to be mixed with social accountability packages. That method we will help remodel La Guajira. However we will’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?

ORTEGA: Our funding in a digital agenda has helped us, significantly with our managerial efforts—our means to know what we’d like and to hint what’s taking place. For instance, we found through the pandemic that we had enormous investments in tools and applied sciences that have been underutilized. We’ve additionally began to embrace automation.

In fact, some individuals really feel threatened by automation. They fear that they are going to turn into irrelevant or that they are going to lose their job. However automation truly facilitates progress. It permits us to relocate individuals to roles the place they’re actually wanted or the place they may very well be extra productive. And computer systems don’t robotically remedy administration issues. Ideally, automated techniques make life simpler for individuals and permit for accountability. However all that requires nice assist from a stable and mature group. In any other case, these techniques gained’t flourish.

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

ORTEGA: Colombia is at the moment debating introducing AMI [advanced metering infrastructure], or sensible meters, for vitality consumption. This know-how will not be but extensively out there in growing nations like Colombia as a result of it’s too costly. However as the value drops, sensible meters will turn into out there and can permit us to cost for vitality at a mean value relative to a time-frame. For instance, if you wish to bake a cake late at night time when fewer individuals are consuming vitality, you’ll pay lower than in case you baked it at dinnertime. Our capability to transition into electrical vehicles additionally will depend on the benefit of charging autos [at hours] when vitality is cheaper. With this technique, individuals might use vitality 24 hours a day and in a way more environment friendly method.

This sort of innovation may assist individuals perceive which home equipment find yourself being costlier as a result of they use extra vitality. For instance, individuals would understand how a lot it prices to have an outdated fridge. And, going additional, we might even provide incentives, like credit score, so that folks can exchange these inefficient fridges. Ultimately, that funding can pay for itself as a result of individuals will get monetary savings on vitality.

Clearly, we have to deal with this sort of information 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 individuals’s lives a lot simpler and generate monumental worth for them.

S+B: When it comes to defending information, what measures are you taking towards cyber threats?

ORTEGA: Final yr, we had a cyberattack, despite the fact that we had purchased all of the safety software program wanted to mitigate the chance of our workers working from residence. It occurred whereas we have been making an attempt to implement our new protection system, and our employees was not absolutely 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. Ultimately, 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 now have targeted on coaching our employees towards cyber threats. We realized that we’ll 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 weak, as we noticed in Ukraine in 2015, when Russian hackers left thousands and thousands with out energy for greater than 24 hours. It’s important to be on high of cybersecurity day by day, and bear in mind that you need to go the additional mile to guard your organization.