How Columbia Plans to Keep Its Oil and Coal in the Ground
November 17, 2022 - In February 2020, the lifeblood that kept the tiny town of La Jagua de Ibirico in northern Colombia going stopped flowing.
As the Covid-19 pandemic sunk coal prices internationally, the multinational giant Glencore, through its local affiliate Prodeco, closed the two coal mines in the area.
Since the closure, the sky has cleared up and the air is fresher, says Álvaro Castro, a social leader and local researcher for Universidad del Magdalena, who lives in the town. Birds now chirp in the newly green treetops, and the blanket of coal ash covering the rooftops is gone, he says.
But at street level, the situation is dire.
As 7,000 workers – from a workforce of 7,300 – lost their jobs and contractors left town, nearly 100 restaurants, cafes, hotels and other businesses closed, the local branch of the country’s largest coal workers union says. As a result, according to the town's mayor, the municipality lost 85% of its income.
Colombia’s new president, Gustavo Petro, has said the world needs an 'immediate withdrawal from the oil and gas industry'
Union leader José Ladeut, one of the few still working at Prodeco’s railroad, says this sudden closure of coal mines in La Jagua de Ibirico should be a cautionary tale for newly elected president, Gustavo Petro. "We were the guinea pigs," he says. "And we weren't ready. The transition found us still wearing nappies."
Petro, an economist and former guerilla who was elected as Colombia's first ever left-wing president in June 2022, rose to power with a socially progressive, environmentally conscious agenda which included a strong message on the need for the country to leave fossil fuels behind.
He promised the nation "a green, not a black future", and told La Jagua de Ibirico and other towns in the coal corridor they would be an essential part of Colombia's transition into a future where coal, oil and gas remain underground. In a speech at the COP27 climate talks in Sharm el-Sheikh, Egypt, in early November, Petro said the world needs an "immediate withdrawal from the oil and gas industry".
Supporters of Colombia's new President, Gustavo Petro, hold a painting depicting him and his vice president Francia Marquez (Credit: Guillermo Legaria/Getty Images)
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So far, Colombia is the largest, most fossil-fuel-dependent country adhering to an agenda that explicitly calls to leave fossil fuel extraction behind. "There's really very few countries in the world that have said anything regarding this 'leave it on the ground' idea," says Paola Yanguas-Parra, policy and energy transition economist at the Technical University of Berlin's FossilExit Group.
Last year, Costa Rica and Denmark formed an international alliance to phase out production of fossil fuels, called the Beyond Oil & Gas Alliance (although under its new presidency, Costa Rica has recently backed away from the alliance leadership). Meanwhile, the South Pacific island nation of Tuvalu recently became the second country to call for a Fossil Fuel Non Proliferation Treaty, joining Vanuatu in backing the idea of creating a legal pathway to regulate and phase out the global production of coal, oil and gas. On the coal front, since its launch in 2017, the Powering Past Coal Alliance, has gathered almost 100 countries and subnational governments working to phase out existing unabated coal power generation.
Compared to countries with a similar dependency, "Colombia's goals could be considered very progressive", says Yanguas-Parra. But a transition away from fossil fuels in Colombia will require several major transformations. And economists and energy policy experts agree that, despite the lofty speeches, Colombia is currently far from ready to "keep it in the ground".
Like most nations, to move to a clean economy, the country needs to clean up its energy grid by switching to renewables and electrify industry, homes and transport. But at the same time, Colombia will also need to replace half of its exports and restructure public finances on a national and a regional scale. To make sure the transition is just, it will also need to ensure about 109,000 workers can find new jobs, and that indigenous and black communities living in critical areas for renewable energy development are fairly included and compensated.
Some transformations, like a 100% renewable electric grid, are achievable as soon as 2030, researchers have found. However, other goals, particularly those referring to substituting Colombia's exports, ensuring economic transformation in fossil-dependent regions, and clean-up plans for closing mines and oil fields, are nowhere close to being a reality.
Until Petro's election this year, replacing oil and gas was not part of the energy transition conversation within the government. Colombia has been slowly building its clean energy policy since 2014, when Congress passed a law to promote the building of renewable energy projects – mainly solar and wind power – via tax breaks and other incentives. But in 2021, less than 1% of energy in the country came from these sources.
Fossil fuels including petroleum and coal make up a large proportion of Colombia's exports (Credit: BBC. Source: OEC)
Yanguas-Parra says failing to recognise Colombia's financial dependency on fossil fuels in clean energy policies has been a mistake. As importing countries decarbonise their own economies, demand could plummet, leaving places like La Jagua de Ibirico extremely vulnerable to abrupt economic recession. This is particularly true in coal towns, as Colombia exports 90% of the coal it extracts.
"What we've seen historically is that when transitions are not planned, the social, economic and cultural repercussions remain for years, and even decades," she says. "It's extremely traumatic." (Read about How a just transition can make India's coal history)
That's exactly what could happen in La Jagua, where the prospects for a just transition currently look bleak.
Here, over the past few decades, taxes and royalties paid by the mining companies have outgrown those of other sectors. The four main coal towns of Cesar – Agustín Codazzi, La Jagua de Ibirico, Becerril and El Paso – represent 35% of the area's entire GDP and 30% of its income. These extraordinary revenues for municipalities have stalled mayors’ willingness to explore other income avenues, leaving many people behind: more than half still live in poverty in Cesar. As the mines pollute air and water, agriculture was lost, even for self-consumption, Álvaro Castro says.
In a way, a similar phenomenon has happened on a national scale. "Colombia has had an artificially strong currency because our exports are commodities paid in dollars," says Juan José Guzmán Ayala, an economist at Columbia's Center on Global Energy Policy. "But those commodities end up flattening the country's industrial growth." Leaving fossil fuels in the ground means finding alternatives incomes to replace them.
Demonstrators stage a protest against fracking in Bogota, Colombia (Credit: Reuters/Nathalia Angarita/Alamy)
The government's campaign plan proposed to create an Energy Transition Fund with taxes and royalties from the industry to finance the phaseout and promote new economic sectors like agriculture, agroecology and clean energy technologies. However, it's still unclear if the fund will happen, how much money it will receive, and how it will decide where to pour it. It is also unclear what kind of product – or combination of them– has the greatest potential to replace such a big chunk of the country’s exports.
A coalition of more than 30 national and international organisations addressed how a transition could be funded in a proposal published earlier this year. New taxes could be placed on the oil and coal industry, it said, (this seems likely, as they are included in a tax reform on the verge of being passed in Congress), while tax exemptions and benefits, which accounted for a lost $1.34bn (£1.14bn) in 2020 according to the proposal, could be removed.
A fund like this might help, but it leaves unanswered the question of what mine closures should look like, says Andrea Cardoso, an economist at University of Magdalena in Santa Marta, Colombia. The country's legal framework is largely silent on what happens to workers if a company voluntarily gives up its mining permits: they are legally responsible for the environmental clean-up, but the layoff of workers or responsibility for health outcomes after decades of pollution is hardly mentioned in laws and policies. The lack of clear regulations, Cardoso says, allowed Glencore to close its Prodeco mines with virtually no explanation.
The dismissals came with no notice, and while they included "voluntary retreat" programmes which gave some workers a year's salary and health insurance, the company did not support them in finding a new job or repurposing their skills, union members say. "With us, the workers and the communities, everything that should not be done in a just transition is being done," Robinson Moreno, a union leader at the country's largest coal workers union, Sintracarbón, says.
Additionally, the company left before fully fulfilling its environmental obligations – according to the National Mining Agency, it has complied with about 42% of them. "There is a lot of talk about alternatives, ecotourism or agriculture," says Cardoso. "But the communities themselves ask, 'But how can we do that if the soil is contaminated, the air is polluted, the water resources are scarce?'"
Glencore did not respond to BBC Future Planet's requests for comment before this article was published.
Energy use in Colombia by source (Credit: BBC. Source: Our World in Data/BP Statistical Review of World Energy)
If Colombia wants to avoid a scenario like this playing out again, it needs to talk explicitly about mine closures and regulate them, says Cardoso. Last year, a Stockholm Environment Institute paper proposed that Colombia should spend the extra money currently coming in from coal's rising prices to research and promote the best alternative economic options in towns like La Jagua.
If the situation around coal is complex, though, things get even more tricky when it comes to oil and gas. Unlike coal, Colombia does need them to function. Gas provides 12% of the country's electricity and fuels its industrial processes as well as the stovetops and water heaters in most of its homes. Meanwhile, gasoline moves practically all of Colombia's fleet – of the 17 million vehicles in the country, only about 7,000 are electric.
That's why many were worried when mines and energy secretary Irene Vélez – a philosopher who, before joining the government, researched the environmental impact of illegal mining and the energy transition – announced in August that the government planned to stop granting new hydrocarbon exploration licenses and halt all pilot fracking projects. Vélez has explained that this will not affect the development of the 117 contracts that are exploring reserves, which, in combination with reserves already being exploited, are expected to last about a decade, according to a recent estimate.
If the government closes the oil and gas tap before demand for these fossil fuels shrinks, the country will have to import more gasoline and gas – and pay that price tag in dollars – risking internal economic chaos, says Guzmán Ayala.
Solar panels could help brig electricity to the 404,000 families that still live without it in Colombia (Credit: Luis Echeverri/Alamy)
That's why he advocates for policies that focus on demand instead of supply – much like the Climate Action package recently approved in the US, which incentives homeowners, companies and states to switch to renewables. In Colombia, this means tackling transport, the country's largest consumer of fossil fuels, says Jessica Arias, a policy researcher at Transforma, an energy transition research center in Colombia. To do this, country must boost electric public transport, shift public investment from roads to railways, and support EV ownership, according to a policy brief co-authored by Arias.
But Yanguas-Parra thinks moving away from the extraction of oil and gas is as necessary as electrifying internally and sees both processes as deeply intertwined. "[W]e either need to reduce exports so we can use more oil or drastically reduce internal use so we can export the same amount," she says.
To replace gas and oil by 2050, the country will need to produce about five times more electricity than it does today, Arias' team found. With an electric grid already relatively green (hydropower dams create about 70% of electricity in the country), reaching 100% renewable electricity grid is possible by 2030, according to a recent paper co-authored by Yanguas-Parra. However, the paper says policymakers need to move firmly towards this and ensure the energy transition gains "social licensing".
In fact, a lack of social approval could become the biggest roadblock for renewable energies, says Yanguas-Parra. If the government focuses on building megaprojects in areas where there is already conflict over land use, "social conflict will totally slow down the progress", she adds.
In Colombia, the wind power industry is already under scrutiny: Wayúu indigenous communities in La Guajira have denounced human rights violations and a lack of transparency from arriving projects. Meanwhile, in the small town of La Loma, near the now-closed mines in La Jagua, the renewable giant Enel is building Colombia's largest solar park, but local communities have said they were not informed about the project nor of any way they will benefit from it. "We agree with an energy transition. We know the world and the time requires it," Moreno, who is one of Prodeco's union leaders, said. "But right now, the energy transition is only for multinational companies."
Enel and SER Colombia, an industry body which brings together several companies developing renewable energy projects in La Guajira, did not respond to a request for comment.
If things like this keep happening, "society is just not going to accept the energy transition", says Yanguas Parra.
Colombia's per capita emissions are relatively low on a global scale (Credit: BBC. Source: Our World in Data based on the Global Carbon Project
So far, Vélez has been explicit about the government’s intention to include communities in the energy transition. She has repeatedly mentioned that the government wants to support "energy communities", in which a neighbourhood can agree to install solar panels in a school or a residential complex, use the energy and sell the surplus to the national grid.
The proposal could be especially helpful in bringing electricity to the 404,000 families that still live without it in Colombia. The national government has also met with local representatives, companies, unions and communities in regional dialogues to create its energy transition roadmap that, according a recent speech by Vélez, will be ready in about six months.
When it came to Prodeco's exit from La Jagua de Ibirico, Ladeut says a fair system would have seen communities, workers and governments sitting down with the company to reach an agreement. "The energy transition is a reality. Today it is us. Tomorrow it will be other companies."
Laudet and other 35 former workers – including Moreno – are working with Cardoso and her research group to create a 150-hour academic programme on labour retraining that they hope will become a bachelor's degree. But they know they can't make the transition happen on their own – the entire society, they say, needs to move towards that goal – and the government needs to clearly outline how to reach it.
"When you're running a marathon, it is not enough to say 'I want to run this marathon'," says Guzmán Ayala. "You have to establish a structured training plan to achieve that goal."
The Colombian government has yet to set out its own training plan to achieve a fossil-free future. But this is essential if it, and the rest of the world, ever wants to be capable of crossing that elusive finish line.