Global Engineering Capability Review

Colombia case study:

Transitioning to green energy

Colombia's Engineering Index scores

Knowledge = 62nd
Labour force = 54th
Engineering industry = 35th

Infrastructure = 70th
Digital infrastructure = 63rd
Safety standards = 19th

At first glance, Colombia appears to have little to worry about with regard to energy production: it exports about three times more than it consumes, and it is home to a rich array of natural and fossil-fuel resources. However, the country remains largely dependent on hydropower to produce electricity, domestic energy demand is growing quickly, and the country is very vulnerable to the effects of climate change. The use of non-conventional energy sources (NCES) is still very low, but solar, wind and biomass hold great potential. The use of NCES would alleviate Colombia’s reliance on hydropower and its exposure to fluctuating prices for fossil fuels and their damaging environmental impact, improving the country’s energy security and efficiency in the process. [65]

Colombia’s energy sector has undergone various structural adjustments towards full liberalisation. Its privatisation in the 1990s saw the unbundling of electricity generation and infrastructure maintenance, marking a broader shift to stimulate competition between regional utilities and eliminate barriers to entry for private investors. Colombia was the first Latin American state to introduce a bidding system in its electricity market, and the increased competition in the sector has improved distribution efficiency and led to higher foreign investment. However, the network remains vulnerable: an increased threat of drought threatens its viability, and in the past few years oil infrastructure has been the target of guerrilla attacks. As a result, interest in alternative energy sources is growing. A regasification plant has already been developed on the north coast to facilitate imports of liquefied natural gas (LNG), and legislation has been passed to promote coal- based power production and bioenergy. [66]

Growing green

The imperative to achieve greater sustainability in energy production led to the launch of the Long-Term Green Growth Policy in 2018. This document contains sustainable development targets for 2030, including expanding the installed capacity of renewable energies to 15% of total energy production. [67] An earlier law (Law 1715), passed in 2014, set out to diversify the energy system by incentivising private capital investment in renewable energy integration. It provided fiscal incentives, a dedicated fund and the legal basis for the development of renewable energy initiatives, allowing further policy and regulatory action. [68]

With close to half of Colombia’s land area and approximately 4% of its population not connected to the electricity grid, expanding access is another priority. The World Bank has deemed essential the development of non-conventional energies in remote areas to enable local communities to access basic services and development opportunities. [69] To this end, the government has created a National Rural Electrification Plan (Plan Nacional de Electrificación Rural, PNER), which “prioritises the use of non-conventional and preferably renewable energies for the promotion and use of appropriate technological solutions for power generation”, in keeping with widespread support for a greener system. [70]

Making it easy: Incentivising investment in green energy

There are a number of barriers to Colombia’s investment in NCES. Perhaps most importantly, the country has vast resources of unexploited fossil fuels, as well as existing infrastructure that supports their extraction and use. This is likely to put off investment in renewable energies, particularly as Colombia does not have a strong record of incentivising green energy investment through subsidies, grants or other means. Energy production has also seen a sixfold increase since the early 1980s, with most of this growth due to the expansion of coal mining activity and oil exploration and production. [71] In addition, there is insufficient infrastructure to supply renewables from the energy-rich north-east of the country to centres of demand. [72]

There is also a huge skills gap across Latin America, which makes it hard for countries like Colombia to adjust to new sources of growth after reaching middle-income status. [73] Broadly speaking, 50% of Colombian firms report difficulty finding workers with the right skills. [74] Data also shows that 40% of young Latin Americans are neither studying nor working, and that 55% of employees are working in the informal economy. [75] With the involvement of the Inter-American Development Bank and the World Bank, the Colombian government launched the Colombia Científica programme in 2016 to strengthen research and teaching in higher education. This has resulted in improvements to the provision of high-quality educational and vocational programming up to the tertiary level. [76]

With close to half of Colombia's land area and approximately two million of its people currently not connected to the electricity grid, expanding access is a priority

The expansion of coal mining activity and oil exploration and production poses a challenge to emerging channels in renewable energy production. In addition, there is insufficient infrastructure to supply renewable energy from the north-east of the country

Guatape, Colombia: artificially created lake for hydroelectric energy production

¡La Reforma! Education reform and upskilling

University engineering programmes in Colombia are generally well regarded. In recent years the curricula of engineering faculties have begun to incorporate sustainability, and this has proved popular with students. While comprehensive theory is taught in university programmes, several experts criticise the limited project work and industry exposure. Professors often have no industry experience, and classroom lessons do not always translate well to real-world applications. The government could address this by pushing curriculum reform to create a more application-focused approach to engineering. Engineering education also remains out of reach for many because of its high cost, and more could be done to improve access. Finally, universities and industry could increase their collaboration. As one expert noted, universities could observe the way in which doctoral students in British universities gain experience working on industry projects.

Colombia has the natural resources to operate lucrative renewable energy projects, but the labour force needs the right mix of skills to support growth. Current expertise in NCES is largely limited to solar energy, rather than biomass or other forms of bio-energy.

This situation could be improved through the transfer of knowledge from countries like the UK, facilitated by university partnerships, organisational programmes, exchanges and workshops. Colombia remains an emerging- market economy, and many companies do not have the resources to invest in the tools necessary for green development. The country also levies heavy taxes on imports of foreign equipment, which limits access. The industry should also seek community input – especially from indigenous populations – in developing renewable energy systems that align with local needs.

Practical remedies to boost renewable energy usage involve closing both the labour and technology gaps. To manufacture, install and maintain solar panels requires both training and electrical batteries. An expert notes that alkaline batteries are hugely important to manage the fluctuating electricity supply that emerging renewable methods will provide in the medium term, so addressing the skills gap in their manufacture would be of great use.

Experts criticise the heavy focus on theory in university programmes, with little project work and insufficient industry exposure

Down a renewable road

Colombia is reliant on hydropower and fossil fuels for its energy, and it is highly vulnerable to climate change and fluctuations in energy prices. The country has rich resources that would allow it to develop NCESs and diversify its power model, but the current market structure is tilted against this: existing infrastructure favours fossil fuels, heavy taxes on imports restrict access to the technology required, and current economic conditions discourage risk. In addition, a skills gap in the labour force constrains ambitions. Nonetheless, the government has made green growth a priority and has set out plans to make this a reality. The commercial and industrial sectors are increasingly aware of the benefits of installing solar panels on roofs, and residential interest is growing. There is also scope for large foreign companies to collaborate with smaller Colombian firms in developing renewable projects.

There is scope for large foreign companies to collaborate with smaller Colombian firms in developing renewable projects


Footnotes