The plan Leopoldo López and Gustavo Baquero put forward in their new book, Venezuela Energética, is incredibly ambitious. Laying down a set of goals for the next hundred years is daunting. It forces us to confront tough but necessary questions like “What do we want? Who do we want to be?” In the context of the current crisis, the universal answer is a resounding “not this,” which is fair, but insufficient.

This book offers a vision rather than a plan, like a sum of goals that, if met, could drive Venezuela into the 21st century. In some ways, I would say their vision falls short, but it’s an excellent point of departure for a discussion around our carbon contributions to the environment.

The grid

López and Baquero’s ultimate goal is to turn Venezuela’s power grid into completely renewable resources. In order to have a totally renewable grid, we’d need to rely heavily on storage or hydrogen, which are very expensive technologies. The authors cite Sweden and Switzerland as examples, which have a large percentage of their installed capacity as nuclear (which is low emission, but requires fuel).

The authors should be more specific. It isn’t clear if they want to remove hydrocarbons from the grid, or if they want to reduce greenhouse gas emissions as a whole. I understand that these aims aren’t mutually exclusive, but if emphasis on the first is what matters, then some nuances must be addressed.

The other problem is the reliance on hydroelectric energy, particularly, the large, centralized type. Everytime a runner in, say, Guri Dam, is down for maintenance (which can last for months), you are removing a large percentage of the nation’s installed capacity. The Guri mega projects come with mega reservoirs, which are filled with methane emitting biomass. This is a known phenomenon in all tropical reservoirs: methane has 32 times the greenhouse effect potential of CO2. Studies conducted in Brazil show that some of these hydro plants have a larger impact than a combined cycle plant, bringing us back to the point: do we want a hydrocarbon free grid? If we actually want to have a reduced impact on the environment, projects like Guri aren’t viable.

The authors are on point when they argue that we should strive for a mix. Any grid that depends on a single resource exclusively is bound to be unreliable. Hydro is very predictable, but requires proper management. Wind is economical and low impact, but very unpredictable. Solar lacks inertia and reactive power. Like a healthy diet, a healthy grid is about a bit of everything, with nothing in excess.

A Deep Decarbonization Path for Venezuela

These words are not mentioned in the book, but I feel this is what Baquero and López tried to say. Many world economies have laid down a path for the decarbonization of both their grids  and their economies. The goals in Venezuela Energética tend to focus on the grid and somewhat on transportation, but decarbonization should be clearer. It’s something everyone worries about, and we have mentioned in Caracas Chronicles how Venezuela is particularly vulnerable to climate change.


The use of electric vehicles (EVs) and hybrids is also tricky. They’re a necessary part of any decarbonization plan, but they have to be complemented with the grid’s transition to renewables. Otherwise, EVs are just transferring the pollution from here to elsewhere.

Venezuela’s gas distribution is decrepit and a transition from gas guzzlers to no-emission-no-sound EVs is in order. It won’t happen until the country gets its act together and forget its entitlement to free fossil fuels, which are costly to produce (and should be priced, and taxed accordingly).

Natural Gas

Here is where Baquero really shows his chops. Venezuela must become a natural gas powerhouse. Natural gas has low emissions, the technology to transport it is mature and some of the infrastructure is already in place. Even if it’s expensive to ship and store, any decarbonization path should include natural gas as a primary mover and stepping stone to a more greener approach. The challenges here are organizational: developing the necessary infrastructure for extraction and distribution.

In closing

I’d love to be a part of Baquero and Lopez’ Venezuela — hell, I’d love to help build it. All of this is day-dreaming, though, as long as chavismo is in the driver’s seat. It’s also very unclear if this plan sees the government as executor or as an enabler. The fastest way to establish a mixed, reliable energy grid is to create an energy market where private organizations can invest, install equipment and sell electrons—the subatomic particles that get pushed through copper pipes and make the world go round—wholesale to a distributor, which could be state-owned or private. But it has to be a state policy, firm and sustainable.

The biggest omission in the book is that there’s no mention of gas and electricity subsidies; there cannot be a different future for Venezuela if this isn’t front and central to the debate. Presenting a system of direct transfers, as the authors have in this book, should make the demise of subsides politically attainable. Allowing for gas and electricity to be sold at a cost (and even at profit) will teach us how to value these resources.

In order for the nation to disdain waste and inefficiency, its citizens must do so first.

Further reading

The issue of renewable energy globally, and especially in Venezuela, is a topic that should be studied and carefully considered. I suggest the following links for more info:

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  1. Interesting observations as always. It seems to me that a large part of the answer to the problem of gas subsidies is vastly improved public transportation. That is also an example of where direct transfers of oil rents are problematic. Individuals can quickly eat up their oil patrimony continuing to drive gas guzzlers and do not necessarily have the long term strategic thinking to see the benefit of the public policy favouring investment in infrastructure. The USA is a good example of this problem: the preference is a tax cut over a road or a bridge or an airport or an up to date train system.

    On the other hand, which is a less efficient and less equitable form of direct transfer…gas subsidies or a straight deposit into a personal account? That seems to be obvious.

    • Just to be clear. When you say 0% tax, do you mean that the retail price should be the same as your neighbors pay after tax? Because it not, then there is an arbitrage opportunity that will invite smuggling.

      In most countries, the taxes are petrol are a significant part of the retail price. So much so that if VZ doesn’t match and enforce these retail taxes in VZ, then there will be an incentive to buy VZ petrol cheap and sell it to your taxed neighbors, just like they are doing today.

      We see this tax arbitrage on a smaller scale in the cigarette market. Smugglers bring under-taxed smokes from Africa to Spain, US to Canada, North Carolina to New York.

  2. Hello Rodrigo, I think these are really valuable comments on a subject that definitely needs a closer look. Kudos to the Caracas Chronicles Team for having this “Energy Week” on the website, the articles so far have shown some powerful insights and the discussion is driving is really promising. I guess is a testament on the effort that Leopoldo and Gustavo put to publish this book and having people involved in this topic. Unfortunately, at this moment I can only make comments on the post and not on the book, but I have to celebrate this publication being out. Chavismo will not allow any of these recommendations, we know what they do and the criminals they are. I don’t want to discuss that now but rather insist on what’s being written in the post.

    I think having a vision instead of a plan at this point could be more helpful in the sense that we need to know first where to go before knowing how to get there. This is not to say that the discussion on the energy transition must be postponed or be treated sequentially (in fact I think as a collective effort, it is a calling for promoting this debate for the specifics), but rather make sure that as a country we can at least think about possible scenarios and how to deal with them.

    I would say that one of the most important arguments in your post is related to infrastructure, reliability and mix of the energy grid and the existence of energy markets (and dealing with the energy subsidies). It’s not possible to think of private investment without the existence of an energy market, because you need some way of compensating for investing in infrastructure and provide a proper valuation of the existing resources. Particularly for generation, some tradeoffs have to be considered: how much land you need for the infrastructure (wind and hydro seem to require a lot of it), emissions per KWh (here fossil fuels are on disadvantage), water consumption for each generation technology, among others. I think translating this into an energy mix requires a market that provides price signals and compensates people for the risk, but also having some mechanism to price the externalities.

    This is why I believe initially the State should act as enabler, developing the institutional and legal framework that allows for the existence of such a market, while at the same time providing security for the investment (again, I know Chavismo will not do any of this, it has to be other people). This is why I think discussing whether to do wind or solar or hydro is not for the government to say but rather should be a decision laid on the investments allowed by the existence of a market. Definitely there are some scale issues that need to be dealt, but I think is more important for reliability to have flexibility.

    I noticed also that the discussion on electricity that you see in Venezuela is on generation by renewables and electric cars. This is too narrow a frame for any energy policy as the reliability of the system also depends on transmission, distribution and if we are thinking in the next 100 years, storage (is not commercially available now but you have to think it will be in the future). Honestly, I believe now that the threat for fossil fuels does not come from EV but from the decarbonization of the grid, given the scale of energy demand in the electricity and transport sectors. Then, you need also a market for transmission and distribution, and here I’m not thinking just electricity, I’m thinking natural gas. It is clear that infrastructure requirements are not met by the State, and you need some way of “organizer la pea”. Again, the State must be an enabler for that.

    I guess the main point here is that while it is important to focus on oil in the short term, to truly have a “Venezuela energética” you need to think on what’s the purpose of having a competitive energy industry and infrastructure (export markets, allowing cheap energy for energy intensive sectors, allowing whatever sector the market wants?) but also what are the enablers for that, rather than get to specific on which generation technologies to develop or what fuel we should use without having incorporated a thorough analysis of costs and benefits

  3. CC had an interesting article several years ago comparing car ownership and gasoline consumption in Venezuela compared to Latin America. Venezuela doesn’t have a much higher rate of car ownership- Brazil, Mexico and Argentina have more autos per capita- but a much higher rate of gasoline consumption. This is because all the 70’s gas guzzlers remain on the road in Venezuela, courtesy of “dirt cheap” gasoline.

    • You make an excellent point. The best way to lower the usage of fossil fuels is by making them more expensive than other options. The market will do the rest.
      Taxing fossil fuel usage and ultimately increasing the costs of electrical power and transportation, can have the knock on effect of raising production costs and be detrimental to a company’s ability to compete in a market.
      Policies that encourage alternative energy production that have long term benefits have been working well. I live east of Lake Ontario. Due to the lake we have one of the cloudiest areas in the US. A physical therapy business here built a new building a few years ago. This is a 15,000 – 20,000 square foot building. With proper storage and efficient solar panels. The owner has been able to be completely off the energy grid.
      Even with tax advantages and subsidies these projects can have 20 year payback forecasts.
      The upfront investment can be substantial. The investor needs to know that the government policies that encourage these type of investments will remain in place.
      I would wholeheartedly support government involvement in the electric car industry. Developing a battery bank that allows for quick change and is standard for all vehicles would create an electric car ownership explosion.
      If you had an electric car that could be driven into a service station and have a depleted battery replaced with a fully charged one in minutes, compared to the hours that recharging requires, range limitations would disappear. Being able to supplement this system with a charging system would give the owners the best of both worlds. battery costs are a significant amount of the price of electric cars, subsidizing the batteries will bring the costs down and encourage buyers.
      Just as we now have HOV lanes in major cities, dropping tolls for EVs around major cities would serve to better the air quality in some of the areas with the most pollution and save a daily commuter significant money over the life of a vehicle. It is a simple solution.

      • The best way to lower the usage of fossil fuels is by making them more expensive than other options. The market will do the rest.
        In the case of Venezuelan gasoline, simply charge them the market rate in other countries. Or charge cost of crude + refining+ retail cost will result in a huge price increase at the pump.

  4. These are the articles I fall asleep on. Partly because I’m too stupid to understand energy policy, but. mostly because it’s putting the cart before the horse.

    There are too many bigger fish to fry…too many bigger issues that need more immediate attention…to waste energy (metaphorically speaking) on pie-in-the-sky dreams of a Venezuela utopia based on energy policy. (And I’m even assuming the death knoll of Chavismo and restoration of respectful democracy.)

    It also minimizes Chavismo’s destruction of VZ and overemphasizes Chavismo’s and past administrations’ ENERGY POLICIES which brought VZ to where it is today:

    It is Chavismo which has destroyed VZ economically, socially, morally and physically. Energy policy is just one part of it.

    Baby steps to bring VZ into the First World, or at least closer to it.

  5. A note of caution… In any future privatization of the power system, you need to allow for an adaquate transition from virtually free electricity to electricity sold at actual cost plus profit. I would recommend that anyone involved take note of the disastrous experiences of AES in the Republic of Georgia. Neither they, nor the goverment which decided to privitize the system took into account the problems of collecting money for a service that, up until then, had been heavily subsidized and was virtually free to the public. Sound familiar?

    AES was nearly bankrupted by their entry into this market. Their troubles were chronicled in a documentary film called Power Trip:

  6. Venezuelas disastrous economy, generalized poverty and limited resources might pose a conflict between getting out of the hole and improving peoples quality of life thru projects and investments that maximize our economic growth and the cost of managing our energy needs in ways that are optimal for the future of the planet , maybe that means going back to the bycicle and abandoning the use of motor vehicles ( just joking) but definitely a balance must be struck between both objectives……..policies must be prefferred which make them both compatible …..!!

    Relevant to this is what can be done to meet our energy needs (as regards both the generation and distribution of electricity and in transportation) in the most cost efficient manner while keeping in mind what we can RATIONALLY do to minimize any damage to the planets climate.

    An important step is to make our production and transportation of electricity as efficient as possible so as to elliminate the waste that goes with its generation and transportation and to incentivate its rational consumption , Understand that some 40% of the electricity transported is lost on its way to where it is to be used . It doesnt help that consumption is too high because its either delivered free of cost or at a subsidised price that does nothing to cover the actual cost of producing it ….., prizes must be more rational and care taken to improve the infrastructure to minimize wasteful use of our energy resources .

    Second step is rescuing where cost efficient the use of hidraulic resources first and natural gas second in the generation of electricity , diesel fuel is a high price export item and its criminal to use it for internal consumption …….. to prefer to use wind or solar farms to generate electricity where natural gas is more cost efficient is foolish , natural gas leaves a carbon imprint which is generally one third that of coal and some 30% below that of oil fuel , its also cheap and abundant and not so expensive to exploit and convert into electricity . Of course once we reach the level of a developed country we can spend whatever is takes to conserve the planet ……..but we are not there yet….!!

    The building of a good transportation system to reduce the use of private cars is also a priority both because it creates jobs , lowers the cost of locally consummed energy, frees resources for a more profitable use for the country.

    My emphasis would be on making the domestic use of energy as cost efficient and rational as possible without trying to emulate in every respect the OECD countries which have the resources to go for more expensive alternatives…

    One last point , the cheaper and more efficient our internal use of energy the greater the advantage to making locally produced goods that can penetrate international markets…..

  7. A political opposition leader in a starvation mode country talking about renewable energy? I know it’s the topic of a series of articles, open to comment, and it’s certainly one of the questions or one of the plans that go into making a reconstruction, so I don’t want to dismiss the series of articles. A lot of interesting considerations.

    However … I would ask, “What if Venezuela had no oil, no gold, no diamonds? What then?” And as Ira says, energy policy is just one facet of a lot of problems. You can’t say that the priority is stopping the decline of the existing energy structure and the oil industry, and expect it to have any effect, but is renewable energy a priority? The currency has fallen apart. Will renewable energy fix that? How? By exporting it to the U.S., Russia, and China? Crime rates are soaring, billions of oil dollars have been stolen, by most reports, the military has run amuck (medical students have been shot), minimum wage doesn’t amount to a decent tip in most countries, the college dropout rate is probably over 50%, nephews of the first family have been sentenced for trying to smuggle 800kg of cocaine into the U.S., malaria is back, medicines are lacking. I know all that isn’t universal, I know it affects the lowest income brackets the most, but it certainly affects the entire population to some degree. Maybe the biggest problem is that 20% of the population still worship Chavez and socialism – and the rest are at best ambivalent about voting because the opposition has been split cleanly down the middle.

    The car doesn’t run, won’t move an inch unless someone pushes it … but look at the shine it has! It’s a beauty, eh? I know … I’m just an ass for not appreciating the book’s importance in shaping a future Venezuela, but I think it is either 40 years too late, or 40 years too early. I will go back to pulling the wings off flies, now.

    • What he said.
      A far better read would be how you put food on the table and bring back medical care.
      “40 years too late or 40 years too early”
      Great quote that fits perfectly.

  8. Renewables that are already established for long term use (hydro) make sense and are already part of what is in place. But the needed maintenance in the dam are already a real problem that they are not addressing.

    Solar and wind only make sense if there is enough environment to support it. I don’t know if those conditions exist in VZ today.

    As far as an export or source if profit, others have already identified one very critical issue. No matter how “green” something is, how well can it be protected from corruption that already exists.

    The systemic problems in VZ and the cultural issues of “it’s ok to steal” (i.e. Chavismo) makes any venture into these areas much more likely to fail. It’s like giving a bag if broken glass to a kid who is already bleeding from finding a loaded gun in the closet. The outcome is not going to be pretty in the hands of a recklessly child. And it does nothing for the existing bullet wound.

    I recommend solving the problems at hand first and then wish upon a star.

  9. Humans are interesting creatures. When faced with difficult seemly impossible situations that they have never faced and have little experience or knowledge of how to deal with they have a great tendency to cling to and to revert back to what they know and to apply those skills regardless of how applicable they may be to the solution of the problems in front of them.

    So if you’re an economist by education and experience, I guess you would apply big broad economic thinking analysis to solve the problem in front of you (even though they may not apply). If you’re an engineer, I guess you would apply broad engineering thinking to design efficient solutions, if you’re a politician you start a dialogue, and on and on ..

    Thus we see the stream of recent articles in CC and elsewhere proposing solutions based on the author’s area of expertise and training ….

    Who has ever really seen or experienced how to solve the unbelievable disaster that is today’s Venezuela? Only a very few instances of the “Venezuelan” problem have occurred in modern times.

    In looking at 1000s of years of human history we see that most solutions that have been successfully applied to resolve similar problems involved applying the skills, knowledge, and experience held by the military.

    A solution no one wants to apply, no one is talk about, and every one sees only as a last resort.

    How many people need to be die from starvation, lack of medical care, political retaliation, or run from the country in fear for their life before a “last resort” status is declared?

  10. What does Venezuela do with the natural gas it produces incidental to oil drilling, burn it off? Are there substantial natural gas fields that have been or are currently in production or that could be developed?

    • There was an article written and run on CC last year, I believe, ago by someone knowledgeable. It detailed where the gas fields are, and laid out the engineering requirements (in layman’s terms) to use it.

      I wish someone would run a similar analysis of the agricultural sector, explaining where which crops can be grown and in what quantities, where cattle and other livestock can be bred and in what numbers, what fishing banks are commercially exploitable, and perhaps something about who owns or owned what, and what happened to it. I know they grow sugar cane in Aragua – lots of it, a sugar-freak child’s paradise, miles of sugar cane.

      By 1860 Venezuela had 6 million head of beef cattle, mostly in the Orinoco region. That seems like a lot of cows, but I don’t know how the yield works out over the course of the life cycle of herds. A rough guess would be 50kg of beef. In 2005, Chavez just reached out and stole the Vesty (British) Group’s lands (66.000 acres) and cattle (8,500 head). That was 4% of national production. Those 8,500 times 25 equals some 200,000 head. That’s way short of six million head. Chavez’s idea was to “redistribute” that land to “the poor”, who thought they could grow crops there, but failed because they were not familiar enough with framing those crops to know that that area around the Orinoco floods most of the year and would wipe out the plantings. Co*o que b*las. The Vesty Group sued and won judgement for some $100 million dollars. I did not find what happened to the cattle, nor to the cattle production on those lands.

      I deduce from economics that “OMG!! What happened?!” to reduce 6,000,000 head (for a population of not more than 1,700,000) to 200,000 head in 2005 (for a population of 30,000,000+/-) is explained by the increasing reliance dating back to the 1930’s on the principal export: OIL. Prior to oil, coffee and sugar were big exports. Cuba, back then, used to import beef from Venezuela and the U.S.. Again, the math of Venezuela: calculating head of cattle per capita in 1860 and 2005 is simple – but totally mind-boggling. I am sure of one thing: cattle will grow in Venezuela. Probably a lot more than 6 million. They eat grass, and there’s a lot of that in Venezuela (the dry season is a bit of a problem, and they lose weight, but with today’s technology, some land could be irrigated).

      A lot of rice is grown, irrigated. Corn. Principal fruit crops include of course platano, cambur, mango (melon, naranjas). I’m sure someone must be a lot more familiar with the whole sector than I am and could write something that went over the “big story” without getting into unorganized detail, and include some (renewable) protein sources for carnivores like pigs, goats, and chickens. Agriculture is 3% of GDP, oil is (or used to be) around 50% of GDP.

  11. ‘López and Baquero’s ultimate goal is to turn Venezuela’s power grid into completely renewable resources”

    The most important renewable resource, by far, is people. The reason Kleptozuela is destroyed is very simple: the lamentable quality of its people, the same ones that elected still adore Chavez, the same Millions that beg and steal everything they can today.

    Yet most people, including Leopoldo and Baquero hardly ever mention it. Until Venezuelans are somewhat educated and build better moral values (steal less), they’re doomed. Regardless of any idealist energy plan. None of them will work. None.

  12. “All of this is day-dreaming, though, as long as chavismo is in the driver’s seat”

    No, all of it is useless day-dreaming as long as Venezuelans in general are under-educated and corrupt. Until a tough government enforces the law, jails most people who steal and educates the general population. Takes at least a generation, and tough love.

    Did Ad/Copey educate the people or engage them in the economy during 4 decades, way before Chavismo? Nope. They stole instead. Less, but they stole a lot, and didn’t educate the people, alienating them and turning them into ignorant, corrupt Chavistas. Millions and Millions, the vast majority. Will the next muddy MUD educate the same deeply corrupt people, instill moral values and punish them when they steal? Of course not. Takes a much tougher government than any foreseeable MUD.

    So dream on.. Dream on that after Chavismo loses power the next government will find a magic cure. It starts with the people, and depends on the quality of the people for any plan to be applicable and, especially, sustainable. Keep blaming this disastrous Chavismo plague, praying it will all go away someday. and educated Venezuelans will learn how to work hard, steal a lot less.

    These plans are for much more developed countries, way more advanced and way less messed up than Kleptozuela is. Heck, even the leading countries in the world are having a tough time deploying such plans. And that’s with educated people and much, much less corruption, the fundamentals.

  13. Educating peoples mind is useless unless you form their character and shape their mentality and behaviour so the information they recieve thru their education can be put to good use , the problems is not getting people to school but forming homes and social milieus where peoples character is formed to habits of discipline , of hard work , of responsability , of prudence , of rational ambition , of human solidarity ……, the best education is not done in schools or universities , but in places where people actually learn skills and modes of behaviour and thinking that put them out of the rut…..often work expertise is much more useful to people than academic schooling …

    • I mean Real Education, of course. Not the crap they have in most Venezuelan schools. Just talk to any average pueblo-people anywhere in Venezuela. It’s shameful and pathetic. Sure, some of them can read and write.. sadly.

    • Bill,

      95% of a person’s “character” is already formed by the time he or she is six years old. This means that to make significant social changes, you need to target women’s education and assure home stability. There are no magic bullets. You have to do everything at once and accept that it is going to take at least a couple of generations.

  14. A word of caution. It is imperative to clarify what the objectives are. Decarbonising (necessary to combat climate change) is different from rolling out renewables en masse. For example, Germany and the UK used to have similar levels of grCO2/kWh a couple of years ago (around 500grCO2/kWh). Today (wihtout much fanfare) the UK has halved that number. Germany remains stuck around 500gr (it rolled out massive amounts of renewables but decided to shut down nuclear and is being protectionist around lignite mine coal jobs). Note the amount of propaganda written about Germany’s ‘energiwende’ (by a greatful lobby of rentseekers, financiers, and naive environmentalists). Beware of this, the goal should be decarbonsing at the lowest cost possible. A rational policy for Venezuela would be a step by step approach that picks first the ‘low hanging fruit’ (am sure Venezuela stil has oil fired generation, for example). It strikes me distributed solar could be very interesting in Venezuela (specially given the crumbling electricity transportation grid). Again, large energy companeis, utilities and lobbyists are not too fond of distributed solar (less fees, financing, etc). For more (easy to find on google) about the crazyness of German energy policy, read here:


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