The tectonic plates are quivering under South America as voters in Chile and Venezuela — the region's emerging and fading icons of energy — go to the polls next weekend.
In Chile, presidential and congressional elections will shape policies affecting global supplies of strategic minerals and — potentially by the end of this decade — green hydrogen. In Venezuela, the credibility of regional and municipal elections will help to determine how quickly the Opec country shakes off sanctions to get its oil back into the open market.
The votes come in the sober aftermath of the Cop 26 climate conference, mirroring the crossroads many see for the global energy and climate future.
On 21 November, Chilean voters will choose a new president from a field spanning the ideological spectrum. The main candidate on the left, Gabriel Boric, heads a disparate coalition — featuring a vocal Communist Party — that espouses an economic and social restructuring of Latin America's most prosperous country to redistribute more wealth. On the right, law-and-order candidate José Antonio Kast heads a socially conservative splinter coalition that wants small, efficient government and lower taxes. In between are center-left Yasna Provoste and center-right Sebastian Sichel who represent moderate factions born out of the traditional parties that have governed Chile since the restoration of democracy in 1990.
There is a broad consensus around aggressive decarbonization strategies rolled out by outgoing president Sebastian Piñera's administration, including an expansion of renewable energy and gradual carbon tax increases. But the top candidates differ sharply over the role of the state in the path to carbon neutrality by 2050. In another manifestation of the polarization that has dogged western liberal democracies in recent years, final polls suggest that Boric could face off against Kast in a 19 December run-off ballot. Critics describe both of their platforms as fiscally quixotic.
Boric would greatly expand social spending, insert the state into the lithium and hydrogen sectors and create a national development bank. He would review Chile's free trade deals and dismantle the privately run pension fund system. In contrast, Kast would lower corporate taxes but firm up regulations. He would expand Chile's international trade agreements and foster more private investment and innovation.
Melting ambitions
In Venezuela, the election process itself is more consequential than the results of local races across the country. Candidates from parties that oppose President Nicolas Maduro's government are participating for the first time in years, jettisoning a failed electoral boycott strategy in favor of gaining tactical advantage ahead of presidential elections around 2024. EU observers will monitor the elections to see if they meet minimum free and fair standards. If they do — and that is a big if — the US will come under pressure to ease sanctions. Either way, Washington is poised to drop recognition of opposition leader Juan Guaidó and lift its protection of US refiner Citgo from creditors early next year.
Whereas Chile's diverse field of candidates generally converges around climate goals, Maduro and almost all of his opponents share an outdated vision of Venezuela as a oil behemoth with ample reserves to restore the country's lost prestige. Environmental, social and governance (ESG) standards are mostly a foreign language that a handful are grudgingly learning to speak. Like its Russian patron, Venezuela was absent from the Glasgow summit.
South America's glaciers may disappear long before the oil market does. But time is not on Venezuela's side. Even if sanctions are lifted tomorrow, it will be difficult for its carbon-intensive heavy oil to compete against climate-savvy producers like neighboring Colombia and Brazil, let alone an aspiring hydrogen hegemon like Chile.
Although climate is not on the ballot in either Venezuela or Chile, voters are not the only ones who will bear the consequences of their clashing energy models, regardless of who wins. And as the Cop summit showed it will be sooner, not later, that countries with a capacity to produce oil will fall behind those with a capacity to reinvent.
