EXCLUSIVE Panama aims to end coal imports and produce ethanol to reduce emissions – Minister

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September 29 (Reuters) – Panama will advance clean energy by adopting ethanol in its gasoline and ending the use of heavy fuel oils and coal for its power plants by 2023, the minister said. the energy of the country.

Even though Panama presents itself as carbon negative, the Central American nation wants to further diversify its sources of electricity generation, reduce transport emissions and expand its regional power interconnections.

A plan approved in November by the Panamanian cabinet set five goals to switch from fossil fuels until 2030, Energy Minister Jorge Rivera told Reuters.

The plan includes targets for electric mobility, distributed electricity production and energy efficiency.

Panama aims to replace some of the hundreds of thousands of barrels per day of fuel, mainly imported from the United States, with biofuels, and to rely more on renewable sources, including solar and wind, for the production of electricity.

The only power plant in Panama that still uses coal is owned by a metal mining project operated by a Toronto-based unit of First Quantum Minerals (FM.TO), which has faced legal challenges, including filing “Unconstitutional” in 2018.

In April, First Quantum said its Cobre Panama unit delivered a record 82,042 tonnes of copper, more than a third of the company’s global production, contributing to gross profit of $ 540 million for the trimester.

Panama began talks about a month ago with Minera Panama, of which First Quantum owns 90%, to negotiate a new contract. The government led by President Laurentino Cortizo wants to increase royalty revenues and push for environmental improvements in the flagship $ 6.7 billion mining project.

As part of the negotiations, Panama is asking the miner to modernize its 300 megawatt (MW) power plant, Rivera said. A specific proposal for the conversion is to be submitted soon by First Quantum, he added.

“We expect negotiations to end this year for a brand new contract,” the minister said.

First Quantum did not immediately respond to a request for comment.

Other private power plants that burn diesel or heavy fuel oil will be decommissioned by the end of 2023 and replaced with a 670 MW natural gas plant that is expected to come into service in 2024.

“The whole market is aware of the evolution of the energy matrix, and the last contracts for the sale of this electricity are about to expire,” said Rivera.

A growing number of countries have set net zero emissions targets to meet the Paris Agreement. This includes the world’s two biggest emitters, the United States and China.

RETURN TO ETHANOL

Panama also plans to resume importing ethanol in 2023 to initially blend up to 5% in motor gasoline, then work with cane growers to produce it locally and increase blending. to 10% to reduce air pollution. It had stopped importing ethanol in 2014.

The changes – along with advances in mobility, including a new metro line – would make Panama, which depends on imported fuels to cover 80% of its consumption, less dependent on fossil fuels supplied from abroad.

Panama has also resumed talks with the Colombian government for an ambitious 300-kilometer (186-mile) interconnection that would allow the two countries to share electricity.

A severe drought affected Panama’s economy in 2019, reducing its ability to generate hydropower and increasing costs such as Panama Canal crossing fees. Even though rainfall has returned to normal, the government and the canal are investing in hurricane and drought preparedness.

As part of the interconnection, Colombia initially planned to sell its surplus electricity to Panama and Central America, but the price gap between the countries has recently narrowed.

“According to recent forecasts, Panama could also export electricity,” Rivera said.

Reporting by Marianna Parraga in Houston, additional reporting by Elida Moreno in Panama City; Editing by Sandra Maler and Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

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