Colombian Energy Company Makes a Bold Bet on Sustainability
The president of Grupo Energía Bogotá, Juan Ricardo Ortega, talks about the challenges of energy transition and environmental protection.
When Juan Ricardo Ortega was appointed president of Grupo Energía Bogotá (GEB), Colombia’s largest natural-gas transporter and second-largest energy transmitter, in July 2020, he brought a unique set of skills and experiences to the role. Ortega was trained in economics, finance, and mathematics at the University of the Andes and then at Yale (where, at age 54, he’ll soon complete a PhD degree in economic development). He began his career as chief economist at multinational banking company BBVA in Bogotá in the 1980s but later transitioned to the public sector, when he was appointed economic adviser to then Colombian President Andrés Pastrana.
Ortega went on to hold other high-level public positions, such as vice minister of finance and commerce and secretary of finance for the City of Bogotá, as well as professorships at Colombian universities. From 2014 to 2020, he worked as an adviser to the Inter-American Development Bank in Washington, DC, but returned to Colombia when he was appointed president of GEB. He joined at a critical moment, as the 125-year-old company expands its portfolio to include nonconventional renewable energy and increases its presence in Latin America. For example, in June 2021, GEB announced an agreement with the Italy-based energy multinational Enel to create Enel Colombia, a subsidiary that will include additional equity value of $1.4 billion in renewable energy assets located in Colombia, Panama, Costa Rica, and Guatemala.
GEB is well positioned to make these moves. It stands out among other Colombian public utilities because of its shareholder structure—although the City of Bogotá owns the majority of its shares (65.7%), close to 35% are privately held—which helps it stay above the political fray. GEB’s net profits rose by 36% in 2020, and it will distribute $437 million in dividends this year. In a recent video interview , Ortega shared his thoughts on the future of the energy sector in Colombia, as the country moves beyond hydropower to embrace other renewables.
Looking ahead to the next few decades, how do you see your business transforming to meet energy needs in Colombia and, more broadly, in Latin America?
Ortega: The climate change and energy transition agenda is central for Colombia, a country where 70% of electricity already comes from renewables [the majority from hydropower]. Colombia’s government has set a goal of reducing net carbon emissions by 51% by 2030. That is a very aggressive goal.
At the same time, I think it would be unreasonable for a country like Colombia to commit to zero net emissions for the next 10 to 20 years. Colombia contributes around 92.5 million tons of carbon a year. The world’s total figure is around 39 billion tons, which means Colombia’s carbon emissions are .25% of the global share. Therefore, if we commit to a zero net emissions strategy, it would hinder Colombia’s capacity to compete with other countries and to boost its economy, especially because the country has a lot of potential in gas.
I think there are very solid arguments to defend gas as a transition energy source in Colombia. It can support growth and employment and help Colombia become an increasingly competitive economy. If the heavy cargo industry, in particular, makes the transition [from oil] to gas, it would help to reduce particulate matter.
I also believe the most sensible decision is to switch commercial vehicles to run on electricity. That’s why our bet is on electric power. We believe it will be one of the big winners in the next 20 years. There is also a huge opportunity in the region as the transmission infrastructure from Mexico to Chile is integrated to enable a more efficient delivery of electric power from plants to customers. Colombia can greatly benefit from this process. We have the companies, the contractors, the value chains, and the expertise to help generate more resilient transmission networks throughout the region.
There are important growth opportunities in this matter, and that is why we are investing in Peru, Brazil, Guatemala, and Colombia—countries where we have a large transmission network, with thousands of kilometers of lines in operation. For example, in Peru we are leaders with ISA REP and ISA Transmantaro [energy transmission companies], and, in Guatemala, we are working on an important energy transmission project. We want to position the company so that, in the future, we can make the most out of this integrated infrastructure and maximize growth.