What is ECPA up to?

Monday, November 07, 2016

Bringing a Practical Perspective to Energy Challenges

Governments make critical policy decisions about energy, but companies tend to be on the front lines of turning that policy into reality. That’s why tackling today’s energy challenges effectively requires real engagement between the public and private sector, a representative of the Americas Business Dialogue recently argued.

Both governments and private companies stand to benefit from an ongoing dialogue, said David Nelson, General Electric’s government affairs coordinator for Latin America and chair of the Americas Business Dialogue’s Energy Working Group. “This can be a partnership that works in both directions,” Nelson told a recent ECPA meeting in Miami.

For example, the public sector may want to reach a specific energy policy goal but need a private-sector perspective on how to develop a business model that would attract investment. Companies, meanwhile, want to be able to explain their own challenges to policymakers, such as the financial, technical, or regulatory constraints that can slow down or halt projects.

Business brings a practical perspective to the table, Nelson said. For the private sector, making energy “sustainable” is not only an environmental challenge but an economic one. “If it’s not economically feasible, it’s not going to be sustainable for the long term,” he said.

Of course, energy projects often require major capital investments, and financing is always an issue. In some cases—for example, providing electricity to remote, sparsely populated areas—a government may decide to absorb the costs because there’s a public good involved. But sometimes private-sector solutions can benefit both government and business, Nelson said.

Take financing for power plants, for example. A company might be willing to cover the upfront costs of building a plant in exchange for a long-term power purchasing agreement that allows it to recover its investment and make a reasonable profit over time. The key is to find investors with similar time frames—in this case, maybe a pension fund that is interested in predictable returns over 15 to 20 years.

Greater private-public engagement would help both sides see opportunities for an alignment of business and policy goals, Nelson said. That’s the idea behind the Americas Business Dialogue, which was established shortly before the last Summit of the Americas, held last year in Panama.

Speaking at the first preparatory meeting for next year’s III ECPA Ministerial, Nelson stressed that the Americas Business Dialogue wants to promote meaningful conversation and address practical issues—not “the energy future of the Americas” but concrete problems and challenges. He encouraged organizers of next year’s ministerial meeting to include opportunities for the region’s energy ministers to talk to the business community, and suggested that specific topics be identified in advance so that the CEOs who attend can do their homework and make the most of everyone’s time.

The more focused the discussions, the more useful they will be, he said. “The companies really do want to see results,” Nelson said. “They really want to see things being achieved.”