In less than 10 years the country has slashed its carbon footprint and lowered electricity costs, without government subsidies. Delegates at the Paris summit can learn much from its success
At the climate summit in Paris this week, the South American nation of Uruguay has announced that it gets an enviable 94.5 percent of its electricity from renewable energy sources, such as wind and solar. And they’ve done it without government subsidies or raising the price for consumers.
Uruguay’s achievements are all the more impressive for happening in a remarkably short amount of time. Its government approved a sweeping 25-year energy policy in 2008. What’s more, the country has proven that switching to clean energy doesn’t have to result in higher prices for consumers. Inflation-adjusted electricity prices today are actually lower than they’ve ever been for the 3.4 million people living in Uruguay, which eliminates one of the main excuses people have for not being able to transition away from fossil fuels: it costs too much. , according to the country’s head of climate change policy, Ramón Méndez.
So what’s the secret to Uruguay’s success? Méndez points to several factors.
One is a strong partnership between Uruguay’s public and private companies. Uruguay’s state-owned national electric company promotes renewable energy by auctioning power purchase agreements to private firms, according to a 2015 report by the International Renewable Energy Agency (IRENA), an intergovernmental organization.
Multipartisan support was also crucial to getting Uruguay’s clean energy policy off the ground. It was endorsed by all political parties in Congress back in 2010, according to IRENA.
Méndez further attributes Uruguay’s success to the fact that investors have discovered clean energy makes good business sense. Uruguay’s state utility guarantees fixed energy prices for 20 years, which has encouraged foreign companies like the German wind power firm Enercon to build plants.
“What we’ve learned is that renewables is just a financial business,” Méndez tells the Guardian. “The construction and maintenance costs are low, so as long as you give investors a secure environment, it is very attractive.”