Fenalcarbón warns that an accelerated energy transition could cost the country $38 billion

The National Federation of Coal Producers (Fenalcarbón) warned that an energy transition without clear planning could have serious fiscal and social consequences for the country. According to the report “Energy Transition of Colombian Coals”, prepared together with the Regional Center for Energy Studies (CREE), Colombia could lose up to $38 billion if you accelerate the process without a solid strategy.

Fiscal and social risks

The report indicates that royalties and income tax from coal represent about 95% of the tax revenue that the country receives from mining. In regions such as Cesar and La Guajira, these resources exceed 100% of current income, which means that a poorly planned transition puts regional stability and education, health and social investment programs at risk.

“This is not a sectoral debate, it is a country debate. The fiscal future of the Nation, the job stability of thousands of families and social investment in 132 municipalities in 11 departments depend on a well-planned transition,” he stated. Carlos Canteexecutive president of Fenalcarbón.

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Transition scenarios

The study proposes three decarbonization scenarios for Colombia:

• Intermediate scenario: seeks carbon-neutrality in 2060, with an 85% reduction in coal production. Although it would be a less abrupt transition, it would entail significant fiscal and labor risks.
• Accelerated scenario: aims for carbon-neutrality in 2050, with an 89% drop in production and an immediate impact on producing regions, without enough time for labor reconversion.
• Gradual scenario: It would extend the transition until 2070 or even 2100, making it possible to take advantage of reserves, sustain royalties and plan the transformation of the territories in an orderly manner.

The union’s proposal

Cante pointed out that the transition must advance at the pace of the global market, but without putting the national economy at risk.

“The transition must have a rhythm aligned with global trends and international market demand, avoiding abrupt impacts that compromise the social and economic stability of the country,” the union said.

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The leader insisted that the process must be joint: “The transition must be built between the State, the regions and the private sectorunder principles of tax and labor justice, that avoid economic imbalances and protect workers.”

Fenalcarbón proposes that the process be financed with the resources already generated by the industry.

“Royalties, taxes and coal production chains must be the basis for financing labor retraining programs, promoting new economic activities in the regions and developing environmental management projects.”

The union also proposed the creation of a Fiscal Fund to face the effects of a disorderly transition and finance training and job retraining programs.