Blog Post

Decarbonization Pathways for Paraguay's Energy Sector

Climate & Energy Team • Dec 14, 2021

Recommendations for how Paraguay can meet its climate commitments under the Paris Agreement

New York | November 2021

The Government of Paraguay is currently preparing for the upcoming revision of Annex C of the Treaty of Itaipú , the legally binding agreement between Paraguay and Brazil for the exploitation of the hydroelectric potential of the Paraná River, which is due for review in 2023.

As such, on behalf of the Government of Paraguay, the Ministry of Finance of Paraguay asked Professor Jeffrey Sachs and his team to revisit the 2013 “ Leveraging Paraguay’s Hydropower for Sustainable Economic Development '' report, with support from the Development Bank of Latin America (CAF) and in partnership with the Sustainable Development Solutions Network (SDSN). This work culminated in a new report, “ Decarbonization Pathways for Paraguay’s Energy Sector ,” published in November of 2021 by the Columbia Center on Sustainable Investment (CCSI), and co-authored by the Quadracci Sustainable Engineering Lab at Columbia University, and Paraguay-based Centro de Recursos Naturales, Energía y Desarrollo (CRECE).

This project, for which SDSN was a partner under the leadership of Professor Sachs, will make technical contributions to the policymakers and negotiators of the revision of Annex C. The resulting report—available in both English and Spanish—provides a set of recommendations for Paraguay to reduce its greenhouse gas emissions and meet its commitments made under the Paris Agreement. The recommendations are based on the results of three energy models, findings from literature reviews, and expert interviews to examine how Paraguay can decarbonize its energy use sectors by 2050 through economy-wide zero-carbon electrification, massive energy efficiency gains, behavioral changes, and institutional reforms.

The report presents six overarching ideas for its vision of the decarbonization pathway of Paraguay’s energy sector:

The 2050 zero-emissions scenario is feasible and desirable. A robust and capacitated Ministry of Energy should be created to oversee decarbonization of the energy sector. Decarbonization should be implemented by a reformed national electric utility (ANDE) that is financially healthy and operationally modern, digitized in the services it provides, and open to private sector participation in electricity generation and distribution.

The electricity master plan should anticipate a massive need for electrification of end-uses (both private and public transportation, shipping, appliances, homes, and industry), aligned with the 2050 zero-emissions scenario. This will require new substantial investments in modern and clean generation (mainly hydropower and solar generation combined with storage), given that the model predicts that Paraguay will utilize its current hydropower surplus capacity by the mid-2030s.

To optimize investment in generation and ensure a balanced load growth as demand increases, efforts should be conducted on eight fronts:

  1. Minimizing commercial and non-commercial distribution losses using digitization of electricity network
  2. Deploying demand response programs
  3. Installing inexpensive storage technologies to reduce peak load demands on national network
  4. Developing incentive programs for efficient home appliances
  5. Deploying the soft and hard infrastructure of a regional energy market
  6. Implement an electric public transportation system over a conventional internal combustion engine transportation system
  7. Systematically searching for efficiency gains throughout the energy end-uses and developing associated enforceable policies (e.g., building codes, efficiency standards)
  8. Introduce green hydrogen and other green fuels to gradually reduce reliance on unsustainable biomass and fossil fuels
Finally, the report recommends that deforestation from unmanaged forests should immediately be stopped; at the same time, the reforestation policy and the sustainable biomass certification program in the implementation phase since July 2021 should be enforced. The development of green fuels should involve the increase in Paraguay's energy crop yields and types for priority domestic use.

Financing sources for decarbonization should come from energy efficiency–related savings, tax reforms, strong revenue management systems avoiding wasteful recurrent expenditures, concessional bond issuance from multilateral development bank partners, and the full or partial use of eventual financial resource availability once the construction debt of Itaipú has been amortized.

To learn more, please access the English and Spanish versions of the full report, the executive summary, the appendices, and the technical reports here.


Nuevo informe: “Evaluación y planificación del sector energético del Paraguay: vías de descarbonización”

Recomendaciones sobre cómo Paraguay puede cumplir con sus compromisos climáticos bajo el Acuerdo de París

Nueva York | Noviembre del 2021

El Gobierno de Paraguay se está preparando para la próxima revisión del Anexo C del Tratado de Itaipú , el acuerdo entre Paraguay y Brasil para la explotación del potencial hidroeléctrico del río Paraná, que se reevaluará en el 2023.

Por lo tanto, en nombre del Gobierno de Paraguay, el Ministerio de Finanzas de Paraguay les pidió al profesor Jeffrey Sachs y su equipo que revisaran el informe, " Aprovechando de la energía hidroeléctrica del Paraguay para el desarrollo económico sustentable " del 2013, con el apoyo del Banco de Desarrollo de América Latina (CAF) y en asociación con la Red de Soluciones de Desarrollo Sostenible (SDSN). Este trabajo culminó con un nuevo informe, “ Evaluación y planificación del sector energético del Paraguay: vías de descarbonización ”, publicado en noviembre del 2021 por el Centro de Inversión Sostenible de Columbia (CCSI) y preparado conjuntamente por el Laboratorio de Ingeniería Sostenible Quadracci de la Universidad de Columbia y el Centro de Recursos Naturales, Energía y Desarrollo (CRECE).

Este proyecto, para el cual SDSN fue socio bajo el liderazgo del profesor Sachs, proporcionará contribuciones técnicas a los encargados de formular políticas y negociadores de la revisión del Anexo C. El informe resultante, disponible en inglés y español, presenta un conjunto de recomendaciones para que Paraguay reduzca sus emisiones de gases de efecto invernadero y cumpla con los compromisos asumidos bajo el Acuerdo de París. Las recomendaciones se basan en los resultados de tres modelos energéticos, hallazgos de revisiones de la literatura y entrevistas a expertos para examinar cómo Paraguay puede descarbonizar sus sectores de uso de energía para el año 2050, a través de la electrificación sin carbono de la economía, ganancias masivas de eficiencia energética, cambios de comportamiento y reformas institucionales.

Este informe presenta seis ideas generales para una visión de la vía de descarbonización del sector energético de Paraguay:

El escenario de cero emisiones de 2050 es factible y deseable. Debe crearse un Ministerio de Energía sólido y capacitado para supervisar la descarbonización del sector energético. La descarbonización debe ser implementada por una Administración Nacional de Electricidad (ANDE) reformada que sea financieramente saludable y operativamente moderna, digitalizada en los servicios que proporciona, y abierta a la participación del sector privado en la generación y distribución de electricidad.

El plan maestro de electricidad debe anticipar una necesidad masiva de electrificación de los usos finales (transporte público y privado, envío, electrodomésticos, hogares e industria), alineado con el escenario de cero emisiones de 2050. Esto requerirá nuevas inversiones sustanciales en generación moderna y limpia (principalmente generación hidroeléctrica y solar combinada con almacenamiento), dado que el modelo predice que Paraguay utilizará su capacidad excedente de energía hidroeléctrica actual a mediados de la década del 2030-2040.

Para optimizar la inversión en generación y garantizar un crecimiento equilibrado de la carga a medida que aumenta la demanda, se deben realizar esfuerzos en ocho frentes:


  1. Minimizar las pérdidas de la distribución comercial y no comercial mediante la digitalización de la red eléctrica
  2. Despliegue de programas de respuesta a la demanda
  3. Instalación de tecnologías de almacenamiento económicas para reducir la demanda de carga máxima en la red nacional
  4. Desarrollar programas de incentivos para electrodomésticos eficientes
  5. Despliegue de la infraestructura blanda y dura de un mercado energético regional
  6. Implementación de un sistema de transporte público eléctrico en vez de un sistema convencional de transporte con motor de combustión interno
  7. Buscar sistemáticamente el aumento de la eficiencia en todos los usos finales de la energía y desarrollar políticas aplicables asociadas (por ejemplo, códigos de construcción, normas de eficiencia)
  8. Introducción del hidrógeno verde y otros combustibles verdes para gradualmente reducir la dependencia de la biomasa insostenible y los combustibles fósiles
Finalmente, el informe recomienda que se detenga de inmediato la deforestación de bosques no manejados; al mismo tiempo, se deben hacer cumplir la política de reforestación y el programa de certificación de biomasa sostenible en fase de implementación desde julio del 2021. El desarrollo de combustibles verdes debe implicar el aumento de los rendimientos y tipos de cultivos energéticos de Paraguay para uso doméstico prioritario.

Las fuentes de financiación para la descarbonización deberían provenir de ahorros relacionados con la eficiencia energética, reformas fiscales, sistemas adecuados de gestión de ingresos que eviten el desperdicio de gastos recurrentes, la emisión de bonos en condiciones favorables por parte de los socios de los bancos multilaterales de desarrollo (BMD) y el uso total o parcial de la disponibilidad eventual de recursos financieros una vez que la deuda de construcción de Itaipú ha sido amortizada.

Para obtener más información, por favor vea las versiones en inglés y español del informe completo, el resumen ejecutivo, los apéndices y los informes técnicos aquí.


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