Energy policy implications of Ecuador’s NDC

In the third national communication submitted by Ecuador, the total greenhouse gases (GHG) emission was calculated at 80,627 GgCO2-eq, considering the country’s commitment to the Framework on Climate Change. In 2018, Ecuador ratified its nationally determined contribution (NDC) to reduce its GHG emissions by 11.87% from the business-as-usual (BAU) scenario by 2025. The macroeconomic impacts of NDC implementation in the energy sector are discussed. A Computable Equilibrium Model applied to Ecuador (CGE_EC) is used by developing scenarios to analyze partial and entry implementation, as well as an alternative scenario. Shocks in exogenous variables are linked to NDC energy initiatives. So, the NDC’s feasibility depends on guaranteeing the consumption of hydropower supply, either through local exports or domestic demand. In the last case, the government’s Energy Efficiency Program (PEC) and electricity transport have important roles, but the high levels of investment required and poor social conditions would impair its implementation. NDC implementation implies a GDP increase and price index decrease due to electricity cost reductions in the productive sector. These conditions depend on demand-supply guarantees, and the opposite case entails negative impacts on the economy. The alternative scenario considers less dependence on the external market, achieving higher GDP, but with only partial fulfillment of the NDC goals.