Post-Fossil Capitalism, a view from Latin America

Lorenzo Pellegrini1

Abstract

The incipient transition from fossil capitalism to renewable capitalism is a transition
from a set of resources (fossil fuels) to a set of technologies (renewables). With
renewables, there is nothing equivalent to the role fossil fuels have played in shaping
Latin America's global economy and political economy. We are looking at a future thatwill in important ways depart from the past.
The new material possibilities and constraints are matched by an emerging ideologicalturn: to post-extractivism is moving from the fringes to the mainstream. This turn isexemplified by President Boric of Chile, elected in 2022, who has made thecommitment to environmental protection a central plank of his programme, which
includes also a new taxation regime for mining and the funding of a new state-owned
company in charge of extracting lithium. President Petro of Colombia, also elected in2022, has made commitments to abandon the exploration and expansion of fossil fuels.
The incipient/current new wave of left-wing governments has been more ambitious interms of environmental regulations, ultimately promising to limit the possibility toexpand extractive activities. This is potentially a real break from the history ofextractivism in the continent. The question is whether a post-extractivist consensus
might be at hand in Latin America and what the implications will be regarding thescarcity of materials for the renewables transition. These broader questions will also
affect the way the transition, and hence post-fossil capitalism will look like for the restof the world.

Post-Fossil Capitalism, a view from Latin America

From the beginning of the 2000s Latin Americaʼs ideology vis-à-vis extractive
industries has been characterised as neo-extractivist by many observers. We canquestion radically the newness of neo-extractivism: the wave of hopes engendered by1

Corresponding author: pellegrini@iss.nl, International Institute of Social Studies, Erasmus University
Rotterdam.

resource abundance, are translated into ʻnewʼ development plans and policies that areremarkably reminiscent of earlier ones at every new resource boom/ super cycle(Pellegrini, 2018; Revette, 2017). Regardless These booms have, again, produced
conditions conducive to radical policy experiments, enabled by and motivating furtherstate protagonism in the extractive sector. A critical enabler is nationalization, tocapture larger shares of rents vis-a-vis transnational companies, which eventually also
extends the remit of the state in the economy (Arsel et al., 2014; Berrios et al., 2012;
Rosales, 2017). The rents appropriated by the state produce an alleged potential for
two-pronged approaches: investment in human and physical capital, and investments
in social policies to tackle poverty head-on. Ultimately, the basic elements of theeconomic development strategy are redolent of the idea that oil (and other rentgenerating non-renewables) can be sowed to harvest development (Papyrakis &Pellegrini, 2019; Pellegrini, 2018; Uslar Pietri, 1936).
This ideology of resource-based development continues to hold currency, but thehistorical track-record of attempts to put into practice this route to development isdismal. Ultimately, evidence suggest that using rents to generate development ispossible only if countries have already solid institutions ‒in other words, thatinstitutional development is a necessary condition to avoid the ʻresource curseʼ. At thesame time, the (old and new) institutional economics schools has convincinglydemonstrated that economic development itself rests on sound institutions (Acemoglu& Robinson, 2012; Hodgson, 1998; North, 1990). As a consequence, the countries thatcan leverage natural resources are the ones that need these resources the least, since
their socio-economic development is rooted in institutional quality, and those that arefacing difficulties and necessitate to fuel development are less likely to benefit fromtheir resource endowments (Papyrakis & Pellegrini, 2019). In other words, for mostdeveloping countries, resource abundance is likely to be a curse. The main lesson for
the incipient new wave of left-wing governments is to be extremely modest of thepotential of non-renewables to fuel development.
The transition from fossil capitalism to renewable capitalism is a transition from a setof resources (fossil fuels) to a set of technologies (renewables). With renewables, there
is nothing equivalent to the role that fossil fuels have played in shaping the global
economy and the political economy of Latin America. This has important implications
for the future and for the value of past experiences in driving our understanding of what
the future might look like. For example, is the production of materials necessary for therenewable transition more amenable to backward and forward linkages? Is there goingto be a small set of countries that control the global supply of some critical material?
Could we have a OPEC-like organization for lithium exporting countries? I doubt it,
there are numerous opportunities for substitution because of technologicaldevelopment ‒for example, the alternative of fuel cells and hydrogen to replaceelectricity and batteries in (parts of) the automotive industry, or in other transportation
sectors. This is a critical implication of the transition to renewable capitalism.
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