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Renewable energy sources in Latin America and the Caribbean: two years after Bonn HUGO ALTOMONTE Chief Natural Resources and Energy Unit Economic Commission for Latin America and the Caribbean

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Renewable energy sources in Latin America and the Caribbean: two years after Bonn

HUGO ALTOMONTE

Chief Natural Resources and Energy Unit

Economic Commission for Latin America and the Caribbean

REN21 – Renewable Energy Policy Network for the 21st Century. Impacts of the international renewable energy policy process. Paris, December 13-14, 2006


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  • Improvements: two years after Bonn

    • Renewable energies legislation ?

    • Share of RE in total energy supply ?

  • Biofuels: situation and perspectives

  • Challenges of CDM and Renewable

  • Conclusions


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the Brasilia Platform on Renewable Energies (November 2003) two years after Bonn

21 countries approved the Brasilia Platform on Renewable Energies, which establishes among its main points: “To further efforts to achieve the goal set forth in the Latin American and Caribbean Initiative for Sustainable Development of ensuring that by the year 2010 the use of renewable energy by the region, taken as a whole, amounts to at least 10% of its total primary energy supply on the basis of voluntary efforts and taking into account the diversity of national situations”.


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ECLAC proposed four relevant issues and initiatives for Latin America and the Caribbean:

  • A revaluation from an environmental and social perspective of hydro power according to the demands of sustainable development;

  • The contribution of renewable sources to the integrated development of rural communities;

  • The rational use of fuelwood;

  • The role of biomass and biofuels.


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I- Improvements in Renewable energies legislation Latin America and the Caribbean:Situation of RE in total energy supply 2004


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ELECTRICITY Latin America and the Caribbean:

“Regional (decentralized) regime to promote renewable energies to electricity generation”.

National subsidies to RE electricity

Regulations and rules on prices governing the operation of renewable energy generation units (setting prices);

Acts on the use of renewable (LAFRE in Mexico & other countries), which provides for the creation of a trust that will increase the share of renewable to 12% of national generation by 2012

Financing pre-investment project “Competitive call for tenders of small energy projects based on renewable sources”

Special tenders for reserve capacity of electricity (5% with RE)


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BIOFUELS Latin America and the Caribbean:

“Regime to regulate and promote the sustainable production and use of biofuels”(mix B5, B!0 y E5, E10)

COUNTRIES, DATES AND % OF MIX VARIABLES

Financing pre-investment project: Competitive call for tenders

Incentives:

provides financial incentive payments for biofuels produced (depending on the size plants).

Exemption Tax (equipment and/or fiscal)

SUBREGIONAL POLICIES AND INICIATIVES (Central America)


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Advances in renewable energy legislation seen in many of the region’s countries do not have yet a substantially effect on the total supply


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? region’s countries do not have yet a substantially effect on the total supply

?

Renewable sources have declined slightly as a proportion of the total energy supply, from 25.7% in 2002 to 24.8% in 2004


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? region’s countries do not have yet a substantially effect on the total supply

Decrease share of Hydro as a result of reduction in Brazil and Uruguay.

Cane products enlarged 8% due to development of ethanol in Brazil.


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? region’s countries do not have yet a substantially effect on the total supply

Although the share of other renewable (solar and wind) is not important yet, its contribution could be improved considerably with the full implementation of PROINFA


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Residential Sustainability Index region’s countries do not have yet a substantially effect on the total supply

Fuelwood consumption/total oil product consumption

160%

2002

2004

140%

120%

100%

80%

60%

40%

20%

0%

CARIBE 1

CARIBE 2

AMERICA

COMUNIDAD

MERCOSUR

MEXICO

BRASIL

CENTRAL

ANDINA


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CARIBE 2 region’s countries do not have yet a substantially effect on the total supply

AMERICA

COMUNIDAD

MERCOSUR

MEXICO

BRASIL

Forest energy dependency over the total renewable supply (FDI

(Fuelwood Supply/supply of all renewables)

100%

2002

2004

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

CARIBE 1

CENTRAL

ANDINA


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Electric power generating pollution index (EPI) region’s countries do not have yet a substantially effect on the total supply

(in thousands Tn CO2 / Total GWh).

6.0

2002

2004

5.0

4.0

3.0

2.0

1.0

0.0

CARIBE 1

CARIBE 2

AMERICA

COMUNIDAD

MERCOSUR

MEXICO

BRASIL

CENTRAL

ANDINA


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On the whole, the obstacles to implementation of energy efficiency and renewable energy measures are well documented and fall into five types: technical, regulatory, economic, financial and institutional.Social ?ADICIONALITY is it new one?


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II- BIOFUELS: SITUATION AND PERSPECTIVES efficiency and renewable energy measures are well documented and fall into five types:


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STRATEGIC ROL OF BIOFUELS efficiency and renewable energy measures are well documented and fall into five types:

  • The share of transport sector is 27% of the total energy consumption in the world and it is supplied by oil products

  • By 2050, this participation could attempt 32 % (IPCC)

  • SCENARIOS 2030-40: Increased in oil product demand must be associated to the decline of oil reserves (IEA, US-DOE)

STRATEGIC ROL OF BIOFUELS: reduction of GHG emissions and oil dependence


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EL DESAFIO DE LA AGRICULTURA ENERGÉTICA efficiency and renewable energy measures are well documented and fall into five types:

  • Existe impresión que agricultura podrá responder en forma ilimitada a este desafío

  • Sin embargo en los últimos años las reservas disponibles de alimentos se han estado reduciendo

  • En de Centroamérica (p. ej.) producción de granos (maíz) destinada a producción de bioetanol, podría significar una presión sobre los alimentos

  • “Agricultura Energética” tendrá que lidiar con asuntos de eficiencia en el manejo tanto de suproductos como de sus suelos.


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EUROPEAN UNION efficiency and renewable energy measures are well documented and fall into five types:

Directive 2003/30/EC:5.25% of the total transport consumption should be supplied by biofuels

A number of countries (German, Austria, Spain) applied total or partial tax exemption from 220 Euros/m3 to 470 Euros/m3.

Others (France, UK & Finland), set up directsincentive for biodiesel from 220 Euros/m3 to 330 Euros/m3


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Objetivo EU en 2010 efficiency and renewable energy measures are well documented and fall into five types: : 5.25% del sector transporte deberá usar biofuels

Fuente: APER (E)


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A) efficiency and renewable energy measures are well documented and fall into five types: Bioethanol: is a reality in a number of LAC countries

E 10

Increasing 22% surface area under Sugar Cane cultivation -- 0.4% of total area

35% of total requirements existing molasses 35%

Cuba, Guatemala, Guyana & Nicaraguagreat potential

from molasses

DEFICITS in Haití, Suriname, Uruguay & Venezuela,

Land availability: less than 1% of the countries’ agricultural areas would suffice to produce enough bioethanol for E10 except forde Barbados, Jamaica, Trinidad y Tobago, Suriname y Venezuela


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A) BIOETHANOL efficiency and renewable energy measures are well documented and fall into five types:

Brazil’s experience is it repeatable in other countries?

  • Brazil’s bioethanol industry is mature

    • has a very favorable cost structure

    • could be well expanded in the future as demand grows


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A) BIOETHANOL efficiency and renewable energy measures are well documented and fall into five types:

Other countries questions are:

  • whether the bioethanol industry (and biofuels in general) can be made financially profitable without government aid;

  • if not, whether such aid would be justified;

  • which factors affect the financial and economic viability of bioethanol production (or expansion) programmes.


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B) BIODIESEL efficiency and renewable energy measures are well documented and fall into five types:

  • Initiatives to develop biodiesel have started to move ahead only recently

    ECLAC preliminary exercise showed that

  • countries which export relatively large amounts of vegetable oil–Argentina, Bolivia, Brazil, Costa Rica, Honduras and Paraguay –– precisely exhibited the largest potential for biodiesel availability.

    2) Its real feasibility can be properly proven, especially in terms of the energy balance sheet and productivity.

    3) The European experience with biodiesel is based on agricultural policies that cannot easily be replicated in the region, with large subsidies and more or less openly protectionist systems.


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B) BIODIESEL efficiency and renewable energy measures are well documented and fall into five types:

  • To increase biodiesel penetration in LAC: one possible line of action would be to identify uses involving higher added value

  • The analysis needs to be further developed and deepened, introducing a range of variables and alternatives to assess the financial, economic and social gains from the production of biodiesel


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III- CARBON MARKET efficiency and renewable energy measures are well documented and fall into five types:


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Latin America leads the carbon market with 49% of all registered projects and it is the largest supplier of projects under CDM (over a total of 259 projects in August 2006 )

  • Brazil and Mexico alone account for 61% of all the projects registered in Latin America, which bears out the statement that large economies offer more opportunities for the supply of CDM projects.

  • the region’s project portfolio is dominated by renewable energies. …..having much more significant impacts on sustainable development than do the reductions in high global-warming potential


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Methane reduction in sanitary landfills accounts for the largest proportion of emission abatement projects in the region

the largest area in LAC is the reduction of methane from sanitary landfills (31% of all avoided emissions)

projects now being submitted for registration suggests that region’s potential lies in :

biomass projects; management of solid animal waste; hydroelectric power projects; and solid municipal by-products


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ADICIONALITY: NEW “BARRIERS” TO DEVELOP RENEWABLE ENERGIE PROJECTS ?

___________________________________

Adicionality: CDM projects needs to meet regulatory, technological, market-competitiveness, economic, financing criteria for assessing the additionality of project components.

BarriersThese requirements mean that projects are very unlikely to be accepted into the CDM scheme if they are i) highly profitable; ii) conform to common practice (and hence face no particular barriers) or iii) are part of State policy

Paradox: even though the future of CDM in Latin America depends on renewable energy projects, any steps to support the development of such ventures would interfere with their eligibility as CDM projects.

In a number of sectors, the CDM rules have thus created a perverse incentive to postpone government support for renewable in order to pave the way for CDM eligibility


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CONCLUSIONS ENERGIE PROJECTS ?

1-In the last few years, the region has seen a number of developments and advances in renewable energy legislation and projects

2-     Renewable sources have slightly declined as a share of the total energy supply, from 25.7% in 2002 to 24.8% in 2004

3-  Advances in renewable energy legislation seen in many of the region’s countries do not have yet a substantially effect on the total supply


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CONCLUSIONS ENERGIE PROJECTS ?

  • 4-Bioethanol is now a reality in a number of Latin American and Caribbean countries

    • Campaigns are needed to raise awareness of the advantages and disadvantages of the production and efficient use of bioethanol

    • It is important to analyse the replicability of Brazil’s experience with bioethanol in other countries of the region

  • 5-Initiatives to develop biodiesel programmes in some Latin American countries have started to move ahead only recently . Analysis need to assess the financial, economic and social gains from the production of biofuels


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    CONCLUSIONS ENERGIE PROJECTS ?

    • Latin America leads the carbon market with 49% of all registered projects and it is the largest supplier of projects under the clean development mechanism (CDM)

    • Methane reduction in sanitary landfills accounts for the largest proportion of emission abatement projects in the region

    • The future of CDM in LAC depends on renewable energy projects, but any initiative to support these could interfere with their eligibility for CDM