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

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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

1. Improvements: • Renewable energies legislation ?

• Share of RE in total energy supply ?
2. Biofuels: situation and perspectives 3. Challenges of CDM and Renewable 4. Conclusions

the Brasilia Platform on Renewable Energies (November 2003) 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”.

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

1) A revaluation from an environmental and social perspective of hydro power according to the demands of sustainable development;
2) The contribution of renewable sources to the integrated development of rural communities; 3) The rational use of fuelwood; 4) The role of biomass and biofuels.

I- Improvements in Renewable energies legislation

Situation of RE in total energy supply 2004

ELECTRICITY
• “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)

• BIOFUELS • “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)

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

LATIN AMERICA AND THE CARIBBEAN 2002 TOTAL ENERGY SUPPLY

Non-sustainable fuelwood Coal 2.6% 2.7% Other Non Renewables 0.6% Geotherma lia0.7%

Natural Gas 28.3% Renewables 25.7% Crude Oil 40.1%

Hydroenergy 14.7%

Charcoal 0.6% Industrial fuelwood 0.2%

Residential fuelwood 4.7% Cane Products 4.1%

Agricultural fuelwood 0.3% Other Renewables 0.5%

LATIN AMERICA AND THE CARIBBEAN 2004
TOTAL ENERGY SUPPLY
NonSustainable Fuelwood 2.2%

?
Coal 4.8%

Nuclear 1.6%

Other NonRenewable 0.5%

Geothermal 0.5% Sustainable Vegetal Coal 1.5%

Natural Gas 24.5% Renovables 24.8% Crude Oil 41.7%

Hydroenergy 11.3%

Leña Sost./Industria 0.7%

Residential Fuelwood 3.6%

?

Cane Products 5.7%

Agricultural fuelwood 0.3%

Other Renewable 1.2%

Power Stationst Renev 0.1%

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

MERCOSUR AND CHILE 2004
TOTAL ENERGY SUPPLY

?
Coal 5.9% Natural Gas 19.2% Nuclear 2.6%

NonSustainable Fuelwood 2.7% Sustainable Vegetal Coal 2.9% Industrial Fuelwood 1.2% Residential Fuelwood 3.5% Cane Products 9.5% Agricultural fuelwood 0.5% Power Stationst Renev 0.1% Other Renewable 2.2%

Hydroenergy 12.2%

Renovables 32.1% Crude Oil 37.5%

Decrease share of Hydro as a result of reduction in Brazil and Uruguay. Cane products enlarged 8% due to development of ethanol in Brazil.

BRASIL 2004 TOTAL ENERGY SUPPLY
NonSustainable ? Nuclear Fuelwood Other NonRenewable 2,7% 3.4% Coal 2.4% 6,6% Natural Gas 8,8% Hydroenergy 12,8%

Sustainable Vegetal Coal 4,0% Industrial Fuelwood 1,4% Residential Fuelwood 3,4%

Renovables 38.7% Crude Oil 37,4% Cane Products 13,6%

Agricultural fuelwood 0,7% Other Renewable 2,7%

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

Residential Sustainability Index
Fuelwood consumption/total oil product consumption
160%

2002
140%

2004

120%

100%

80%

60%

40%

20%

0% CARIBE 1 CARIBE 2 AMERICA CENTRAL COMUNIDAD ANDINA MERCOSUR MEXICO BRASIL

Forest energy dependency over the total renewable supply (FDI
(Fuelwood Supply/supply of all renewables)
100% 90% 80% 70% 60%

2002

2004

50%
40% 30% 20% 10% 0% CARIBE 1 CARIBE 2 AMERICA CENTRAL COMUNIDAD ANDINA MERCOSUR MEXICO BRASIL

Electric power generating pollution index (EPI)
(in thousands Tn CO2 / Total GWh).
6.0

2002
5.0

2004

4.0

3.0

2.0

1.0

0.0 CARIBE 1 CARIBE 2 AMERICA CENTRAL COMUNIDAD ANDINA MERCOSUR MEXICO BRASIL

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?

II- BIOFUELS: SITUATION AND PERSPECTIVES

STRATEGIC ROL OF BIOFUELS
• 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

EL DESAFIO DE LA AGRICULTURA ENERGÉTICA
• • 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 su productos como de sus suelos.

•

EUROPEAN UNION
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 directs incentive for biodiesel from 220 Euros/m3 to 330 Euros/m3

5.25% del sector transporte deberá usar biofuels

Objetivo EU en 2010:

Fuente: APER (E)

A) Bioethanol: is a reality in a number

of LAC countries

E 10

35% of total requirements existing molasses 35%

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

Cuba, Guatemala, Guyana & Nicaragua great 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 for de Barbados, Jamaica, Trinidad y Tobago, Suriname y Venezuela

A) BIOETHANOL
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

A) BIOETHANOL
Other countries questions are: 1. whether the bioethanol industry (and biofuels in general) can be made financially profitable without government aid; 2. if not, whether such aid would be justified; 3. which factors affect the financial and economic viability of bioethanol production (or expansion) programmes.

B) BIODIESEL
• 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.

B) BIODIESEL
• 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

III- CARBON MARKET

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

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

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. Barriers These 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

CONCLUSIONS

1- In the last few years, the region has seen a number of developments and advances in renewable energy legislation and projects Renewable sources have slightly declined as a share of the total energy supply, from 25.7% in 2002 to 24.8% in 2004
23- Advances in renewable energy legislation seen in

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

CONCLUSIONS 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

CONCLUSIONS

6. 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) 7. Methane reduction in sanitary landfills accounts for the largest proportion of emission abatement projects in the region 8. The future of CDM in LAC depends on renewable energy projects, but any initiative to support these could interfere with their eligibility for CDM


				
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