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Cablegate: Letting Off Steam: Energy and Environment

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 SAN JOSE 002928

SIPDIS

STATE PLEASE PASS TO AID
SAN SALVADOR FOR AID (ANNE DIX)

E.O. 12958: N/A

TAGS: ENRG SENV EAID
SUBJECT: LETTING OFF STEAM: ENERGY AND ENVIRONMENT
PARTNERSHIP WITH CENTRAL AMERICA ORGANIZES VI REGIONAL FORUM
ON GEOTHERMAL POWER GENERATION

1. Summary: The VI Regional Forum for the Energy and
Environment Partnership with Central America, a 2002 World
Summit on Sustainable Development (WSSD) initiative, was
held in Managua October 5-6. The Forum focused on
opportunities for sustainable development and energy
diversification linked to geothermal power generation. The
region is barely tapping its geothermal potential, where ill-
fitting legal regimes, limited technical capacity and
biodiversity concerns frustrate further investment.
Nevertheless, regional and international organizations are
making resoures available to stimulate further activitiy in
the field. End summary.

2. Regional Environmental Assistant (REA) attended the VI
Regional Forum for the Energy and Environment Partnership
with Central America entitled "Strategic Impact of
Geothermal Energy and other Renewables in Central America",
held October 5-6 in Managua, Nicaragua. The forum delivered
an overview of Central America's sources for electricity and
contrasted current installed capacity for geothermal energy
production with the latest estimates on the region's
geothermal potential. Presentations touched on the benefits
of the geothermal resource; existing barriers for geothermal
projects; and examples of existing financing mechanisms for
geothermal and other renewable energy production. Countries
were encouraged to showcase their geothermal energy success
stories.

Partnership Background
----------------------

3. The Ministry of Foreign Affairs of Finland, the General
Secretariat for the Central American Integration System (SG-

SIPDIS
SICA) and the Central American Commission for Environment
and Development (CCAD) launched the Energy and Environment
Partnership with Central America during the Johannesburg
2002 WSSD. The partnership's main objective is to encourage
governments and the private sector to promote the use of
renewable energy resources in satisfying the energy needs of
the isthmus, thereby contributing to sustainable
development, the reduction of greenhouse gases, and
mitigating the impact of global climate change.

Regional Electrical Power Generation
------------------------------------

4. (Energy production from renewable and nonrenewable
sources throughout the region, expressed in GWh (giga watts
per hour):

Geothermal/
Country Hydro Wind Thermal Biomass Total

Belize 88 0 73 19 180
Costa Rica 5,970 259 134 1,121 7,484
El Salvador 1,206 0 1,863 907 3,976
Guatemala 2,264 0 3,314 194 5,772
Honduras 1,611 0 2,465 5 4,081
Nicaragua 190 0 1,908 189 2,287
Panama 2,501 0 2,643 0 5,144

REGION 13,830 259 12,400 2,435 28,924

5. Comparison of (approximate) estimated and installed
capacity for geothermal production in Central America.
--------------------------------------------- ---------

(Both Estimated Capacity (EC) and Installed Capacity (IC)
figures are given in mega watts (MW))

Country Geothermal (approximate)

EC (MW) IC (MW)

Belize N/A N/A
Costa Rica 7,400 1,750
El Salvador 3,650 1,500
Guatemala 4,800 300
Honduras 1,250 0
Nicaragua 9,900 750
Panama 400 0

Benefits of the Geothermal Resource
-----------------------------------

6. Participating countries were encouraged to showcase
their geothermal success stories, which were frequently
linked to local development opportunities. Benefits
associated with geothermal energy included its high use
factor due to its local, reliable availability; reduced
fossil fuel reliance, energy imports, and greenhouse gas
emissions; and its potential for multiple uses, including
agro-industrial processes. Highlighted projects included:

-- Guatemala's Agroindustrias La Laguna, which used
geothermal heat to dehydrate fruit. General Manager Luis
Arturo Merida explained the process that won La Laguna
CCAD's Environmental Innovation Award for Central America.

-- Costa Rica's Miravalles Geothermal Plant, which supplied
the electrical grid with 15.4% of its power.

-- The many geothermal projects of LaGeo, El Salvador's
only geothermal operator, generating 22.8% of locally-
produced electricity.

-- Polaris Energy Nicaragua's plan to more than double its
geothermal production to 66 MW. Polaris estimated that the
additional production would boost geothermal's contribution
to Nicaragua's power mix from 9 to 29 percent.

Barriers Affecting Geothermal Energy
------------------------------------

7. Participants frequently cited as key obstacles the lack
of coordination among decision makers at a governmental
level and lack of familiarity with the legal framework at
national levels. The region needs to develop its limited
expertise in the field. With little awareness of potential
multiple uses of geothermal energy, the private sector was
not likely to link tourism, agro-industry or other
opportunities to geothermal production. Without a Regional
Renewable Policy, there was little incentive to incorporate
geothermal energy's social, strategic and environmental
benefits into government or private sector decision-making.
In some countries, like Costa Rica, prime sites for
geothermal development lay within protected areas, and
therefore cannot be developed under current law.

Finance Mechanisms for Renewable Energy Production
--------------------------------------------- -----

8. Representatives from the Central American Bank for
Economic Integration (Banco Centroamericano de Integracion
Economica - BCIE), from E + Co Capital, and from the Andean
Development Corporation (Corporacion Andina de Fomento -
CAF) made brief presentations on different finance
mechanisms.

-- BCIE presented its strategy and investment plan for 2005-
2010, which included the following focus areas for
financing: efficiency and rational use of energy,
diversification of energy sources, energetic integration,
the search for renewable sources, contamination and
environmental risk, and institutionalism. BCIE planned to
create a trust fund for electric energy savings, jumpstart a
Central American Emergency Energy Plan, and develop policy
incentives to encourage better efficiency and energy
savings.

-- E + Co Capital discussed the Central American Renewable
Energy and Cleaner Production Facility (Facilidad
Centroamericana para Energia Renovable y Produccion mas
Limpia - CAREC) it administers. CAREC planned to invest US
20 million in clean energy projects in the region, focusing
on renewable energy generation and energy efficiency and
cleaner production. It proposed to invest in 20 to 25 small
and medium enterprises, with up to US $3 million financing
per project.

-- CAF, a multilateral financial institution that promotes
regional integration and the sustainable development of its
shareholder countries and regional integration, presented
its Latin American Carbon Program (Programa Latinoamericano
de Carbon-PLAC). PLAC's focus areas were renewable energy,
massive transportation projects, energy efficiency, capture
and use of methane in industry and landfills, and fuel
transformation/change. It sought to identify clean
development mechanism opportunities; aid in developing
purchasing agreements, individual carbon sales, and risk
profiles; and facilitate access to funds for technical
training and other financing services.

9. Power point presentations (the source for the data
provided) and the participant list are available at
www.sgsica.org/energia. Please direct further questions or
comments to Cinthya Alfaro, Environmental Analyst for the
Regional Environmental Hub for Central America and the
Caribbean, at alfarocg(at)state.gov, or 506-519-2392.

LANGDALE

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