With Chavez gone, what will become of his PetroCaribe program? Photo credit: Valter Campanato, Agencia Brasil
Among the questions arising after the death of Venezuelan leader Hugo Chavez is what will become of the PetroCaribe program he started in 2005 and upon which many Caribbean economies have become dependent. Since it began, PetroCaribe has become a much-needed lifeline to countries in the region that are overly reliant on fossil fuel imports to supply their energy and transportation sectors. However, it has also increased the unsustainable debt levels of these countries. What comes next is uncertain as Venezuela prepares to elect Chavez’ successor as president of Venezuela next month.
Chavez started PetroCaribe with the aim of helping neighboring countries bear the burden of oil dependence at a time when oil prices began to rise sharply. Touted on its Web site as a “shield against misery,” the program allows participating Caribbean countries to purchase Venezuelan oil under preferential conditions. At the outset, 50 percent of the payment was due within 90 days with the remainder being financed over an extended period, sometimes up to as long as 25 years. The interest charged on the balance was at 2 percent but fell to 1 percent once oil surpassed US$40 per barrel.
To reduce its dependence on fossil fuel imports, Central America has embraced alternative energy in recent decades. Non-fossil fuel resources now account for 64.9 percent of electricity capacity in the region. But the largest source of this renewable energy—hydropower—cannot only be considered clean energy. Hydropower accounts for 51.6 percent of the region’s installed power capacity, supplying – with over 20,000 gigawatt-hours per year, more than all other energy sources combined. Although hydropower is “renewable” to the extent that the water resource is regenerated through hydrological and climate cycles, the damming of rivers has major social and environmental impacts.
The 134MW Pirris Hydroelectric Dam in the Southern part of San Jose province, Costa Rica
These impacts are frequently overlooked because hydropower can be one of the least expensive sources of electricity. After relatively high initial upfront costs, there are fewer recurring risks than fossil-fuel based energy. Hydropower also serves an important role in a stable energy supply because it provides baseload power that can be ramped up or down on demand, unlike more variable renewable energy sources such as wind that depend on favorable weather conditions.
Costa Rica currently derives over 90 percent of its electricity from renewable sources, 76 percent of this from hydropower. Political leaders in the country have praised large-scale hydro because of the economic development and energy security benefits it can provide. In 2011, the 134 megawatt (MW) Pirris Dam was brought online to address rising domestic electricity demand and further reduce Costa Rica’s petroleum fuel imports.
Large hydro’s heavy footprint
Proponents of large hydropower often portray the technology as “green.” The evidence, however, suggests a more mixed picture. One report indicates that dammed reservoirs in tropical regions produce as much as 4 percent of total human caused greenhouse gas emissions. The methane released from decomposing organic material in reservoirs would otherwise be stored in carbon sinks such as topsoil, forests, rivers, or oceans. Building hydroelectric facilities also requires large amounts of carbon-intense concrete, steel, and other materials.
Last Sunday marked the first anniversary of an unprecedented catastrophe that struck northern Japan. On March 11, 2011, a tsunami—triggered by a major earthquake—swept into the area surrounding the Fukushima Daiichi nuclear power station, disabling the cooling capabilities of three of the plant’s oldest reactors. In the days and weeks that followed, as workers struggled to cool and dismantle the plant, reactors 1, 2, and 3 went into meltdown. A series of explosions and fires led to the release of radioactive gas, and fears of contamination ultimately prompted the evacuation of approximately 100,000 people from the immediate area; some 30,000 may never be able to return to their homes.
The Fukushima Daichi Nuclear Power Plant, 25 March 2011 (Source: econews)
The first anniversary of this horrific event—the worst nuclear disaster since the Chernobyl accident in 1986—is a time to commemorate the more than 20,000 people who died in the initial earthquake and tsunami, as well as the courage of those who risked radioactive exposure to regain control of the plant and prevent further calamity. But it is also a time to look forward—to examine what we have learned from Fukushima and what it means for the future of energy in Japan and around the world.
A “moment of opportunity” for Japan
In the aftermath of the meltdown, the Japanese public turned decidedly against nuclear power, marking a pronounced change in a nation that was once one of the world’s most committed proponents and producers of civilian atomic energy. Japan has been using nuclear power since the 1960s, and in 2010 it generated 30 percent of its electricity from nuclear plants. In the past year, however, the vast majority of nuclear facilities in Japan have been shut down for routine maintenance or “stress tests” and have not yet been reopened. Today, all but two of Japan’s commercial reactors have been shut down, with the last one scheduled to go offline as early as April. The country has also abandoned any existing plans to build new reactors.
What options are available for Haiti’s energy future? The office of the country’s new State Secretary for Energy is weighing the available options for energy supply and beginning consultations to plan the next steps for Haiti’s power sector. In doing so, decision makers should consider not only the short-term technical and economic costs, but also the long-term environmental and social costs and benefits for Haiti’s population.
A March 2011 report, commissioned to Nexant by the World Bank and the Public-Private Infrastructure Advisory Facility, a multi-donor technical assistance facility, explores future electricity supply options for the Caribbean region. For Haiti, the Nexant analysis presents three scenarios and concludes that liquified natural gas (LNG) is the cheapest fuel option at nearly all capacity factors. (See table.) The report also notes that renewable energy technologies such as wind power and hydropower are economically viable in the country through 2028.
Four of seven Central American countries have utility scale wind projects.
On December 1, I attended a conversation on energy and infrastructure in Central America hosted by the Brookings Institution here in Washington, D.C. In many ways, the discussion reaffirmed the case for a socially and environmentally sustainable course of development through renewable energy. José Fernández, Assistant Secretary of State for Economic, Energy and Business Affairs at the U.S. Department of State took part, along with other knowledgeable panelists working on the region. The discussion was highly relevant to a new project here at Worldwatch on the state of renewable energy development in Central America, and the transition to a more sustainable energy future.
Energy economies in Central America vary widely. Costa Rica, for example, generates 90 percent of its energy through sources other than fossil fuels (primarily large hydropower), whereas El Salvador depends on fossil fuels for 80 percent of its electricity. According to Pablo Rodas, Chief Economist at the Central American Bank for Economic Integration (CABEI), the region currently generates 45 percent of its electricity using oil, spending some $7 billion annually on imports. Costa Rica alone spends $2 billion annually on oil. This means that as policy incentives improve and financing increases, while technology costs for new renewables such as wind, biomass, geothermal, and solar go down, market forces due to high oil prices will provide the motivation for countries to look toward these alternative energy sources.
The Dominican Republic is one of the few Caribbean nations to have LNG import capability - will Jamaica be next?
On November 14, the government of Jamaica began evaluating six proposals from companies hoping to supply liquefied natural gas (LNG) for a planned floating LNG storage and regasification terminal. The terminal, for which bids will be submitted on January 13, 2012, would provide Jamaica with its first supplies of natural gas, a fuel that the government believes will play a leading role in reducing the country’s dependence on expensive heavy fuel oil imports. Jamaica currently spends 13 percent of its GDP on importing energy.
Jamaica has been seriously exploring the potential for importing LNG since 2001, and in 2004 signed a Memorandum of Understanding with Trinidad and Tobago to import gas from its Caribbean neighbor. Although this deal was shelved in 2006, LNG remained a centerpiece of Jamaica’s fuel diversification strategy in its National Energy Plan, released in 2009, which also contains language supporting the development of renewable energy sources in the country’s electricity mix. Jamaica’s Office of Utilities Regulation (OUR) 2010 Generation Expansion Plan compared three scenarios for the expansion of Jamaica’s fossil energy system through 2030 – a natural gas scenario, a coal and natural gas scenario, and a business as usual (heavy fuel oil) scenario – and found that the natural gas strategy would cost the least (US $5.77 billion versus US $5.85 billion for the coal and gas scenario and US $8.18 billion for the business as usual scenario). This year, with requests for proposals announced for both the terminal and the LNG to supply it, this strategy has begun to take on a definite shape.
The Turbines at Los Cocos and Quilvio Cabrera are Fully Assembled
Earlier this month, Worldwatch researchers visited the Los Cocos and Quilvio Cabrera wind farms, adjacent to each other on the border between Barahona and Pedernales provinces in the southwestern corner of the Dominican Republic. These installations, operated by power company EGE Haina, are expected to come online this August. They will represent the first utility-scale wind projects in the Dominican Republic. As with most ventures that are the first of their kind, Los Cocos and Quilvio Cabrera offer valuable lessons for future wind development in the Caribbean.
The Los Cocos wind farm consists of 14 Vestas V90 turbines, each with an installed capacity of 1.8 megawatts (MW). Quilvio Cabrera holds 5 Vestas V82 turbines, each with an installed capacity of 1.65 MW. All told, the two farms will have a combined installed capacity of 33.5 MW. Based on seven years of data collection on site, the capacity factor of the facilities is anticipated to be 33 percent, which means that they will produce an average of around 11 MW, or just under 100 Gigawatt-hours per year (not accounting for downtime due to maintenance). The Los Cocos project alone is expected to avoid the emission of 125 thousand metric tons of carbon dioxide (CO2) per year, equivalent to the annual greenhouse gas emissions from over 20,000 passenger vehicles in the U.S.
Earlier this year The Worldwatch Institute went to Santo Domingo for the 2011 Caribbean Clean Energy Business Forum. Alexander Ochs, the Director of our Climate and Energy team, presented on our Low-Carbon Energy Roadmap methodology and upcoming work in the Dominican Republic, Haiti, and Jamaica.
Other presenters included Rene Jean-Jumeau, the Coordinator of the Energy Sector Management Unit at the Haitian Ministry of Public Works, Transport and Communications and one of our key partners in Haiti. He spoke about the Haitian energy system and the needs and opportunities for investment in renewable energy.
Through these initiatives, we are taking a holistic approach to documenting the potential for low-carbon development, which we believe will provide insights directly useful to policymakers and business leaders. The first half of the project has yielded good results, and we hope it will be the first of many such projects for our Caribbean Program.
Recently the Brookings Institution hosted a panel that examined Haiti’s political and humanitarian developments since the January 2010 earthquake. A theme that came up regularly was that of competing priorities such as turbulent elections, a cholera outbreak, a lack of dependable energy supply, and gender-based violence.
As the Worldwatch Institute prepares to develop a Low-Carbon Energy Roadmap for Haiti, some have questioned whether limited donor resources should be channeled into something more pressing than assessing and improving the country’s energy infrastructure. Is an energy roadmap really needed right now, or are other matters more important?
Haiti: Many sections, many challenges.
The cholera outbreak in Haiti is an urgent matter that deserves all the attention it is currently receiving. However, we must keep in mind that a lack of proper sanitation – due to a lack of electricity – helped cause the recent outbreak. Had the country’s energy infrastructure been more robust and sustainable, basic sanitation and electricity in hospitals might not have been lost and the current epidemic might have been avoided.
To be clear, Worldwatch is not suggesting that the Low-Carbon Energy Roadmap project we are undertaking is more important than addressing the cholera outbreak. But we believe that keeping an eye focused on the long term – while simultaneously addressing immediate concerns – can start a process that will help prevent such outbreaks in the future.