SUMMIT IMPLEMENTATION REVIEW GROUP (SIRG) OEA/Ser.E Sixth Regular Meeting of 2008 GRIC/O.6/doc.3/08 December 10-12, 2008 9 December 2008 Hotel Royal Decameron Salinitas Original: English El Salvador

PRESENTATIONS BY THE PARTNER INSTITUTIONS OF THE JOINT SUMMIT WORKING GROUP - JSWG

INTER-AMERICAN DEVELOPMENT BANK

(Energy Security)

ENERGY SECURITY

Vicepresidence for Sectors and

Knowledge . Infrastructure and

Environment Sector . Energy Division

German CruzDecember 2008

V Summit of the Americas 2009

Primary Energy

• Crude oil is the more accessible and commercial form of primary energy around the world

• Petroleum derivates can be used for transportation sector o thermal power generation

• Other fossil sources like gas, or coal are used fundamentally for thermal power generation.

• Other sources supply of primary energy, like hydro, wind, or solar, can be used only for electric power generation

Source: OLADE SIEE, 2005

Primary Energy Supply

0

20

40

60

80

100

%

AndeanRegion

Caribbean CentralAmerica

SouthernCone

Mexico LAC

Primary Energy Supply

Fossil Fuel Renewable Energy

Western Hemisphere- oil

Hemisferio Occidental: Producción y Consumo de Petróleo (mbd) 1965 - 2006

10000

15000

20000

25000

30000

35000

Producción (mbd)

Consumo (mbd)

Importación (mbd)

Fuente: BP Statistical Review of World Energy June 2007

Western Hemisphere- oil 2020

Hemisferio Occidental: Producción y Consumo de Petróleo (mbd) 1965 - 2020

10000

15000

20000

25000

30000

35000

40000

Producción (mbd)

Consumo (mbd)

Importación (mbd)

Fuente: BP Statistical Review of World Energy June 2007 y Cálculos Propios

1985 1995 2005% of total

stocksWestern

Hemisphere

164 173 163 ~ 0%

North-America

102 89 59 36.5%

South-America

63 84 104 63.5%

Non-Andean

5 10 16 9.9%

Andean 57 73 87 53.6%

Western Hemisphere Oil Stocks (Bb)

Energy Sector in Latin America and the

Caribbean• Energy production and consumption in the region

is comparatively low, although these are rising.• The intensity of energy use and energy supply

varies across the region. • Much of the region’s energy consumption is

concentrated in Argentina, Brazil, Mexico, and Venezuela.

• Across the region, the sectors consuming the most energy are:– Industry (region-wide average of 38%)– Transportation (32% on average)

Evolution of Electricity Generation by source

- Latin America -

Energy supply LAC- 2004

Source: Altamonte, 2006. ‘Renewable Energy Sources in LAC: 2 years after Bonn’

Geothermal, 0.5%

Hydroenergy, 11.3%

Vegetable coal, 1.5%

Industrial Timber, 0.7%

Residential Timber, 3.6%

Agricultural Timber, 0.3%

Cane products, 5.7%

Other renew ables,

1.3%

Oil, 41.7%

Nuclear, 1.6%

UnsustainableTimber

2.2%

Coal, 4.8%

Natural gas,

24.5%

Renewable,

24.8%

Other non-

renewables,

0.5%

Renewable Energy in LAC*• Today, renewable sources of energy generate 24.8%

of LAC’s electricity.

– Studies indicate they could generate up to 47% of the electric demand estimated for 2030.

• Biomass and biological wastes are another important source of renewable energy in the region

• Central America and the Caribbean could replace between 10% and 50% of their gasoline consumption through the production of ethanol generated from sugar cane.

* LAC: Latin American and the Caribbean

Hydropower• The region as a whole relies heavily on

hydroelectricity (Brazil, Colombia, etc.)• The region holds 21 % of global hydro-generation

capacity. • Most countries in the region use already a good

portion of their hydraulic potential to generate electricity.

• Most countries operate on the multi-megawatt range. However, small hydropower should be exploited as a good alternative given the high rainfall indices and rough topography of many countries.

Source: Huacuz, J., 2003

Hydropower Potential LAC

0.00

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

120,000.00

140,000.00

160,000.00

Brazil

Colom

bia Peru

Mex

ico

Venez

uela

Argen

tina

Bolivia

Chile

Ecuad

or

Paragu

ay

Guyan

a

Costa

Rica

Guatem

ala

Hondu

ras

Panam

a

Surina

me

El Salv

ador

Dom. R

ep.

Urugu

ay

Nicarag

uaCub

aHait

i

Jamaic

a

Barbad

os

Grenad

a

Trinida

d & T

obag

o

Pow

er (

MW

)

Hydropower, cont.

Source: OLADE, 2005. ‘Energy Statistics Report 2005’

Solar Energy• Thanks to its low cost is becoming an attractive means of bringing

electricity to isolated rural communities.

– The first solar cells cost around $200 dollars per watt. Today they cost less than $3 dollars per watt.

• Peru- Sustainable Rural Electrification: Installation of 12,500 Photovoltaic systems in rural households ill-suited for grid extension in four regions of the country.

• Chile- Rural Electrification Program: IDB financed US$40 million. Nearly 1,000 one-house photovoltaic systems have been installed in isolated rural dwellings.

Geothermal Energy• Costa Rica generates 98 percent of its electricity

through renewable sources, thanks in part to a growing reliance on geothermal energy.

• Mexico is now the world’s third largest producer of geothermal electricity. – It generates 953 MW for around 6,600 GWh of

geothermal energy per year, contributing 3.1% to the Mexico’s electricity supply (global geothermal supply is 0.442%).

– Studies have shown a potential for 3,650 MW (20,460 GWh) that could provide more than 12% of total electricity generation.

Source: Gawell & Greenberg, 2007. ‘2007 Interim Report, Update on World Geothermal Dev.’

Wind Energy

• Most commercial RE alternative in the developed world. Estimated $71 billion invested in RE worldwide in 2007, of which 47% was for wind.

• Principal component for decarbonizing society since free of GHG emissions

• New materials, turbine designs and new technologies have slashed the cost per watt

Wind Energy LAC• Good experiences with pilot projects at

different levels: Costa Rica (commercial), Colombia (technical cooperation).

• Brazil: Rapidly increasing its wind installed capacity:– 2006: 28MW – 2007: 237 MW– Expected increase from new projects: 1400 MW

• Mexico - La Venta II: total installed capacity of 83.3 MW and 307,728 MWh estimated yearly average generation. – Expected increase 3000 MW for 2006-2014

according to the Mexican Wind Energy Association

Biofuels

Sustained Biofuels• Certain importing markets will require biofuels that

meet certain sustainability standards.• LAC has the potential to be at the forefront of

creating a sustainable biofuels industry.• IDB partners with the Roundtable on Sustainable

Biofuels to increase investment in sustainable biofuels.

• The IDB is currently :- Developing internal sustainability guidelines for biofuels- Developing a “scorecard” to promote only the most sustainable biofuels

What lies ahead

• Increase energy efficiency and reduce harmful pollution while also promoting economic development.

• Investment needed in Energy in LAC (2005-2030)

• The energy demand in LAC will increase 75% by 2030.

• Required investments: US$ 1,600 billion

• In the next decade alone, LAC will require a 50% increase in its installed capacity, more than 90GW

Towards the future: Supply and Demand balance achieved through RE and EE

Renewable Energy: Importance

for Poverty Alleviation• Energy security has important implications on Poverty• Poverty is still higher than in 1980 in both relative

and absolute terms• Approx. 10% of total population (50 million people)

does not have electricity• Poverty relief linked to increased energy consumption• For the 16 countries which are net importers of oil,

the price increase of hydrocarbons poses an increasing challenge.

• Some of LAC’s major exporters are experiencing reduction in the productivity of their deposits

Sustainable Energy: A priority for the IDB

Challenges for the Region• Achieve sustainability of energy supply and

rational use of resources

• Energy access for all the population

• Within the region some countries face:

– Energy security issues and high energy bills

– Urban pollution problems and extreme vulnerability to climate change

• Regulatory and institutional frameworks

• Pre-investment resources to support project preparation and development

Conclusions• The Western Hemisphere is an energy net importer • The deficit originates from the energy gap of North

America• With declining stocks, this gap will tend to widen

with time. • Climate Change is likely to add extra strain to the

energy deficit.• Renewable Energies and Energy Efficiency will

contribute to cover the energy deficit. • Climate Change Mitigation and Adaptation are

becoming part of Energy Security strategies.