Interrelationship between the Foreign Policies on Climate ... · • Market trends • Offers should be presented by experienced developers (alone or associated with local companies)

1 Interrelationship between the Foreign Policies on Climate Change of Developed Countries and their implementation of Renewable Energy Policies in Developing Countries.

Interrelationship between the Foreign Policies on Climate

Change of Developed Countries (UK and Germany) and

Implementation of Renewable Energy Policies in Developing

Countries (Latin America: Mexico and Uruguay).

INDONESIA – GERMAN SEMINAR on Setting the Pace for Renewable Energy Technologies in Developing and Emerging Markets

with Case Studies on Renewable Energy Technology Transfer Institut Teknologi Bandung, 27th of September 2011


Content

• About the Speakers

• Background

• Renewable Energy Technology (RET) Application

• Foreign RET Policies in Developing Countries

• Germany and Uruguay.

• Lesson Learned: Wind Park Project in Uruguay

• Mexico and U.K.

• Lesson Learned: Prosperity Fund in the Mining Sector, Mexico

• Replication in Indonesia?


About the Speakers

Augusto Mosqueda Solís

• Wind Energy Project Manager. SEINCO srl.

Montevideo - Uruguay

• Project Manager. EAB group. Großschirma

(Germany) and Porto Alegre (Brazil).

• MBA in IMRE 2006. TU - Freiberg. Germany.

• Mechanical Engineer. ITESM - Mexico

Luis Darío Ochoa Rodríguez

• Trade and Investment Officer for the Energy Sector.

British Embassy. Mexico.

• MBA in IMRE 2005. TU - Freiberg. Germany.

• Mechanical Engineer. ITESM - Monterrey.


Background

During the last quarter of the twentieth century, the

world experienced an accelerated depletion of the fossil fuels.

The peak oil (1973) pushed some of the developed countries to look for alternative technologies and

policies that could substitute partially or completely the fossil fuel based model.

Countries like Denmark, Germany, U.S.A, UK, among others, began to support the research and

development of wind, solar and other renewable technologies. In order to avoid the high dependence on fossil fuels with the parallel objective of the

mitigation of environmental impacts caused by global warming, by the study and implementation of

renewable energy technologies (RET’s).

Nowadays, these technologies are mature and

secures sources of energy for several countries and its development has been limited only by its variability

that is as well being backed up by other clean sources.


RET Application

• Developed Countries

• Developing Countries • Limited by the high investment costs

• Usually is cheaper the utilization of other technologies (i.e. Fossil fuels)

•Latin America, depend, on average, of 71% from fossil fuels for their

energy sources.

• Poverty, wars and other similar factors affect the implementation of such

technologies.

• Lack of policies and governmental commitment

• Diversification of their energy matrixes

• Utilization of local renewable resources

• Optimization of their energetic resources

• National security

• Energetic independence

• Result of research

•Defined foreign policy in climate change


Foreign RET Policies in Developing Countries

Several countries have developed cooperation mechanisms in order to expand their market and know-how in order to

develop their economies. Such mechanisms also include the aid and development of less industrialized countries in

which the living conditions as well as their economies could be significantly improved with the utilization and

implementation of RET’s.

Organizations, banks and governmental funds such as the IDB, BMZ, UN, UKTI and the FCO among others have set

mechanisms for the implementation of RETs into countries like Indonesia, Mexico and Brazil among others that

possess large renewable energy resources.

Some of these programs will be presented throughout this work.


Germany

The BMZ (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung), that is, the Federal Ministry for Economic

Cooperation and Development has set a series of agreements as well as programs and foreign policies in relation to the development of

RET’s in Latin America.

The BMZ through the GIZ (Deutsches Gesellschaft für Internationale Zusammenarbeit) has set the: “Strategy on Development

Cooperation with Countries in Latin America and the Caribbean” on which it has been focused the consolidation of the environment

and climate protection by the foundation of strategic partnerships with the ECLAC (Economic Commission for Latin America and the

Caribbean) and the IDB (Inter-American Development Bank) as well as with subregional development banks combined with the

mobilization of development loans, combined financing and PPP’s (Private Public Partnerships).

The importance of the renewable energy cooperation between the BMZ and the Latin America region is reflected on the increase of the

portfolio share (financial and technical) that the BMZ has designated during the last years. The average investment amount for the years

2004, 2005, 2006 and 2007 amounted to € 93.8 million.


Uruguay

Uruguay is located in the south east of South America. The country is

176.220 Km2 and has a population of 3.361.000 people. It is also

worth mentioning that Uruguay possesses one of the highest

development index of the region (0.765).

The total installed capacity is of 2692MW (mainly hydro). Since

2006 droughts have affected the country and this situation has turned

Uruguay into a country with a high deficit on energy generation and

very vulnerable to the climate change effects such as longer dry

seasons.

The government has since then, established several objectives for the

short, medium and long term in order to include RETs into the

country’s generation matrix.

The official program has established so far the short term (2015)

objectives. For this, it is established that for 2015 at least 64% of the

energy matrix should come from a renewable resource (including

hydro) but from that percentage 15% should come at least from a non-

traditional renewable source (e.g. wind, solar, biomass) and a 15%

reduction of fossil fuels should be reached. All of these with an

electrification percentage of 100% of the country.

The energy ministry has set already the installation of 500MW of wind

energy and 200MW of biomass for 2015.


Wind Park Project in Uruguay

• In June 2008 the first wind energy tender (biomass and wind) took

place.

• SPV (Special Purpose Vehicle) AMPLIN S.A. obtained 14.7MW

being the solely adjudicated from the 117MW presented. The price

offered was 90.25USD/MWh.

• After negotiations with the local Utility (UTE), other projects were

granted accepting the same price as AMPLIN S.A. That was 30MW

more.

• The conditions of the tender were very lax:

• Location of the windpark (no land leasing agreement)

• Capacity of the project (in MW)

• National content of the project (for a comparative price at

the tender)

• SECURITY BOND (maintenance offer guarantee )

• AMPLIN S.A.’s offer was:

• 14.7MW project

• 70% national component

• Prototype machines


Lesson Learned (Uruguay)

• Evaluation of the tender conditions according to the local

resources.

• Industrialization level of the country

• Set of clear objectives

• Previous experiences of neighboring countries

• Market trends

• Offers should be presented by experienced developers (alone or

associated with local companies).

• Assessment of the global market conditions and logistics of the local

market (is global development technology suitable to the local

market?).

• Learning curve on the local policies (avoid implementation failures)


Mexico and U.K.

The Department of Energy and Climate Change (DECC) released in March 2011,.

The Carbon Plan (including domestic and international activity). It sets out a vision of

a changed Britain, powered by cleaner energy used more and with more secure

energy supplies.

Approach in the UK

In 2010 the Government published the 2050 Pathways in order to reduce

greenhouse gas emissions by at least 80%, by 2050;

Generating their own electricity

Heating for home and businesses

Powering their cars and vehicles

International Approach

The UK has a direct national interest in ensuring that the world tackles climate change.

The UK accounts for just 2% of global emissions, so their long-term security and

prosperity depends on effective international action.

Developing leadership within the European Union

Building the case for global ambition with key countries and international institutions;

Supporting the development of low carbon, climate resilient economies

Ensuring progress within the international climate change negotiations


Mexico and U.K.

In August of 2005 the prospective scenario for renewable

energy in 2030 was released. According to this scenario, in

2030, for renewable energy the following growths were

projected:

• Hydropower will grow 2.3% per year;

• Biomass and waste will grow 3.7% ;

• Other RE sources will grow 4.1%;

• Renewable energies not used for electric generation

will reach 5% of the total portfolio.

Mexico has released, through different national commissions

and supported by the Executive Power, several Laws and

Programs that intend to support and promote the use of

renewable energy and cogeneration in the national grid.

The most important target for this special program is the

reduction of Green House Gases emissions by 50% by 2050

(taking as a baseline 2000)


International Prosperity Fund Strategy from the UK

The Foreign & Commonwealth Office’s program funds seek to create real,

measurable outcomes in support of the FCO’s policy goals. Build Britain’s

prosperity by increasing exports and investment, opening markets,

ensuring access to resources, and promoting sustainable global growth.

Prosperity High Level Goals

1. A stronger, more sustainable global economy;

2. Enhanced security of resources supporting UK and global prosperity;

3. International community on track for green growth.

The Prosperity Fund is seeking targeted opportunities to identify and

support specific partners (developing countries mainly) contributions to

address challenges in developing a low carbon, high growth global

economy that is supportive of an open, multilateral trading system.

Prosperity Fund


Prosperity Fund in Mexico

The case with Mexico

The UK Government is committed to strengthening our trade and investment links with the

fastest growing economies of the world, including Mexico. Both countries committed to

double bilateral trade to £4.2 billion by 2015.

The Prosperity Fund Strategy for Mexico has been released in 2011 and it gives an

opportunity to implement the climate change foreign policies and contribute to the

growth of trade and investment between both countries. Several projects participated

for the prosperity fund:

•Cogeneration project for the Tequila Industry

•Bio-Construction Project for the North of Mexico

•Sustainable transportation project for Mexico City

•Environment, Energy Efficiency and Renewable opportunities for the Mining Sector

After an analysis from a Prosperity Fund Committee in the UK accept the proposal for the

mining project considering the following evaluation aspects:

•Expertise of British Experts/Companies for the selected project

•Value added technology and services and competition analysis with local and other

international providers

•Potential business volume of the projects under evaluation

•Impacts for the local economy aligned in the Carbon Plan and Prosperity Fund


Prosperity Fund Project in the Mining Sector in Mexico

This project is currently in development and is going to be completed at the end December of 2011 but here are some facts and updates:

1) Research with main Mining Companies, Mining Chamber and Ministry of Economy.

2) These key contacts were interviewed and detailed specific business opportunities in the mining sector as follows:

a. Low carbon technologies applied for minerals and material processing and transportation

b. Renewable energy projects for further development such as wind parks, tidal/wave parks and

solar energy facilities.

c. Energy efficiency projects focused their current operations and equipment replacement.

d. Corporate social responsibility programs focused in improvement of their relationship with

communities and stakeholders.

3) 35 companies were identified with products and solutions that can be attractive for the

Mexican market. These companies were evaluated according to:

a. Previous experience in trading in Latin America or similar markets;

b. Products and service differentiated from other European and American competitors;

c. Interested in expanding operations in the Latin American market.

4) Mining trade mission will be organized by UKTI with 10 companies




• In the case of the UK-Mexico prosperity fund

projects we still need to wait to see the results of

these efforts.

• The evaluation will focus on the success of the

British companies in establishing commercial

relationships with the Mexican mining players and be

able to implement projects that contribute with the

Carbon plan and the increase of trade between both

nations.

• The success of this program will incentive further

projects in other sectors

– Tidal/wave projects in the Pacific coast of Mexico

– Biomass projects focused in specific industries in

Mexico such as sugar industry, tequila industry


Replication in Indonesia?

• Assessment of the local available renewable energy (wind, solar, geothermal, etc.) potential and rank them accordingly.

• Setting objectives based on local and foreign experiences (lessons learned)

• RETs are an alternative that have to be implemented in a sustainable manner and based on the local potential (e.g. wind microgeneration, >30% people missing electricity, low wind speeds 3-6m/s).

• Soft loans and cooperation programs integration.

•Prosperity Fund UK-Indonesia –Contacts and current initiatives

•Expertise of Biomass from British Institutions

–List of institutions and organizations with potential partner interest to do projects in Indonesia


QUESTIONS?

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Interrelationship between the Foreign Policies on Climate ... · • Market trends • Offers should be presented by experienced developers (alone or associated with local companies)