Documents and Videos of the October 12th, 1999 Meeting of the 

SPECIAL COMMITTEE ON INTER-AMERICAN SUMMITS MANAGEMENT

Hall of the Americas, Organization of American States


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VIDEO

Regional Energy Cooperation

Presentation by Mr. Mark Lambridies, Senior Specialist, Unit of Sustainable Development and Environment, OAS.

In April 1998, the Heads of States of the Americas ratified the Declaration of Santiago and a Plan of Action at the Second Summit of the Americas in Santiago, Chile. These documents outline an important vision for energy policy and climate change issues in the hemisphere. They specifically address the promotion of energy-related trade, the integration of energy markets, transparent and predictable regulatory systems, rural electrification, renewable energy and energy efficiency, and a climate change/clean development mechanism. In the past 18 months, national governments have made significant strides to implement this vision.

The Americas are leading the world in terms of privatization, deregulation, and integration of the energy sector. Most countries in the hemisphere either have already adopted legislation calling for restructuring, integration, and privatization, are in the process of doing so, or expect to do so in the near future. A few notable examples include the Dominican Republic, Guatemala, and Bolivia. In the Dominican Republic, the Government has been privatizing via the capitalization of the Dominican Electricity Cooperation (Corporación Dominicana de Electricidad, CDE), the state-owned utility. The process was delayed slightly because of the repercussions of Hurricane Mitch, but was eventually completed in second-quarter 1998. In May 1999, the Government sold a 50 per cent stake in two generating companies (totaling 1,246 MW) to two private developers. Just before the Second Summit of the Americas, in March 1998, the President of the Dominican Republic, Leonel Fernández, approved a decree that created a Superintendency of Electricity to oversee a national competitive power market. Guatemala, along with five other Central American nations, has been active in the integration of energy markets through the Electric Interconnection System for Central American Nations (Sistema de Interconexión Eléctrica para los Países de America Central, SIEPAC), a $350 million project that will connect Guatemala, Honduras, Nicaragua, El Salvador, Costa Rica, and Panama via a 1,800, 230-kV transmission line. The Inter-American Development Bank, the Spanish Government, and the governments of the six participating nations are financing the SIEPAC. Guatemala is also in the midst of privatizatizing its energy sector. It passed a General Law of Electricity in November 1996 and ratified regulations to implement it in March 1997. More recently, in October 1998, the Guatemalan Government created a wholesale electricity exchange, the Wholesale Market (Mercado Mayorista, MM). Additionally, the distribution system of the Guatemalan Electric Company (Empresa Eléctrica de Guatemala, S.A., EEGSA), one of the two main utilities in Guatemala, was privatized in July 1998. The Nation Electrification Institute (Instituto Nacional de Electrificación, INDE), the other principal utility, privatized its distribution system in December 1998. Bolivia is deeply involved in the integration of energy markets, thanks, in part, to its abundant natural-gas reserves (in 1998, natural-gas exports accounted for 26% of Bolivia's total exports). A $2.1 billion pipeline connecting Bolivian natural-gas fields with the growing southern Brazilian market was completed in February 1999 and became operational in July 1999. The construction of the pipeline resulted in a sharp increase in energy-related investment in Bolivia. Bolivia has also been restructuring its electricity sector since December 1994, when it passed a law that divided the assets of the state-owned utility Empresa Nacional de Electricidad (ENDE) and separated the responsibilities for electric generation, transmission and distribution. This was part of a larger capitalization program to improve the nation’s economic situation. Currently, four private companies are partial owners of generating assets in Bolivia, distribution is divided among five partners, and transmission is a regulated monopoly that was awarded to a single private firm. On the regional level, a Hemispheric Energy Business Network and Forum is in its initial planning stages. Its objective is to work with pre-existing hemispheric organizations to play a role in energy policy and development. The Network will address issues related to legal, regulatory, or policy issues and legal or regulatory changes that would affect its members. The Network was endorsed by most of the Energy Ministers of the Americas at the recent (July 1999) IV Hemispheric Energy Ministers Conference in New Orleans, Louisiana.

Many countries of the Americas have expressed concern over renewable energy and energy efficiency, and climate change and are committed to dealing with the related problems. On the aggregate level, heads of state from the hemisphere affirmed their commitment to this issue at the IV Hemispheric Energy Ministers Meeting in the Joint Statement on Clean Development and Use of Energy and pledged to make sustainable energy development and use a reality for the new millenium. Specifically, governments will work to integrate energy, economic, and environmental goals, building on the progress in energy cooperation initiated by the Heads of State and Government in the Miami Summit of the Americas and reaffirmed in the Santa Cruz Summit on Sustainable Development and the Santiago Summit of the Americas. The Renewable Energy in the Americas (REIA) Initiative, a program of the Organization of American States (OAS), is working throughout the region to promote environmentally clean development through the use of renewable energy and energy-efficient technologies. REIA works closely with energy ministers and financial institutions to develop means for implementing programs in these areas. Examples abound throughout the region. Argentina approved a renewable energy law in 1998 that encourages the development of renewable energy projects by providing a US$0.01/kWh incentive for generation of these alternative types of power. Likewise, Honduras passed a new law that providing tax incentives and other benefits designed to promote the development and use of non-fossil-fuel based electricity generation. In Brazil, a 1998 law makes available for isolated non-fossil-fuel based generation, incentives similar to those previously provided for diesel fuel. The program is entitled Conta de Consumo de Combustíveis – CCC and is a measure that will enable the development of many small hydroelectric, biomass, solar, and wind electricity facilities for rural consumers. The island nations of the Caribbean launched the Caribbean Renewable Energy Development Project in 1998, with the support of the World Bank/Global Environment Facility, designed to stimulate use of such technologies throughout the region.

Many countries of the region have launched or are continuing aggressive rural electrification programs that rely heavily on the use of renewable energy sources. Among these nations are Chile, Argentina, Brazil, Bolivia, Peru, Guatemala, and Mexico. In the case of Brazil, the Federal Program for State Development (Programa de Desenvolvimento Energetico de Estados e Municipios, PRODEEM) seeks to implement over 9,000 rural community renewable energy projects affecting over two million people in five years. In efforts to minimize the demand for grid-tied, conventional power, the Mexican Comisión Nacional para el Ahorro de Energía (CONAE) is implementing a 1999 program plan that focuses on such areas as promoting demand side management practices, efficient generation of thermal energy, sustainable transportation, renewable energy, and the promotion of energy service companies (ESCOs). In the United States, President Clinton challenged the nation to install one million solar energy systems on U.S. rooftops by 2010, and has offered incentives to help make this a reality.

The use of renewable energy sources and energy efficient technologies is also tied to the climate change provision of the Santiago Declaration. A strategy to address the problem of global climate change is to reduce fossil-fuel emissions through either efficiency improvements or the substitution of other, non-global-warming fuel sources (e.g., solar, wind, hydro). Countries throughout the region are working consistently on issues related to climate change, Joint Implementation, and Clean Development Mechanism. Following are a few selected examples of activities being carried out throughout the hemisphere. Belize is currently involved in at least three projects specifically related to climate change. It is collaborating on a carbon sequestration project (via Joint Implementation with the United States) through the non-governmental organization Programme for Belize in the Rio Bravo. On the regional level, Belize is participating with other countries of the region in the Caribbean: Planning for Adaptation to Global Climate Change (CPACC) project. CPACC is funded by the GEF, implemented by the World Bank and executed by the Organization of American States (OAS). Its objective is to increase national and regional planning resources and skills for adapting to the effects of global climate change on coastal and marine resources. The seven Central American countries are participating in the Central American Climate Change Project. Its objective is to assess the vulnerability of the countries to climate change, focusing on agricultural, coastal zone, and water resources. The project is funded through the U.S. Country Studies Program. Costa Rica has been in the forefront regarding joint implementation. It established one of the first national offices on climate change (Oficina Costarricense de Implementación Conjunta). Guatemala, El Salvador, and Argentina have established similar offices. Further, pursuant to their obligation under the Kyoto Agreement, all non-Annex I countries in the region either have issued national communications or are preparing them. The United States and Canada, the only Annex I countries in the hemisphere, have presented the required annual reports. As of August 1999, 22 countries in the Americas had signed the Kyoto Protocol, and seven had ratified it (Antigua and Barbuda, 8/3/98; The Bahamas, 9/4/99; El Salvador, 11/30/98; Jamaica, 06/28/99; Panama, 5/3/99; Paraguay, 8/27/99; Trinidad and Tobago, 1/28/99).

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