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