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RR RUEHDE RUEHGR
DE RUEHSP #1372/01 3351502
ZNR UUUUU ZZH
R 011502Z DEC 06
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC 7636
INFO RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCNCOM/EC CARICOM COLLECTIVE
RUEHHH/OPEC COLLECTIVE
RUEHBR/AMEMBASSY BRASILIA 0088

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 001372 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EPET EIND EINV CARICOM TD
SUBJECT: CONFERENCE PROMOTES CARIBBEAN ENERGY DIVERSIFICATION 
 
REF: PORT OF SPAIN 1040 
 
¶1. Summary:  Caribbean Energy Ministers met in Port of Spain 
September 6-8, 2006, at the "Energy and The Competitiveness of The 
Caribbean" conference to discuss opportunities for developing 
renewable energy to reduce the region's dependency on foreign oil. 
The goal of the conference was to illuminate the challenges, 
opportunities and path forward for realizing a more diversified 
energy sector in Caribbean countries.  Noting current high oil 
prices and their impact on the region's development, several 
ministers raised concerns over national security and voiced 
frustration about a perceived lack of help from the international 
community. USG underscored our commitment to be part of the solution 
to addressing the region's energy challenges.  DOE delivered a 
strong message about the need to diversify the region's energy mix 
in order to overcome the long-term challenges associated with 
petroleum dependence.  IDB President Moreno announced the creation 
of an Infrafund that will increase funding for energy 
infrastructure, as well as other efforts to increasing financing for 
Caribbean energy projects.  Brazilian officials expressed their 
government's willingness to cooperate with the Caribbean on ethanol. 
  End Summary. 
 
--------------------------------- 
Conference Dynamic and Key Themes 
--------------------------------- 
 
¶2. The Department of Energy (DOE), Government of Trinidad and 
Tobago, Inter American Development Bank (IDB), Caribbean-Central 
American Action (CCAA), and United Nations Development Program 
(UNDP) sponsored the event, which was well-attended by a dozen 
Caribbean/CARICOM energy ministers, Aruba's Prime Minister, as well 
as financial institutions and regional and U.S. private industry 
(international oil companies and suppliers of alternative energy). 
USG delegation included DOE, State, OPIC, and USTDA officials. 
Information on the conference, including selected presentations, is 
accessible on the CCAA website:  http://www.c-caa.org/ 
 
¶3. On September 5, immediately prior to the conference, Trinidad and 
Tobago Prime Minister Patrick Manning publicly criticized the United 
States, claiming that the U.S. is not focusing enough attention to 
the region (reftel).  In the same speech Manning also criticized 
Venezuela's PetroCaribe initiative, warning of negative implications 
for regional energy security.  While expressing different views on 
PetroCaribe (see para 10), Jamaican Foreign Minister Hylton echoed 
Prime Minister Manning's criticism of the U.S. in remarks to the 
press, noting that U.S. attention in Iraq has side-tracked its 
counter narcotics efforts in the region. 
 
¶4. Trinidad and Tobago Energy Minister Lenny Saith opened the event 
September 7, noting Trinidad's key role as a regional energy 
supplier and reinforced that his country was doing all it could to 
help the Caribbean cope in the high oil-price environment. 
Conference discussion focused on reducing Caribbean dependence on 
foreign oil through increased renewable energy such as biofuels, 
wind, solar, ocean thermal/wave action technologies, and hydro 
power.  Though some Caribbean countries have already taken steps to 
diversify their mix, many conference participants pressed leaders 
for further action to promote the production and consumption of 
renewables.  The conference format promoted full participation of 
participants, which allowed Ministers or their representatives to 
hear feedback first-hand.  Most participants urged Caribbean 
officials to develop long-term energy planning and to attract much 
needed energy investment through harmonization of legal and 
regulatory standards and mandated usage of biofuels, such as ethanol 
blending with gasoline.  (NOTE: Barbados and Jamaica have followed 
the U.S. lead and are in the process of phasing out MTBE.  END NOTE) 
 
 
¶5. A key concern expressed by Caribbean Ministers was the impact of 
high oil prices on development, with Dominica's and St. Vincent and 
the Grenadines' energy ministers accusing private industry of price 
gouging and failing to help the Caribbean mitigate the impact of 
high oil prices.  Dominica's Energy Minister launched into a 
passionate description of the deleterious socio-economic effects the 
high prices were having on the small island nations, criticizing 
international oil companies and the U.S. for not helping the region 
that, he claimed, faces national security challenges due to high 
energy prices.  In response, DOE A/S Harbert refuted claims that 
international oil companies are price gouging, noting that the USG 
recently conducted an extensive investigation into alleged price 
gouging in the United States and found no evidence that illegal 
pricing activities were taking place.  Harbert further explained 
that oil prices are determined by supply/demand dynamics in the 
world market, that OPEC members are producing above quota in an 
effort to bring down prices, and that the vast majority of the 
world's oil reserves are controlled by state-owned oil companies, 
not private industry. 
 
¶6. In discussing biofuels, ministers noted the need to balance food 
 
PORT OF SP 00001372  002 OF 003 
 
 
security with energy security, as increased biofuel production will 
place pressure on the agricultural sector.  Montserrat's energy 
minister pointed to possible social dislocations that may occur if 
farmers produce other agricultural goods for biofuels production.  A 
recurrent theme was the need for the Caribbean to maintain ownership 
over production processes.  In response to an Exxon-Mobil 
representative's assertion that biofuels are not commercially viable 
and would require massive subsidies to succeed, a number of 
panelists pointed to the economic benefits associated with biofuel 
production, as well as other potential benefits including 
environmental benefits from cleaner energy, job creation, poverty 
reduction, and increased trade. 
 
--------- 
Financing 
--------- 
 
¶7. Private financiers, IDB, and the Caribbean Development Bank were 
optimistic that private capital is available for energy project, and 
they noted their eagerness to identify creditworthy projects.  To 
help close the gap between available capital and developing stronger 
project proposals, IDB President Moreno announced the creation of an 
Infrastructure Fund named the "Infrafund."  The Infrafund will begin 
with US$20 million in grants, and its goal is to provide US$12 
billion in investment funds to Latin America and the Caribbean over 
five years.  Moreno announced that the IDB will partner with Brazil 
on ethanol; support biofuels project including small-scale hydro, 
wind, and solar projects; commit  US$500,000 to fund two Caribbean 
focused programs for renewables and energy efficiency; carbon 
finance projects for CARICOM; and an environmental and social 
assessment of the impact of implementing a regional biofuels 
strategy. Caribbean Ministers and other regional representatives 
expressed frustration over the difficulty of accessing IDB, GEF and 
other IFI funds due to the apparent complexity of rules, arduous 
process, and ineligibility in some cases for applying to available 
funds.  (NOTE:  Jamaica and Trinidad & Tobago are members of the 
IDB, but nonmember countries can only access IDB funds through the 
Caribbean Development Bank. END NOTE) 
 
-------------------- 
Regional Cooperation 
-------------------- 
 
¶8. Through CARICOM's Energy Task Force, the region has drafted a 
regional energy plan or blueprint that the Task Force intends to 
present to CARICOM Heads of Government in February 2007.  Several 
participants expressed concern over how best to balance national 
energy planning within the regional context.  CARICOM Energy Task 
Force Chairman Andrew Jupiter stated that the Task Force was 
committed to developing an overall energy strategy within which each 
individual member would be able to fit its specific energy policy. 
However, a recurring theme of the conference was the lack of 
regional planning, with some Ministers expressing the view that the 
CARICOM Energy Task Force was ineffective and needs to be 
revitalized. 
 
¶9. Brazilian officials from the Ministry of Energy and Mines 
presented the Brazilian ethanol experience, which provided an 
excellent example of long-term and multi-sectoral planning to 
develop biofuels.  Some noted that Brazil has been working the 
biofuels issue for more than 30 years, so the Caribbean has quite a 
ways to go.  Antonio Simoes, Director of Energy for the Brazilian 
Ministry of Foreign Affairs, enthusiastically underscored Brazil's 
desire to cooperate with the Caribbean, stating "We are not here to 
sell you anything, we honestly want you to help you become ethanol 
producers and exporters because we cannot meet projected world 
demand by ourselves." 
 
----------- 
PetroCaribe 
----------- 
 
¶10. While acknowledging that PetroCaribe is not a substitute for 
long-term planning, Jamaican Foreign Minister Hylton claimed it is a 
short-term option that provides "breathing room" and relief to 
foreign exchange reserves.  Though PetroCaribe was not an explicit 
central theme during discussion, press coverage focused on the 
initiative and Hylton's remarks.  The overall structure of the 
conference did, however, address the crux of the PetroCaribe issue 
by advocating for long-term solutions to oil dependence over 
short-term fixes.  In her remarks to the conference and in 
discussions with the press, DOE Assistant Secretary Harbert 
emphasized that PetroCaribe may hold appeal in the short run by 
appearing to provide some initial economic relief for governments 
but in the long term, it is an obligation that is carried on the 
government books and that the taxpayers and citizens of these 
nations will have to repay.  Harbert also noted that Venezuela's oil 
deals do not affect the retail prices of petroleum products, so 
PetroCaribe is not providing any relief for consumers. 
 
 
PORT OF SP 00001372  003 OF 003 
 
 
¶11. COMMENT:  Caribbean officials initially expressed disappointment 
that the U.S. had not arrived with ready-made solutions and funding. 
 However, by the end of the event our message - that sustainable 
solutions would come from each country putting together the 
structures and policies that encourage the private sector to invest 
- seemed to have greater resonance.  Companies reported good access 
to decision makers.  Many of the small alternative energy firms 
reported good progress with ministers in raising interest and 
awareness for their services, as well as having gleaned much useful 
information on how to penetrate Caribbean markets.  Caribbean 
governments now need to take further action to encourage the growth 
of renewables.  Though skeptical to a degree, the ministers were 
eager to learn more about how to proceed and to better understand 
the social and economic benefits and challenges that come with 
alternative energy resources and biofuel production and use.  The 
event underscored the need to build technical capacity in the 
region, in order to help understaffed and under-funded ministries 
take advantage of private sector interest and financing which 
currently stand just beyond their technical ability to access.  The 
conference was a good first step in building a stronger relationship 
with Caribbean countries that are committed to improving their 
energy and economic security through a diversified energy portfolio. 
 The USG should continue to press the importance of diversification 
of energy supply with Caribbean governments and to look for 
practical ways and capacity-building options to assist the region. 
End Comment. 
 
¶12.  DOE delegation members provided input for this report. 
 
AUSTIN