VZCZCXYZ0009
RR RUEHWEB

DE RUEHDG #2581/01 3232001
ZNR UUUUU ZZH
R 192001Z NOV 07
FM AMEMBASSY SANTO DOMINGO
TO RUEHC/SECSTATE WASHDC 9646
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHBO/AMEMBASSY BOGOTA 1680
RUEHGT/AMEMBASSY GUATEMALA 0702

UNCLAS SANTO DOMINGO 002581 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
PLEASE PASS TO MATT MCMANUS (EEB) AND FAITH CORNIELLE 
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E.O. 12958: N/A 
TAGS: ENRG ETRD ECON DR
SUBJECT: MESO-AMERICAN BIOFUELS GROUP MEETING SUMMARY 
 
¶1. (SBU) Summary: The Meso-American Biofuels Group met on 
November 14 in Guatemala City to discuss progress in 
developing the production and consumption of biofuels across 
Central America from Mexico to Colombia.  Attendees were 
government representatives from particpant countries, the 
Inter-American Development Bank (IDB), EconOff from Santo 
Domingo, and a private biofuels expert sponsored by the 
Business Roundtable on Renewable Energy who discussed 
biofuels sustainability challenges.  The discussions were 
upbeat and positive with the exception of Costa Rica, which 
focused on the challenges and pitfalls of implementing an 
ethanol blend into the local transportation industry. 
Controversial issues (i.e., food price impact, U.S. farm 
subsidies, etc.) were touched on briefly during the wrap-up 
conclusionary session, but were not the central focus of 
discussions, which dealt more with the sharing of best 
practices in national support for biofuels growth. End 
Summary. 
 
¶2. (U) On November 14, representatives from six Central 
American countries, Mexico and the Dominican Republic met in 
Guatemala City for the Fourth Meso-American Biofuels Meeting 
sponsored, in part, by the IDB.  Each country presented a 
review of government and private sector progress in 
developing their respective biofuels industries, and the 
meeting concluded with a roundtable discussion. Below is a 
very brief summary of the main points from each country's 
report, in order of presentation: 
 
Costa Rica 
---------- 
 
¶3. (SBU) Costa Rica's presentation focused primarily on the 
difficulties experienced in its pilot program for introducing 
a mandatory 5 percent ethanol blend in vehicles in its 
northwestern Barranca region.  These difficulties centered on 
misinformation and lack of education about the impact of 
blended fuel on vehicle performance and the potential for 
engine problems, which reportedly resulted in widespread 
confusion about the science of blending ethanol with 
gasoline.  Costa Rica's representative even pointed out that 
auto importers had recently pushed for a limit on blending of 
ethanol at only 5 percent citing engine problems that they 
claimed could result with a higher percentage blend. 
However, Costa Rica's representative confirmed that the pilot 
program would ultimately be extended nationwide to include a 
5 percent biodiesel blend and a 7 percent ethanol blend based 
on supply restrictions, although the exact timeline remained 
in question. 
 
¶4. (SBU) Costa Rica's broader biofuels plans center on the 
importation of Brazilian ethanol both for local consumption 
and for export to the U.S. under the Caribbean Basin 
Initiative (CBI).  There appears to be very limited local 
production of ethanol or biodiesel and no figures for local 
production were cited, only that the total consumption and 
exportation of ethanol equaled approximately 158 million 
litres per year. On an important side note, Costa Rica touted 
its plans for blending ethanol and biodiesel in its 
distribution pipelines rather than splash-blending at the 
distribution points, a concept that would be unique to Costa 
Rica.  A Brazilian attendee confirmed the opinions of others 
in the room who raised skepticism about this approach citing 
the corrosive nature of ethanol's water content to pipeline 
infrastructure.  The Brazilian attendee noted that pipeline 
blending had been considered but ultimately rejected in favor 
of distribution point blending and noted that the same is 
true in the United States. 
 
Honduras 
-------- 
 
¶5. (SBU) Honduras' representative was upbeat about the 
prospects for biofuels development and was keen to gain 
support for his country's initiatives, but also acknowledged 
problems and delays in successfully realizing goals.  To 
start, he noted that biofuels/renewable energy legislation is 
close to passage, having passed through its first readings in 
congress, by the end of this year.  This legislation would 
require the mixture of ethanol and gasoline through the 
elimination of MTBE.  As part of its biodiesel initiatives, 
he noted the government's efforts to work with transportation 
unions to produce their own biodiesel and convert to biofuels 
exclusively.  He said the government's goal is to replace 
imported diesel completely in the next few years.  However, 
he said there are real problems convincing farmers to plant 
biofuels production which has resulted in, for example, 
 
production stoppages at some of the five small-scale jathropa 
plants that have been constructed.  (Note:  The 
representative from Honduras lamented the fact that Honduras 
was not included in the initial group of countries targeted 
by the U.S.-Brazil Biofuels Partnership and expressed his 
desire that it be included in any future expansion of the 
initiative.  He also showed EconOff a presentation on tilapia 
fish oil conversion to biodiesel that he described as an 
innovative project with large expansion potential in the 
region.) 
 
Mexico 
------ 
 
¶6. (SBU) Mexico was unable to send a representative from the 
Energy Ministry and so a representative from the Ministry of 
Foreign Affairs stood in with a very broad and general 
assessment.  The representative highlighted recently passed 
renewable energy legislation as an important first step, but 
said that additional legislation is necessary to fully 
realize the potential for biofuels in the country. 
 
Dominican Republic 
------------------ 
 
¶7. (SBU) The Dominican Republic representative made a few 
significant announcements.  First, he announced that the 
government has decided to mandate at least a 3 percent 
ethanol blend to replace MTBE at the country's sole refinery, 
which will soon be 100 percent government owned, supposedly 
in long-awaited regulations from its recently passed 
renewable energy legislations.  Second, he highlighted a 
large scale ethanol project to produce up to 100 million 
gallons per year of ethanol, with 40 percent targeted for 
local consumption and 60 percent targeted for export under 
CAFTA-DR using previously fallow sugar plantations currently 
owned by the government's State Sugar Board.  He also 
highlighted a biodiesel project that is currently producing 
6,000 gallons/month and cited two pilot programs, one along 
the border with Haiti to produce cooking oil from jathropa 
plants through clusters of energy farms, and another for 
biodiesel production using sugarbeet, which he said had 
already produced results.  In addition to these announcements 
the Dominican representative discussed possible plans to 
convert the nation's buses to biodiesel, although no 
specifics were provided. (Comment:  Considering the lack of 
specifics presented by the Dominican government as recently 
as September 2007 in meetings with Embassy and visiting State 
Department officials on many of these same issues, this 
presentation marked a stark contrast with previous public 
statements about the potential and advancement of biofuels 
production in the Dominican Republic. That being said, most 
of the projects and initiatives he identified are still in 
the concept phase.  End Comment.) 
 
Belize 
------ 
 
¶8. (SBU) Belize's representative described his country's 
efforts to develop biofuels as just beginning, but cited a 
jathropa project that is under consideration by the 
government and noted the government's interest in 
rejuvenating its fallow sugar plantations.  Emphasizing 
Belize's interest in moving towards biofuels the 
representative noted that Belize currently spends 57 percent 
of its foreign exchange receipts on the importation of 
petroleum products and said he would welcome technical 
assistance from international organizations or other 
governments. 
 
El Salvador 
----------- 
 
¶9. (SBU) El Salvador's representative was highly enthusiastic 
and described a plethora of ongoing projects for both ethanol 
and biodiesel production.  He even noted the rising 
difficulty of coordinating the range of foreign assistance 
being pumped into El Salvador, including the U.S.-Brazil 
Biofuels Partnership as well as IDB and European assistance. 
Regarding local consumption El Salvador's rep highlighted a 
mandatory 10 percent ethanol mixture and 5 percent biodiesel 
mixture.  However, recognizing that these goals are 
ambitious, he noted the government's efforts to ensure price 
stability to achieve these goals.  In addition to producing 
for local consumption, he noted El Salvador's current and 
anticipated export goals for dehydrated ethanol from Brazil 
under CBI as well as the strong growth potential they see for 
biofuels exports under CAFTA-DR from new local production 
projects. 
 
Guatemala 
--------- 
 
¶10. (SBU) Guatemala's representative focused on the recent 
creation of its National Biofuels Commission (NBC) and on the 
transition of power to a new government early next year.  The 
representative noted that the NBC, which has been charged 
with all decision-making related to biofuels, is focused on 
providing a set of recommendations to the incoming 
government, hopefully by the end of this year, including a 
chronogram of necessary incentives and requirements for local 
production and consumption.  He said that the NBC was 
anxiously awaiting the IDB's technical assistance team's 
formulation of a National Action Plan for biofuels, but said 
that things were largely on hold at the government level 
until the transition to a new government is completed.  On 
the production side he said that there is already sufficient 
local production capacity to enact a 10 percent fuel blend, 
but said that the lack of government regulations and 
legislation poses a hurdle to private sector initiatives. 
 
 
Panama 
------ 
 
¶11. (SBU) Panama's representative gave a brief account of the 
country's progress touting its current capacity of four 
ethanol plants that produce up to 200,000 litres/day for 
local consumption and exportation.  Panama's representative 
focused on exports of ethanol that Panama hopes to generate 
under the new free trade agreement with the U.S. While she 
didn't rule out biodiesel production on a small scale, she 
said the government didn't believe that jathropa production 
is economically viable in Panama. 
 
Conclusionary Discussion 
------------------------ 
 
¶12. (SBU) Following the country presentations, as well as 
EconOff's presentation of the U.S.-Brazil Biofuels 
Partnership goals and implementation strategy, there was a 
wrap-up session to identify the way forward and address any 
outstanding issues.  During this session several of the 
sensitive political issues were raised, including what the 
impact on food prices is of subsidized corn-ethanol 
production in the U.S. and what the consequences would be of 
a U.S. administration change be on the U.S.-Brazil Biofuels 
Partnership.  Attendees appeared satisfied with EconOff's 
explanation of a continued commitment to promote renewable 
energies in Latin America that transcends poltical parties, 
and had little appetite for the discussion of food prices, 
which was dropped after only a couple of brief comments. 
There was a brief, but pointed, debate about the independent 
expert's presentation on sustainability of biofuels 
production  Unfortunately, there was no concrete decision on 
what the way forward should be for the group apart from 
agreement on continued technical assistance through the 
Secretary General of the System for Central American 
 
SIPDIS 
Integration, which is supported by the IDB.  That being said, 
participants largely appreciated the exchange of information 
and updates on biofuels initiatives and many participants 
made sideline agreements to share information more regularly 
on innovative or creative approaches. 
 
¶13. (SBU) Comment: With the exception of Costa Rica and to a 
lesser extent Honduras, the countries focused primarily on 
the positive developments and prospects for biofuels 
production and consumption.  However, if the Dominican 
Republic's optimism is any guide, many of the projects and 
initiatives discussed and touted by government 
representatives likely remain in the nascent developmental 
stage.  Participants were generally dynamic and looking for 
ideas to expand their production and consumption of biofuels. 
 Common themes across governments were the lack of clear 
regulatory frameworks as well as concerns about pricing 
structures, lack of standardization across Central America 
and infrastructure difficulties.  (Note: All PowerPoint 
presentations will be forwarded to the Department via email 
once received from the conference organizer in Guatemala. 
For additional information or to receive the presentations 
please contact Economic Officer, Hagen Maroney, at 
maroneyhd@state.gov.) End Comment. 
 
BULLEN