VZCZCXYZ0000
OO RUEHWEB

DE RUEHTG #1125/01 3502036
ZNR UUUUU ZZH
O 152036Z DEC 08
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9022
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RHEHNSC/NSC WASHDC
RHEHAAA/WHITE HOUSE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE USD WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS TEGUCIGALPA 001125 
 
STATE FOR WHA/CEN, TRANSISTION TEAM, WHA/EPSC, OES, EEB/ESC (Matt 
McManus) 
PASS USAID FOR EGAT, EE 
PASS PRESIDENT'S COUNCIL ON ENVIRONMENTAL QUALITY 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: BEXP ECON ENRG EINV KGHG KPAO SENV HO
SUBJECT: RENEWABLE ENERGY COOPERATION With HONDURAS 
 
REF: A. TEGUCIGALPA 963 
      ¶B. STATE 113530 
 
¶1. This is an action request.  See para 8. 
 
¶2.  Summary: Embassy Tegucigalpa is launching an initiative to 
deepen cooperation with Honduras on renewable energy.  Recent steps, 
such as the approval of a 100 MW wind energy project and Honduras' 
inclusion in the U.S.-Brazil biofuels assistance program, allow the 
Mission to capitalize on current momentum in favor of renewable 
energy to make the issue a positive pillar of the bilateral 
relationship while advancing U.S. global goals.  Honduras is 
currently highly dependent on imported oil and gas for meeting a 
significant proportion of its energy needs.  A strong case can be 
made for environmental, security and business reasons for Honduras 
to seek to promote renewable energy sources.  Post proposes to 
arrange a reverse trade mission, led by senior GOH officials 
(possibly including President Zelaya), to the National Renewable 
Energy Laboratory in Colorado.  We also intend to launch a public 
diplomacy campaign, support the hosting of a renewable energy 
conference, and lobby for government and private sector financed 
renewable energy projects.  Addressees are invited to comment on 
Post's ideas and suggest additional ways to increase linkages in 
this area.  End Summary. 
 
---------- 
Background 
---------- 
 
¶3.  Honduras has developed renewable energy projects with success 
over the last few decades.  With the construction of the El Cajon 
hydroelectric dam in 1985, Honduras integrated a major renewable 
source into its grid that then generated 75 percent of the country's 
electricity.  Over the last 20 years, however, priorities shifted; 
now about two-thirds of electricity is generated by burning imported 
fossil fuels, while about 8 percent comes from biomass and the rest 
from hydro sources.  The net result of this trend is that in 2007, 
Honduras, which has no oil or gas reserves, imported USD 1.375 
billion of hydrocarbon products; in the first half of this year 
alone, imports reached USD 1.25 billion because of the jump in oil 
prices.  This situation has significantly weakened Honduras' balance 
of payments, as well as contributed significantly to inflationary 
pressures. 
 
¶4.  In October 2007, the GOH passed a law to promote the generation 
of renewable energy by private developers.  An abundance of 
small-scale hydroelectric projects are in the pipeline, and the GOH 
recently approved a 100 megawatt wind project.  The Honduran 
Association of Renewable Energy Producers (AHPPER) estimates there 
is a medium-term potential for an additional 5,000 MW of wind and 
hydro energy in the country, as well as opportunity to begin 
development of solar and geothermal capacity.  But implementing 
regulations for the 2007 renewable energy law are yet to be 
promulgated, and projects continue to languish within the 
bureaucracy.  Current producers of fossil energy actively thwart 
development of small renewable projects. 
 
¶5.  Honduras also has considerable potential to produce biofuels -- 
both ethanol from sugar cane and biodiesel from African palm, 
jatropha, switch grass, and other sources.  Although there is no 
commercial-scale production yet, there are several small plants 
producing biodiesel on a trial basis for their own vehicle fleets or 
on-site power generation.  The United States and Brazil recently 
included Honduras in their biofuels assistance program; with the 
technical assistance and feasibility studies offered under this 
alliance, the GOH has additional opportunities to expand its 
renewable energy arsenal. 
 
-------------- 
U.S. Interests 
-------------- 
 
¶6.  A United States-Honduras renewable energy cooperation initiative 
will: 
 
-  Strengthen bilateral relationship with Honduras through joint 
promotion of renewable energy initiatives; 
-  Promote sustainable development and energy security in Honduras; 
-  Create new markets for U.S. renewable energy technologies; 
-  Demonstrate U.S. commitment to addressing climate change in 
Central America; 
-  Improve public health; and 
-  Reduce poverty in Honduras by reducing and stabilizing energy 
prices and giving poor, remote communities access to cheap, reliable 
power. 
 
-------------------------- 
Strategies for Partnership 
-------------------------- 
 
¶7.  Current circumstances provide the United States a unique 
opportunity to strengthen our bilateral relationship with Honduras 
while advancing U.S. global goals (climate change, energy security, 
sustainable development) through the promotion of renewable energy. 
The following strategies represent post's initial ideas to move this 
agenda forward: 
 
-  Establish partnerships within USG agencies.  The Mission will 
establish points of contact within Department of State (DOS) 
bureaus, U.S. Agency for International Development (USAID), 
Department of Commerce (DOC), Department of Energy (DOE), Department 
of Agriculture (USDA), Overseas Private Investment Corporation 
(OPIC), Office of Science and Technology Policy (OSTP), U.S. Trade 
and Development Agency (USTDA), Export Import Bank 
(EXIMBANK),President's Council on Environmental Quality (COQ), and 
others to coordinate USG renewable energy efforts in Honduras and 
maximize the impact of our investments. 
 
-  Identify local and international partners.  Several organizations 
are already working to support and finance renewable energy 
initiatives in Honduras, including the World Bank, Inter-American 
Development Bank, Central American Bank for Economic Integration, 
the United Nations Development Program, and bilateral donors.  The 
Mission will research existing programs and develop complementary 
partnerships with these organizations. 
 
-  Establish Renewable Energy Working Group.  Regular meetings will 
be held with government, industry, and other partners in the 
renewable energy sector in Honduras.  We will identify areas of 
shared interest and coordinate efforts where appropriate. 
 
-  Encourage Honduras to take full advantage of the US-Brazil 
biofuels initiative.  Honduras agreed to participate in the second 
tranche expansion of projects under this program.  The United States 
funds technical assistance and consultation efforts for target 
countries as they design and implement biofuels legislation and 
projects. 
 
-  Lobby for approval of renewable energy projects. According to 
AHPPER, dozens of projects with a total generating capacity of 125 
MW have completed all regulatory requirements but are waiting - in 
some cases for several years - official GOH approval.  In addition, 
biofuels capacity is sitting idle for lack of market-friendly rules 
to permit its commercialization. 
 
-  Organize Reverse Trade Mission to National Renewable Energy 
Laboratory (NREL).  A delegation possibly led by President Zelaya to 
NREL and renewable energy installations in the region will foster 
understanding among GOH officials and private sector participants. 
The President and relevant ministers have expressed interest in this 
idea. 
 
-  Coordinate Trade Mission to Honduras.  DOC will bring a selection 
of U.S. renewable energy firms to make contacts and identify 
potential exports to Honduras. 
 
-  Promote favorable policies.  The Mission will organize a 
renewable energy policy conference/exhibition, involving experts and 
industry figures, to educate the Honduran public and policymakers on 
the benefits of renewable energy and the sorts of policies necessary 
to promote its development.  We will also bring in periodic speakers 
with expertise on different aspects of renewable energy technology 
and policy. 
 
-  Initiate Ambassador's Clean Energy Award.  The Mission will 
identify Honduran government agencies, firms, business associations, 
and NGOs who are leading the way in the development of renewable 
energy in the country.  An award will be given annually to one of 
these innovative partners at a reception hosted by the Ambassador. 
 
- Launch public diplomacy campaign.  The Mission plans to launch a 
major public diplomacy campaign making the climate change, security, 
and business case for renewable energy.  The Mission has drafted a 
speech and talking points for use by the Ambassador and Country Team 
 
members in reaching out to local audiences. 
 
-------------- 
Action Request 
-------------- 
 
¶8.  Post seeks reactions from Washington agencies to the initiatives 
proposed in para 7.  Post also welcomes any suggestions for 
additional ways to increase linkages in this important area, 
including points of contact from other USG agencies.  Contact Sarah 
Duffy at DuffySA(at)state.gov  for more information.  Post looks 
forward to working with addressees on this important matter.  End 
Action Request. 
 
LLORENS