VZCZCXYZ0000
RR RUEHWEB

DE RUEHSN #0006/01 0061419
ZNR UUUAA ZZH
R 061419Z JAN 09
FM AMEMBASSY SAN SALVADOR
TO RUEHC/SECSTATE WASHDC 0547
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHME/AMEMBASSY MEXICO 6791
RUEHBR/AMEMBASSY BRASILIA 0155
RUEHPU/AMEMBASSY PORT AU PRINCE 0259
RUEHDG/AMEMBASSY SANTO DOMINGO 0788
RUEHKG/AMEMBASSY KINGSTON 0423
RUEHOT/AMEMBASSY OTTAWA 0362
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SAN SALVADOR 000006 
 
STATE FOR WHA/CEN, WHA/EPSC FAITH CORNEILLE, EEB/ESC/IEC/EPC MATT 
MCMANUS, BRIAN DUGGAN AND NOEL GURWICK 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ENRG EINV EPET ES
SUBJECT: OAS AND IOA HOLD REGIONAL CONFERENCES ON RENEWABLE ENERGY 
 
¶1.  SUMMARY: The OAS and the Institute of the Americas (IOA) 
organized two USG-funded regional conferences on renewable energy in 
San Salvador on December 11-12.  At the December 11 OAS conference, 
delegates from Central and North America discussed their current 
energy matrices and policies to improve cooperation and boost 
investment in renewable energy.  The IOA event brought a diverse 
group of energy specialists and private sector leaders to discuss 
global economic trends, regional integration and other factors 
affecting investment in renewable energy.  Speakers at the IOA 
meeting also provided numerous examples of renewable energy projects 
in Central America and illustrated the regional opportunities and 
challenges that face project developers.  Panelists at both 
conferences noted constraints posed by oil price volatility and the 
global financial crisis but underscored the long-term environmental 
and economic benefits of renewable projects.  During panels and 
separate press roundtables, biofuels consultants highlighted 
technical assistance projects promoting biofuels development under 
the U.S.-Brazil initiative.  END SUMMARY. 
 
¶2.  Ambassador Glazer joined Minister of Economy Ricardo Esmahan and 
OAS Executive Secretary for Integral Development Alfonso Quinonez to 
open the OAS Forum on Sustainable Energy for Central and North 
America on December 11.  In his remarks, Ambassador Glazer 
highlighted U.S. engagement in promoting renewable energy through 
support for sub-regional OAS meetings on renewable energy and 
technical assistance to promote biofuels under the U.S.-Brazil 
initiative.  To underscore U.S. sponsorship of both conferences, the 
Ambassador also hosted a reception on December 11 for guests from 
both events. 
 
HIGH POTENTIAL FOR RENEWABLES IN CENTRAL AMERICA 
--------------------------------------------- --- 
 
¶3.  During the opening panel, energy specialists from regional 
organizations noted Central America's dependency on oil imports and 
the expected doubling of energy demand over ten years, but 
underscored the high potential for renewable energy projects.  An 
energy specialist from the Central American Bank for Economic 
Integration (CABEI) estimated that Central America can potentially 
produce 36,000 MW of renewable energy, nearly six times current 
demand, with most of this potential - 31,000 MW - in hydroelectric 
projects.  Several panelists pointed out that carbon credits have 
increased the economic incentives for renewable projects and 
commented that environmental benefits will grow more important with 
increasing focus on climate change initiatives. 
 
¶4. Delegations and regional organizations discussed policies and 
programs for promoting renewable energy. Panelists from the 
Inter-American Development Bank and CABEI discussed regional 
programs for financing renewable energy projects.  The planning 
director from Mexico's energy agency described detailed energy 
conservation and diversification strategies that Mexico is 
implementing to reduce dependency on oil and lower its carbon 
footprint.  A generation company manager from Panama discussed how 
regulatory frameworks allowing long-term energy contracts have 
helped to encourage investment in Panama. 
 
TRANSPARENT RULES NEEDED FOR REGIONAL INTEGRATION 
--------------------------------------------- ---- 
 
¶5.  During the private sector forum organized by the Institute of 
the Americas on December 12, many speakers emphasized the importance 
of establishing a clear and consistent regulatory framework to 
encourage investment in renewable energy and regional integration. 
Several panelists noted that the Central American Energy Electrical 
Interconnection System (SIEPAC) is developing a regional 
transmission line, but participating countries have lagged in 
developing a regional regulatory framework necessary for regional 
energy markets to develop. 
 
¶6.  Some business leaders expressed doubts that Central American 
countries will agree to a regulatory framework to allow significant 
long-term trade in electricity within the region.  With regional 
leaders having diverse views on state intervention in markets, 
companies fear they may be reluctant to curtail their ability to 
restrict energy exports during energy shortages.  Nevertheless, 
U.S.-owned Cutuco Energy expressed confidence that a regional 
framework will be developed that will enable Cutuco to develop a 550 
MW gas-fired power plant in El Salvador targeting the regional 
market. 
¶7.  Panelists in both conferences commented that recent reduction in 
oil prices and credit shortages caused by the global financial 
crisis may delay future renewable energy projects.  Several noted, 
however, that those companies that can secure financing will find 
turbine and investment costs lower due to sharp cutbacks on new 
generation projects around the world.  A representative of 
Mesoamerica Energy discussed ongoing projects to develop 400 
megawatts in wind power projects in Central America, showing that 
wind energy remains economically viable despite low oil prices and 
financial constraints.  Speakers also emphasized that recent oil 
price volatility underscores the long-term need for energy 
diversification, and that energy policies need to rest on a 
long-term vision. 
 
U.S.-BRAZIL BIOFUELS INITIATIVE 
------------------------------- 
 
¶8.  During the IOA conference on December 12, consultants from 
Energy Security Group (ESG), Arkel Sugar and Winrock International 
discussed their projects to promote biofuels in El Salvador, Haiti 
and the Dominican Republic under the U.S. Brazil initiative.  David 
Walden provided an overview of prospects for biofuels projects in El 
Salvador, Haiti and the Dominican Republic and described Winrock's 
mission to identify technical assistance projects to promote 
biofuels in these three target countries.  ESG and Arkel consultants 
described their ongoing projects to develop an ethanol policy 
framework and conduct a feasibility study for sugar mills to invest 
in ethanol production.  Biofuels researcher George Philippidis 
presented a recent study showing high potential for ethanol 
production in Central America, once a supporting policy framework is 
established. 
 
¶9.  During two separate press round-table discussions, the biofuels 
consultants and EEB/EPSC Office Director Matt Rooney discussed U.S. 
involvement in promoting biofuels under the U.S.-Brazil partnership. 
 
 
¶10.  Presentations from both forums are available on the following 
websites: http://www.oas.org/dsd/reeep/ReunionElsalvado r.htm and 
http://www.iamericas.org/ presentations/energy/Salvador08/ 
 
 
Glazer