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UNCLAS BOGOTA 002834 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG SENV PGOV ECON CO
SUBJECT: COLOMBIA: BIOFUELS MEANS JOBS IN POST-CONFLICT 
ZONES 
 
¶1.  (U) Summary.  Environment Minister Carlos Costa recently 
highlighted for us the rationale behind Colombia's biofuels 
policy:  1) create jobs in rural and post-conflict zones; 2) 
remain self-sufficient as an energy producer; and 3) protect 
the environment.  The policy has been bolstered by Colombia's 
success in providing in major cities a 10 percent mix of 
ethanol (E10) from sugarcane in gasoline pumps and a 5 
percent mix of biodiesel (B5) from palm oil in diesel pumps. 
Colombia's mandate for biofuels for 2012 and 2015 are E15/B15 
and E20/B20 levels respectively, which may be overly 
ambitious.  End Summary. 
 
--------------------------------------------- --------- 
Economic Development in Rural and Post-Conflict Zones 
--------------------------------------------- --------- 
 
¶2.  (U) Minister Costa told Econoffs on August 27 that the 
GOC's primary reason to invest in and expand the biofuels 
sector is to create jobs in rural areas and post-conflict 
zones.  According to the Colombian Association of Sugarcane 
Cultivators (Asocana), the sugarcane industry employs 36,000 
direct employees and over 212,000 indirect employees.  The 
palm oil industry employs more than 42,000 direct employees 
and 63,000 indirect employees.  Both industries, which are 
located in rural areas, have been expanding into 
post-conflict zones, creating a licit economy with social 
programs that benefit the communities and providing 
additional revenue streams to poor municipalities. 
Colombia's initiative to increase biofuel levels will expand 
cultivation and production further into the rural and 
post-conflict zones (e.g., Narino, Valle de Cauca, Meta, 
Casanare) and create much needed employment. 
 
¶3.  (U) Small farmers also are enjoying the benefits of the 
biofuel boom.  According to the Federation of Palm 
cultivators and producers (Fedepalma), small farmers have 
united to form alliances to create better economies of scale 
and become more competitive.  There has been a major increase 
in the participation of small farmers (with less than 20 
hectares), generating 18.4 percent of Colombia's palm oil 
production in 2008 compared to 3.7 percent in 1999.  (Note: 
Under Plan Colombia, USAID has assisted at least 80 percent 
of the small farmer alliances, which account for an estimated 
50,000 hectares of palm cultivation.  End Note.) 
 
------------------------------- 
Remain a Net Exporter of Energy 
------------------------------- 
 
¶4.  (U) The second priority in expanding biofuels production, 
according to Minister Costa, is to remain self-sufficient as 
an energy provider.  The GOC expects to continue to be a net 
exporter of oil and gas through at least 2019.  These 
predictions continue to change as more, but smaller, oil and 
gas fields are discovered.  That said, Colombian authorities 
maintain that the country needs to complement its oil and gas 
reserves with biofuels.  The largest consumer of petroleum 
products is the ever-expanding transportation sector. 
Ethanol and biodiesel, however, are still priced higher than 
their counterpart fuels, but Costa noted that a greater 
increase in supply should reduce biofuel prices. 
 
¶5.  (U) Currently, there are 337,000 hectares of palm under 
cultivation and more than 205,000 hectares of sugarcane. 
Minister of Mines and Energy Hernan Martinez told us that the 
objective over the next 20 years is to convert three million 
hectares of fallow cattleland into sugarcane and palm fields 
for the production of ethanol and biodiesel. 
 
¶6.  (U) The sugar and palm oil producers are encouraged by 
Colombia's success in providing in major cities a 10 percent 
mix of ethanol (E10) from sugarcane in gasoline pumps and a 5 
percent mix of biodiesel (B5) from palm oil in diesel pumps. 
Colombia's mandate for biofuels for 2012 and 2015 are E15/B15 
and E20/B20 levels respectively.  Biofuel experts we 
consulted estimated the targets are overly ambitious given 
the available technology in country. 
 
----------------------- 
Protect the Environment 
----------------------- 
 
 
¶7.  (SBU) Minister Costa acknowledged the potential hazards 
of what an increase in biofuels may have on the environment, 
particularly deforestation.  In an attempt to mitigate this 
hazard, the Ministry of Environment and the Institute of 
Hydrology, Meteorology, and Environmental Studies (IDEAM) 
have created a map of Colombia that charts areas for palm and 
sugarcane expansion.  The biofuels plan seeks to avoid 
deforestation and use fallow cattleland and grasslands, 
generating a neutral or beneficial impact.  Stakeholders in 
both industries are reviewing the map. 
 
¶8.  (SBU) Costa is also interested in an environmental and 
social certification program for the biofuels industry. 
Norms have yet to be decided, but he cited European standards 
as a possibility.  Econoffs noted that pilot projects of the 
World Wildlife Fund and the Rainforest Alliance are 
establishing an environmentally-friendly certification 
process for palm oil producers.  If successful, the palm oil 
industry could rebrand itself, since its image has suffered 
within the NGO community.  (Note: NGOs have accused the palm 
industry for environmental damage of monocroping, displacing 
people to acquire more land, and disproportionately favoring 
large landowners.  End Note.) 
 
¶9.  (U) Both industries are conscious of the environment and 
are looking for ways to reduce their carbon footprint. 
According to Asocana, most Colombian ethanol mills are energy 
self-sufficient and use bagasse -- a byproduct of ethanol 
production -- to generate the power for their plants. 
Surplus bagasse-based power is sold to the national electric 
grid. 
 
¶10.  (U) The palm oil industry, led by Fedepalma, is looking 
to become energy self-sufficient through a recently approved 
UN Clean Development Mechanism (CMD) umbrella project.  This 
project will capture methane from the residual pool of 32 
palm oil plants and use the captured methane in cogeneration, 
powering the palm oil plants and providing surplus energy to 
the national grid.  In May 2009, the UN's Executive Committee 
for the Clean Development Mechanism (CDM) approved 
Fedepalma's project, making the Colombian initiative the 
largest sectoral CDM project registered by the UN Framework 
Convention on Climate Change. 
 
--------------------------------------------- - 
Comment:  Opportunities for Energy Cooperation 
--------------------------------------------- - 
 
¶11.  (SBU) Post is exploring potential areas of cooperation 
to best match Colombia's agenda with the Administration's 
goals under the Energy and Climate Partnership of the 
Americas.  Areas of interest here in Colombia are biofuels, 
wind, geothermal, carbon/methane capture, trans-border 
electricity transmission, green cities, and the 
privatization/reforming of state-owned utility and energy 
companies. 
 
 
 
 
Brownfield