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Laura Bocalandro Coordinator Regional Public Goods Program

Funding Opportunities for Latin American and Caribbean Energy Infrastructure FIER 2008 - Buenos Aires, Argentina. Laura Bocalandro Coordinator Regional Public Goods Program. Roadmap. Energy market: demand and supply » Energy needs by source » Challenges and potential for LAC

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Laura Bocalandro Coordinator Regional Public Goods Program

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  1. Funding Opportunities for Latin American and Caribbean Energy InfrastructureFIER 2008 - Buenos Aires, Argentina Laura Bocalandro Coordinator Regional Public Goods Program

  2. Roadmap Energy market: demand and supply »Energy needs by source » Challenges and potential for LAC »A preliminary assessment IDB, a partner in energy for the LAC region »Lending and instruments »The regional plus »Conclusions 1

  3. Roadmap Energy market: demand and supply »Energy needs by source » Challenges and potential for LAC »A preliminary assessment IDB, a partner in energy for the region »Lending and instruments »The regional plus »Conclusions 2

  4. The energy market: demand and supply Projections »LAC energy demand in 2030 will be 75% higher than in 2004 » Electricity production will expand approximately 50% in next 10 years »Transportation fuel use is expected to increase by 70% until 2030 Source: International Energy Agency Diversification of energy matrix »To meet increasing demand, LAC should diversify its energy matrix and improve efficiency »Required investment: US$ 1,600 billion »Energy Intensity in LAC differs significantly between countries » Within the whole mix, EE is the most cost effective option 3

  5. The oil business: challenges and opportunities Western Hemisphere 2020 Scenario 40000 Consumption (mbpd) 35000 30000 Imports (mbpd) 25000 20000 Production (mbpd) 15000 10000 Source: BP Statistical Review of World Energy June 2007 Courtesy: Ramón Espinasa - IDB 4

  6. The oil business: challenges and opportunities North America 30000 2020 scenario Consumption (mbpd) 25000 Imports (mbpd) 20000 15000 Production (mbpd) 10000 Source: BP Statistical Review of World Energy June 2007 Courtesy: Ramón Espinasa - IDB 5

  7. The oil business: challenges and opportunities South America 15000 Scenario 2020 12000 Production (mbpd) 9000 Exports (mbpd) 6000 3000 Consumption (mbpd) 0 Source: BP Statistical Review of World Energy June 2007 Courtesy: Ramón Espinasa - IDB 6

  8. Electricity: the blue advantage Evolution of Electricity Generation by source - Latin America - The other “squeeze”: Climate Change Source: OECD/IEA, 2007 7

  9. Renewable energies: the green advantage Primary Energy Supply 100 80 60 % 40 20 0 Andean Caribbean Central Southern Mexico LAC Region America Cone Fossil Fuel Renewable Energy 8

  10. Energy efficiency: the untapped potential »Energy Efficiency is the most cost effective option to partly meet growing demands »Energy Efficiency is the cleanest source of energy » Energy Efficiency is the quickest source of energyto deploy » Amongst others, EE is on the forefront to secure energy supply » Regulatory, financial and operational frameworks need to be established » Strong international cooperation necessary to support project preparation financing and technology transfer 9

  11. Challenges for the LAC region • »Achieve sustainability of energy supply and rational use of resources • »Energy access for all the population • »Within the region some countries face: • Energy security issues and high energy bills • Urban pollution problems and extreme vulnerability to climate change • »Regulatory and institutional frameworks • »Pre-investment resources to support project preparation and development 10

  12. Energy: Importance for Poverty Alleviation »Energy security has important implications on poverty »Approx. 10% of total population (50 million people) do not have electricity »Poverty relief linked to increased energy consumption »For the 16 countries that are net importers of oil, the price increase of hydrocarbons poses an increasing challenge »Some of LAC’s major exporters are experiencing reduction in the productivity of their deposits Sustainable Energy: A priority for the IDB 11

  13. Taking advantage of the LAC potential Supply and Demand balance achieved through RE and EE Global energy scenarios for 2050 12

  14. A preliminary assessment • »The Western Hemisphere is an energy net importer • • The deficit originates from the energy gap of North America • • With declining stocks, this gap will tend to widen with time • • That gap can be filled through increased exports from South America • »For South Americato double its production, investments need to be increased by 60% • »Climate Change is likely to add extra strain to the energy deficit • »Renewable Energies and Energy Efficiency will contribute to cover the energy deficit Climate Change Mitigation and Adaptation are becoming part of Energy Security strategies 13

  15. Roadmap Energy market: demand and supply »Energy needs by source » Challenges and potential for LAC »A preliminary assessment IDB, a partner in energy for the LAC region »Lending and instruments »The regional plus »Conclusions 14

  16. IDB lending to Energy (1998-2007) US$ Million 15

  17. IDB Support Instruments Financial Products » Public Sector Loans (with and without sovereign guarantees) »Private Sector Loans »Political Risk Guarantee » Financial Guarantees in Local Currency »Infrastructure Funds ex.: CAMIF Technical Assistance » Regional Public Goods Initiative(RPG) » Sustainable Energy and Climate Change Initiative (SECCI) » Infrastructure Fund (InfraFund) »Regional Integration Infrastructure Fund (FIRII) »Fiduciary Funds (50 funds from 18 non-borrowing member countries) 16

  18. The regional plus: RPG Regional Public Goods Initiative • » Supports the institutional development processes for the creation of regional policy solutions • » Works on the premise that: • It helps establish the rules of the game among the participating countries, and • Investors perceive a lower level of risk, and therefore, investment follows • » Key elements of the RPG Program: • coordination and collective action among participating countries • ownership • south-south innovation • the solutions at the pre-investment phase • bottom-up or mixed bottom-up/top-down approaches 17

  19. Regional Public Goods and Cooperation Regional EnergyInformation System ($750,000) • » Develop a Regional Information System for Energy as a platform for public and private programs of expansion and improvements of the infrastructure • » Support the regional planning matrix on energy for LAC with information on: • Supply energy from different sources • Demand energy to different sectors • National and transnational investments on energy • »Initial participating countries are: Argentina, Brazil, Chile, Colombia, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Jamaica, México, Nicaragua, Panamá, Paraguay, Peru, Dominican Republic and Uruguay Energy Efficiency for Caribbean Water and Sanitation Companies ($435,000) » Improve energy efficiency, reduce energy costs and GHG emissions within the water and sanitation sector in the Caribbean through an action plan to increase energy efficiency »Initial participating countries are: Bahamas, Barbados, Guyana, Haiti, Suriname, Jamaica, Trinidad and Tobago 18

  20. The regional plus: IIRSA and PM IIRSA »The Integration of Regional Infrastructure in South America initiative supports regional integration » Includes Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela »Has three core focus areas: transport, energy and telecommunications PM (Ex-PPP) »The Mesoamerica Project initiative supports regional integration »Includes Belize, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, México, Nicaragua and Panamá »Highlights eight areas: transport, energy and telecommunications, trade facilitation, health, natural disasters, sustainable development and social housing 19

  21. Regional financing for Mesoamerica » SIEPAC: US$380 million; IDB loan US$240 million » México-Guatemala Interconnection: US$43 million; IDB loan US$38 million »Panamá – ColombiaInterconnection: Investments for US$200 million; IDB is financing the technical, economic and financing feasibility studies, the social and environmental impact study and the regulatory harmonization » IDB support the Energy Directors and the institutional committee (SG-SICA, SIECA, CCHAC, CEAC, CEPAL, INCAE, BCIE, AID) for the development of the Matrix for the Integration and Energy Development of Central America 21

  22. Regional financing for South America (US$ million) »Argentinean Northeast Gas pipeline (AR/BO) 1,400 »Garabí Hydroelectric Power Plant (AR/BR) 3,600 » Corpus Hidroelectric Power Plant (AR/PR) 2,400 » Liquefied Natural Gas Terminal (AR/UR) 700 (Technical, economic and financing feasibility studies) 22

  23. Conclusions »LAC requires significant investments in the Energy Sector to match demand growth »Energy efficiency is an effective option to adjust demand growth and reduce supply gaps »IDB provides support for: • Public and private Investments (financing and guarantees) • Technical Assistance (e.g., RPG, SECCI, InfraFund, FIRII) • Focus on the strengthening of the regional framework for energy cooperation • Emphasis on energy efficiency, diversification of energy sources, social and environmental sustainability The IDB is a partner in energy for its member countries at the national and regional levels Committed to support energy efficiency and infrastructure 23

  24. Inter-American Development Bank www.iadb.org

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