A BLUEPRINT FOR GREEN ENERGY IN THE

AMERICAS VOLUME ONE

2009
Strategic Analysis of Opportunities Prepared
for The Inter-American Development Bank by:

GARTEN ROTHKOPF
Blueprint for Carbon Markets | Section 7 i
A BLUEPRINT FOR GREEN ENERGY IN THE

AMERICAS
A Letter to the Readers of
A Blueprint for Green Energy in the Americas
This second edition of A Blueprint for Green Energy in the Americas explores a vital, rapidly changing subject
in the only way that effective analysis of an issue of such scope is possible: through an extraordinary and
wide-ranging collaboration. The first part of that collaboration is our work with the Inter-American
Development Bank. The IDB’s president Luis Alberto Moreno, since taking the helm of the bank, has made the
development of green energy and the preservation of Latin America’s extraordinary resources one of the
institution’s top priorities. The bank’s board and its staff have joined in, shaped, and built upon that
commitment to create programs of real impact.

This report is a product of the bank’s commitment to sustainable growth throughout the Americas. However, it
should be noted at the very outset, the report is not a product of the bank. Rather, in order to ensure that they
are working with the latest thinking and the broadest array of views, the bank has asked our firm, Garten
Rothkopf, to provide a report to them that represents a full range of outside perspectives. Needless to say no
report on such a complex subject, even a fairly extensive one, can hope to be comprehensive. Rather, what
you will find here is illustrative, and a hopefully a source of useful insights from experts throughout the
Americas and around the world. It is important to underscore, however, that the views in this report are not
those of the IDB; rather, they are offered to assist the bank in shaping internal positions and in keeping up with
worldwide developments.

To prepare the report, Garten Rothkopf analysts have worked directly with over 300 experts, including
scientists, technology specialists, senior government officials, business leaders, investors, representatives of
non-governmental organizations, and academics. We conducted four major scenario events at the IDB, which
gathered viewpoints from over 150 ministers, CEOs, Chief Investment Officers, and lead technologists on key
issues and likely developments in the region. We not only sought expert insights, but we also had selected
experts review sections of the text to ensure they were up to date and represented as many key viewpoints as
possible.

The approach and structure of the book itself is also a consequence of the collaboration with the IDB. The first
edition of the Blueprint, which was published in 2007, focused primarily on biofuels in the Americas. Nothing
better illustrates the volatility of the issues associated with green energy than the wild ride that atittudes on
biofuels have taken in the interim. When we started, they were a subject for specialists. When the book came
out, they were at the center of a worldwide frenzy of interest. In the months that followed, they were subject to
a backlash because of some reasonable concerns (that they needed to be produced sustainably, and that
some biofuels feedstocks and technologies were neither efficient nor ready for prime time), and some
unreasonable ones (a widespread view—that later turned out to be undercut by events—that the biofuels
boom was playing a primary role in pushing up food prices). Today, finally, a more reasoned and rational view

A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf iii
 of the substantial promise of biofuels (when handled responsibly and with appropriately measured
expectations) is emerging. Fortunately, that is the view we encouraged in the first volume of the “Blueprint,”
and we believe it illustrates the benefits of remaining objective and evidence-based in the assessment of a
field that is today the subject of much hype and passion. The primary reason for pulling together such an
extensive volume is to help policymakers and business leaders in their important efforts to drill down to the
core truths they will need to make sound decisions for the future.

Readers will note that the book itself is also not organized to cover each technology or set of policy options in
each country. Rather, the leadership at the IDB has requested that the report reflect the structure of their
centerpiece Sustainable Energy and Climate Change Initiative (SECCI). Thus, the body of the report focuses
on several of the key pillars of that effort – renewable energy, biofuels and carbon finance. In each case, we
were asked to illustrate the coverage with examples of countries in the region that were active with the
technologies or policy options being covered. As a consequence, not every country in the region is covered,
but it is our sense that the vast majority of those that are most active are. Further, of course, not every detail of
every initiative in every corner of the Americas could possibly be covered here; rather, we have tried to find
those that provide useful insights into the state of activity in countries of different types, with different
resources, and with different sets of concerns and priorities.

Overall, the structure of the report builds around this SECCI core with several other elements. The report
begins with an executive summary that highlights key findings and recommendations. That summary is then
followed with a series of essays. While this is rather unorthodox in a report of this nature, we felt that given the
subject matter involved that it would be useful to look in depth at some of the cross-cutting questions with the
greatest resonance to those with active interests in the green energy in the Western Hemisphere. One such
essay looks at whether Latin America is treating the issue with the urgency it deserves. Another deals with the
fact that many of the most important core concepts associated with this green revolution are not new at all,
and that they in fact were well known to indigenous peoples of the Americas and worldwide many centuries
ago. Another deals with an area of great opportunity, which we call micro-energy, and examines the ways new
energy technologies and distributed grid-thinking can bring power to the millions of people in the hemisphere
(and worldwide) who have none and do so sooner, cheaper and more sustainably than traditional approaches.
Yet another essay deals with the potential to apply a portfolio approach to the development of national energy
strategies.

The one essay yet to be mentioned deals with a theme that has become central to the book: the relationship
between green energy and growth. As this book is being published, the world is in the throes of an economic
crisis that looks likely to be sustained and to deepen for some time before recovery begins. Leaders
everywhere are seeking both to offset the impact of the downturn and to lay the foundations for future growth.
A recurring theme in this regard is associated with the subject of this book: green energy and climate change.
New attitudes, innovation, regulation, investment, and growth in these areas suggest that they will be the
source of many new jobs and indeed of new industries worldwide. As a consequence, the book contains a
series of green boxes that focus on ideas that could be useful to policymakers when considering their own
green stimulus and green recovery options.

The essays are followed by a summary of the scenario exercises mentioned earlier, which are, in turn,
followed by the body of the text. In the course of that body we cover six different core energy technologies
that are central to the IDB’s thinking—small hydro, geothermal, wind, solar, wave, and biofuels and bioenergy.
A total of 16 country case studies examine the developments and challenges for these technologies and the
related issue of carbon finance. As a consequence, the book not only covers a wide range of key issues and
questions, but it also offers an overview of how half the world is dealing with one of the great challenges of
our time.

iv A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

Given the enormous amount of activity in the areas covered by this book and the likely increases in
investments and project volume that will take place as leaders throughout the region implement new policies,
a book like this can only hope to offer a snapshot of a scene that is rapidly changing. Over time, updates and
future volumes will be required, including a focus on the critical issues of energy efficiency and the greening of
traditional energy sources. Indeed, one of the key challenges our research identified was the great difficulty
that even the most informed policymakers in the Americas have with remaining current on issues that involve
so many scientific, technical, business, investment, social, and other complexities. As a firm that has as its
largest practice a specialization in worldwide developments, opportunities, challenges, and trends in the area
of green energy and climate change, Garten Rothkopf is acutely aware of how daunting that challenge can be,
especially given that many of the most important facts come shrouded in hyperbole, the self-interested
pleadings of special interests, and uncertainty. It is our hope that this book contributes to both better
understanding in this area and ultimately to efforts that will seize the promise of the energy alternatives
explored here to provide a more sustainable, prosperous future for the Americas.

Finally, we want to offer our own personal thanks to the team that put this book together, our terrific group of
analysts and researchers in Washington, New York, and San Francisco. We especially would like to highlight
the leadership, creativity, and professionalism of Claire Casey, our Senior Vice President who leads our green
energy practice. These books are very much the reflection of many, many hours of great work by a dedicated
team and we are very grateful to them.

JEFFREY E. GARTEN
DAVID J. ROTHKOPF

Winter 2009
Washington, DC

A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf v

vi A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Table of Contents

VOLUME ONE

1 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2 Essays on Major Themes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

2.1 Green Urgency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.2 The Microenergy Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.3 Improving Energy Security: A Portfolio Approach to Energy Resource Management . . . . . . . . . . . . 65
2.4 The Culture of Green . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
2.5 Energizing Qualities of Green T[echnology] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

3 Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
3.1 Scenarios for Green Energy in the Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
3.2 Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
3.2.1 Pale Green . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
3.2.2 Out of the Blue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
3.2.3 Myths, Misconceptions, and X-Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
3.2.4 Bright Green . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

4 Global Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

4.1 Drivers of Global Energy Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
4.2 Small Hydropower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
4.3 Geothermal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
4.4 Wind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
4.5 Solar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
4.6 Marine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
4.7 Biofuels and Bioenergy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf vii
Table of Contents

VOLUME TWO

5 Blueprint for Renewable Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
5.2 Key Factors Influencing Renewable Power Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
5.2.1 Global and Regional Electricity Supply and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
5.2.2 Renewable Resource Endowments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
5.2.3 Renewable Power Investment and Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
5.2.4 Electricity Market Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
5.2.5 Renewable Power Policy Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
5.2.6 Social and Economic Impacts of Renewable Power:
Rural Electrification and Green Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
5.3 Renewable Power Technology Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
5.3.1 Renewable Power Research and Development Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
5.3.2 Emerging Renewable Power Technologies – Small-Scale Hydropower . . . . . . . . . . . . . . . . 293
5.3.3 Emerging Renewable Power Technologies – Offshore Wind Power . . . . . . . . . . . . . . . . . . . 297
5.3.4 Emerging Renewable Power Technologies – Concentrating Solar Power . . . . . . . . . . . . . . 302
5.4 Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
5.4.1 Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
5.4.2 Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
5.4.3 Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365
5.4.4 Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389
5.4.5 Guatemala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423
5.5 Conclusions and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451

6 Blueprint for Biofuels and Bioenergy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495

6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496
6.2 Macro Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497
6.2.1 Economic Trends: The Impact of Commodity Prices on Food and Feedstocks . . . . . . . . . . 497
6.2.2 Environmental Policy Trends: Determining the Impact of First Generation Biofuels . . . . . . . 502
6.3 The Next Generation of Biofuels – Overcoming First-Generation Barriers
Through Technology and Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519
6.3.1 Biofuels for Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519
6.3.2 Biofuels for Electricity and Thermal Power Generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
6.4 Trends in Latin American Biofuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545
6.4.1 Drivers in Biofuels Development in a Petroleum-Based Region . . . . . . . . . . . . . . . . . . . . . . 551
6.4.2 Agricultural Resource Endowments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552
6.4.3 Potential Social Impacts of Biofuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554

viii A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
 6.4.4 Potential Environmental Impacts of Biofuels Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556
6.4.5 Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560
6.4.6 Financing Feedstock and Capacity Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563
6.4.7 Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568
6.4.8 Conclusions and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579
6.5 Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .581
6.5.1 Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581
6.5.2 Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618
6.5.3 Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 648
6.5.4 Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 677
6.5.5 Honduras . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
6.5.6 Dominican Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717
6.6 Conclusions and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731

7 Blueprint for Carbon Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 763

7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 764
7.2 Global Carbon Markets – Latin America in Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767
7.2.1 Where We Stand Today . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767
7.2.2 A Short History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 768
7.2.3 Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769
7.2.4 Mandatory Allowance-Based Emissions Schemes Worldwide . . . . . . . . . . . . . . . . . . . . . . . 773
7.2.5 Voluntary Carbon Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 776
7.2.6 Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 782
7.3 Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 785
7.3.1 Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 785
7.3.2 Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 798
7.3.3 Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 805
7.3.4 Honduras . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 814
7.3.5 Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 823
7.4 Global Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 833
7.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 833
7.4.2 People’s Republic of China (PRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 833
7.4.3 India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 841
7.4.4 Latin America and Asia Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 847
7.5 Conclusions and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 853

A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf ix

x A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
SECTION ONE
EXECUTIVE
SUMMARY

Executive Summary | Section 1 1

A Blueprint for Green Energy in
the Americas
In 2007, Garten Rothkopf prepared for the IDB the first
edition of A Blueprint for Green Energy in the Americas.
Neither the IDB nor the authors anticipated the
exceptionally positive response the book would get.
Clearly, there is a great and rapidly growing demand for
fact-based, hype-free analysis of what is happening in the
areas of energy choice and climate change in the region.
As a consequence, the IDB has commissioned another
edition, this year’s focusing on all forms of alternative
energy. The objectives, unlike last year’s book, are to focus
on who is leading the way in each area, what the overall
trends are, what the obstacles to further progress seem to
be, and how these fit with the mission of the Bank and the
goals of its member countries.
scrupulously objective, technology-agnostic, and focused
on the pros and cons associated with each technological
approach. We have also sought to evaluate trends in terms
of the differing needs and challenges associated with
individual countries. There are no magic bullets. There is
no one-size-fits-all solution to rapidly reduce carbon
emissions and meet, with greener technologies, the
energy needs of a rapidly growing and changing region.
Each country must adapt a portfolio approach (see
Section 2.3 on this subject) and do so in a careful yet
timely way (see Section 2.1, on the urgency of greener
energy throughout the Americas). We believe this report
can be a useful resource in helping each country, and
companies within each country, to make key decisions
that will lead them forward in what is certain to be a
revolution that will change every country of the Americas
in profound and lasting ways.

The resulting study is even more comprehensive than last

year’s, but it needed to be. This is a huge subject, and the
issues involved are absolutely vital to the energy security,
economic security, and environmental security of every
country in North and South America. In order to make the
information in the Blueprint as accessible and useful as
possible, not only has the book been carefully organized,
indexed, and footnoted, but this detailed executive
summary has been prepared.

The summary is followed immediately by a series of five

essays that explore key themes that have arisen in the
year of research that Garten Rothkopf has conducted
while preparing this year’s edition of the Blueprint. Each of
the essays looks at a cross-cutting idea that will help
frame the more technical assessments and
recommendations that follow.

Immediately following these essays is a summary of four

important events that shaped the study, a series of
scenarios with government, technical, business, and
investment leaders that were conducted at the
headquarters of the Inter-American Development Bank.
These scenario exercises explored just what was driving
the growth of green energy in the Latin America and the
Caribbean, what was impeding it, and where hidden
opportunities might lie. The more than 150 participants
included cabinet ministers, undersecretaries, CEOs,
leading scientists, portfolio managers, and others who
shared their views with the Bank and made the events into
a great success.

What follows is the body of the book, organized around

sources of energy and, within each of those sections, by
country. Throughout, the mandate has been to be

2 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

Executive Summary Perspectives on Green Energy and Climate
Change in LAC: Essays on Major Themes
Latin America and the Caribbean are lagging behind in the
global green energy revolution. By any metric, whether it be Green Urgency
capturing a share of the $148.4 billion in new investment A direct human cost to climate change is being felt in Latin
last year, developing and deploying new technologies, America and the Caribbean, with millions of lives affected
participating in carbon markets or establishing supportive each year by natural disasters of increasing intensity. The
policy and regulatory frameworks, the region IPCC and others have projected that if we continue on our
underperforms its competitors. And yet, thanks to its vast current course, the future will promise more severe
natural resource endowment, there is no other region on droughts, heat waves, and tropical cyclones, among other
earth that has greater potential to transform its energy phenomena, putting the development imperatives of the
matrix, leapfrog old technologies, and establish new region at risk from rising sea levels, crop failures, water
engines for economic growth and social development. shortages and the proliferation of diseases. Green
Urgency examines the ways in which climate change
This potential becomes all the more important in the midst affects countries in the region, its anticipated future
of a global economic downturn. The crisis is forcing impact, strategies for mitigation and adaptation, and the
governments around the world to assess their policy potential opportunity to be seized by building on the
choices and take major decisions on how to best spur region’s low emissions profile and advancing a favorable
growth over the long term, including infrastructure agenda in global climate talks.
development, investment promotion, and technology. It is
an opportunity to map out a smart, green recovery that The Microenergy Opportunity
creates new jobs, enhances competitiveness and reduces The advent of microenergy — small scale, decentralized
their strategic vulnerabilities. Institutions like the Inter- energy systems fueled primarily by renewable energy
American Development Bank will have a critical role to play sources — presents an opportunity to leapfrog the
in addressing both the short term challenges of access to traditional model of electricity grid-expansion and
capital, and the long-term strategic planning for a greener, accelerate the spread of modern energy to millions in the
more competitive future for the region. Americas and worldwide. This essay examines this
microenergy opportunity. It highlights the potential
Chart 1.0a Global CDM Projects per Year developmental impact of extending modern energy
services to the 1.6 billion people who currently lack access
1,400 to electricity and explains why microenergy’s
1308
LAC developmental, decentralized, and diversified model
1,200 Rest of World

1,000
887 Chart 1.0b Annual Growth in Renewable Power Capacity
800 (2004-2007)
600
461 Rest of 13.7%
400 World

200 30% LAC 9.4%

34%
62 48%
0 44%
2005 2006 2007 2008 0 5% 10% 15%

Chart 1.0c Global Renewable Power Investments Chart 1.0d Total Global Commissioned Biofuels Projects
160
100 LAC
$87 155
Rest of World 120 Rest of World
80
US$, Billions

LAC 104
60
80
$41 51
40
$28
40 29
20 $12
0.02% 2.22% 1.31% 2.85% 0 10% 24% 20% 13%
0
2004 2005 2006 2007 2004 2005 2006 2007
Sources: REN21, New Energy Finance, World Energy Council, CAMMESA, MEM, International Geothermal Association, Geothermal Resources Council,
Polaris Geothermal, Business News Americas, OLADE, Global Wind Energy Council, Latin America Wind Energy Association, ANES, MEM, SEFI

Executive Summary | Section 1 3

represents a marked improvement over traditional grid-
based energy infrastructure, particularly in rural,
impoverished areas. Small and medium-sized enterprises
(SMEs), rather than large utilities, have been and will likely
continue to be the drivers of sustainable growth in the
fledgling microenergy industry. However, support from
governments, development banks, NGOs, and an
increasing number of private organizations, is critical to
realize the full potential of the microenergy opportunity.
The ability of these supporting organizations to improve
and integrate their SME financing and capacity-building
services will determine the trajectory of this industry.
Improving Energy Security: A Portfolio Approach to
Energy Resource Management
The conventional wisdom that governs energy resource
management needs rethinking. In today’s increasingly
risky energy markets, continued adherence to the
traditional least-cost energy planning model exposes
national power infrastructures to significant price, supply,
and environmental risks. To insulate national energy
markets from these risks, and thus to strengthen energy,
economic, and national security, energy planners must
apply a portfolio approach to energy resource
management. This essay examines the application of
well-established financial portfolio theory to energy
resource planning. It offers an overview of the principles
of portfolio theory, examines the various risks faced by
undiversified energy portfolios in the Americas, and
illustrates the key role that renewables play in achieving
energy diversification. Energy planners face several
practical challenges to applying a portfolio approach to
energy resource management, such as high transition
costs associated with portfolio redistribution, imperfect
substitutability among energy options, and misaligned
incentives between individual power producers and
national energy markets. Policymakers can employ a
number of alternative energy incentives and mandates,
including feed-in tariffs and renewable portfolio
standards, to help energy planners overcome the
obstacles to diversifying and strengthening national
energy portfolios.
The Culture of Green
The answers to today’s challenges of global climate
change and energy security can be found in principals
developed thousands of years ago. The indigenous
cultures of the Americas promoted principles of
interconnectedness and balance not as lofty ideals, but
as principles of survival. The Culture of Green examines
how indigenous views of nature and the environment can
help development organizations integrate climate change
considerations into development strategies. Because
climate change poses a significant threat to economic
4 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
and human development, it must underlie all bank
missions and country policies, not just those that take
aim at the environment. Multilateral institutions, like the
IDB, face significant barriers to integrating climate
change into development goals, yet they may begin to
do so through the indigenous principles of countries they
are dedicated to serve. The concepts of
interconnectedness, balance, cyclicality of time, and
active stewardship guide practical solutions for
integrating climate change. Approaches include full
greenhouse gas emissions accounting, adaptive
management, longer project lifespans, and improved
member country engagement.
Energizing Qualities of Green T[echnology]
Green technology has a broad range of energizing spillover
effects on economies — and nowhere is this potential
greater than in emerging markets like those in Latin
America and the Caribbean, where new technologies can
leapfrog existing infrastructure and provide low-cost,
tailored power supplies to off-grid communities. While still
an understudied area, the evidence of the payoffs of green
technology is becoming clearer and more quantifiable.
Latin America and the Caribbean offer an abundance of
opportunities for the development and deployment of
green technologies. The region accounted for just over 5%
of global investment in sustainable energy in 2007, with
negligible investment in innovation. This essay examines
the energizing qualities of green technology on markets,
scientific and technological innovation, social development,
national security, policy, and the environment and offers
guidance for Latin American and Caribbean countries
toward harnessing green technology’s potential.
Scenarios for Green Energy in the Americas
In the first quarter of 2008, Garten Rothkopf and the Inter-
American Development Bank (IDB) convened three
day-long, invitation-only scenarios devoted to technology,
investment, and policy trends in green energy. These
scenarios brought together more than 150 leading experts
from throughout the hemisphere to game out the likely
impact of three possible scenarios for our energy future: a
baseline “Pale Green” scenario, an “Out of the Blue” shock
scenario, and a “Bright Green” scenario for unprecedented
international cooperation on climate change. During the
sessions, participants took part in anonymous polling to
frame our discussion and gauge the sentiment in the room.
The discussions and polling results together produced new
insights into the key challenges faced by this hemisphere in
the coming years, the areas of greatest opportunity, and
how the IDB can best help countries in the region adapt to
the changing energy and climate future.
The purpose of a scenario exercise is not to predict the
future, but rather to allow a group of leaders to consider
collectively how they might be affected by different
outcomes, what their vulnerabilities and risks are, what their
comparative strengths are, and which approaches make the
most sense. Across scenarios and sessions, the vast
majority of participants identified three critical gaps as the
most significant barriers to green energy development in the
hemisphere — policy, infrastructure, and technology — as
well as proposals for how the IDB might help address them.
Participants overwhelmingly identified the policy gap as the
greatest barrier to green energy in the Americas, followed by
technology and innovation issues. According to 42% of
participants, policy is the greatest gap. Another 24% cited
R&D, while 51% cited political will as the greatest challenge
to green energy. Lack of technology was the answer of 19%.
It was nearly unanimously believed that countries in the
region lack sufficient energy and climate change planning
and have insufficient resources dedicated to these issues
(94% and 88%, respectively). The issue extends beyond a
mere lack of will or interest, with 68% of participants
deeming policymakers in the region to be lacking in the
understanding and knowledge necessary to develop sound
policies in this area. Multilateral financial institutions,
however, were seen as having an important role to play in
addressing these gaps, with 86% of participants agreeing
that institutions like the IDB should work with countries to
develop new models for green energy in developing
countries. A number of very specific proposals were offered:
• The IDB should sponsor a study of the economic impact
of climate change on the hemisphere, at a regional, sub-
regional, or national level to increase knowledge on the
costs of climate change and support sound decision-
making and allocation of resources by governments.
• The IDB should focus special attention on the islands
and shorelines uniquely exposed to the impact of climate
change.
• The IDB should consider enhancing the environmental
and energy economic analysis capacity at the Bank and
establish a clearinghouse for regional data.
• The IDB should continue activities like the scenario series,
with a more specific regional or even national focus.
As stated above, local innovation and access to
technologies were seen as the next most important barrier
to the development and deployment of renewable energy
in the Americas. Only 9% of participants did not perceive
the region as dependent on technology imports, with
experts time and again citing multi-year waiting lists for
capital equipment imports such as wind turbines and the
lack of tailored solutions for local conditions. Again,
specific ideas were given for ways in which the IDB could
help address these issues, including the facilitation of
South-South technology transfer and investment through
coordination with other regional development banks. With
regard to catalyzing local R&D, participants pointed first to
providing financial and technical support for the
development of appropriate policy frameworks (42%),
followed by the direct funding of centers of excellence
dedicated to green energy in the region (23%).
Finally, participants predicted the need for massive
investments in new energy infrastructure over the next five
years, with 75% of those polled expecting the bill to be in
the range of $50 billion to $100 billion. The focus here was
on the power-generation sector, particularly connecting
the 40 million people living in the Americas today who are
without access to electricity. In this context, 45% said that
transmission lines to rural areas should be the priority
infrastructure gap addressed in the region, with an
additional 30% citing upgrading existing grids. What was
not captured in these raw numbers, but was pointed to
consistently throughout the sessions, was the potential for
renewables to play a role in leapfrogging existing systems
and providing off-grid power to rural communities.
Global Outlook
A review of the world’s leading energy information sources
points to a period of substantial transition and turbulence
in the global energy sector. With three of the most
powerful drivers of energy markets — demand, supply,
and the environment — undergoing considerable change,
the future composition of the energy system remains
highly uncertain. Economic growth in the developing world
has caused an unprecedented increase in energy demand,
with increased industrialization, urbanization, and
population levels driving much of the exponential growth
in demand. Although the increase in demand is a clear
trend, the future availability of supply is much less certain.
Several leading energy information sources predict
insufficient supply levels. As the world scrambles for
solutions to the current energy dilemma, environmental
concerns have risen to the top of the agenda, prompting a
global trend, at both the national and local levels, to enact
new policies not only to reduce greenhouse gas emissions
and their environmental impacts, but also to diminish
dependence on fossil fuels through the diversification of
energy supplies.
Renewable Power in Latin America
LAC’s prodigious renewable resources offer a true solution
to the region’s energy security woes in the power sector,
Executive Summary | Section 1 5
but major gaps in policies and financing are preventing
this potential from being realized. The lack of support for
renewables in most countries in the region is primarily
due to their higher costs compared to conventional
generation sources, a disadvantage that has been
exacerbated by a precipitous fall in fossil fuel prices in
the last quarter of 2008. This section aims to identify
and explain the opportunities and challenges facing
renewables in the region within the context of the power
sector more broadly, as well as to propose a series of
measures that the Bank could pursue in order to help
facilitate the development of these critical energy
resources for the region’s future. In order to do so,
Garten Rothkopf has analyzed the key drivers and trends
shaping the renewable power sector globally and
regionally and has explored the interplay of these factors
at the country level through five case studies. A wide
range of sources were drawn upon, including
government, academic, and non-profit analyses, public
and private data sources, news articles, and primary-
source interviews in English, Spanish, and Portuguese
conducted between February and September 2008.
Energy Security in LAC and the Promise of
Renewables
The drive for the development of renewable power sources
in Latin America is rooted in the shortcomings of its present,
crisis-prone electricity supply mix. Historically, most
countries in the region outside of the Caribbean (which
relies mostly on fossil fuel-fired generation) have depended
heavily on large-scale hydropower installations for most of
their electricity, including Brazil’s reliance on hydropower for
more than 90% of its generation.1, 2 This has left the region
highly vulnerable to drought-induced power crises, which
are likely to increase in severity in the future as climate
change leads to more intense El Niño events.3
In the 1990s, regional struggles with these power shortages,
increasing recognition of the environmental and social costs
of large-scale hydropower, and widespread liberalization of
the region’s power sectors resulted in a shift in most
countries to fossil fuel–fired plants for new generating
capacity. While private investors strongly favored these
thermal generators due to their fast construction times, low
up-front costs, and then-inexpensive supplies of natural gas
and oil, skyrocketing fossil fuel prices in recent years have
caused generating costs in the region to soar. Moreover,
the politicization of the energy sectors of key regional
exporters, including Mexico, Venezuela, Bolivia, Ecuador,
and Argentina, has created further distortions in
consumption patterns and uncertainties over long-term
production. Thus, large hydropower as well as fossil fuel
generation are both demonstrably volatile sources of power
and are likely to become increasingly insecure with time.
6 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
The problems that this dependence poses are becoming
more acute as economic growth leads predictably to
robust electricity demand growth, with average annual
increases in power consumption of 4.9% in South
America and 5.8% in Central America over the past five
years (although the Caribbean has lagged, at just 2.7%).4
This growth has increasingly strained the ability of many
power systems in the region to keep up with demand,
leading to an increasing risk of outages and power
rationing from droughts or decreases in fossil fuel
supplies. At the same time, the urgent need to increase
power generation has led most countries to focus on the
continued development of these unsustainable
conventional power sources to satisfy growing demand.
This is due primarily to their proven track record and
historically lower costs, despite their proven risks and a
changing supply landscape.
Renewable energy sources offer truly secure, long-term
solutions to the region’s power supply needs. Geothermal
energy provides some of the most reliable baseload power
in the world, and while solar and wind generation may not
be able to provide baseload power without storage, they
can replace a substantial fraction of conventional
generation and are not vulnerable to price spikes or
unexpected supply interruptions. Small hydropower is also
included in this study as an important and under-utilized
source of renewable power that avoids the environmental
and social costs of large-scale dammed hydro, although
like larger hydro installations it is subject to drought-
induced shortages. In the long-term, wave and tidal
power technologies also promise further diversity for the
region’s power mix.
Renewable energy sources offer
truly secure, long-term solutions to
the region’s power supply needs.
Further, advocates of renewable power worldwide are
touting the potential social and economic development
impacts of greater use of these resources, an argument
that has particular appeal in Latin America and the
Caribbean. In the rural development context, renewables
have been used to provide the benefits of modern power
services to isolated households and communities, with 13
countries in the region having created dedicated
renewable power initiatives as part of their rural
electrification programs. More broadly, slow employment
growth in traditional energy industries, fast-growing
demand for renewable power, and the greater labor
intensity of renewables due to their smaller scale, have led
to hopes that a more widespread adoption of renewable
power could lead to a surge in new “green jobs.” 5 While
data on the concrete impacts of renewables on socio-
economic development objectives are currently very
limited, they could potentially play an important role in
creating political support for the sector.
However, while all of these renewable power
technologies offer opportunities to provide needed
improvements to reliability and price stability for the
region’s power sectors — and to create positive
externalities that contribute to socio-economic
development goals — their adoption in LAC has been
much slower than in other regions of the world.
The Current State of Renewable Power
Development in LAC
Latin America and the Caribbean have lagged behind
the global pace of adoption of new renewables, with
geothermal, wind, and solar energy accounting for just
1.9 GW out of a total of 267 GW in the region in 2007 —
approximately 0.7% of the total.6 This is significantly
less than the role these three technologies play in the
Regional Leaders:
Brazil: Brazil has set the pace for wind and small
hydropower development in the region, thanks to
its PROINFA feed-in tariff incentive and readily
available domestic long-term financing from the
Brazilian National Social and Economic Develop-
ment Bank (BNDES).
Chile: Chile has one of the most well-regulated
power markets in LAC, which has been made
even more attractive for renewables developers,
thanks to funding for feasibility studies and finan-
cial consulting from CORFO, the state economic
development agency, as well as a new renewable
portfolio standard (RPS) incentive that will require
5% of the country’s power to come from renew-
ables by 2010.
Costa Rica: Costa Rica has long been a leader in
the development of renewables in Central America,
with an effective system of government-run auc-
tions for wind and geothermal power. It could fur-
ther harness the country’s resources with recent
consideration of a bill that would open parts of the
country’s park system to geothermal development.
overall global mix, where they account for 113 GW, or
about 2.5% of the 4,300 GW total worldwide capacity.7
When small hydro installations are included, these
figures increase to a total of 4.6 GW in LAC (1.7%) and
186 GW (4.3%) globally. The lag is even more dramatic
when considering the miniscule portion of total global
renewable energy investment flows entering the region,
with LAC receiving $2.5 billion in renewable power
investments in 2007 — less than 3% of the global total
of $87 billion, according to New Energy Finance.8
Renewable Power Deployment in LAC
The development trajectory of renewable power in LAC
varies significantly by technology as well as by country.
Technologies
Small hydro: Due to its relatively low costs and the
region’s long experience with hydropower, small hydro is
the largest source of renewable power covered in this
report in LAC, with an estimated 2.7 GW of installed
capacity. This is less than 4% of a global total of 73 GW
of small hydropower, including 47 GW in China alone,
Laggards:
Argentina: Argentina’s power sector development, as
a whole, was derailed by the economic crisis of
2001–2002, and the maintenance of tariff freezes en-
acted during the crisis have caused private sector in-
terest in the sector to vanish. Wind power
development is thus almost completely stagnant,
with only government-sponsored projects being ex-
plored, despite attempts to introduce new incentive
programs.
Mexico: Mexico has maintained its power sector as a
state-owned monopoly, which has struggled to con-
cession wind farms due to the below-market prices it
has offered. New rules and incentives for renewables
in November could stimulate investment in the sector,
but details of their implementation will not be finalized
until mid-2009.
Colombia: Despite a wide range of renewable re-
sources and financing assistance in recent years for
renewables from the World Bank and IDB, Colombia
has yet to pass any incentives to support the sec-
tor’s development, limiting prospects for private
sector investment.
Executive Summary | Section 1 7
Chart 1.0e Small Hydro Capacity, LAC Region
2,000
1,800
1,600
1,400
1,200
MW
1,000
800
600
400
200
0
Brazil Peru
Sources: New Energy Finance, World Energy Council, CAMMESA, MEM
where it has been used as a primary resource for
extending electricity access to rural communities.9 While it
is also one of the most widely used renewable power
technologies in the region, with significant installations
identified in nine countries in both Central and South
America, this capacity is heavily concentrated in Brazil,
which alone accounts for nearly 1.9 GW.10
Small hydropower’s low costs, particularly when
integrated with existing hydraulic infrastructure such as
irrigation canals, will likely ensure that it will continue to
play a leading role in the development of the region’s
renewable resources. Moreover, these projects can
provide more robust power supplies for rural development
than photovoltaics and are increasingly being integrated
with local environmental initiatives, which can serve to
improve generation performance as well as create jobs
and enhance relations with local communities. However,
its usefulness in enhancing energy security is limited
because it is even more vulnerable to droughts than large
hydro due to a lack of dam storage.
Geothermal: Geothermal is the largest and most
established source of non-hydro renewable power in Latin
America and the Caribbean, but this generation is
currently confined to Central America and Mexico, and its
expansion has been slow. There is 1.4 GW installed
throughout the region, of the roughly 10 GW worldwide.11
Mexico leads by far, with its 960 MW ranking third in the
world in installed geothermal capacity.12 Despite its
8 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Argentina Guatemala Mexico Chile Honduras Ecuador Colombia
unsurpassed reliability and competitive costs, high up-
front project risks and a limited number of potential
development sites have made geothermal the slowest-
growing renewable power source worldwide, with annual
growth of just 2%–3% per year, and it has similarly seen
just 26.5 MW added in LAC since 2005.
Geothermal power capacity is expected to continue to
grow in Central America, and potentially at an increased
pace, thanks to a new geothermal feed-in tariff in
Nicaragua and a plan to open sections of Costa Rica’s
national park system to geothermal development.
Moreover, moves to develop the excellent geothermal
potential in northern Chile’s mining areas could mark an
important first step toward the wider development of the
vast geothermal resources located along the continent’s
Pacific coast.
Wind: Wind is the fastest growing non-hydro renewable
power source in Latin America, but two-thirds of wind
capacity added since 2005 have come from Brazil,13
where future growth is uncertain due to the winding
down of its PROINFA subsidy program. Wind power’s
fast construction time, widespread applicability, and
increasing competitiveness with conventional power
sources have made it the largest and one of the fastest-
growing renewable power sources worldwide, expanding
at a pace of 25% per year between 2002 and 2006 and
reaching 95 GW installed worldwide at the start of
2008.14 This study has identified 506 MW of installed
Chart 1.0f Geothermal Capacity, LAC Region

1,200

1,000

800
MW

600

400

200

0
Mexico Costa Rica El Salvador Nicaragua Guatemala

Sources: International Geothermal Association, Geothermal Resources Council, Polaris Geothermal, Business News Americas

Chart 1.0g Wind Capacity, LAC Region

300

250

200

150
MW

100

50

0
Brazil Mexico Costa Rica Argentina Jamaica Chile Colombia Cuba Ecuador Peru

Sources: GWEC, OLADE, LAWEA, NEF

Executive Summary | Section 1 9

wind power capacity in LAC, nearly half of which is in
Brazil. The rest is spread across nine other countries in
Central and South America as well as the Caribbean,
making this already the most widely used renewable
power technology in the region.
Wind power’s costs are increasingly similar to
conventional power in many cases, but they are higher on
average than small hydro or geothermal and are thus more
sensitive to the availability of incentives to attract
investors. The most proven incentive program in the
region by far, Brazil’s PROINFA, is winding down, which
could jeopardize continued growth in this key market.
However, a number of countries have recently created
policies of their own that are expected to benefit wind
power, including Chile, the Dominican Republic, and
Guatemala. Two of the region’s most promising wind
power markets, Argentina and Mexico, have seen their
development of this resource hamstrung by heavily
politicized energy sectors, although in November 2008
Mexico passed a renewable energy law that will require
the creation of Mexico’s first renewable power incentive
program by mid-2009.
Solar: The high costs of solar power have made its
development almost completely dependent on the
availability of generous subsidy programs that have been
largely absent in LAC, resulting in negligible development
of this resource. Grid-connected solar is the world’s least-
developed renewable power source, with an estimated 7.8
GW capacity at the end of 2007, but it is also the fastest
growing, with 50% annual increases in installed capacity
in both 2006 and 2007, thanks largely to feed-in tariff
incentives in Germany and Spain.15
While Brazil’s PROINFA program included incentives for
small hydro, biomass, and wind, it offered no support for
photovoltaics. Ecuador and Argentina have passed their
own regulations for feed-in tariff incentives that included
subsidies for solar, but they have not been utilized, as
political risks in both countries have virtually eliminated
private sector financing, and heavily subsidized tariffs for
end-users have removed the incentive to develop
distributed generating sources. Mexico created the
region’s first net-metering policy, which allows any solar
PV generation to count against a consumer’s electricity
bill, but, as with Ecuador and Argentina, subsidized
power tariffs give users little incentive to invest in their
own power generation. Power sector reforms in these
countries could help catalyze solar power development
in the region, but otherwise the use of this huge potential
resource will be limited to small-scale, off-grid
applications until countries develop effective incentive
programs and solar generation costs drop overall.
10 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Renewable Power Potential in LAC
This relatively low level of renewable power development
is a shadow of Latin America and the Caribbean’s
enormous potential, as its diverse geography has richly
endowed it with a broad range of renewable resources.
These include:
• Substantial untapped small hydro resources throughout
the region, including Mexico and Guatemala in Central
and North America, the Dominican Republic in the
Caribbean, and Brazil, Peru, and Colombia in South
America;
• Widespread wind energy resources including some of
the world’s most promising sites, such as Oaxaca in
Mexico, Southern Patagonia in Argentina, and the
Pedernales region in the Dominican Republic;
• Geothermal resources along the region’s Pacific coast,
thanks to the “Ring of Fire,” the volcanically active area
around the borders of the Pacific tectonic plate that
accounts for most of the world’s present geothermal
generation;
• High levels of solar insolation in many countries,
including Mexico, Guatemala, Cuba, and Haiti north of
the Equator, and northern Chile, southwestern Bolivia,
northeastern Argentina, northern Brazil, and southern
Peru in South America; and
• Promising wave and tidal resources that have only just
begun to be considered, including the superior wave
energy resources off Chile’s long coastline and expected
tidal generation potential in Mexico and Argentina.
This lack of renewable power development is thus due
primarily to a lack of regulatory support and financing
barriers, and not a lack of potential for these forms of
generation.
Gaps Preventing the Wider Adoption of
Renewables in LAC
Renewable power technologies face similar challenges
when competing with conventional generation sources
everywhere, primarily due to their higher up-front costs.
However, Latin America and the Caribbean have been much
less successful than other regions of the world in
overcoming these obstacles, due to regulatory
shortcomings, a lack of policy incentives, and limited access
to financing. The region’s renewable power development is
also hindered by a lack of funding for innovative research
and development and demonstration projects, including
adaptations of existing technologies to regional needs, as
well as opportunities to become an early leader in the
adoption of newer renewable power technologies.
Electricity Sector Regulation
Following the perceived and real failures of the region’s
move toward deregulation in the 1990s, power sectors
in Latin America and the Caribbean today are frequently
characterized by ad hoc mixtures of regulated and
deregulated approaches, reflecting global trends away
from rigid ideological prescriptions and toward more
pragmatic approaches to regulation.16 However, some
countries in the region have moved to roll back elements
of previous reforms in dramatic ways, which has often
negatively impacted the development of renewables and
the power sector more broadly by driving away private
investment. In Argentina and Ecuador, government
interference in tariff-setting has made power sector
investments unprofitable and has scared off foreign
capital, and in Venezuela the 2007 nationalization of
AES-owned La Electricidad de Caracas (EDC), the
country’s largest private power producer, was only one
in a string of a moves by President Hugo Chávez to
assert political control over the energy sector.
Power sectors in Latin America
and the Caribbean today are
frequently characterized by ad hoc
mixtures of regulated and
deregulated approaches.
At the same time, elements of liberalization that have been
either retained from previous reforms or created as parts
of newer policies hold the promise of opening the power
sector up to a broader range of actors, including small
IPPs as well as large industrial and commercial
consumers. Although Brazil has taken steps to increase
the regulation of its power sector in the aftermath of the
2001 power crisis, it has also created a new category of
consumers that allows commercial or industrial users
contracting for 0.5 MW or more of renewable power to
participate in the spot market, compared to a 3 MW
minimum for regular users. This offer is attractive because
spot market prices are generally lower than the regulated
market, and a growing number of users are taking
advantage of this opportunity.
Mexico provides a dramatic example of this dynamic as
well, where very high commercial tariffs — the result of
large and highly inefficient subsidies to residential users —
have driven a wide range of these large consumers to plan
up to 2 GW in combined wind power projects in Oaxaca.17
These projects are being developed in joint ventures with
wind power developers under “self-supply” arrangements
created by 1996 reforms to the country’s constitutionally
mandated state-run power sector, one of the few avenues
available for private sector development.
Policy Incentives
Patterns of renewable power development globally have
been strongly determined by the availability of adequate
policy incentives to make up for gaps in
competitiveness with conventional sources of power.
Brazil’s PROINFA feed-in tariff program has played a
central role in making it the region’s biggest renewable
power developer by far since 2004, but its abandonment
of this policy in favor of a competitive auction system for
renewables could endanger this leadership. While
government tendering policies have been successful in
catalyzing wind and geothermal power projects in Costa
Rica, they have struggled in Mexico and countries in
other areas of the world, such as the UK, where auction
prices were set too low to attract developers. Similarly,
the first renewable power auction in Brazil, in June 2007,
failed to attract any bids from wind projects due to a bid
ceiling set more than a third below the level that
developers claim is necessary.
The nascent policy landscape in the region outside of Brazil
is largely characterized by potentially successful but largely
untested policies, along with policies that have been
rendered ineffective by regulatory or policymaking failures.
• Several countries in the region have created a range of
promising incentives for renewable power development in
2008, including a renewable portfolio standard (RPS) in
Chile, a feed-in tariff for geothermal in Nicaragua, and a
package of tax credits and exemptions in the Dominican
Republic. A range of new projects is currently planned in
each of these countries, auguring well for their success,
even if their impact has yet to be felt.
• At the same time, several major policies in the region
have been ineffective due to broader regulatory issues or
implementation difficulties, demonstrating that adequate
incentives are a necessary, but not sufficient, condition
to stimulate renewable power development. Argentina
and Ecuador have both created feed-in tariff programs,
but these have barely been utilized due to political risks
surrounding their power sectors; Ecuador’s program will
close at the end of 2008. In Mexico, the government first
proposed a wide-ranging incentive law in 2005, but
struggled to pass it for years. In November 2008, a new
renewable energy law was finally passed, but this
legislation only outlined a strategy for the Secretary of
Executive Summary | Section 1 11
 Energy (SENER) and Energy Regulatory Commission
(CRE) to develop several new rules and incentives for
renewables over the course of 2009, and did not include
specific implementing policies.
Access to Financing
Renewables often face greater challenges than
conventional power plants in securing sources of debt
finance, for a range of reasons including high up-front
costs, perceived riskiness, and a lack of a commercial
track record with some areas and technologies.18 Brazil
has garnered over 90% of the region’s investments in new
renewable power generation since 2005, due not only to
PROINFA but also to the availability of long-term, low-
interest loans from the Brazilian National Social and
Economic Development Bank (BNDES).19
By contrast, outside of Brazil, debt financing for renewable
power projects in LAC has been rare, and it has consisted
almost entirely of concessionary loans from multilateral
and international development banks. This has helped to
limit the universe of renewable power project developers in
most countries to large entities with access to large
reservoirs of their own capital, including major
international developers like Iberdrola and Enel, state-
owned utilities and energy companies, and governments
themselves. Moreover, available sources of concessionary
finance are often biased toward larger projects, due to the
lending economies of scale of these international and
multilateral institutions. The lack of financing for smaller
developers is a major hindrance to the unlocking of the
renewable power sector’s full potential.
Outside of Brazil, debt financing for
renewable power projects in LAC
has been rare, and has consisted
almost entirely of concessionary
loans from multilateral and
international development banks.
This may change, as opportunities for domestic loans in
Mexico and Chile are beginning to emerge through
programs administered by Banobras, the Mexican
development bank, and CORFO, Chile’s economic
development agency. However, most projects in the
region outside of Brazil will likely depend on financing
from developer equity and/or loans from international
and multilateral banks, making it critical for these
institutions to provide financing instruments that address
the unique challenges and opportunities of the renewable
power sector.
12 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Innovation in LAC
Energy sector R&D in LAC is extremely limited in size and
scope, compared to the U.S., the EU, and Asia, and this
imbalance is even more pronounced in the renewable
energy segment, due to the relative newness and technical
challenges posed by many of these technologies.20
Although it is unlikely that the region will produce its own
renewable energy manufacturing giants that can compete
with international leaders like Vestas, General Electric, or
Q-Cells anytime soon, it still could benefit from the
stimulation of domestic renewable power R&D and
manufacturing capacity geared toward the needs of local
markets. There are already efforts underway to adapt wind
turbine designs to the harsh winds of Mexico and
Argentina, and there is substantial untapped opportunity to
develop applications for small hydro and solar
photovoltaics that are appropriate to the region’s needs.
The encouragement of this in-region R&D capacity could
help ensure the availability of equipment and plant designs
suitable to local conditions, increase the jobs created by
the renewable power sector, and encourage growth in
domestic science and engineering education.
Looking beyond existing renewable power technologies,
the LAC region also has excellent resource bases that
could be harnessed by emerging renewable
technologies such as wave power, tidal power,
concentrating solar power (CSP), and engineered
geothermal systems (EGS). Although there has been
negligible research within the region on these
technologies so far, there are a fast-growing number of
start-ups pursuing their commercialization in the U.S.
(and in Europe to a lesser extent), and these companies
must frequently compete for a limited number of suitable
testing sites, transmission capacity, and financing in
their home countries. Due to its wealth of resources,
LAC could provide an appealing alternative destination
for these early-stage projects, given sufficient financing
incentives, potentially including financing for necessary
transmission capacity, as well as sufficient intellectual
property rights assurances.
Recommendations
While realizing the region’s renewable power potential will
pose requirements that will vary widely by country and by
technology, five core pillars will undergird any
comprehensive effort on this front. The IDB can play a
major role in providing guidance as well as support for
each of these pillars through loans, loan guarantees,
policy-based and innovation loans, and other instruments
administered by the Bank and its International Investment
Corporation (IIC) and Multilateral Investment Fund (MIF).
I. Establishing the Potential for Renewable Power
While low-resolution maps are available for basic
evaluations of renewable resources in the region, more
detailed, higher-resolution maps of the most promising
areas can play a significant role in encouraging project
development by reducing the time and cost of resource
prospecting. In addition to providing valuable information
for project developers, these efforts can play a critical role
in informing policymakers who are formulating goals for
the sector’s development.
More detailed studies of specific low-cost, high-impact
technology applications, such as irrigation canal–integrated
small hydro projects, can also help to ensure that “low-
hanging fruit” in the sector are picked. Broad-based
technical assistance for feasibility studies for small and
medium-sized project developers can also serve to lower
the information and up-front investment barriers to
participation in the sector by a broad range of generators.
Program Ideas
• High-Resolution Resource Mapping Project: Provide
technical assistance and financing for the development
of improved, high-resolution mapping of promising
renewable resources, including both established and
emerging technologies.
• Inventories of Low-Cost, High-Impact Project Sites:
Technical assistance and financing for surveys of low-
cost, high-impact renewable power applications that
represent “low-hanging fruit” for project developers.
• Feasibility Study Funding — Small and Medium-Sized
Project Developer Program: Expand existing feasibility
study funding through the Multilateral Investment Fund
(MIF), with a focus on grants for small- and medium-
sized enterprises and potentially paired with ongoing
financial consulting and business-development
assistance.
II. Encouraging Renewable-Friendly Regulation
The smaller scale of renewable power plants has the
potential to open the sector to a wide range of participants
beyond traditional utility players and international
independent power producers, including local developers,
municipalities, cooperatives, and large commercial and
industrial users. However, in order to facilitate this broader
participation, electricity sectors must be well regulated
enough to attract a broad pool of private sector
investment and must have provisions that allow and/or
encourage smaller generators.
Furthermore, although the gap between the cost of
conventional power generation sources and renewable
alternatives is closing, the development of the renewables
sector remains largely contingent on the creation of
appropriate regulatory and policy supports. Few countries
in LAC have had significant experience with them, most
notably Brazil and Costa Rica, but a growing number of
are adopting new incentive policies of their own.
Program Ideas
• Latin America and Caribbean 21st Century Power
Markets Initiative: Develop a regional initiative to assist
in the transition toward a more decentralized, energy-
secure, and low-carbon power sector based on
increased renewable power generation, including steps
to identify key market frameworks and the use of policy-
based lending (PBL) to support their proliferation.
• LAC Renewable Power Policy Incentives Working
Group: Create a regional forum to share experiences
with the region’s growing range of renewable energy
policies, with participation from policymakers, regulators,
investors, and other relevant stakeholders and experts.
• International Exchange Program for LAC Legislators:
Hold a series of exchanges to bring LAC elected officials
abroad to learn from countries that have had longer
experiences with renewables-appropriate policies, as
well as bringing legislators from abroad to key countries
in LAC to share their views.
III. Expanding Access to Finance for Renewable Power
Projects
Brazil’s BNDES is the only widely used source of
domestic project finance for renewable power projects in
the region, forcing projects to rely on international and
multilateral lenders for debt financing or else to fund
projects wholly through developer or syndicated equity.
While reforms to the region’s banking sectors are
improving access to finance in general, long-term loans
for renewable power projects are very rare due to the high
up-front costs of these technologies as well as perceived
risks due to their lack of a track record. Particularly given
the recent turmoil in global credit markets, international
and multilateral finance will likely continue to be critical to
the expansion of the renewables sector. Moreover,
finance must not only be available in general, but it must
be scaled to project sizes smaller than many of these
institutions typically fund.
Program Ideas
• LAC Renewable Power Financing Facility: Target
existing IDB financing support to the smaller average
size of renewable power projects in several ways,
including loan guarantees for domestic banks, IIC loans
for small- and medium-sized developers (including
Executive Summary | Section 1 13
 large commercial and industrial end-users), and the
packaging of several similar projects together in
portfolios.
• LAC Renewables Exposition for International
Developers: Hold an annual LAC Renewables Exposition
to bring together top international renewable power
developers and energy officials from LAC countries
seeking to promote potential projects in their countries,
possibly including international financiers as well.
• LAC Microenergy Initiative: Instead of providing direct
financing and assistance for rural electrification
programs using renewables, IDB would provide support
for SMEs and microfinance institutions capable of
bundling together many small-scale microenergy
projects into attractive investment portfolios through a
Microenergy Support Fund. Experiences could be
shared with similar initiatives in other regions of the
world through a Global Microenergy Network.
In addition to these overarching program changes, a number
of more region- and technology-specific programs could be
created to improve access to financing in key areas.
• Loans and Loan Guarantees for the Development of
Wind and Solar Manufacturing Plants: Provide loans
and loan guarantees to support the development of
manufacturing plants in key markets, boosting potential
for job creation and technology transfer.
• South American Geothermal Fund: Create a program
offering grants and loans for geothermal project
development as well as geological risk insurance,
focused on the undeveloped geothermal resources of
South America.
• Small Hydro for Community-Based Rural Electrification:
Expand support for off-grid small hydro installations, where
this technology is relatively underutilized compared to solar
PV and in absolute terms compared to its enormous
potential for this type of application.
• Integrated Support Packages for Solar PV Programs:
Design integrated support packages for public-private
sector solar initiatives focused at the national, state, or
even city levels that bring together assistance for a wide
range of stakeholders, including suppliers; developers;
installers; commercial, residential, and institutional end-
users; policymakers; and other relevant parties.
IV. Providing Funding for Innovation and Cutting-Edge
Technologies
While there are limited near-term opportunities for Latin
14 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
American companies to compete directly with highly
competitive international renewable power equipment
manufacturers like Vestas, Q-Cells, or Ormat, there is
significant potential for research and development funding
efforts by regional manufacturers to adapt existing
technologies to local contexts, particularly with small hydro
and solar power. R&D labs in the region’s larger markets
are also working on long-term efforts to develop their own
wind turbine designs, including Argentina’s IMPSA and
INVAP and the CERTE research center in Mexico.
In addition to opportunities to adapt and manufacture
existing technologies where possible, the region could
seek to achieve leadership in the development of key
emerging technologies. A growing number of cleantech
startups are developing new renewable power generation
technologies that often struggle to secure permits and
financing for demonstration or commercial-scale plants
as well as the transmission lines needed to serve them.
By providing funding for demonstration projects and/or
R&D testing facilities, the region could attract projects
using these early-stage technologies, potentially
establishing it as a leader in their development as well as
deployment.
Program Ideas
• Innovation Loans for LAC Renewable Power
Research and Development: Offer innovation loans
targeted toward both relatively simpler, near-term efforts
to license and adapt technologies to local conditions as
well as more comprehensive, long-term R&D to develop
original technology designs.
• Financing for Demonstration and Deployment of
Emerging Renewable Energy Technologies: Provide
technical assistance grants and innovation loans to
support small-scale pilot projects as well as loan
guarantees for larger, utility-scale plants using
emerging technologies such as concentrating solar
power (CSP), wave power, and enhanced geothermal
systems (EGS).
V. Understanding the Impacts of Renewables
As noted above, the availability of appropriate policy
incentives is critical to the development of renewable
power technologies, but these programs require ongoing
political support to maintain. Given rising energy prices as
well as growing economic fears, energy policymakers will
be pressed to justify incentives that promote a wide range
of social, environmental, and economic benefits in the
long term but cost taxpayers and/or ratepayers in the
short term. Thus, the availability of improved data on these
wider benefits — including improved energy security, rural
economic development, and the creation of green jobs —
could play a critical role in creating and maintaining
political support for renewable power incentives.
Program Ideas
• Measuring the Benefits of Renewable Power in LAC
Initiative: Offer technical support grants for the
execution of important studies in a number of areas that
currently lack significant LAC-specific data, including
developing new accounting methodologies to account
for the long-term energy security benefits of renewables,
improving data on rural electrification projects that use or
could use renewables, and monitoring the “green jobs”
created by the industry’s development.
Biofuels in Latin America
In the midst of a global backlash against biofuels, LAC is well
positioned to emerge as a leader in the sustainable
production of biofuels and bioenergy. However, bridging the
current technology gap through homegrown innovation will
be critical to determining the direction of LAC’s biofuel future.
This section seeks to identify the major trends impacting the
development of the biofuels and bioenergy sectors and to
identify means by which the IDB can assist stakeholders in
the region in a strategic and sustainable manner. As each
country faces a unique set of challenges, the report does not
assert a blanket prescription for sector development but
rather seeks to identify the tools necessary to make informed
decisions regarding potential biofuel expansion, including in-
depth feasibility studies, R&D centers, financing for
agricultural and industrial capacity expansion, and
investment in infrastructure projects.
The spike in food and feedstock
prices challenges biofuels
sustainability and alters the biofuels
landscape.
To this end, Garten Rothkopf has analyzed the primary
drivers and trends in the global and regional biofuel sector
and has selected Brazil, Peru, Colombia, Argentina,
Honduras, and the Dominican Republic as case studies to
highlight areas of success and to outline the challenges that
apply to the rest of the region. The information contained in
this report stems from a range of primary and secondary
research sources from government, academic, and scientific
data, including direct interviews and in-country research.
An Altered Landscape
Despite the rise in energy commodity prices, increased
energy insecurity, and growing awareness of the potential
impacts of global warming, the role of biofuels in
addressing these challenges has been questioned. While
the region experienced a surge of investment in the sector
over the last two years, the initial optimism surrounding
global and regional biofuels potential has since waned.
First-generation biofuels projects that are dependent on
edible feedstocks have come under intense scrutiny and
skepticism in the context of rising agricultural commodity
prices and concerns over food security, worries about their
environmental impact, skyrocketing feedstock costs, and
doubts about their economic viability. The strategic
expansion of biofuels and bioenergy projects within the
region continues to hold tremendous promise for
diversifying the region’s energy base, adding value to
LAC’s agricultural sectors, and attracting private
investment. The region has an opportunity to strengthen
its competitive advantage vis-à-vis the relatively inefficient
grain-based biofuels industries of the U.S. and the EU and
to become a leader in sustainably produced biofuels.
Given Latin America’s vast wealth of natural resources,
favorable climates, and available arable land, the region
has been, and continues to be, well positioned to become
a leader in the generation of biofuels and bioenergy and
must harness the benefits of advanced technology to
maintain a competitive edge. Biofuels and bioenergy are
not a panacea for fossil fuel displacement, but they can
provide a means of energy diversification, economic
growth, and rural development, provided that policies are
balanced with sound sustainability criteria, agricultural
best practices, appropriate technology, and provisions for
food security.
The spike in food and feedstock prices challenges
biofuels sustainability and alters the biofuels landscape.
From 2003 to their peak in July 2008, the prices of maize,
soy oil, and palm oil - primary biofuels feedstocks - rose
135%, 166%, and 139%, respectively.21 While the high
commodity prices are a boon for farmers, particularly
those who are integrated into global markets, they have a
stinging impact on consumers and first-generation
biofuels producers. The rapid escalation in food prices
has sparked riots in Mexico, Haiti, Ethiopia, and
elsewhere throughout the developing world.
While biofuels have shouldered much of the blame for so-
called “food inflation,” the diversion of corn to ethanol
production is only one in a myriad of factors currently
driving up commodity prices. Other primary factors
include:
• High oil prices increasing cost of production until late 2008
• Decrease in global stocks in the midst of increasing
demand
Executive Summary | Section 1 15
• Inclement weather damaging harvests
• Global population growth and increased food demand
• Increased incomes in emerging markets and dietary shift
to include grain-fed meat
The confluence of factors has contributed to a generalized
increase in food prices. Consumer demand is relatively
inelastic, with consumers unable to substitute away from
higher-priced staples. Mexico’s “tortilla crisis” in January
2007 marked a turning point for the global biofuels
industry, as the tripling of corn prices led to riots in the
streets of Mexico City and forced President Calderon to
institute temporary price controls.22 While a variety of
components contributed to the price spike, the situation
illustrated the harsh impact of food inflation on the poor
and underscored the need for the biofuel industry to
evolve away from dependence on edible feedstocks.
Deteriorating biofuel economics for grain and oilseed
producers challenge many first-generation biofuels
producers. In addition to fueling concern over food
security, grain and edible-oil price increases have
challenged the economics of first-generation biofuel
production as feedstocks account for 50%–70% and
70%–85% of overall production costs for ethanol and
biodiesel, respectively.23 Record high prices have
directed feedstocks toward the commodity markets
rather than biofuels projects, limiting access to
necessary inputs. Further, as recently reported by the
UN, biofuels subsidies and tariffs, primarily in OECD
countries, increasingly distort the market and limit
opportunities for developing countries to benefit from
growing global biofuels use.
A noticeable reduction in investment in the sector reflects
the deteriorating economics, with asset-based financing
slipping from $1.82 billion in the first three quarters of
2007 to $805 million during the same time period in
2008.24 High operational costs, coupled with reduced
margins, have forced smaller players out of the market and
have resulted in the consolidation of the industry across
global biofuel markets. Such consolidation could limit the
degree of participation by small- and medium-scale
producers, necessitating targeted assistance to help
SMEs access supports for biofuels and bioenergy.
Developing sustainability criteria are forcing changes in
the industry. In addition to food security, rapid
expansion of feedstock cultivation has sparked concern
that unsustainable agricultural and industrial practices
will lead to widespread deforestation, illegal logging,
biodiversity loss, and pollution and hasten climate
change. Such concerns have induced national and
international coalitions to develop criteria and related
16 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
certification schemes for sustainable biofuels. While at
present the guidelines lack harmonization, are
voluntary, and are largely unenforceable, they are
driving changes within the industry. As such criteria
may present barriers to biofuels trade, major producers
in countries such as Brazil are committing to agro-
environmental protocols and improved harvesting to
maintain international market access. The early
establishment of land-zoning and permitting programs
could help to diminish risks to biodiversity throughout
the region by directing feedstock cultivation and
expansion to underutilized areas that are suitable for
agricultural production and not deemed ecologically
sensitive. Monitoring will be a critical component of
such programs to help ensure compliance and enhance
environmental protection over the long term. The IDB’s
pioneering “Biofuels Sustainability Scorecard” provides
a useful tool that can be utilized by various
stakeholders to evaluate the environmental and social
impacts of projects throughout the project lifecycle.
While this Scorecard could be augmented further to
incorporate food security provisions, it does provide a
means to preliminarily assess project performance. It,
as well as other tools, will need to be periodically
updated as evaluation methodologies are refined.
Current State of Biofuels Development
In LAC
Expanding Legal and Regulatory Frameworks
Since the publication of the first Blueprint, a number of
countries in the region have adopted legislation and have
established regulatory frameworks for biofuels and
bioenergy production and commercialization, but new
challenges facing the industry necessitate that each
country adapt its biofuels strategy in the context of its
natural resource base, energy mix, and socio-economic
and environmental goals. Of the 20 countries in LAC, 11
have legal frameworks in place, six are under
preparation, and three have laws under revision. While
countries in the region are currently at varying stages of
development, experience throughout the region has
demonstrated that biofuels sectors cannot advance
without an established legal and regulatory framework
that sets the parameters for biofuels production and
consumption and provides clear indication of
government support for biofuel-related investment.
This is also the case for bioenergy. The paucity of
frameworks and incentives for biomass and biogas
represent a barrier to sector investment. While the IDB has
provided support in this regard, additional strategic
planning support will be needed to account for socio-
economic, environmental, and technological considerations
as well as technical assistance to strengthen the regulatory
institutions that will be implementing policy.
Fossil Fuel Dependence
Record high energy prices have made energy
diversification a high priority. With 39% and 27% of the
region’s energy derived from petroleum and natural gas,
respectively, the development of alternative energies is
urgent, particularly for countries in Central America and
the Caribbean that rely highly, if not exclusively, on the
importation of fossil fuels. In addition to reducing reliance
on petroleum-based fuels, the evolving geopolitical
situation in South America, and the Southern Cone
specifically, has hastened the transition toward biofuels.
In fact, the decrease in natural gas supplies from Argentina
to Chile prompted the Chilean Ministers of Economy,
Energy, Agriculture and Revenue to eliminate a specific tax
on biofuels, which in effect reduced prices to one-third
that of fossil fuels, to promote consumption.25
Ironically, the shift away from fossil fuels is being driven
largely by national oil companies, notably Brazil’s Petrobras,
Colombia’s Ecopetrol, Mexico’s PEMEX, and Uruguay’s
ANCAP, whose investment in biofuels production is naturally
facilitated by the fact that they are often the entities charged
with the blending and distribution of the fuels. Engagement
by the national oil companies has injected significant capital
into biofuels development, with the companies often
becoming major players in influencing the direction of
biofuels policy. State and private oil companies will likely
continue to drive biofuels development in LAC as the
companies expand investments into logistics, infrastructure,
and trade, but safeguards should be put in place to
maintain market competitiveness and participation of
independent producers.
Current Capacity for Biofuels Development
Land Resources and Current Feedstock Cultivation
With the exception of the Caribbean Basin, most countries
in the region have vast expanses of land available for the
expansion of biofuel feedstock cultivation, without
compromising the food supply. The countries with the
greatest potential for sugarcane expansion include Brazil,
Bolivia, Argentina, Colombia, Paraguay, and Uruguay,
while those with the greatest potential for palm oil and
soybeans expansion are Brazil, Argentina, Peru, Colombia,
and Bolivia.26 In principle, land need not be a constraint for
food or feedstocks cultivation, and prudent biofuels
expansion need not infringe on agricultural processes or
disrupt the food chain.
Research suggests that sugar and palm oil present less
of a food security risk to the region than do fluctuations
in corn and soybean prices. While sugarcane, palm oil,
and soy oil continue to be primary feedstocks throughout
Latin America, their expanded use should not be
promoted in countries where they are a primary foodstuff
and in short supply. The productive efficiency of
feedstocks per acre of land and per unit of water will be
critical to ensure that first-generation feedstocks to not
divert resources from edible crop production.
Expanding the production of alternative, inedible
feedstocks on marginal land could help alleviate pressure
on edible commodities. A variety of alternative
feedstocks for ethanol, biodiesel and biomass are
currently being developed including canola, sugarbeet,
sweet sorghum, jatropha, and miscanthus. Yet projects
are dispersed and uncoordinated and unable to benefit
from the other test trials and demonstrations occurring
throughout the region due to the absence of formal
networking, resource and collaboration channels.
Expanding the production of
alternative, inedible feedstocks
on marginal or under-utilized land
could help diminish competition
for arable land.
Concentrated Industrial Base — Need for Technology
Upgrades and Bioenergy Capacity
Latin America and the Caribbean accounted for 10.1% of
world biodiesel capacity and 22.3% of ethanol capacity,
respectively, with 9,655 and 41,027 million liters per
annum, respectively, in 2008,27 yet, the region could
capture a larger share of the world market if gaps
identified in this report related to R&D development,
expanded financing, and infrastructure are addressed. The
opportunity to secure a larger market share grows as
biofuels producers in the U.S. and Europe (corn-ethanol
producers in the U.S. and rapeseed-biodiesel producers in
Europe) are pressured by falling margins and as new, more
competitive projects come online in Latin America and the
Caribbean.
The relative competitiveness of sugarcane ethanol has
fortified Brazil’s major producers and induced
consolidation. The industry’s consolidation trend has
been most noticeable in 2007, evident in the 25 mergers
and acquisitions carried out in the industry that year, as
compared to nine in 2006. Observers estimate that within
10 to 15 years, the Brazilian ethanol industry will comprise
of 20 large groups. A similar phenomenon is occurring in
Argentina’s soybean-based biodiesel industry. Maintaining
Executive Summary | Section 1 17
a competitive edge will require the integration of advanced
technologies for greater efficiency.
The region has seen an increase in development in the
bioenergy sector, much of it driven by revenues from the sale
of emissions reduction through the Clean Development
Mechanism (CDM). According to New Energy Finance,
bioenergy capacity in LAC for 2007 totaled 5.5 GW, a paltry
6.7% of world bioenergy capacity, which totals 81.3 GW,
mostly concentrated in Asia, and barely 2.1% of regional
installed capacity. Yet, within renewables, bioenergy stands
head and shoulders above other sources. Solar, wind, and
geothermal, combined, account for 1.9 GW (.7%) of capacity
in a region with total installed capacity of 267 GW. Still,
additional industrial capacity is needed to harness the latent
energy potential of the region’s vast biomass resources.
Financing for Feedstock and Industrial Capacity
A range of actors have played an important role in
financing biofuel capacity to date, including: multilateral,
regional, and private lending institutions; regional lending
institutions; investment banks; domestic private and
public-private lenders; and private-sector investors. Within
the private sector, intra-regional South-South investment
is an important trend. Another source of financing
frequently used in biomass and biogas projects is the
CDM, usually with the involvement of carbon credit
aggregators and brokers such as Ecosecurities, though
uncertainty about the replacement framework beyond
2012 inhibits further expansion of these projects.
Additionally, multilaterals and governments frequently act
as brokers and guarantors to facilitate debt financing.
As more governments define their legal and regulatory
frameworks for biofuels and bioenergy in the region, local
and foreign equity investors and lenders of all types have
engaged in the region by financing projects that expand
feedstocks and bioconversion capacity. Brazil leads in all
categories, though significant investments have been
reported in Mexico, Argentina, Peru, and Colombia.
Private investment into the region’s biofuels sector will
likely continue apace, with the countries that have the
clearest and most stable legal and regulatory frameworks
attracting the bulk of the investment.
The majority of financing that has occurred has largely
been limited to first-generation production. Select
sugarcane and ethanol producers in the region, primarily
Brazil and Colombia, have installed or plan to install high-
efficiency bagasse boilers for electricity co-generation and
sales of excess power to national grids. However, additional
resources are needed to upgrade technology in dilapidated
sugar mills and to integrate advanced technology in existing
first-generation facilities throughout the region.
18 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Investment in second-generation biofuels, biomass, and
biogas has not been nearly as vigorous reflecting the lack of
incentives and regulatory signals from regional governments.
Several large-scale second-generation feedstock and
capacity-expansion projects have been announced; most
are jatropha-based, such as a 100,000 hectare privatesector
jatropha investment in Colombia. However, few are actually
underway or completed. Biomass-to-liquids fuels projects
are beginning to take hold in Argentina and Chile.
Small- and medium-scale producers often lack the
resources to engage in agricultural or industrial biofuel
production. Other barriers that SMEs face are the lack of
economies of scale inherent in their mode of production,
the need for individual growers and producers to associate
or enter into cooperative arrangements, and a lack of
technical and administrative expertise. Many regional
governments are attempting to overcome these barriers
through tax incentives, though governments are not
mandated to originate or identify projects that can take
advantage of the fiscal incentives. NGOs and multilateral
financial institutions are attempting to bridge that gap by
providing preferential financing and technical assistance
targeting relatively small-scale projects.
Research and Development Lagging
Biofuels R&D is occurring throughout the region, but it often
occurs in isolated pockets. With the exception of leading
countries such as Brazil and Colombia, R&D is often not
coordinated with biofuel producers or with the entities
developing and implementing biofuel policy. Within the
private sector, some sugar industry producers and oil palm
trade associations in the region fund sugarcane research
through dedicated institutions. While a myriad of large-scale
projects have been announced, private-sector R&D in
second-generation feedstocks and biofuels production is
largely limited to demonstration plots, often ranging from
10-50 hectares in size, for sweet sorghum, sugar beet,
jatropha, and castor oil plant. Several national and
multinational oil and energy companies are also investing in
biofuels development in the region, but their public is often
not able to benefit from their proprietary research.
Developing Latin America’s
infrastructure will be a critical
component of strengthening the
region’s biofuel competitiveness.
LAC countries have lagged the U.S. in advanced
biofuels and bioconversion investment and R&D, though
some indigenous efforts that circumvent expensive
enzyme development have taken place in Brazil. The
vast majority of ethanol and biodiesel projects
throughout the region were developed with first-
generation technology and have yet to integrate
advanced technologies, such as high-pressure boilers,
cogeneration, and recycling techniques for greater
efficiency. While select biomass-to-energy projects are
underway, they are largely at the hands of foreign
investors with imported technology. While advanced
technologies have application across the region, local
technology development and technology transfer remain
limited, particularly with respect to SMEs in rural areas.
The ability to bridge the technology gap for both
industrial and small-scale producers will largely
determine LAC’s biofuel future.
Underdeveloped Infrastructure
Infrastructure remains a primary barrier to biofuels
development in the region. Despite favorable agricultural
and political conditions, many countries in Latin America
and the Caribbean continue to suffer from underdeveloped
or dilapidated infrastructure, which affects bioenergy-
sector competitiveness and hinders expansion of biofuels
production due to increased logistical costs and biofuels
use by limiting access and distribution. Transport costs
exceed tariffs and export costs across the region with few
exceptions.28 Infrastructure expansion over the last two
decades has been slow in LAC inasmuch as barely 2% of
GDP is invested in infrastructure regionally (except for
Chile with 6% and Colombia with 4%); just enough to
conserve the existing infrastructure base. CEPAL
estimates that countries in the region would have to
increase their infrastructure investment by 2%–4% in
order to prevent the infrastructure gap with respect to
southeast Asia from growing.29
Developing Latin America’s infrastructure will be a critical
component of strengthening the region’s biofuel
competitiveness. While grid development and extension
would facilitate the uptake of biomass-based energy, the
expansion and upgrade of roadways and highways will
most readily facilitate the expansion of both agro-industrial
and liquid biofuels production throughout the region. Poor
conditions of roadways and congested ports are already
impacting the efficiency and increasing the cost of biofuels
operations throughout regional supply chains.
Furthermore, agricultural expansion projects, particularly
those targeting under-utilized land, will likely be inhibited
without access to improved and expanded infrastructure.
In many countries in the region, waterways and ports also
serve as essential links in the biofuels logistics chain.
These connections are particularly critical for intra and
inter-regional transportation of feedstock; the heavy
soybean trade on the Parana River from Brazil and
Paraguay to crushing facilities in Argentina is a case in
point. Further, waterways serve as a means to transport
biofuels from producing regions to the coast, as is the
case with the Amazon river in the transport Peruvian
biodiesel from the port of Ipaiales. Peru provides a clear
example of how cabatoge could be explored as an
alternative to costly ground transport. Pipelines will help to
facilitate the transport of biofuels from remote regions to
consumption centers, particularly in Brazil, but port
maintenance and expansion must remain priorities lest
LAC’s already high logistics costs grow and further
weaken its export competitiveness.
Two regional initiatives, the Meso-American Integration
and Development Project (PIDM — previously known as
Plan Puebla-Panama) and the Initiative for the Integration
of Regional Infrastructure (IIRSA), seek to adress the
infrastructure investment gap at a supranational level.
These mechanisms could emerge as one of the main
regional platforms for the facilitation of biofuels and
bioenergy production and distribution. Developments in
rail network expansion and modernization related to the
two regional initiatives could help mitigate some of the
region’s road infrastructure shortcomings in the medium to
long term, though they are not significantly represented in
the design- and execution-phase portfolios of the two
regional initiatives. Riverine waterway and port
rehabilitation, expansion, and construction could also play
a major role in the expansion of biofuels production,
especially in remote growing areas, but IIRSA’s priorities
indicate that these projects will not be designed, much
less executed, in the near future.
With the exception of the highest-profile projects, the
private sector will not likely replace the public or
multilateral sector as the primary funding source for the
majority of roads, rail, and waterway projects, and the
successful attraction of private funding may depend on
creative intergovernmental cooperation and low-cost
financing from sources such as the Inter-American
Development Bank, the Inter-American Investment
Corporation or other such institutions.
Potential to Lead Through Best Practices,
Technology and Innovation
Improving Land and Resource Efficiency with
Advanced and Alternative Feedstocks
Advanced ethanol feedstocks, such as energy cane and
sweet sorghum, have the potential to further enhance the
competitiveness of sugarcane-based ethanol and diminish
the sector’s impact on the environment and food
production. Enhanced varieties can substantially increase
ethanol and biomass yields while reducing agricultural
Executive Summary | Section 1 19
inputs and water requirements. Countries with advanced
sugar and sugarcane ethanol industries, such as Colombia
and Brazil, could translate higher yields into higher ethanol
production. Others with less-developed sugar and ethanol
industries, such as Peru, Argentina, and the Dominican
Republic, could benefit as well but require major capital
investments in sugar and ethanol plant equipment.
With respect to biodiesel, inedible feedstocks, such as
jatropha, animal fats and grease, and algae, provide
alternatives to conventional oilseeds. While palm oil remains
a superior feedstock in terms of yield, jatropha is a
promising high-yield and low-input alternative. Tallow from
concentrated cattle operations in Argentina and Brazil
presents another low-cost alternative. Fish oil is used in
Honduras to produce biodiesel, and there are already small-
scale projects that incorporate residual oils and fats into the
diesel supply chain in Dominican Republic and Peru.
Greater integration of animal fats, used or residual oils, and
greases would increase access to low-cost feedstocks,
reduce industrial waste, and add value to waste products.
Potential to Develop R&D Capacity for Feedstock and
Bioconversion Technology
While biofuels R&D is occurring throughout the region by
public, private, and non-profit groups, it is often clustered
in leading agricultural producing nations and
uncoordinated with biofuel entities. R&D in second-
generation feedstocks is occurring on demonstration plots
for sweet sorghum, sugar beet, industrial yucca, jatropha,
and castor oil plant, but researchers lack integrated means
of sharing results and benefiting from regional expertise.
Millions of dollars are being channeled into advanced
feedstock R&D globally, particularly in U.S. universities
and dedicated bioenergy research institutions, with Latin
America and the Caribbean falling behind.
While a few countries in the region
are beginning to produce ethanol
and biodiesel equipment, the
grand majority of producers are
dependent on costly, imported
technology.
With the clear exception of Brazil, there is even less R&D
in bioconversion processes, be it for ethanol, biodiesel, or
biomass and biogas power generation. The noticeable
dearth of research and development into industrial
technology necessitates the import of costly processing
technology from abroad. While a few countries in the region
are beginning to produce ethanol and biodiesel equipment,
20 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
a large majority of processing plants have been imported
from U.S. and European manufacturers at great cost to
producers. Bioconversion technologies are being developed
and employed in the U.S., the EU, and India, catalyzing the
transition to next-generation production. Developing a
domestic industrial production capacity through the
support and financing of technology corridors or
technology incubators could help LAC countries expand
their industrial base as well as reduce the current costs
associated with expanded domestic biofuels programs.
With respect to both feedstock and bioconversion
technology, R&D institutions in the region need to be
networked so that existing and potential project
developers may access existing knowledge through
more centralized means. Centers of Excellence, such as
those recommended in the first Blueprint and now under
development in Brazil, are working toward this end, but
similar coordination is needed elsewhere in the region.
Harness LAC’s Vast and Underutilized Biomass
Resources through Advanced Technology
Biomass and biogas technologies are expanding, but they
still represent great unrealized potential. Biomass
represents 13% of the region’s primary energy supply,
mainly woody biomass consumed inefficiently in the
residential sector, and bagasse and other agricultural waste
in the agricultural sector. Biogas is hardly represented at all
in the region’s energy matrix. Industrial biomass- and
biogas-based heat and electricity generation have
unrealized potential to displace fossil fuels in the region,
especially in the rural sector and in nations such as
Honduras and the Dominican Republic, which are highly
dependent on imported diesel for power generation. Wood
residues from forestry industries in Peru, Chile, and
Argentina in particular are an untapped energy source.
Capture Latent Waste Energy Ripe for Biogas
Conversion
While biomass has been utilized for decades as a power
source, biogas production is just beginning to gain
ground. Anaerobic digestion of municipal solid waste
(MSW) can convert waste into electricity, biodiesel, water,
and animal feed, a process that generates revenue from
electricity sales to the grid and reduces the pollution that
accompanies straight incineration. Such technology has
direct application across LAC’s major cities, where waste
management has become a burden. Far from urban
areas, biogas can also be captured from industrial and
small-scale agricultural activity for sale to the grid or use
as heating and cooking fuel. Biomass is the primary
source of heat and cooking energy in rural areas, and the
anaerobic digestion of biomass is among the most
promising renewable energy processes, particularly for
developing countries, as it converts organic waste streams
into renewable energy, heat, liquid fuels, compost, and
fertilizer while reducing pollution. While such technologies
have ubiquitous application across the region, technology
development and transfer remain elusive, particularly with
respect to SMEs in rural areas.
Incorporate Sustainable Practices for Greater
Efficiency and Competitiveness
While methodologies vary, such sustainability and
emissions-reduction requirements could actually bode well
for LAC producers that are able to demonstrate and verify
their production methods. Corn-based ethanol and
rapeseed-based biodiesel, primary biofuel products in the
U.S. and EU, respectively, have relatively low energy
balances when compared to sustainably produced
sugarcane-based ethanol and palm oil–based biodiesel,
and they have been demonstrated to be greater
contributors to food shortages and price inflation. While
first-generation feedstocks that are utilized in LAC — for
example, sugarcane, soy oil, and palm oil — still present
challenges, sustainable agronomic practices coupled with
advanced technology can help producers in the LAC
region to capture the energy, socio-economic, and
environmental benefits of biofuels-sector expansion.
However, this will require additional support to improve
production practices and establish monitoring and
certification systems to help secure a competitive position
in the increasingly discriminating global biofuels market.
The convergence of factors presents an opening for LAC
to become a world leader in sustainable biofuels.
While the impacts on water, air, and soil quality could be
degraded by both agricultural and industrial processes, the
incorporation of advanced agronomic techniques and
technology can mitigate environmental impacts and reduce
operational costs. Zoning programs can identify suitable
land for feedstock expansion that does not encroach on
ecologically sensitive areas. Reduced use of chemical
fertilizer, utilization of organics, and the controlled
application of treated vinasse can minimize contamination
while the elimination of cane trash burning and utilization of
agricultural waste for co-generation improve air quality and
minimize erosion. Further, incorporation of advanced
feedstocks, such as energy cane or sweet sorghum, has
the potential to double yields with a fraction of the water
requirements, further reducing biofuels’ environmental
footprint and promoting food security.
Recommendations
By matching assistance with regional needs, the IDB
can continue to play an important role in facilitating
biofuels and bioenergy expansion in the region. The five
main action areas are described below, accompanied by
four program ideas. In all of its biofuels efforts, the IDB
should strive to tie financing to socioeconomic
sustainability criteria including food security.
Establishing a clear legal and regulatory evaluation
methodology or rubric that incorporates such criteria will
help to ensure that public and private investments are
sustainable.
I. Strengthening Policy Support for Biofuels and
Bioenergy
The need for a regional initiative at the IDB that would
provide technical assistance for the regulation of biofuels
and bioenergy production has become more acute since
the publication of the original Blueprint, where this same
program idea was first proposed. A growing number of
countries in the region have acted to remove policy- and
regulation-based barriers to biofuels production with
assistance from the IDB. Yet there is no systematic, long-
term, regional initiative to identify and disseminate
information regarding effective regulatory frameworks
established in specific countries. The need is all the greater
in the bioenergy sector, where significantly fewer advances
have been made in terms of regulation and policy
development. Furthermore, incongruent policies among
nations continue to impede potential for international trade
in biofuels. Greater harmonization of regulatory
frameworks and technical standards would facilitate
greater engagement in expanding global biofuels markets.
Program Ideas
• A Hemispheric Biofuels and Bioenergy Regulatory
Initiative: Such an initiative would establish a platform
from which the Bank could provide technical
assistance for development of regulatory frameworks
and strategic planning, increasing support for
bioenergy frameworks in particular. Such an initiative
could establish a methodology for benchmarking and
measuring regulatory progress as well as provide
technical assistance for institutional strengthening of
designated biofuels and bioenergy regulatory
agencies and bodies.
• A Sustainable Biofuels Certification Initiative: The IDB
could assist policymakers in integrating sustainable
production criteria into existing legal and regulatory
frameworks. The policy support could be supplemented
with a program designed and funded to conduct life-
cycle assessments of biofuels and bioenergy projects
and develop a sustainable biofuels certification scheme
in line with developing international criteria to help
producers improve production and remain competitive in
the increasingly restrictive global biofuels markets. Such
Executive Summary | Section 1 21
 a program could utilize the IDB’s recently developed
“Biofuels Sustainability Scorecard” as a tool to facilitate
the certification process.
II. Supporting Innovation and Technology
For countries across the region, there continues to be a
profound need to advance technology and training to
support the development of competitive and efficient
biofuels industries. The lack of technology-development
capacity in the region threatens to undermine the region’s
competitive edge in the sector. As proposed in the first
Blueprint, efforts need to go beyond supporting and
cultivating individual efforts to advance innovative capacity
within countries to support countrywide and regionally
based innovation centers. A Biofuels and Bioenergy
Innovation Initiative would create an umbrella program for
projects aimed at promoting research and development, as
well as a platform to promote technological cooperation
and integration at a regional level. Such an initiative, if
undertaken, would lend substantial support and leverage to
the formation of regional Centers of Excellence in Biofuels
and Bioenergy recommended in the first Blueprint.
Program Ideas
• Conduct Feasibility Studies for Integration of
Advanced Technologies: Such studies would be
designed to examine agronomic variables, such as soil
quality and climate regimes and water resources, and
pilot cultivation programs to test various first- and
second-generation biofuels and bioenergy feedstocks.
• An Advanced Biofuels and Bioenergy Technology
Education Initiative: The initiative could lend region-wide
financial support for advanced studies in science and
engineering fields relevant to biofuels and bioenergy
through the provision of funds and expertise for
scholarships, fellowships, and grants; improving curricula
and education infrastructure; support for biofuels and
bioenergy research initiatives; support for inter-country
exchanges, internships, and distance learning.
• Next-Generation Support Programs: These programs
could lend technical and financial assistance to
promote advanced feedstocks and bioconversion R&D
projects through feasibility studies and assessments for
technology upgrades to existing first-generation
projects; loan guarantees to producers seeking to
integrate advanced technology into current biofuels
projects; support for public-private partnerships to
advance pilot projects incorporating next-generation
technology; and support for the strengthening of
regional trade agreements and patent-enforcement
laws to facilitate the transfer of ideas and technology
across borders.
22 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
III. Enhancing Sustainable Biofuels and Bioenergy
Production
As several countries in the region have moved forward
with plans to initiate or expand biofuels and bioenergy
production, the IDB and other multilateral or bilateral
agencies have responded with several feasibility studies
and pilot projects in various stages of execution.
However, existing methodologies do not incorporate
provisions for indirect environmental or socio-economic
impacts of production. Further, efforts to improve the
environmental and socio-economic performance of
projects remain isolated, with producers unable to access
instructive information from successful initiatives
elsewhere in the region.
Program Ideas
• Life-Cycle Analysis (LCA): Each biofuel project under
consideration would undergo a thorough LCA with
consideration for earth-to-engine production that
accounts for carbon and other pollutant emissions from
land clearing, cultivation, and biofuels and bioenergy
production.
• Food Security Impact Assessments: Such
assessments would be designed specifically for biofuels
projects, would carry the same weight as environmental
impact assessments and follow the four dimensions set
forth by the Food and Agriculture Organization:
availability, access, utilization of resources, and
remuneration.
• Land Zoning for Efficient and Sustainable Land Use:
Government officials and project developers would
conduct surveys of available, under-utilized and marginal
agricultural land to provide basic parameters for
expanded biofuels feedstock cultivation based on
adequate first- or second-generation feedstocks.
• Biofuels and Bioenergy Information Warehousing
Project and Resource Directory: Such a directory
could provide players in the biofuels and bioenergy
sectors with a centralized, web-based and publicly
accessible data repository that would include
information on pilot projects, R&D project plans, policy
frameworks, and technical specifications. The
Warehouse and Directory would gather existing data on
current projects in the region and provide a forum for
stakeholder exchange of expertise.
IV. Financing for Broad-Based Technology Upgrades
and Support for SMEs
While there has not been a shortage of financing for large-
scale biofuels producers, small- and medium-scale
producers continue to lack access to low-cost financing to
invest in feedstock and bioconversion technologies,
limiting the potential for biofuels to contribute to rural
development in the region. Financing bottlenecks not only
impede the development of new projects, but they also
inhibit existing first-generation producers, small- and
large-scale, from integrating more advanced and efficient
technologies into current operations. Primary targets for
financing include:
Program Ideas
• A Financial Education and Public Outreach Initiative:
Such an initiative would provide finance workshops and
trainings to small- and medium-scale producers to
support business planning and provide critical
information regarding available financing options and
application procedures.
• Targeting Financing to Small- and Medium-Scale
Producers: Programs could be designed to extend
financing support through loan guarantees, purchase
guarantees, or equity shares for SMEs that are unable to
access capital markets. Such programs would also help
SMEs to access existing fiscal incentives for biofuels
and bioenergy.
• Financing Technology Deployment: Financing support
should target existing facilities where technology
upgrades would improve efficiency and environmental
performance. In addition to continued financing for well-
established technologies such as cogeneration,
financing can be extended to greenfield, second-
generation feedstock and bioconversion projects to help
offset technology risk.
V. Expanding Biofuels and Bioenergy Infrastructure
Inadequate infrastructure remains a primary obstacle to
efficient and competitive biofuels production in the region.
Dilapidated roads and railway networks, coupled with
congested ports, continue to create bottlenecks between
major supply and demand centers. Routes connecting
remote agricultural areas with demand centers remain
among the most neglected of these bottlenecks, yet they
have the greatest potential to boost agricultural
productivity, enhance competitiveness, and extend the
benefits of biofuels to the rural poor. As the private sector
has largely failed to engage in this sector, there remains an
opportunity for the IDB to fill the gap.
Program Idea
• An Agro and Bioenergy Infrastructure Investment
Initiative: Such an initiative would serve to expand
traditional IDB investment in transportation infrastructure
in support of biofuels production and distribution beyond
expanding road networks, to include pipelines,
rehabilitating and expanding rail networks, establishing
dedicated fuel export terminals and facilities, and
promoting waterway and maritime cabotage. The initiative
would provide continued support for grid expansion,
interconnection, and facilitate bioenergy uptake.
Carbon Markets
LAC’s natural resources offer a considerable force for
sustainable development in the form of carbon market
projects, but policy, finance and institutional gaps in
many cases inhibit the region’s true potential. This
section of the report seeks to identify and explain the
opportunities for success as well as the challenges
facing specific countries in the region. It also proposes a
series of measures that the IDB could pursue in order to
facilitate the development of these development
resources to better the prospects for the region’s future.
The worldwide carbon market
grew almost twelve-fold between
2005 and 2008, from $10 billion to
$118 billion.
For this analysis, Garten Rothkopf has analyzed the key
trends shaping the carbon markets in five countries in the
region as well as two in Asia — China and India — in an
attempt to compare the relative strengths and weaknesses
of each. The analysis that follows is derived from a wide
range of sources, including government, academic, and
non-profit analyses, public and private data sources, news
articles, and primary-source interviews in English,
Spanish, and Portuguese conducted between February
and September 2008.
The worldwide carbon market has seen tremendous
growth over the past few years. After tripling in size
between 2005 and 2006 to reach an estimated $30 billion,
it doubled again in 2007 to reach $64 billion. Analysts
estimate that the world’s carbon markets reached a value
of $118 billion in 2008. The regulated European Union
Emissions Trading Scheme (EU ETS) accounts for about
80% of the current market value. Regulated accounts will
likely dominate for the foreseeable future, but the voluntary
carbon market is also emerging as a force of its own,
especially in the developing world.
For the purposes of this study on carbon markets in Latin
America and the Caribbean, most of the focus will be on
the Clean Development Mechanism market and the
voluntary carbon offset market, as these are the two
Executive Summary | Section 1 23
Chart 1.0h Percent of Registered Global CDM Projects by Country/Region
India
China
Brazil
Other LAC
Other Asia/Pacific
Mexico
Africa/ME
Source: UNFCCC
markets that are most involved in the region today. The
CDM market is the second-largest component of carbon
markets worldwide, both in terms of volume transacted
and value. The voluntary market, by comparison, is much
smaller, though it is showing impressive growth. Taken
together, these two markets could prove to be a
considerable force for sustainable development in Latin
America and the rest of the developing world.
The Current State of Carbon Markets
in LAC
Latin America is among the world leaders today in
hosting CDM projects. Along with Asia, the two regions
together account for more than 95% of all projects
globally. In Latin America, Brazil and Mexico stand out as
regional leaders, hosting a majority of all projects in the
region and together accounting for almost one-fifth of all
projects globally. In addition to the CDM sector, LAC and
Asia are also involved in the creation and implementation
of projects designed for the voluntary carbon market.
Asia is also by far the world’s leader in terms of the
number of voluntary offset projects hosted, with over
40% of the global total. Latin America, though active,
garnered just about 8% of global voluntary offset
projects in 2007. While Asia is the leading region for
hosting carbon projects worldwide, Latin America is a
distant second and has considerable room for growth.
Latin America and the Caribbean lag behind Asia in terms
of CDM projects and voluntary carbon projects
implemented and in the pipeline. This was not always the
case. During the first year of the Clean Development
24 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
30%
27%
11%
10%
10%
8%
4%
Mechanism, from November 2004 to November 2005, 39
CDM projects were developed worldwide. Latin American
projects accounted for 18 of these, including the first two
to be registered, and three of the first five. It was a
promising start for the region in terms of the beginning of
an era in sustainable development. Today, Asia hosts
more than 65% of all CDM projects in the world, while
Latin America hosts about 30%. This is almost entirely
due to the burgeoning economies of China and India,
which account for the vast majority of projects in Asia.
Moreover, while certain advantages are inherent to each
region, Asia has arguably pushed more forcefully and has
taken advantage of more opportunities to ensure its
primacy in the sector.
One reason for investors to look to implement carbon
offset and CDM projects in Latin America and the
Caribbean, however, is the general treatment of climate
change at the national level in many countries. Of the
countries that were analyzed in this study, Mexico has
recently released its Climate Change 2008 to 2012
roadmap; the Brazilian government declared 2007 the
“National Clean Development Year”; Colombia is gearing
up to develop a National Climate Change Policy; and
Chile in the past two years has created a Ministry of
Environment and a Ministry of Energy, each of which lend
institutional support for the implementation of carbon
projects. This open support for projects to help mitigate
the effects of climate change is an indication of the
seriousness with which national governments are treating
the issue and the extent to which they plan to address it
in the context of sustainable development. The region is
rich in natural resources that can be utilized for the
implementation of carbon projects. It is a growing
Chart 1.0i Percent of Global CDM Projects in the Pipeline

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08

India
China
Brazil
Mexico
Source: UNFCCC

agricultural powerhouse and thus could become an
important source for certain renewable energy projects
that rely upon biomass for production. The region is also
rich in forests, which are disappearing in record
numbers. Protecting these resources represents a great
opportunity for investors looking to develop carbon
offset projects.
Today, hydroelectric projects represent one of the most
common types of CDM projects in the hemisphere,
while forestry projects are among the most numerous
in the voluntary sector. Of the five countries in the
region that this study analyzed, hydroelectricity
projects are the most common or the second most
common type of project in four of them. In places like
Brazil, Chile, Colombia and Honduras, this is a
reflection of the ample fluvial resources that exist in
these countries. At the same time, however,
hydroelectric projects are subject to climate change
risks. A severe drought in Brazil in 2001 played a role
in the virtual breakdown of hydroelectricity as rivers
dried up, contributing to a 1.5% reduction in GDP.
Looking ahead, helping countries in the region to
diversify their energy matrices — as well as their
carbon portfolios — could help them to avoid climate
change-related risk. Forestry projects in the voluntary
sector are found throughout the region and, in many
cases, reach isolated areas where CDM projects do not
generally exist. This type of project’s promise for the
region is that it can be implemented almost anywhere,
and has already shown that it can contribute
significantly to sustainable development.
Several countries in the region are taking innovative
steps to augment their involvement in, and treatment of,
the carbon market. In Chile, the government has begun
to make a serious commitment to the diversification of
the country’s energy matrix. Included in this effort is a
mandate that 15% of the new energy capacity in the
country come from renewable energy sources.
Furthermore, the state is encouraging green building and
energy-efficient construction. Mexico’s Secretariat of the
Environment and Natural Resources (SEMARNAT) has
worked with the Centro Mario Molina and BANCOMEXT
to create the Mexican Carbon Fund (FOMECAR), which
is designed to support activities related to emissions

Executive Summary | Section 1 25

reduction. FOMECAR’s goal is to increase Mexico’s
participation as a host country within the CDM. The
National Development Bank of Brazil has begun a Clean
Development Program that launched two closed-
investment mutual funds to support projects that can
generate certified emissions reductions (CERs). Such
undertakings indicate that the region’s approach to
carbon markets is becoming more robust.
Gaps Preventing the Wider Adoption of
Carbon Markets in LAC
Carbon projects, whether as part of the regulated or
voluntary market, face myriad challenges in their
implementation. For the Americas, one of the most
fundamental challenges vis-à-vis its competition with
Asia to implement projects that it cannot offer the same
number of emissions reductions to investors for the
simple reason that its energy matrix is less heavily
geared toward traditional fossil fuels than are China’s
and India’s. While this is an inherent disadvantage for
the region, there are other disadvantages in policy,
financing, and institutions that can be smoothed out or
overcome in order to better the prospects for carbon
markets in the region.
Lack of Policy Initiatives
The extent to which governments take an active role in
promoting carbon projects is strongly correlated to the
success that these countries have had in the carbon
market. The Brazilian government declared 2007 the
“National Clean Development Year,” which included at its
launch a protocol signed by 15 government bodies to take
action to reduce greenhouse gas emissions through the
use of CDM projects. This type of action by a national
government is a clear instance of leading by example. In
Mexico, SEMARNAT created FOMECAR to increase the
country’s participation as a host country within the CDM
framework and to gain further benefits in the form of
foreign investment and technology transfer. Chile’s
National Commission on the Environment (CONAMA)
created a strategy to support sectors where CDM projects
need to be developed, including recommending specific
technologies or procedures for potential CDM projects.
These proactive policy initiatives have helped to build and
sustain lively carbon markets in several countries.
Some countries in the region, however — even those that
have had relative success within the carbon market arena
— have had particular trouble with gaps in policy. In
Honduras, for example, convoluted procedural standards
that vary among government offices create uncertainty that
can deter developers and investors. Brazil has faced
certain issues as well, including the undefined fiscal status
26 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
of CDM projects. Policy initiatives must be not only
proactive, but also consistently applied throughout a
country. Ensuring that this is the case not only makes the
processes of project proposal and implementation less
cumbersome for developers and investors, it also speeds
up the project-development process and lowers
transaction costs.
The extent to which governments
take an active role in promoting
carbon projects is strongly
correlated to the success that
these countries have had in the
carbon market.
Access to Financing
Among the most challenging aspects of project design
and implementation in the Americas is project financing.
This is especially true in smaller countries with lessinvestor
confidence and also for smaller projects.
Several countries are better placed than others to help
project developers access financing. Because of
institutional parameters set out in countries like Brazil,
Chile, and Mexico, project proposals are more easily
channeled so that the best projects are consistently given
precedence over those that might need more work. In
countries like Brazil and Mexico, where investors are more
likely to look for opportunities, institutional and policy
benefits play an important role in attracting financing.
However, lack of financing for small projects continues to
hamper growth efforts throughout the region, especially in
smaller countries such as Honduras. Projects that are
smaller in terms of emissions credits produced are not
necessarily small in terms of the impact they can have on
sustainable development. But because these projects do
not provide the same return on investment as larger
projects, investors are often unwilling to pursue them, just
as lending institutions may be. Even when lending
institutions do provide funding, the rural nature of smaller
projects often affects the speed with which they can be
completed, due to infrastructural limitations. In this context,
Garten Rothkopf found that financing opportunities are
often limited to one round and, should construction run
over the expected budget, project developers are forced to
seek additional financing elsewhere.
Institutional Gaps and Inefficiencies
The institutionalization of standards and norms relating to
the carbon market is another area that helps to guide
project developers and channel projects through a set
system on their way from project design to implementation.
Brazil, for example, was one of the first in the region to
establish an institution, the Inter-Ministerial Commission on
Climate Change (CIMGC), to coordinate discussions on
climate change issues and integrate the discussions into
government policies. Today, CIMGC is composed of nine
ministries that are responsible for approving project
activities eligible for CDM as well as creating additional
eligibility criteria beyond those rules established under the
Kyoto Protocol. Similarly, Mexico’s Inter-Ministerial
Commission for Climate Change (CICC) and its Secretariat
of the Environment and Natural Resources (SEMARNAT)
both work to channel the efforts of diverse stakeholders
toward concerted efforts to develop carbon projects for the
sake of sustainable development.
In Honduras, institutional delays created by long periods
for completing feasibility studies and the lengthy project-
approval process act to drive up transaction costs which
are already prohibitive in many cases. In the course of this
study, Garten Rothkopf identified one privately-financed
hydroelectric project in the country that had to wait three
years just to complete the permit process to begin
construction. In Chile, the designated authority, CONAMA,
requires project developers to ask for a separate Letter of
Approval (LoA) for any new information that is added
during the course of project design and implementation.
This makes the project approval process much more time
consuming and drives up transaction costs for all parties
involved.
Recommendations
Though countries in the Americas vary to a large extent
in terms of the potential for their participation in the
carbon market, four pillars will help each country to
become as robust as possible in the field. In order for
carbon markets to continue growing in Latin America, the
IDB must play a leading role to support these pillars by
lending financial support, heightening building capacity
in the region, and helping countries to design and
implement institutional programs to streamline and
enhance their carbon sector.
I. Establishing the Potential for Carbon Markets
The key to understanding the process of emissions
mitigation is an all-encompassing view of national
emissions portfolios. Fully comprehending the contours
of national emissions on a sector-by-sector basis can aid
local and international institutions in bringing about the
most appropriate emissions-mitigation and sustainable-
development projects for each country. In Latin
America’s case, taking stock of individual country
endowments may result in a more nuanced approach to
project development and could help to identify specific
potential emissions mitigation projects in each country.
As the IDB has already accomplished an inventory of its
own corporate greenhouse gases as part of its Carbon
Neutral Initiative, it can translate this knowledge through
capacity building in the region to help government
institutions understand how to inventory emissions. This,
in turn, will help countries identify emissions-mitigation
projects that may have been overlooked up to this point.
Program Ideas
• National Greenhouse Gas Inventories Project:
Undertake a thorough inventory of national greenhouse
gas emissions by sector throughout the region, including
those from deforestation, in order to highlight troubling
trends as well as to identify the potential for new types of
emissions-mitigation projects.
• Private Sector Carbon Footprint Initiative: Promote
private sector emissions accounting through the bank’s
own efforts as part of the Carbon Neutral Initiative and
tie private carbon mitigation efforts regionwide to local
offset projects in order to establish a link between local
corporate efforts to reduce emissions and sustainable-
development projects to generate offsets.
II. Streamlining Institutional Structures and Procedures
Central coordinating bodies for the Clean Development
Mechanism (CDM), referred to as Designated National
Authorities (DNAs), already exist as important central
institutions for the promotion and approval of carbon
projects in many countries in the region. These institutions
often play a key role in helping project developers design
and implement the best projects possible. In many cases,
however, these institutions also create a certain amount of
institutional inertia, prolonging the project development
process and upping transaction costs for all parties
involved. In order to streamline the project approval
process, legal and procedural gaps need to be addressed
so that fewer projects do not fall through the cracks.
These DNAs only address the process of CDM project
development. In order to facilitate broader participation,
individual governments can create a single central
coordinating body for any project seeking carbon credits,
in the voluntary sector as well as the CDM. Doing so
would ensure that each country properly utilizes all the
carbon assets available, not just those that are the largest
and seem the most lucrative. Such institutions could also
help to facilitate an increase in the number of voluntary
projects in a relatively short time span, as the voluntary
market is unregulated and does not have to contend with
Executive Summary | Section 1 27
the inefficiencies associated with policy, financial, or
institutional gaps. This would help the region to become
more active and more innovative in the market and could
help in terms of development on a very local level.
Program Ideas
• Institutional Capacity Building Plan: Identify legislative
and procedural gaps that concern the implementation of
carbon projects by interviewing project developers, and
build government capacity to fill them by increasing
technical support throughout the project-development
and -implementation phases.
• Carbon Project Clearinghouse Program: Centralize all
matters regarding CDM and voluntary carbon offset
project proposals to give project developers a single place
to submit their applications for any project that they want
to pursue, no matter the size or type, ensuring that small
projects that do not qualify for the CDM are not thrown
out but instead incorporated into the voluntary market.
III. Promoting Specific Types of Carbon Projects
Many countries have already begun initiatives to harness the
potential for renewable energy. Developing a plan for the
implementation and use of a renewable energy sector is
especially important for smaller countries in the region, which
generally do not have sufficient alternatives to traditional
fossil fuels when confronted with drastic oil price fluctuations.
This can lead to considerable economic hardship. Pursuing
renewable energy projects beyond the hydroelectric sector
will help countries to become less dependent upon foreign oil
through the diversification of energy matrices and will also
work to reduce national emissions portfolios.
At the same time, there is a tremendous opportunity in
Latin America for carbon-offset projects in the forestry
sector. Deforestation is rampant in the region: From 1990
through 2005, it accounted for over 60% of global
primary forest loss. Central America has the highest rate
of deforestation of any region in the world over the past
15 years, with Honduras leading the way. Today, there
are a number of forestry projects that are CDM-certified
or registered in the voluntary market. Some pay
communities to plant trees in previously forested areas,
while others take a more holistic approach that
emphasizes land management and sustainable
agriculture in the context of the replanting of indigenous
tree species. Given the staggering rate of deforestation in
certain areas of the region and the sustainable
development benefits that can be gained, there is today
huge latent potential for the promotion of such a sector.
28 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Program Ideas
• Renewable Energy Projects for the CDM Program:
Map national endowments for various types of clean
energy, and promote the implementation of renewable
energy projects by offering preferential financing to
private sector project developers.
• National Forest Protection Program: Work with
governments to map national deforestation, implement
capacity-building measures to educate communities in
those areas in long-term sustainable land-use
management, and finance initial replanting and avoided-
deforestation projects, which can then compensate
communities in the long-term through the sale of
voluntary carbon offsets.
IV. Improving Access to Financing
Lack of financing is one of the key hurdles inhibiting the
growth for the carbon sector throughout the region. Some
national institutions have addressed this shortcoming. The
Brazilian National Development Bank (BNDES) and the
Mexican Carbon Fund (FOMECAR), for example, have
instituted programs to support emissions-mitigation
projects. These types of institutions play an important role
in expanding the scope of projects suitable for the carbon
market and act as useful examples of how relatively well-
endowed countries can go one step further to support
market development. Most countries in the Americas,
however, do not have the resources necessary to fund
such institutional programs. The ability of countries to fund
carbon projects will be increasingly important, as it will act
to build investor confidence and to foment interest from
project developers seeking to implement new projects.
Program Ideas
• Public-Private Partnership Working Group: Match
interested private project developers with potential
public-works projects throughout the hemisphere that
can be utilized to generate offsets, such as innovative,
low-emissions public transportation or landfill gas
projects.
• Latin American Carbon Fund: Create a trust fund to
obtain future flows of certified emissions reductions
(CERs) on behalf of participants, in return for up-front
project finance support.
• Latin American Carbon Market Plan: Increase the
number of bank-sponsored clean energy projects by
providing additional early-stage project development
financing as well as technical support to validate project
designs and certify emissions reductions that result from
these projects.
Endnotes Section 1

1 International Energy Agency. “Energy Balance of Non-OECD Countries – 2008

Edition.” International Energy Agency. 2008. 30 Oct. 2008
<http://www.iea.org/textbase/publications/free_new_Desc.asp?PUBS_ID=1078>.
2 Operador Nacional do Sistema Elétrico (ONS), “Dados Relevantes 2006.” 5 Apr.
2008. 9 Sept. 2008
<http://www.ons.org.br/biblioteca_virtual/publicacoes_operacao_sin.aspx>.
3 Intergovernmental Panel on Climate Change (IPCC). “Climate Change and Water.”
UNEP and WMO. June 2008. 30 Oct 2008 < http://www.ipcc.ch/pdf/technical-
papers/climate-change-water-en.pdf>.
4 OLADE. “Sistema de Información Económica Energética.” OLADE. Nov. 2007. 1
Sept. 2008 <http://www.olade.org/documentos2/plegablecifras-2006.pdf>.
5 Renner, Michael, Sean Sweeney, and Jill Kubit. “Green Jobs: Towards Sustainable
Work in a Low-Carbon World.” UNEP. Sept 2008. 31 Jan. 2009
<http://www.unep.org/labour_environment/PDFs/Greenjobs/UNEP-Green-Jobs-
Report.pdf>.
6 OLADE. “Sistema de Información Económica Energética.” OLADE. Nov. 2007. 1
Sept. 2008 <http://www.olade.org/documentos2/plegablecifras-2006.pdf>.
7 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr. 2008
<http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
8 Sustainable Energy Finance Initiative and New Energy Finance. “Global Trends in
Sustainable Energy Investment 2008 – Dataset.” UNEP. 2008. 5 Sept. 2008
<http://sefi.unep.org/fileadmin/media/sefi/docs/publications/data_2008.pdf>.
9 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr. 2008
<http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
10 New Energy Finance. “NEF Desktop 3.0.” 10 Sept. 2008
<http://www.newenergymatters.com>.
11 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr. 2008
<http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
12 International Geothermal Association. “Installed Generating Capacity.” 29 July
2008. 1 Sept. 2008 <http://iga.igg.cnr.it/geoworld/geoworld.php?sub=elgen>.
13 Global Wind Energy Council. “Global Wind 2007 Report – Second Edition.” May
2008. 1 Sept. 2008 <http://www.gwec.net/fileadmin/documents/test2/gwec-08-
update_FINAL.pdf>.
14 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr. 2008
<http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
15 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr. 2008
<http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
16 Fay, Marianne and Mary Morrison. “Infrastructure in Latin America and the
Caribbean: Recent Developments and Key Challenges.” The World Bank. 2007. 3
Jan. 2008 < http://www.iadb.org/sds/conferences/infrastructure/WB-
IDB%20Infrastructure%20in%20Latin%20America.pdf>.
17 AMDEE. “Perspectiva del Mercado.” Primer Encuentro Internacional para el
Fomento de las Energías Renovables en el Estado de Oaxaca. 29 Feb and 1 Mar
2008. 10 Apr 2008 < http://www.oaxacaenergialimpia.com.mx/bloque02/10.ppt>.
18 Sonntag-O’Brien, Virginia and Eric Usher. “Mobilising Finance for Renewable
Energies – Thematic Background Paper.” International Conference for Renewable
Energies, Bonn 2004. Jan. 2004. 9 Jan. 2008
<http://www.uneptie.org/energy/act/fin/docs/TBP05-Financing.pdf>.
19 New Energy Finance. “New Energy Finance Desktop 3.0.” New Energy Matters. 7
Sept. 2008 <http://www.newenergymatters.com>.
20 Jannuzzi, Gilberto De Martino. “Public Interest Research and Development:
Electricity Sector Reforms and the Effects in Energy R&D Activities.” International
Energy Initiative – Latin America. Energy Discussion Paper No. 2.62-01/03. Apr.
2003. 23 Jan. 2008 <http://www.iei-la.org/documents/RelIEI2-62-01-03.pdf>.
21 Maize U.S. #2 Yellow, USDA; Soy Oil FOB Argentina, USDA FAS; Palm Oil CIF
Rotterdam, Malaysian Palm Oil Board
22 Roig-Franzia, Manuel. “A Culinary and Cultural Staple in Crisis.” The Washington
Post. 27 Jan. 2007. <http://www.washingtonpost.com/wp-
dyn/content/article/2007/01/26/AR2007012601896_pf.html>.
23 International Energy Agency. “Biofuels for Transport: An International Perspective.”
Paris, 2004.
24 New Energy Finance, statistical database, accessed 05 Sept. 2008.
25 N.a. “Chile slashes taxes on biofuels to avoid social and health crisis.” Biopact. 18
May 2007. <http://biopact.com/2007/05/chile-slashes-taxes-on-biofuels-to.html>.
26 “Oportunidades y riesgos de la bioenergía.” Comisión Económica para América
Latina y el Caribe (ECLAC). Centro de Prensa. 07 May 2007.
<http://www.eclac.cl/cgi-
bin/getProd.asp?xml=/prensa/noticias/comunicados/6/28506/P28506.xml&xsl=/pre
nsa/tpl/p6f.xsl&base=/prensa/tpl/top-bottom.xslt>.
27 New Energy Finance, accessed 01 Oct. 2008.
28 Mesquita, Mauricio. “IIRSA Economic Fundamentals.” IADB. N.d. Aug. 2006.
29 Rozas Balbontín, Patricio. Powerpoint presentation. CEPAL. APEC 3rd Senior
Officials’ Meeting and Related Meetings: Seminar on Best Practices in Regulation
and Promotion of Efficiency in Transport Infrastructure Facilities. Lima, Perú. 15–16
Aug. 2008.

Executive Summary | Section 1 29

30 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
SECTION TWO
ESSAYS
ON MAJOR
THEMES

Essays on Major Themes | Section 2 31

2.1 Green Urgency
2007 was a busy year for the UN Office for the Coordination
of Humanitarian Affairs (OCHA), which had to dispatch a
record nine missions to the Americas out of a total of 17
around the world in response to an unusually high number of
natural disasters in the region. Of these missions, 70% were
in response to hurricanes and floods, prompting OCHA to
refer to these disasters as “a possible glimpse of the shape
of things to come, given the reality of climate change.”1
Throughout the Americas, these disasters stood out as
perhaps the most tangible examples yet of the immediate
and impending effects of climate change on the region.
Rains left most of Mexico’s Tabasco state under water for
weeks, including large parts of Villahermosa, a city of over
650,000. At least 700,000 people in the region saw their
homes flooded, and the aftermath brought fears of
outbreaks of water-borne illnesses.2 The state of Tabasco
saw 100% of its crops disappear under water and 70% of
the entire state flooded.3
Elsewhere, in the Dominican Republic, Tropical Storm Noel
triggered floods that killed dozens of people. Category five
Hurricane Felix hammered Honduras. Meanwhile, Uruguay
suffered from its worst flooding in 50 years, while in Bolivia
tens of thousands were left homeless, and an area the size
of Britain was left under water by the worst flooding in
more than a quarter century. The flood’s effects were
exacerbated by deforestation in the Amazon Basin brought
about by large-scale cattle ranching and soy production.4
These events are just a few of the most recent examples
of what is a growing trend in the Americas as a whole:
tangible evidence of global climate change. The effects
have not been limited to storms or floods. Drought, in fact,
is likely to become the norm in much of the region should
current trends persist, and it could have staggering
consequences for the region’s role as a global agricultural
supplier for decades to come.
The warning signs are already here. In 2005, Brazil’s
Amazon suffered its worst drought in more than 100 years;
that is, since record-keeping of this sort first began. As a
result, production of corn dropped 13.5%, while that of
soybeans fell 4.6%, even though the area in which it was
planted had increased 16% from the year before.5 These
were not trivial reductions — together, the two crops
account for more than three-quarters of Brazil’s grain
production. The drought caused rivers and lakes to dry up
completely, prompting states of emergency to be called in
all 61 municipalities of the country’s Amazonas state.
Brazil’s military was dispatched to supply water, food, and
medical supplies to tens of thousands of people left
32 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
stranded by the drastic drop in water levels.6 On the
Madeira River, a main artery for products like soybeans
and diesel oil, navigation had to be suspended when
water levels fell to barely one-tenth of their rainy-season
averages. Crops rotted because they could not be
shipped to market. Communities that relied on rivers to
carry away human waste risked outbreaks of cholera and
other diseases.7 Analysts at Brazil’s National Space
Research Institute (INPE) later determined that the drought
had been caused by global warming.8
What should we make of all these events? Skeptics
alternately discount the trend of global warming or, if taken
as a given, argue that there is scant evidence that such
warming is human-induced. Both of these assertions miss
an important point — that countries in Latin America and
the Caribbean are already living through global warming’s
daily effects. According to the IPCC, these include
“widespread changes in precipitation amounts, ocean
salinity, wind patterns . . . droughts, heavy precipitation,
heat waves and the intensity of tropical cyclones.”9 For the
sake of the people living in these areas, policymakers do
not have the luxury of merely debating the scientific merits
of climate change. Disasters are already occurring, and a
sense of urgency needs to take hold in order for leaders in
the region to address this issue through collective action
on a scale never before seen. The Americas could have a
bright future if concerted efforts are made on this front. If,
instead, the buck is passed to countries that are viewed as
having been responsible for much of the change up to this
point, then the region will have missed a golden
opportunity to act decisively while it stands on the
precipice of irreparable disaster.
This essay will take a look at the myriad ways in which
climate change today affects the Americas and how the
actions and inactions of governments and other regional
actors in turn exacerbate the effects of climate change to
their own detriment. Five major channels are discussed;
three regarding climate change’s effects on the human
population in the region, and two exploring how human
activity makes these effects worse. First, the paper
provides evidence that global climate change is leading to
an increase in the intensity of natural disasters in the
region. Second, it explores the ramifications of this
increased intensity in the context of long-term efforts to
develop. Third, it demonstrates the ways in which climate
change will threaten public health throughout the region.
Regarding human actions, the final two sections discuss
how urbanization and deforestation magnify the effects
that climate change has on populations in the region.
Finally, a series of recommendations is given for ways in
which the Americas can take concrete steps to address
mitigation and adaptation strategies.
 The Setting
Latin America and the Caribbean is a region of natural
bounty. With just one-sixth of the total land area of the
planet, the region has more than 40% of its animal and
plant species and over one-quarter of the planet’s forests.10
Those who live there, representing about 8% of the world’s
population, enjoy 29% of global precipitation and more
than one-third of all fresh water.11 They also make use of
the world’s largest reserves of arable land, which account
for almost one-quarter of the world’s total and
approximately 30% of the region’s entire area.12
Despite these benefits, Latin America and the Caribbean
remains a place where inequities in the distribution of
wealth are among the most severe globally, making the
region one of the most vulnerable to the effects of climate
change. The poverty rate is 44%.13 One in seven of its
citizens has no access to a safe water supply, a majority of
whom live in rural areas.14 Such geographic and economic
disparities intra-regionally present challenges for Latin
America and the Caribbean. In a place sorely in need of
infrastructure to better its prospects for economic
advancement and adaptation to climate change, the
region has the highest incidence of cancellation for
infrastructure projects of any region in the world.15 These
shortcomings highlight the systemic challenges that the
region faces in confronting climate change.
The Americas have been at the center of attention before,
regarding efforts to tackle climate change collectively. Rio
de Janeiro played host to the 1992 UN Conference on the
Environment and Development (UNCED), which prompted
countries to agree that “states shall enact effective
environmental legislation” and “cooperate in the spirit of
global partnership [in order] to conserve, protect and
restore the health and integrity of the Earth’s ecosystem.”16
While acknowledging its limitations at the time, one U.S.
State Department official claimed on the first day of the
conference that “the history books will refer back to this
day as a landmark in a process that will save the planet
from destruction.”17 Now, more than a decade and a half
later, the prognostications of the beginning of the end for
anthropogenic destruction have been replaced by
warnings that we are only now witnessing global climate
change’s initial effects.
That is not to say that the world, including the Americas,
has not accomplished meaningful progress toward
identifying local climate change phenomena and taking
certain steps to adapt since 1992. The meeting to take
place in Copenhagen in December 2009 to determine a
post-Kyoto Protocol agreement is a testament to the utility
that that the Protocol has served up to this point, as well
as to the aspirations for a meaningful post-Kyoto
successor. In the wake of the Rio summit, regional
countries rolled out environmental secretariats and
ministries to evaluate environmental impacts and to create
norms and instruments for environmental management. In
some countries — Mexico, Brazil, Chile, and Colombia —
specific institutions were created for the generation of
environmental data on a national scale.18 These actions
were taken with the understanding that governments
needed to do more to address climate change.
Quantifying it was one way to measure its effects over
time and to make comparisons inter- and intra-regionally.
For the Americas today, even the countries that the
developed world sometimes derides for not doing enough
to address climate change often do more than their
developed-world counterparts. Mexico, for example,
recently finished fourth in a climate change global-
performance index, trailing only Sweden, Germany, and
Iceland. Three countries from the region — Mexico, Brazil,
and Argentina — finished in the top ten.19 The U.S.
finished in 55th place out of 56 countries. For Mexico, the
high ranking came as the result of the development of a
comprehensive climate change mitigation strategy and
efforts to develop the first voluntary corporate greenhouse
gas emissions inventory.20
Meanwhile, recent efforts by Brazil to find a solution to its
deforestation problem highlight the challenges the country
faces, but also the measured success that it has already
achieved. The country’s “Plan for a Sustainable Amazon”
(PAS) is setting up a tax regime to benefit those who
employ sustainable practices, establishing a legal
framework for transferring parts of the forest from public to
community control. This plan is adding three million
hectares to the government’s “officially protected” zone
and is seeking ways to allow the international community
to help preserve the forest. In Amazonas state — 98% of
which is pristine forest — the “Bolsa Floresta” has been
developed as a conditional cash-transfer system to
compensate people living in the state or not cutting down
trees.21 Brazil’s President, Luis Inacio Lula da Silva,
recently launched an international fund to protect the
Amazon and help combat climate change, hoping to raise
$21 billion for the effort by 2021.22
Not only the biggest countries in the region have sought to
address climate change through policy initiatives. In 2007,
Costa Rica announced that it would aim to go carbon-
neutral by 2021, just in time for the country’s 200th
birthday. In order to do so, it plans to clean up its fossil
fuel–fired power plants, promote the use of hybrid
vehicles, and increase tree planting. In the final case,
Costa Rica has already accomplished a lot — tree cover in
Essays on Major Themes | Section 2 33
the country has increased from 40% to 51% of the
country’s total area in the last decade.23
While some governments in the region have undertaken
initiatives to address the climate change issue, progress
has tended to be concentrated more in countries and
regions that are generally better off, while climate change
more gravely affects those who are least well off. Even in
countries where it is addressed, the problem of climate
change has not been attacked with the fierce urgency that
it should be. In many cases, pledges to reach climate
change policy goals by a certain date decades into the
future are belied by facts on the ground, and in others
some of the most obvious solutions for protecting citizens
and the world from the effects of climate change are
seemingly overlooked or given short shrift. Furthermore,
problems of enforcement have tempered, or even
undermined, executive and legislative successes in the
region meant to mitigate climate change’s effects.
Meanwhile, the low-hanging fruit of urban planning and
emergency-disaster response, both of which would help
the region to adapt to climate change, simply are not given
the same attention as more fashionable efforts to combat
climate change on a larger and more profitable scale.
These often-overlooked solutions to adaptation and
mitigation are not the only way forward, however, and must
be implemented in conjunction with more diversified energy
matrices. 2008’s oil-price spikes made it even more difficult
and costly for the region to develop. While 26 million Latin
Americans climbed out of poverty between 2002 and 2006,
the UN World Food Program estimates show that 15 million
could slide back into poverty if the price of oil were to jump
so high again. In 2007 alone, 500,000 toppled back into
poverty in El Salvador and Guatemala.24 Such a backward
slide is especially threatening in Central American countries,
which import much of their grain and nearly all of their oil.
While 26 million Latin Americans
climbed out of poverty between
2002 and 2006, the UN World
Food Program estimates that
15 million could slide back into
poverty if the price of oil were
to jump to mid-2008 levels again
for a sustained period.
Elsewhere in the Americas, the effects of high oil prices
earlier in the year forced governments to dole out fuel
subsidies. The Colombian government recently raised its
34 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
subsidy to $3 billion after 145,000 truck drivers went on
strike over fuel costs. In Argentina, $11 billion was spent
on fuel oil subsides in 2007, while the figure reached
almost $2 billion in Ecuador.25 In Mexico, meanwhile, the
government spent about $20 billion on gasoline subsidies
in 2008, an amount four times that given in 2007.26 Though
the country has recently announced plans to phase out
these subsidies, Mexico and other countries are still
pouring valuable resources into maintaining unsustainable
energy matrices. Regional governments must expend
greater effort and spend more money to consider ways to
diversify their energy matrices in order to address the twin
threats of climate change and underdevelopment.
Up to this point, policy efforts regarding climate change in
the region have fallen short. The main obstacles to climate
change policy implementation throughout the region have
been political will and lack of data and technical knowhow.
All three, if addressed together, could go a long way to help
the Americas tackle the issue. Technical studies of climate
change in the region must be undertaken to determine the
extent to which various countries are affected. At the same
time, international institutions have a role to play in
harmonizing data collection intra-regionally and in helping
to increase technical capacity so that such collection can
be expanded. Finally, once these pieces are in place,
governments have an obligation to address the issue of
climate change policy implementation as urgently as
possible.
It is time for the Americas to take urgent action regarding
climate change policy. Countries in the region must work
together, alongside inter-governmental institutions, to
implement short-, medium-, and long-term goals to
address these challenges. Not doing so could have grave
human and economic implications years into the future.
The effects of climate change in the region are, after all,
already being felt. Governments that address them after
the fact will incur a much higher cost in terms of
development and human well-being than those that take
ambitious steps to implement measures today.
Why the Americas Need to Do More
Before getting to what could and should be done, it is first
important to tackle why it is so important that actions are
taken. Simply put, climate change is already threatening
the region in such a variety of ways that it is easy to forget
the scope of such changes. According to the IPCC,
“highly unusual extreme weather events” have had
negative impacts on populations, increasing mortality and
morbidity in affected areas.27 The economic viability of
certain regions will also be threatened. While natural
disasters are a major part of it, a place also needs to be
held for the man-made actions that exacerbate the effects
of these disasters (for example, urbanization and
deforestation). Only by understanding the ways in which
countries in Latin America and the Caribbean are already
affected can we even begin to consider how the region
should go about taking a more active and leading role in
mitigating the disastrous effects from which it suffers.
The Intensity of Natural Disasters Will Continue to
Increase...
Several types of natural disasters will affect the Americas
with increasing frequency. Hurricanes and other storms
are probably the most visible of the regional natural
disasters, in part because they are relatively easy to
predict and prepare for in short time spans. A few in the
past decade stand out as exceptional examples of the
types of events that the region should better prepare for,
especially given the warning put forth in a recent report
from the UN Environment Program (UNEP) stating that the
region should expect “an increase in the intensity and
frequency” of these events.28
The first of these was one of the deadliest and most
powerful storms ever recorded in the Atlantic Basin. In late
October 1998, Hurricane Mitch formed in the Caribbean
and quickly strengthened to Category Five status.
Maximum sustained winds reached 180 mph. Even
though Mitch subsided to a Category One storm with 80
mph winds by the time it made landfall in Honduras, its toll
on human and economic well-being was catastrophic.
Chart 2.1a Number of Major Hurricanes Per Year and Ten-Year Averages in the Atlantic Basin, 1851–2006
9
# of Major Hurricanes
8
10 per. Mov. Avg. (# of Major Hurricanes)
7
Number of Major Hurricanes
0
1851 1876
Source: Atlantic Oceanographic and Meteorological Laboratory
Some 7,000 people died in Honduras, and another 3,000
died in Nicaragua, with an additional 80,000 people in the
region sustaining injuries.29
In addition to increasing in intensity and frequency,
hurricanes may show up in places that are not
accustomed to their effects. In March 2004, Brazil
unexpectedly found itself face to face with the first
hurricane ever recorded in the South Atlantic. Named
Catarina, after the state in Brazil that it hit, the hurricane
was more of a disturbance than a catastrophic event. Still,
some 40,000 students in Catarina were out of class for
more than two weeks. Total economic damage was
estimated at around $420 million.30 Twenty-three cities
were severely struck, and some 33,000 people were left
homeless.31 October of the following year saw the most
intense hurricane ever recorded in the Atlantic Basin,
Wilma, make its way through the Caribbean to Mexico’s
Yucatan Peninsula before turning northeast to make
landfall in Florida.
Floods are even more calamitous than hurricanes in terms
of the number of people killed throughout the Americas over
the past few decades. Many are caused by hurricanes, as
evidenced by the large amounts of rainfall accompanied by
Hurricane Mitch in Central America in 1998. Others,
however, come about as the result of heavy rains that affect
highly vulnerable areas. Throughout the Americas, a
combination of steep slopes, saturated soils, variations in
precipitation patterns, unsuitable infrastructure, and heavy
occupation of riverbeds — together with persistent rainfall
1901 1926 1951 1976 2001
Essays on Major Themes | Section 2 35
and glacier melting — will lead to an even worse situation Chart 2.1b Percent of All Deaths Caused by
for the region if more intense rains fall, as predicted by Natural Disasters in the Americas, 1970–2001
today’s climate change models.32
50%

This was the case in Venezuela in 1999. Two weeks of 45%

torrential rains in the second half of December caused
40%
flooding and landslides that led to the deaths of between
30,000 and 50,000 people.33 Another 200,000 people were 35%
left homeless, with entire towns along the Caribbean coast
30%
washed away. About 230,000 jobs were lost as a result of
the floods.34 Meanwhile, in 2007, the worst flooding in 50 25%
years hit Uruguay, where it forced the relocation of 12,000
people, closed schools, brought down electricity and 20%
phones lines, submerged farm land, and contaminated
15%
water supplies.35 These events have extracted both human
and economic costs that cannot be recovered. They are 10%
especially important to address, given IPCC models
5%
predicting that floods will become more frequent, which
will increase the amount of sediment and degrade the 0%
quality of water in certain parts of Latin America and the

es

ds

es

ics

es
m
ak

oo

no

d
or

em
Caribbean.36

sli
qu

Fl

ca
St

id

nd
rth

l
Vo

Ep

La
Ea

Two weeks of torrential rains in Source: UNEP Global Environmental Outlook 2007

Venezuela in 1999 caused flooding
and landslides that led to the
deaths of as many as 50,000
people and economic damages
estimated at $9 billion.
Glacial melt will also threaten the region. The ice-covered
area of the Peruvian Andes, where 70% of the Earth’s
tropical glaciers exist, decreased by 22% from 1970 to
1997. Meanwhile, the rate of the melt is increasing.
Quelccaya, the world’s largest tropical ice cap, located in
Peru, is retreating at about 200 feet per year, up from 20
feet per year during the 1960s.37 The same is happening in
Colombia.38 There, snowcaps are receding at a rate of 80
feet per year, up from 50 feet per year just a few years
ago. From Ecuador to Chile to Argentina, temperature
changes and humidity are causing glaciers to retreat. This
melting plays a role in “significantly affect[ing] water
availability for human consumption, agriculture and energy
generation.”39 It will also alter shipping and boating routes
used for commerce and tourism.40 The impact of glaciers
melting in the Andes will change river flows and threaten
water supplies for people, industry, agriculture, and nature.
It could even lead to inter- and intra-national disputes over
access to water resources.41 The disappearance of these
glaciers will also play a significant role in the increased
occurrence of drought in the region.
The effects of these natural disasters, while not
necessarily avoidable even in the absence of global
warming, can be mitigated with the implementation of
national and regional policies aimed at taking on very
specific areas. The incidence of hurricanes and droughts
and the rate of glacial melt will not diminish overnight,
even given a strong effort to tackle climate change today;
however, the effect they have on the region can be
reduced if governments take climate change seriously.
With its citizens already threatened, now is the time for
regional governments to address development patterns
and adapt accordingly. If measures are not taken, the
long-term impact could be drastically worse.
…Hampering Efforts at Long-Term Development,
Especially in Agriculture…
Human suffering as the result of these disasters will not be
temporary, and in many cases they will irreparably damage
areas on which people depend to make their livelihoods.
Hurricane Mitch’s impact on food availability in Honduras,
Nicaragua, El Salvador, Guatemala, Belize, and Costa Rica
was devastating. Honduras was hit the hardest, with over
50% of its infrastructure and production severely affected
or completely destroyed.42
The long-term economic effects of this storm were
debilitating. In Mitch’s wake, the USDA initially estimated
that export earnings in the region would be much lower for
at least two years, due to plant and infrastructure losses.43
Hundreds of thousands were left without work or any

36 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

means of income. More than 30% of the assets of the
poorest quarter of the population were destroyed, while
the proportion of children in homes affected by the
hurricane who had to work instead of going to school
jumped from 7.5% to 15.6% overnight.44 According to the
UN Food and Agriculture Organization, the hurricane’s
damage to basic infrastructure, agricultural production,
and the industrial sector “virtually destroyed more than
two decades of progress” in the region.45 This is the sort of
nightmare scenario with which regional governments have
to contend.
In 2005, hurricanes in Latin
America and the Caribbean killed
over 4,500 and caused economic
losses valued at over $205 billion.
These storms are wide reaching. In 2005, hurricanes alone
in Latin America and the Caribbean left 4,598 dead and
left seven million affected.46 They also caused economic
losses valued at over $205 billion, or the equivalent of
Hong Kong’s entire economy, the 37th–largest in the
world. To put it in the proper context, those losses are the
equivalent of about 16% of Brazil’s economy, 23% of
Mexico’s economy, and 79% of Argentina’s economy,
Latin America’s three largest.47 Clearly, these are not
losses that can be sustained in the long term, especially
given predictions that hurricanes may become more
frequent and are likely to become more powerful.
Estimates of the total losses brought about by the floods
in Venezuela in 1999 reached as much as $9 billion.48 In
this particular case, mudslides and raging rivers swept
away shantytowns perched on steep slopes.49
Subsequent floods in the country in 2002 affected almost
60,000 people and led to the loss of at least 200,000 acres
of farmland.50 Floods and landslides brought about by
Hurricane Mitch, prompted by as much as six feet of rain
released in the interior of the country, were felt throughout
the country.51 Over 150,000 tons of grain were lost.
Continued glacial retreat also has grave implications for
Latin America, especially South America. As this retreat
continues, water availability and hydropower in the region
will be affected significantly. This is no small consideration
for a region in which 14% of the population today has no
access to safe water.52 Peru will be hit especially hard, as
glaciers account for 80% of the freshwater in the country’s

Diagram 2.1a Estimated Impact of Climate Change

Latin North Polar

Africa Asia America Oceania Europe America Regions Islands
Water resources
Marine ecosystems
Forest ecosystems
Grassland ecosystems
Lakes, rivers and wetlands
Coastal ecosystems
Wildlife
Commercial agriculture
Subsistence agriculture
Livestock
Forestry
Coastal settlements
Urban areas
Heat stress
Vector-borne diseases
Increased energy demand
Transport
Construction industry
Tourism

Strongly positive
Positive
Neutral
Negative
Source: Environmental Health Perspectives, April 2007 Strongly negative
No information

Essays on Major Themes | Section 2 37

cities.53 Nor is glacial retreat trivial for a country like Brazil,
which lies downstream from the Peruvian Andes and
generates 84% of its electricity from hydroelectric power.54
There, in 2001, a combination of increased energy
demand and drought brought about the virtual breakdown
of hydroelectricity, contributing to a reduction in GDP of
1.5%.55 Perhaps even worse for Latin America is the effect
that reduced glacial melt will have on agriculture, to which
almost 74% of all freshwater in the Americas is
dedicated.56 According to the IPCC, glacial water loss will
lead to the salinization and desertification of 50% of the
region’s cultivated land, leading to less agricultural
productivity.57 Rising temperatures of 2 degrees Celsius
would lead to a 60% loss of unirrigated maize in Mexico,
upon which two million farmers count for survival. The
implications for regional development are grim.
Tropical glaciers today provide
Peru’s cities with 80% of their
freshwater. It is estimated that these
glaciers will disappear completely
between 2020 and 2030.
Increased drought — brought about by glacial melt,
deforestation, increases in temperature, and subsequent
changes in rainfall patterns — could lead to more massive
crop failure and subsequent demographic shift than it
already has. Current estimates are that as much as 75% of
this region is at risk of being turned into desert, brought
about by higher variability in rainfall patterns that result
from global warming.58
The UN Development Program has warned that there is a
“high probability” that “crop yields will diminish significantly
in climate change conditions for most of the countries in
the Americas, and … soil degradation processes will
continue to increase.” Such effects will likely lead to a drop
in maize production in the Americas of 15% on average.59
Given that Latin America today produces 47% of the
world’s soybean crop, such events could be catastrophic
for its economic development.60 Furthermore, as witnessed
in Brazil in 2001, droughts can also lead to the drying-up of
hydroelectric power sources. That drought led to
hydroelectric plants that could not function and to a
subsequent decrease in GDP of 1.5%.61 At the same time,
droughts increase the probability that sudden and intense
rainfall will lead to flooding, as the ground is less able to
absorb water.62 Meanwhile, the result of spreading drought
throughout Latin America will be increased rates of rural-
urban migration. In northeast Brazil during the early 1980s
and 1990s, prolonged droughts provoked rural-urban
38 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
migration of subsistence farmers on a large scale.63 The
more the intense droughts move forward, the more such
migration is likely to increase.
…And Increasing Threats to Public Health
These disasters can bring direct and indirect consequences.
Epidemics are probably among the most underestimated
natural disasters in the Americas and also among the most
preventable. Infrastructural development and proper long-
term planning could help guard against the spread of
cholera, giardia, and typhoid in a disaster’s wake.
The Americas are already witnessing the effects that
epidemics can have. In the wake of Hurricane Mitch,
flooding brought about a six-fold increase in cases of
cholera to Nicaragua. In Guatemala, cholera cases jumped
four-fold.64 Meanwhile, the World Health Organization
predicts that general changes in the region’s climate are
likely to lengthen the transmission seasons for important
vector-borne diseases.65 Thus, in addition to epidemics
brought about by natural disasters, increased temperatures
will lead to at least a heightened probability that epidemics
occur. Changes in temperature and surface water will, for
example, affect the life-cycle of mosquitoes, which can
lead to the spread of diseases like malaria and dengue to
countries in more temperate zones that are not currently
affected. As temperatures increase, climate change is also
likely to lead to an increase in rodent-borne disease.66
Flooding in the aftermath of
Hurricane Mitch in 1998 brought
about a six-fold increase in cholera
cases in Nicaragua and a four-fold
increase in such cases in
Guatemala.
Drought can also help fuel epidemics, just as floods can.
As droughts diminish water availability, there is usually an
increase in the amount of drinking water shared between
human populations and the livestock from which they
make a living. Heavy downpours during a drought can
cause sewers to overflow, leading to rain runoff that
washes microbes off farms and streets and into water
supplies. A number of studies have demonstrated a
correlation between heavy downpours and outbreaks of
water-borne diseases such as cryptosporidiosis,
giardiasis, and cyclosporidiosis.67 Major droughts in the
northeastern Brazilian cities of São Luís and Teresinha
between 1983 and 1985 and 1992 and 1994 coincided
with important epidemics. There, kala-azar, a potentially
fatal parasitic disease, re-emerged. On the coast of
Colombia in 1995, heavy rainfall following the worst
summer drought in 50 years precipitated a cluster of
diseases involving mosquitoes, such as equine
encephalitis and dengue; rodents, such as leptospirosis;
and toxic algae, which resulted in the death of 350 tons of
fish in the country’s largest coastal lagoon.68 More recently,
in 2007, changing weather patterns contributed to a
dengue epidemic in the Americas. Through the first nine
months of 2007, the Pan American Health Organization
(PAHO) logged more than 630,000 cases, or 11% more
than in all of 2006.69 By the end of 2007, PAHO reported
over 900,000 cases, the equivalent of a 63% increase in
the number of cases of dengue in just one year.70
Also contributing to the rise of epidemics in the region will
be the increased rate of glacial melt brought about by
global warming. Glaciers help to regulate the region’s
resources by contributing to runoffs during warm and dry
periods and by storing water during cold and wet periods.71
In Central and South America today, glacial retreat brought
about by global warming is enabling plant communities to
migrate upward, and mosquitoes and mosquito-borne
diseases are being found at higher altitudes.72 This could
bring malaria back to major cities like Quito, Ecuador, and
Mexico City, where it has not been for decades.73 The trend
is likely to continue in other cities as well, as analysts
expect most tropical glaciers in the region to be completely
destroyed between 2020 and 2030.74
Meanwhile, Human Actions Will Continue
to Exacerbate the Effects of Climate Change…
In addition to natural disasters, certain human actions
exacerbate the effects of global climate change in the
Americas. Among the most important are deforestation
and urbanization, both of which act to intensify the
outcomes of climate change that many people already
feel. These activities highlight the areas in which
policymakers can make the greatest gains in order to
lessen the impact of global climate change.
…As Urbanization Continues Apace…
2007 marked the first year in history that more people in
the world lived in cities than in rural areas. The trend is set
to continue: Estimates are that some five billion people out
of a total global population of 8.1 billion will be living in
cities by 2030.75 Urbanization itself is not necessarily
something that the world, or the Americas, can or should
stop. Governments can, however, implement policies to
mitigate the often-destructive process of urbanization. Two
billion of those five billion urban citizens, for example, will
live in slums. This is a statistic that could be altered with
proper planning. The trend is especially pertinent to the
Americas, which is the most urbanized region in the
developing world. Seventy-five percent of the region’s
population lives in urban areas, where 90% of all
economic activities take place.76 Estimates are that by
2050, almost 90% of the region’s population will live in
urban areas.77 By the end of the 21st century, sea-level
rise will threaten increasingly urbanized and low-lying
coasts in Argentina, Colombia, Costa Rica, Ecuador,
Guyana, Mexico, Panama, El Salvador, Uruguay,
Venezuela, and the Caribbean islands.78
Throughout the Americas, urbanization is leading to forest
loss, ground-surface hardening, and temperature
increases. This last outcome, known as the “heat-island”
effect, is the result of lower evaporative cooling, increased
heat storage, and heat flux caused by lower vegetation
cover in cities. Individual cities can show a large heat-
island effect, measuring between nine and 20 degrees
Fahrenheit warmer than in surrounding rural areas.79 The
effect can lead to massive heat waves, given the right
conditions, like those that persisted throughout Europe in
2003, when a heat wave caused the deaths of between
27,000 and 35,000 over two weeks.80 Populations in larger
urban areas, like Mexico City, São Paulo, Caracas, and
Havana, may be especially vulnerable to heat waves.81
Furthermore, heat waves exacerbate the already ill effects
of air pollution in these cities. Some 80 million people in the
region are affected by air pollutants on a daily basis. This is
especially true in São Paulo, Rio de Janeiro, Santiago and
Mexico City, where air pollutants exceed the maximum
limits recommended by the World Health Organization. By
some estimates, urban air pollution in Latin American and
the Caribbean is the leading cause of about 2.3 million
annual cases of chronic respiratory illness in children and
some 100,000 cases of chronic bronchitis in adults.82 The
result is the loss of close to 65 million days of work in Latin
America and the Caribbean every year.83
Urban air pollution in the region is
the leading cause of about 2.3
million annual cases of chronic
respiratory illness in children and
100,000 cases of chronic
bronchitis in adults.
Climate change will affect urban populations, just as
urbanization will exacerbate climate change’s effects.
Most threatened by climate change’s consequences on
urbanization are those who live on the periphery of cities,
often in areas unsuitable for settlement. This urban
expansion “has altered the hydrological ecosystems while
increasing the [population’s] vulnerability and risks to
Essays on Major Themes | Section 2 39
Chart 2.1c Urban Population Growth in the Americas, 1950–2050 (Projected)

800 100%

Urban Population (m) 90%

700
% Urban 80%
600
70%

500
60%
Millions

% Urban
400 50%

40%
300

30%
200
20%

100
10%

0 0

20
10
00

45
30
15
55

50
35

40
80

25
05
90
75

85
60

65

70
50

95

20
20
20

20
20
20
19

20
20

20
19

20
20
19
19

19
19

19

19
19

19

Source: UN Population Division

natural disasters.”84 Evidence of such instances is not hard
to find. In a report to assess the direct and indirect
impacts of Hurricane Mitch on Central America,
researchers found that the human and economic toll was
“the result of a powerful storm that encountered profound
human vulnerability.” Mitch, they wrote, is “a harbinger of
future disasters unless actions are taken to reduce societal
vulnerability.”85 This type of vulnerability also led to many
of the 30,000 deaths from the floods in Caracas in 1999.
There, the precarious placement of shantytowns on steep
slopes of the Avila Mountain enabled raging rivers and
mudslides to sweep away entire settlements.86
In Rio de Janeiro, most of the deaths due to flood
episodes result from either mudslides or from
leptospirosis, an infectious disease transmitted by the
urban sewer rat, which thrives under such conditions.87
These threats will affect places like Brazil the most, where
76% of the country’s poor live in urban shantytowns.88
Given the expected increase in intensity of storms,
droughts, and floods, regional governments overlook
proper human-settlement planning at their own peril.
…And Deforestation Threatens the Region’s
Agricultural Sector….
Coupled with urbanization is deforestation, probably the
issue that receives the most media attention of any land-
use change in the Americas. It is also likely one of the
most important for the future of the region’s well being,
with grave implications for the availability of water, the
quality of air, weather patterns, and the economic viability
of agriculture.
The Americas today house about 25% of the world’s forest
cover on just one-seventh of its total land. South America
alone holds about 92% of these forests, mainly in Brazil and
Peru.89 Today, however, deforestation is threatening the
region. Of the 400 million hectares (1.54 million sq. miles) of
natural forest lost worldwide between 1972 and 2002 —
approximately the size of Sudan, the tenth-largest country in
the world — 40% was in Latin America.90 From 1990 to 2005,
the Americas accounted for over 60% of global primary forest
loss (see chart 2.1d).91 Over the medium term, deforestation
throughout the region will likely lead to less rainfall, higher air
temperatures, more flooding; the loss of food, medicines, and
fuel brought about by land-use degradation; a reduction of
crops and loss of vital nutrients; the spread of tropical
diseases due to an increase in pathogen-development rates
and transmission; and the worsening of climate change.92
Deforestation will act as a negative feedback loop, creating
cycles of further climate destruction to which the world will be
harder pressed to adapt.
The Amazon is at the heart of this debate, not only
because of the staggering biodiversity housed within it but
also due to the role it plays in regulating the continent’s

40 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

Chart 2.1d Percent of Global Primary Forest Loss, 1990–2005
North America 1%
Africa 5%
Asia 30%
LAC 64%
Source: FAO, Global Forest Resources Assessment, 2005
climate. The Amazon helps to regulate the amount and
quality of water resources available for surrounding
regions and also helps to prevent soil erosion and the
sedimentation of rivers.93 Moisture injected into the
atmosphere by the Amazon plays a critical role in South
America’s precipitation patterns, the serious disruption of
which could lead to desertification over vast areas.94 This
is no small consideration for a region that depends on
agriculture to survive. Nor is it small for the world at large,
as estimates have it that the Amazon stores about 20
times the world’s annual greenhouse gas emissions in the
biomass of its tropical forest,95 or some 49 billion metric
tons of carbon.96 These forests generate evaporation and
condensation over Amazonia, acting as “engines of global
atmospheric circulation” that have “downstream effects on
precipitation across South America and further afield in the
Northern Hemisphere.”97 The potential effects of forest
loss in the Amazon are all the more frightening for the
world, given the recent finding that untouched natural
forests store up to three times more carbon dioxide than
previously estimated.98 It will not be enough merely to
replant trees in the wake of deforestation.
Regionally, the effects of Amazonian deforestation will be
grave. Perhaps the most important regional ecosystem
service that the Amazon provides is the extraction of soil
water by tree roots more than 10 meters deep and its
subsequent return to the atmosphere. Through this
process, as much as 50% of rainfall throughout the entire
Amazon Basin is recycled from forests. Large-scale forest
loss, then, will have the effect of reducing rainfall in the
region. By one estimate, the removal of 30% to 40% of
the forest “could push much of Amazonia into a
permanently drier climate regime.”99 The disturbance of
this process will have significant consequences in
countries like Bolivia, Brazil, Colombia, Ecuador, and Peru,
for each of which the Amazon Basin makes up more than
one-third, and as much as three-quarters, of its territory.
As much as 50% of rainfall
throughout the entire Amazon
Basin is recycled from forests,
which are disappearing at the rate
of an area the size of a soccer field
every eight seconds.
Deforestation in the Amazon is a reality. Current studies
indicate that the tipping point of deforestation there — the
point at which the composition and ecological
characteristics of the Amazon could be changed
irreversibly — would be the destruction of approximately
30% to 40% of the total forest area. While this does not
sound particularly threatening, it is much closer than many
people realize. Already, 17% of the Amazon has been
destroyed. Most recently, in the five months from August
through December 2007, an explosion of deforestation in
the Amazon saw the destruction of an area almost twice
the size of the state of Delaware.100
The results of continued large-scale deforestation could be
disastrous for human health and economic livelihoods. In
addition to helping to regulate regional climate and
weather, forests in the Amazon help to maintain the
Essays on Major Themes | Section 2 41
quantity and quality of water. This is a huge consideration
in a region that houses two of the world’s six largest
watersheds: the Amazon and Paraná-La Plata Rivers.101
The Amazon River alone is the largest single source of
freshwater runoff on Earth, representing up to 20% of
global river flow.102 For a region where 70% of the
population is expected to live in places with a low water
supply by 2025, the quality of water itself should not be an
additional burden on the population.
The country that is most able to address this problem,
Brazil, also stands to lose the most of any other country
in Latin America. An emerging agricultural power,
scientists note that Brazil’s southern breadbasket
flourishes largely due to today’s rainfall patterns, which
could be altered in the face of droughts and
desertification.103 Aware of this, Brazil’s Ministry of
Agriculture is already planning for a dramatic geographic
reorganization of the country’s agricultural production.104
Still, the outlook is uncertain. Even today, with
enforcement stepped up to some extent, 80% of all
logging done in the Amazon is illegal, and an area about
the size of a soccer field is lost every eight seconds.105 It
certainly does not help that, in the face of the current
world food crisis, the governor of Mato Grosso, Brazil’s
largest soybean-producing state, called for more of the
Amazon to be cut away in order to make way for more
farmland. In his eyes, “There is no way to produce more
food without occupying more land and taking down
more trees.”106
That is not only a dangerous assessment, it is a false
one. A recent report by McKinsey points out that of
Brazil’s endowment of arable land — roughly the size of
the EU 25, before Bulgaria and Romania joined — only
17% is now in use. The country could more than double
its current utilization level without harming the Amazon
forest.107 In fact, Brazil today has more farmland at lower
utilization levels than China, India, or the U.S.108
Furthermore, with agricultural labor productivity in the
country at only 5% of what it is in the U.S., there are
huge efficiency gains that could be made before serious
consideration would need to be given to cutting down
more forest.109 Finally, concerted efforts to heighten
infrastructural capabilities would also increase the
amount of food available to the market. With 7% of
soybeans and as much as 12% of all grains spoiling
before reaching either ports or consumers due to
infrastructural limitations, Brazil has the opportunity to
increase the amount of food that reaches markets
without touching any more forest acreage. Right now,
such limitations lead the country to waste about 26
million tons of food each year, or enough to feed about
35 million people.110
42 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Brazil could more than double its
current utilization of arable land
without harming the Amazon forest.
Clearly, cutting down the Amazon to meet Brazil’s growing
agricultural production goals is not the answer, especially
given the implications for deforestation. The zones of most
active deforestation are also the zones of highest risk for
drought.111 Increasing deforestation for the sake of
agricultural output could backfire dramatically, seriously
undermining Brazil’s status as an agricultural power as
well as the agricultural prowess of other countries in Latin
America. In 2006, agribusiness represented 36% of
Brazil’s exports and 52% of Argentina’s. In both places,
agribusiness and related activities generate roughly one-
third of GDP.112 Given that Brazil is the world’s largest
producer of poultry, sugar, frozen orange juice, beef, and
coffee, and the second-largest producer of soybeans, the
implications for decreasing crop productivity go far
beyond local considerations.113 With as much as 40% of
the regional working population employed by the
agribusiness sector, the region stands to be hit hard by the
combined impacts of deforestation and climate change.114
What the Americas Must Do
At the heart of the climate change issue for the Americas
are adaptation and mitigation. As the region already
contends with climate change’s effects, adapting to and
planning for those effects will be crucial for the human
and economic well being of the region going forward. At
the same time, mitigating the region’s own climate-
worsening actions is a must in order to ensure that
long-term threats are not exacerbated by the hope of
short-term economic benefits.
The long-term benefits of major investments in cutting
greenhouse gas emissions would vastly outweigh the
costs.115 According to the World Bank, some developing
countries already lose 4% to 8% of their GDP annually by
productive and capital loss related to environmental
degradation.116 The UN Human Development Report has
stated that for every $1 that is invested in improving
natural disaster prevention in the developing world, more
than $7 in losses could be avoided.117 And while it is an
unfortunate twist of fate that those affected most
immediately and most dreadfully are often countries that
have contributed little to the problem and are least able to
afford the costs of adaptation, they can afford even less
not to adapt.118 Included under this umbrella are several
steps that the Americas must take to combat the direct
effects of climate change.
Chart 2.1e Percent of National Territory as Part of the Amazon Basin
80%
70%
60%
50%
40%
30%
20%
10%
0%
Bolivia Brazil Colombia
Source: IPCC
Improve Natural Disaster Preparedness
Today, not nearly enough is invested. Current multilateral
investment in adaptation to climate change in developing
countries is about $26 million, which is on par with what
the UK spends each week to protect its land from floods.119
Establishing alert and support systems to improve natural-
disaster prevention and adaptation will be pivotal.
Several examples highlight the cost-effectiveness of doing
so. A flood-reconstruction and prevention project in Rio
de Janeiro has yielded an internal rate of return of over
50%. Disaster-mitigation and preparedness programs in
India and Vietnam have achieved cost-benefit ratios of
over 13 and 52, respectively, in the period from 1994
through 2001. The experience in these places has helped
to underscore the point that improving disaster
preparedness and management both saves lives and
promotes early and cost-effective adaptation to climate
change risks.120
Cuba serves as an instructive case in this context as well.
Though the country has limited resources, it has built upon
decades of experiences in battling hurricanes. Among the
tangible assets that Cuba relies upon for success in this
regard are an efficient early-warning system, a strong and
well-organized civil defense, well-equipped rescue teams,
and emergency stockpiles of goods. The results have
been impressive: In the seven years from 1996 through
2002, only 16 people died in the country from six major
hurricanes. In each case, hundreds of thousands of people
Ecuador Guyana Peru Venezuela
were evacuated. When the most intense hurricane ever to
strike the Atlantic Basin hit Cuba with 160 mph winds in
2005, no deaths or injuries resulted in Havana, despite the
fact that the sea made its way more than one half-mile
inland to flood the capital.121 Recently, Category Four
Hurricane Gustav flattened 100,000 homes on the island
but did not kill a single person. In Louisiana, the hurricane
killed 26 people despite a massive evacuation. And
though the death toll from more recent Hurricane Ike was
high by Cuban standards at five, it paled in comparison to
the hundreds killed by the same storm in nearby Haiti.122
What these facts imply is that support for community-
based coping strategies must be increased. Among these
strategies, capacity-building and the implementation of
early-warning systems can help to mitigate rural-urban
migration in a disaster’s aftermath.123 Institutionalized
methods for disaster relief and reconstruction can go a
long way toward ensuring that settlements are not
abandoned and that sustainable development methods
are utilized.
Promote Sustainable Urban Development
The problems associated with urban development in the
Americas are manifold and extend far beyond the issue of
climate change. Given the current extent of it in the region
and the expectations for future urbanization, planning
ahead to ensure that urban growth is undertaken
sustainably and in such a way as to minimize potential
harm to citizens will be of the utmost importance.
Essays on Major Themes | Section 2 43
Past disasters, such as the floods that killed tens of
thousands in Venezuela in 1999, should act as reminders
of the harm that unplanned and misplaced urbanization
can have on large populations. Lack of water resources
in urban areas will be an increasingly pervasive threat
over time. Soil impermeability caused by construction
prevents rainwater from seeping into aquifers and
accelerates runoff during periods of high precipitation,
heightening the risk of floods.124 In addition, accelerated
urban growth throughout Latin America will lead to high
percentages of people in cities who have little or no
access to sanitation services, an absence of water-
treatment plants, high groundwater pollution, and a lack
of drainage, which could lead to other threats such as
disease outbreak.125
As in other policy realms, proper planning and
management can dramatically reduce the number of
people who, perhaps unknowingly, situate themselves in
harm’s way. More specifically, integrating sustainable
transport considerations into business development, road
infrastructure development, and local community
development will be significant, as will the utilization of
alternative energy technologies and proper water
management. This will be done through long-term
government planning and greater investment in capacity
building and project development. Public-private
partnerships should be sought to help fund such efforts.
Rapid urbanization need not mean increased
environmental degradation and heightened exposure to
natural disasters.
Continue to Develop Clean and Efficient Energy
to Diversify Energy Matrices
The use of fossil fuels in countries large and small in the
Americas does little for the long-term security of the
population. Much the region depends heavily on fossil
fuels, especially oil and natural gas, to meet its needs. The
potential for sustainable and renewable energy in Latin
America and the Caribbean, however, is enormous. Brazil,
Colombia, and Peru, for example, all derive more than
30% of their total energy consumption from
hydroelectricity.126
Still, developing and deploying renewable resources
throughout the region is not a one-size-fits-all challenge,
nor should it be a practice of finding one solution and
sticking to it. If there is one thing of which governments in
the region must take account looking ahead, it is that
climate change will affect the Americas in a variety of
ways. Just as there is not one renewable source to act as
a panacea for clean development, neither is there just one
way in which any country in the region will feel climate
change’s effects.
44 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Countries in the region must develop a diverse array of
energy sources in order to meet their own needs and also to
ensure that their plans do not fall victim to the results of
climate change. Brazil, which today relies upon hydropower
to meet 84% of its electricity, runs the risk of losing capacity
due to drought and glacial melt. Construction of the dams
made to produce hydropower, meanwhile, has resulted in
the loss of over 21,000 square miles of productive lands
and forests and has forced the relocation of about 1 million
people.127 The same will go for future endeavors all over the
Americas to grow crops for biofuels. Given the increasing
risks of drought and desertification brought on by climate
change and deforestation, countries will have to look to
various methods in order to generate clean energy.
To that end, rigorous management will be needed to
ensure that crops that are grown for biofuels production
have a net benefit to the environment. It must be kept in
mind that the successful development of biofuels in the
Americas is both an opportunity and a threat, as the
benefits of increased energy independence are partially
offset by the pressure that agricultural land use puts on
biodiversity in tropical forests.128 Managing and
maintaining the biodiversity is one sure way to avoid
exacerbating climate change’s effects.
Support Agricultural Methods that Require Less Water
About three-quarters of all freshwater in the Americas
today goes toward agricultural production.129 At the same
time, three-quarters of all agricultural land in the region is
already affected by mild to severe degradation due to soil
erosion caused by deforestation, overgrazing, and
chemical contamination. Degraded soil is less able to
absorb heavy rainfall, resulting in more frequent flash
floods. Deforested slopes, meanwhile, become less stable
and more susceptible to collapse.130
With a net increase in the number of people in the
Americas experiencing water stress due to climate change
estimated at 77 million by 2020, agricultural producers will
have to find a way to produce even more food by using
less water.131 The result will be increased competition
among agriculture and drinking as well as industrial users,
making agriculture itself more expensive.132 Utilizing
genetically modified, drought-resistant crops is one
method for potentially mitigating this competition. Another
way to address the issue would be for governments and
development agencies to promote crops that provide the
necessary benefits but utilize less water in production.
Rein in Land Use Changes and
Manage Conservation Efforts
Land-use changes have intensified the use of natural
resources and exacerbated land degradation. Much of this
Chart 2.1f Total Energy Consumption by Type (2005)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Argentina Bolivia Brazil
Gas Oil
Source: Energy Information Administration
land-use change is due to cattle ranching. According to a
report by researchers published in Science, about 70% of
the deforestation that has occurred in Brazil’s Amazon, for
example, has been provoked by cattle ranching.133 But
even addressing that issue alone will not solve the larger
issue, as higher beef consumption accelerates grain
production as well. With OECD predictions that sales of
beef in the developing world will rise by 31% by 2015,
stymieing the growth of important and lucrative export
industries is unlikely to be politically or economically
expedient in the near term.134 Given such considerations, it
is estimated that by 2050, 50% of all agricultural lands in
Latin American are very likely to be subject to
desertification and salinization.135
These changes are not only limited to the Amazon either.
Central America, over the past five years, has the highest
deforestation rate of any region in the world. Between
1990 and 2005, it lost over 19% of its forests, mostly due
to subsistence activities and agricultural schemes.136 The
large-scale conversion of tropical forest into pasture will
likely lead to changes in local climate through increased
surface and soil temperatures, greater temperature
fluctuations, and reduced evapotranspiration, from which
precipitation over the Amazon originates.137
Regional governments must set clear targets and
timetables for reducing deforestation, including increasing
Colombia Ecuador Mexico Peru Venezuela
Coal Hydro Nuclear Other Renewables
local governance and providing economic incentives for
sustainable forest management, while effectively
implementing protected areas.138 Governments must also
educate their citizens, enforce restrictions, and incentivize
the use of better cattle-grazing management, which is
currently done illicitly on a large scale. Undertaking these
steps is a matter of future prosperity. At the same time,
governments can reduce the risks of flooding and drought
by promoting wetland and watershed protection and
restoration and taking a greater hand in land-use
planning. Regional leaders have a responsibility to assist
those countries that are deemed particularly vulnerable to
these effects.
Map Vulnerabilities and Establish Monitoring Systems
Establishing monitoring systems is fundamental to staying
apprised of threats that are likely to affect various regions
and enabling countries to better implement steps to
mitigate the impacts of climate change on human
populations. To date, there has been a lack of analysis of
climate vulnerability and its risks, and also a limited
understanding of the best methods to maximize human
resilience at local and national levels.139 Governments
need to be aware of the most imminent threats to their
countries and must convey that knowledge down to the
local level. Establishing national monitoring systems to
measure the various effects of climate change could play a
role in preventing harm to citizens by allowing
Essays on Major Themes | Section 2 45
policymakers to make more informed decisions. Having
this ability would also enable better-informed economic
development and public health policy throughout the
region, ensuring that such efforts do not inadvertently put
people at greater risk. Finally, this action is needed to
avoid a “one-size-fits-all” approach to mitigating the
effects of disasters as well as adapting to them.

Work Multilaterally to Address These Issues

and Implement Solutions
Just as each government in Latin America has a
responsibility to act now to avert future disaster, so must
the region utilize the many resources it already has to
attack these problems head-on. The Pan American Health
Organization (PAHO), for example, already has vast stores
of data regarding public health information. Countries
could tailor their adaptation responses to take into
account what the most severe public health threats of the
past have been and what they are most likely to be under
increased global climate change in the future.

Similarly, the OAS and similar inter-governmental

organizations can act as important forums for the
discussion of best practices in climate change policy.
Countries in the region have different experiences
experimenting with different strategies and taking on
varied responses to climate change and disaster
response. Countries in the region can and should learn
from each other regarding successes and failures so that
best practices are utilized and past failures are avoided.

Finally, there is ample room for bilateral and multilateral

efforts between and among governments. The seven
countries that house the Amazon Basin, for example, each
have a stake in properly maintaining it. Working
intergovernmentally to address issues is the surest way to
enable the most comprehensive and thought-provoking
adaptation and mitigation responses. Two governments
sharing riparian borders must work together to ensure that
both countries are doing the most possible to maintain
fluvial ecosystems. The key to designing the most
responsive and effective strategies to future climate
change challenges will be multilateral work at both the
macro and micro levels.

46 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

2.2 The Microenergy Opportunity
Technological advancement and entrepreneurial ingenuity
have created an opportunity for discontinuous change in
energy markets in the developing world. The traditional
large-scale, centralized, grid-based energy model, which
has failed to provide electricity to 1.6 billion people,1
stands to be supplanted by “microenergy”: small-scale,
decentralized, renewable energy resources. This shift
promises to create new energy markets and, perhaps
more important, offers the chance to improve the
development trajectory of billions of people.
A decade ago, the telecommunications industry faced,
and seized, a similar opportunity for discontinuous
change. The introduction of mobile phone technology,
strong demand for basic communication services in the
developing world, and the industry’s willingness to adapt
new business models to fit the needs of this new market
brought modern communication services to millions of
people who had never heard a dial tone.2 The new model
for telecommunications infrastructure — flexible,
decentralized, and freed from costly landlines — facilitated
this industry leapfrog. For service providers, new markets
such as Africa and India present incredible economic
opportunity. For new clients, mobile phones save the time
and cost of travel, offer access to modern services (e.g.,
personal banking) and information (e.g., commodity
market price projections), accelerate the growth of small
businesses, and, in many cases, have sparked the growth
of a new, entrepreneurial cell-phone rental and sales
industry.3
Though the comparison is not perfect, the cell-phone
leapfrog offers an important lesson for the energy industry.
The traditional energy model, like the old telecommunications
model, is limited by a system of static landlines. Though
the grid will certainly expand, in 2030 1.4 billion people are
expected to remain without access to electricity,4 leaving
Table 2.2a Conventional Generation vs Microenergy:
Size and Cost Comparison
Conventional
Generation Approximate Size
Natural Gas 600 MW
Coal 250 MW
Nuclear 1,000 MW
Microenergy
Biogas Digestor 300 m3
biogas/year
Solar Home System 60-150 Watts
Small Wind Turbine 1-3 kW
Microhydro Installation 10-50 kW
Sources: REN21, National Renewable Energy Laboratory, Reuters
Note: Estimates for conventional generation are based on projects announced in the US in 2008.
vast markets untapped and great potential for
development unmet. Just as the introduction and
successful commercialization of cell phones enabled an
exponential jump forward in terms of communications
coverage, today, the microenergy model presents an
opportunity for a vast expansion of energy access.
If pursued deliberately and
aggressively, the microenergy
model offers a means to
fundamentally transform the
traditional energy generation
paradigm.
The corresponding development opportunity is
enormous. The provision of modern energy services is a
key enabler of social and economic growth. Each of the
United Nations’ Millennium Development Goals—which
range from halving extreme poverty to halting the spread
of HIV/AIDS and providing universal primary education by
the target date of 20155—is essentially dependent on
access to modern energy. Moreover, leveraging
renewable resources to provide energy access to the
developing world has great environmental potential.
Replacing traditional fuels such as biomass, oil, and
kerosene with clean alternatives will significantly improve
local and global climates; building an energy
infrastructure grounded in sustainable energy will lay a
path toward a cleaner energy future.
The microenergy model has proved to be effective.
Successful projects span the globe from South and East
Asia to Latin America and Africa. Microenergy is far from
being an established industry, however, and economic,
regulatory, and social obstacles remain in the way of its
expansion. Traditional utilities have struggled to adapt
established business models and static corporate
cultures to respond to the unique challenges and
opportunities presented by microenergy. Small and
medium microenergy enterprises (SMEs) — ranging from
several to several dozen (and sometimes several
Approximate Cost
hundred) people in size — have struggled to build the
$400-$500 million capacity and access the financing necessary to launch,
$720-790 million
sustain, and scale energy service operations. In the near
$6-8.5 billion
to medium term, large, risk-averse utilities will likely play
a smaller role in driving microenergy forward, while
$200-$250 innovative, dedicated SMEs will provide the engine of
growth. Many key stakeholders, including governments,
$500-$2,000
$3,000-$5,000 multilaterals, development banks, and traditional utilities,
$10,000-$50,000 must provide capacity-building and financial services to
these organizations to support their efforts. There is great
Essays on Major Themes | Section 2 47
potential to strengthen the microenergy industry’s
support network through the development and
proliferation of enterprise-development financiers, which
offer both capacity-building and financial services
concurrently to SMEs.
If pursued deliberately and aggressively, the microenergy
model offers a means to fundamentally transform the
traditional energy generation paradigm. This is not to
suggest that there is an opportunity to soon replace
existing, mature, grid-based systems with thousands (or
millions) of small, decentralized generation networks. But
across the large areas of Africa, Asia, and Latin America
where robust and reliable energy infrastructure has yet to
be developed, microenergy presents an opportunity to
leapfrog an old, inadequate, unsustainable model with a
promising alternative.
Traditional Model: Centralized Generation
and Grid-Based Distribution
In the traditional, grid-based energy model, prevalent
throughout the developed world and across urbanized
areas of developing countries, power is generated in large,
centralized power plants and delivered to end-users
Chart 2.2a Urban and Rural Electrification Rates by Region (2002, 2015, 2030)
100
80
60
Percent
40
20
0
Urban Rural Urban Rural
North Africa Sub-Saharan
Africa
Source: IEA
48 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
through a series transmission lines. Rather than a true
grid, at the macro level, the system more closely
resembles a spoke and wheel. Access to power is first
provided to a dense population center and, as demand
outside that center grows, lines are extended outward to
provide power to more distant areas. Each addition to the
grid requires additional investment in costly transmission
infrastructure, and the decision to extend coverage is
based squarely on an assessment of whether the
investment will be profitable given the size and reliability of
demand on the other end of the line.
This model has not experienced significant changes since
its advent in the late 19th century. Innovation in
transmission technology has enabled the grid to carry
increasingly more power across expanding distances, but
the basic structure — centralized generation serving both
urban and remote demand — remains the same. This is
not surprising, as the model has been, on the whole,
successful. Today, nearly five billion people worldwide
have access to electricity, the vast majority of whom
receives that electricity via connection to a grid.
The Traditional Model Will Fail to Alleviate
Energy Poverty
Continued reliance on the grid-based model poses a
series of significant development challenges. Over 1.6
Urban Rural Urban Rural Urban Rural Urban Rural
China and East South Asia Latin America Middle East
Asia
% Urban 2002 % Rural 2002
% Urban 2015 % Rural 2015
% Urban 2030 % Rural 2030
billion people lack electricity, primarily in the developing
world; Sub-Saharan Africa and South Asia together
account for over 80% of the world’s non-electrified
population.6 Lack of access to modern energy is also
concentrated among rural populations: four out of five
individuals who lack access to power live in rural areas of
developing countries.7 An examination of electrification in
Latin America illustrates this pattern. In 2002, urban areas
in the region, electrified at an average rate of 98%,
accounted for only 1 million people without electricity. In
contrast, 61% of the rural population — a total of 39
million people — lacked access to power.8 This trend
holds true across the world. As can be seen in Chart 2.2a,
the IEA projects that by 2030, urban electrification rates
will exceed 80% in every region but Sub-Saharan Africa,
while rural electrification rates will lag far behind.9
The IEA projects that absent
radical policy changes, in 2030
1.4 billion people will still lack
access to electricity.
The central obstacle to electrifying rural regions is a
financial disincentive for traditional utilities to extend
service to those areas. Specifically, high costs associated
with extending transmission lines to remote areas, and the
lower demand for electricity services among rural
customers, make grid extension a high-risk, low-return
investment. As a result, the rate of grid extension to these
areas is very slow. Data on electrification rates illustrate
this fact: The IEA projects that, absent radical policy
changes, in 2030 1.4 billion people will still lack access to
electricity.10
Lack of access to electricity is not the only energy-
deprivation challenge. Over 2.4 billion people — many of
whom are connected to the grid — still rely on traditional
fuels such as biomass (for example, wood, manure, and
residues), charcoal, and kerosene for daily cooking and
heating purposes.11 These individuals also suffer from
energy poverty and face significant development
obstacles, as described below.
Development Impacts of Energy Poverty
The negative development impacts of energy poverty —
defined as the lack of access to reliable, affordable, safe
energy — have been well documented.12 Broadly, energy
poverty impacts individuals’ personal, social, and
economic well-being. For example, individuals who are
forced to burn traditional biomass for cooking purposes
suffer high levels of indoor air pollution, which contributes
to as many as two million deaths each year.13 Limited
and/or unreliable light limits time for study and work,
hampering academic and economic pursuits. Without
electricity, life-improving services, such as refrigeration
and modern communication, are inaccessible.14 While
research confirms that escaping energy poverty is not
itself sufficient to drive social or economic growth,15
energy security establishes a solid foundation upon which
to build toward a robust set of development objectives.16
The Millennium Development Goals offer a comprehensive
catalog of development imperatives and serve as a helpful
guide to examine the positive impacts of electrification
and energy security. Several studies have examined the
role that energy can play in achieving each of the goals.17
A summary of those findings, supplemented with findings
regarding additional potential benefits of energy access, is
presented in Table 2.2b.

Table 2.2b Impact of Improved Energy Access on the Millennium Development Goals
Development Goal Role of Improved Energy Access
MDG 1: Eradicate extreme poverty and hunger • Access to energy services facilitates economic development—including development of microenterprises,
livelihood activities, and locally owned businesses—which helps to reduce poverty
• Energy enterprises create job opportunities in rural communities

MDG 2: Achieve universal primary education • Energy services reduce time spent by school-going children on basic survival activities
• Lighting permits home study, increases security, and enables the use of educational media and communication

MDG 3: Promote gender equality and empower women • Improved energy devices reduce the household burdens of girls and women, allowing them time to stay in school and
pursue productive activities outside the home

MDG 4, 5, 6: Reduce child mortality, improve mental • Energy contributes to a functional health system by lighting operating theaters, refrigerating vaccines and drugs,
health, and combat disease sterilizing equipment, providing transport to clinics, and providing clinics with operating power
• Improved energy reduces air indoor pollution
• Energy services can provide clean pumped water and fuel for cooking

MDG 7: Ensure environmental stability • Improved energy efficiency and use of sustainable energy protects natural resources and reduces emissions

MDG 8: Develop a global partnership for development • Energy development and supply require trade and international cooperation and foster institutional collaboration and cooperation

Essays on Major Themes | Section 2 49

The Traditional Grid-Based Infrastructure is
Unsustainable
Traditional grid systems are vulnerable to numerous
externalities, including fuel supply disruptions, extreme
weather and natural disasters, and acts of deliberate
sabotage.18 Less drastic events can also cause massive
disruptions in mature grids. Consider, for example, the
rolling blackouts in California in 2000 and the total
blackout of the Northeast U.S. grid in 2003. In both
cases, physical challenges created simply by distance
and complex interconnections collapsed the grid,
leaving millions without power and causing significant
economic loss.19
These grid failures occurred in the world’s largest
economy; in the developing world, maintaining grid
security is even more challenging. In these countries,
inefficient systems, poorly maintained infrastructure,
and high levels of electricity theft rob grids of a large
percentage of their total electricity load. In some
regions of India, transmission and distribution (T&D)
losses consume nearly 25% of electricity;20 Brazil loses
over 18% of its load in transit.21 In much of the
developing world, blackouts and brownouts are
common, expected occurrences. This fact serves to
underscore the difficulty of delivering energy services to
the world’s poor through centralized generation and
grid-based transmission.
In some regions of India,
transmission and distribution
(T&D) losses consume nearly
25% of electricity; Brazil loses
over 18% of its load in transit.
The negative environmental impacts of centralized
generation also raise concerns about the continued
viability of the traditional energy generation model. There
is a growing consensus on the contribution of fossil fuel
based power generation to local and global environmental
challenges, and the need to dramatically increase the use
of renewable energy sources in order to prevent the most
drastic effects of global warming.
Currently, excluding large-scale hydropower, renewables
account for only 1.5% of global electricity generation.22
While there is potential for significant increases in the
application of certain renewable energies (such as wind)
to grid-based technologies, the grid itself can prove to
be a significant limiting factor. In the U.S., for example,
while the Department of Energy estimates that wind
50 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
power can produce up to 20% of the nation’s energy by
2030, objections over where to place and how to pay for
transmission lines present a significant challenge to
achieving this increase.23 Other renewables, such as
solar and biomass, are either not yet fully developed or
not sufficiently cost-effective when compared to other
grid-connected technologies. While these technologies
will eventually comprise a larger share of grid-based
power generation, in the near to medium term, continued
reliance on the grid equates to an increased use of fossil
fuels and, in turn, greater environmental risk.
Microenergy Offers an Alternative Paradigm
A relatively new approach to energy generation —
“microenergy” — presents a compelling alternative.
Microenergy is defined by three basic characteristics that
differentiate it from the traditional energy model: It is
development motivated, employs a small-scale,
decentralized model, and embraces a diversity of primarily
renewable energy resources.
Microenergy is Development Oriented
The term “microenergy” deliberately invokes
microfinance, which provides a guiding principle to
microenergy: an orientation toward development.
Whereas the traditional financial services industry is
organized around a purely economic objective —
maximizing profit — microfinance is grounded in a social
objective: extending financial services to the poor. To
extend services to this underserved population in a
financially sustainable way, microfinance institutions have
developed innovative tools and have rethought traditional
concepts such as credit and collateral. In doing so,
microfinanciers have taken a bottom-up approach,
working with local clients to develop services that are
appropriate, given their specific economic, social, and
cultural environments.
Microenergy embraces an approach to development
similar to that of microfinance. It acknowledges that poor,
rural populations in developing countries have suffered
disproportionately from energy deprivation and recognizes
that access to modern energy is a key enabler of social
and economic development, as well as environmental
preservation. As such, microenergy pursues a triple
bottom line, valuing social and environmental objectives
as well as financial returns. It is important to note this
balanced-outcome orientation does not preclude
microenergy from being a profitable enterprise.
Maintaining financial solvency is critical to individual
project sustainability and continued expansion of
coverage to new areas.
Microenergy furthers development in that it espouses a
bottom-up approach to electrification. The model
recognizes that local natural and economic resources,
along with social and cultural contexts, will determine the
most appropriate energy resources, business models, and
cost structures. Microenergy also stresses local
collaboration. As observed by the Global Network on
Energy for Sustainable Development, local integration is
key to promoting local development: “If communities are
not consulted as to their real needs and capacities, there
will be a mismatch between what is provided and what is
actually required. Inappropriate technologies, which local
skills are not adequate to operate nor maintain, do not
generally drive development.”24 Collaboration with end-
users, community leaders, and local suppliers enables
microenergy enterprises to build sustainable infrastructures
and business models that offer affordable, useful energy
services in response to local demand.
Microenergy Is Small and Decentralized
To understand microenergy’s decentralized approach to
power generation, it is helpful to compare it to the
traditional, centralized model. The traditional model begins
with the construction of large, expensive power plants.
Investment in transmission infrastructure then delivers
power from these plants to large power users, such as
industrial consumers, and additional transmission lines are
constructed to connect centers of high population density,
typically large urban areas. When these areas are
saturated, and if there is a profitable level of demand in
rural areas, the grid then extends to serve those
populations. In a final step, rural residents must install
household wiring in order to connect to the newly
extended grid. This process is costly and slow; the IEA’s
projection that 1.4 billion people will continue to lack
electricity in 2030 suggests that the rate of grid extension
is only barely keeping pace with population growth.
Microenergy reverses the traditional model. It is rooted
in small, site-specific power sources that provide energy
directly to local communities. These generation facilities
range in size and cost. Small solar systems that are used to
electrify individual homes can cost individual families as
little as $10 per month (with a $150 installation fee), for a
total of $500–$2,000.25 On a slightly larger scale, wind
turbines capable of producing 500 kWh per month typically
cost several thousand dollars; microhydropower
installations large enough to power entire villages can be
financed for $10,000–$50,000.26 Larger hydropower and
biomass facilities, which can generate up to 10MW and
serve commercial as well as industrial purposes, require
investments of several million dollars.27 While costs
exceeding a million dollars may not seem “small,” they pale
in comparison to the price tags of traditional gas, coal, and
A PATH TO GREEN GROWTH
For the 39 million rural inhabitants in
LAC who currently lack electricity,
renewable-powered microenergy
often offers the most immediate,
cost-effective pathway to
electrification and represents a
potential catalyst for improvements
to education, small business, public
health, and communication.
nuclear generating facilities, which can range from
hundreds of millions to billions of dollars.28
Energy service providers build local, often home-based
systems first and, if demand warrants, can expand
coverage and capacity via village-based mini-grids.
Service providers can also construct larger power-
generation facilities and more extensive grids to meet
growing household and industrial demand. The
conditional, modular nature of each of these steps
signifies a departure from the traditional model that has
important development implications. Whereas rural
electrification is the last step in the traditional model,
contingent on the completion of every step before it,
microenergy electrifies rural communities first. Another
development benefit is that microenergy’s incremental
model leverages household energy expenditures in a
constructive way. Whereas rural households waiting to
be connected to the grid incur net-loss expenditures on
traditional energy sources such as kerosene, charcoal,
and/or dry-cell batteries, microenergy enables rural
communities to invest in systems that meet current
energy needs while also building the foundation of a
sustainable and expandable energy infrastructure.29
The microenergy model is not just applicable in rural
communities. In urban areas of the developing world, the
inability of traditional utilities to meet growing demand for
electricity creates an opportunity for small-scale,
independent energy systems to meet the need for reliable
power. Such systems can stand alone or can be connected
to the grid, feeding excess power back into the system to
improve overall capacity.30 To date, however, little work has
been done to examine the full potential of the urban
microenergy opportunity; it warrants further exploration.
However, the primary development opportunity lies in
bringing modern energy to rural communities. That
opportunity remains the focus of this paper.
Essays on Major Themes | Section 2 51
Chart 2.2b Capacity Investment and Demand Growth
Demand (GW/h)
Year
Source: WADE
Power surplus due to blunt nature
of centralized generation
development cycle
Source: WADE
The decentralized nature of the microenergy model offers
systemic improvements over the traditional centralized
system. For example, when built incrementally,
decentralized generation improves system efficiency.31 In
a centralized generation model, accurately matching
generation capacity to demand is difficult. Once the need
for additional capacity is identified, long lead times for the
construction of large, expensive power plants create
periods of insufficient supply. Conversely, the need to
build significant extra capacity into large-scale generation
facilities (to account for future growth in demand) results
in long periods of excess capacity.32 Microenergy largely
avoids this inefficient cycle of under- and over-production.
Service providers can install small-scale capacity
comparatively quickly, reducing lag times as well as the
need to build for long-term demand growth.33 A
comparison of the cycles of centralized and decentralized
capacity investment is illustrated in Chart 2.2b.
By virtue of being decentralized, microenergy also
promotes the security of the energy system, improving the
reliability and resiliency of energy resources. At the local
level, small, on-site power-generation systems are less
subject to the vulnerabilities and failures of long
transmission chains, such as T&D loss.34 From a
systematic perspective, compared to an interconnected
and interdependent network of a limited number of large,
centralized generation facilities, a collection of many
independent generation sources offers greater security
against a single disruptive act, such as a natural disaster
or a deliberate attack on the energy infrastructure.
52 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Centralized
capacity investment
Decentralized
capacity investment
Power shortage due to long
lead times for large,
centralized power plants
Microenergy Promotes Diverse Energy Resources
In addition to a decentralized design, microenergy is
characterized by a diversity of energy resources. In
contrast to the traditional energy model, which relies on a
few, primarily fossil-based fuel sources, microenergy’s fuel
source profile is dominated by a wide range of renewable
energies, including solar, wind, hydro, and biomass.
Renewables are well suited to microenergy because of the
abundance of renewable resources in rural regions and the
small load sizes required by their populations. Moreover, a
focus on renewables offers microenergy adaptability,
enabling each local system to leverage the most abundant,
powerful energy resources that are available. As a result,
renewable-powered microenergy often presents the least-
cost option among modern energy choices, particularly in
rural areas.35 Despite comparatively high up-front costs for
renewable power systems, renewable systems have no fuel
costs, which significantly reduces total system cost when
compared to those that rely on imported fossil fuels
delivered at highly volatile prices. It must be noted,
however, that traditional fuels such as diesel and liquefied
petroleum will continue to serve an important niche in the
microenergy model, in the service of both village-based
mini-grids and improved cooking appliances.36
Microenergy promotes energy diversity beyond fuel
diversity. Whereas the traditional energy model provides a
single energy output — grid-based electricity —
microenergy offers a range of specialized energy services.
For example, in addition to standard electrification, some
microenergy systems are specifically designed to pump
Table 2.2c Microenergy Technologies
Technology Primary Countries Productive End-Uses
Improved Biomass Stoves China, India, Africa (esp. Kenya) • Cooking

Wind Pumps Argentina, South Africa • Water pumping

• Irrigation
• Agro-industrial uses

PV Pumps India • Water pumping

• Irrigation
• Agro-industrial uses

Solar Water Heaters South Africa, Lebanon, Argentina • Heating

• Cooking

Solar Home Systems Bangladesh, Brazil, China, India, Mexico, • Residential power (lighting, radio, television)
Mexico, Nepal, Sri Lanka, Thailand • Communal lighting
• Battery charging

Biomass Gasifiers India, China, Cambodia • Agro-industrial uses

• Heat
• Battery charging

Biogas Digesters China, India, Nepal • Residential lighting

• Cooking

Solar/Diesel Hybrid China, India • Village-scale mini-grids (residential and small industrial uses)

Wind/Diesel Hybrid India • Village-scale mini-grids (residential and small industrial uses)

Micro-Hydro China • Village-scale mini-grids (residential and small industrial uses)

Sources: Global Network on Energy for Sustainable Development, United Nations Environment Program, Energy Sector Management Assistance Program

water or dry produce. The diversity of inputs and outputs different energy sources; the former can be accomplished
allows microenergy to meet the specific end-use demands with solar driers, while the latter requires power levels
of local populations more effectively than might a offered by a mini-grid.37
standardized grid connection. This is particularly true in
rural and developing regions, where insufficient In its report on the Senegal case, the Energy Sector
infrastructure would constrain communities’ ability to use Management Assistance Program summarizes the
grid-based electricity productively. An overview of various flexibility provided by the microenergy approach: “Solar,
technology options, the primary regions where they are wind, hydro, biomass, minigrids, and central grid electrify
currently deployed, and their productive uses are detailed [sic] provide different levels of power, quality, and cost
in Table 2.2c. effectiveness that add up to different electricity services
for different tools and equipments. Thus, it is important to
While the generalizations offered in Table 2.2c are helpful, establish the link between the expected gains identified
in practice, microenergy project developers have adopted and the behind-meter type of equipment or tools
more nuanced approaches to aligning appropriate necessary, and then match them with the type of
technologies to meet specific needs of individual electricity source required.”38 While available microenergy
communities. In Senegal, for example, the Senegalese technologies, or renewable energies in general, may not
Rural Electrification Agency (ASER) collaborated with always prove to be the most appropriate or sufficient
private power providers and a team of local consultants to source of power, microenergy introduces a much wider
identify the range of potential productive uses of electricity range of options, and its end-use-oriented approach
in villages targeted for electrification. Based on these improves the likelihood that power providers will meet a
assessments, project designers were able to make better- community’s productive needs.
informed decisions regarding the most appropriate form of
energy to implement, given natural constraints. For Decentralization and Diversity Enable a Portfolio
example, in the fishing industry, drying and freezing fish Approach
each require distinct equipment that can be serviced by Two of the defining characteristics of microenergy’s

Essays on Major Themes | Section 2 53

infrastructure model — decentralized generation and energy
diversity — imply a guiding principle for the development of
future infrastructure: portfolio management. This principle is
not new, nor is it unique to microenergy. Many large utilities
are pursuing diversified generation portfolios, increasing the
share of natural gas, nuclear, and renewables to balance
traditional fossil fuels such as coal. However, the model of
centralized generation is not particularly conducive to
diversification, given the limited number of power plants and
the narrow selection of fuels that are widely available,
scalable, and cost-effective in the centralized generation
model. In contrast, the large number and small size of
microenergy generation facilities, and the adaptation of
each to locally available resources, inherently encourage
portfolio diversification.
Who Will Drive Microenergy Forward?
The microenergy model presents a number of challenges
that are distinct from those currently faced by the
traditional power industry. The lack of access to necessary
supplies and skilled labor in rural areas is one such
challenge. The need to adapt each microenergy project to
the natural resources, intended end-uses, and social and
cultural contexts of the local community, is another
challenge. Securing financing to cover the high up-front
costs of microenergy facilities presents yet another. The
following section briefly examines how potential
microenergy service providers, including utilities, SMEs,
and local cooperatives, are positioned to tackle the
challenges specific to the microenergy opportunity.
Utilities
Utilities’ access to capital and technical expertise enables
them to manage project finance and construction and
maintenance effectively. When fully engaged in
microenergy projects — typically when there is an
opportunity to eventually integrate rural communities into
the grid — utilities can provide stable and reliable service
to end-users. In Brazil, for example, small, local utilities in
the Amazonian region are working in collaboration with the
Brazilian and U.S. governments to deploy wind and solar
resources to upgrade diesel-based mini-grids.39 In El
Salvador, Empresa Eléctrica del Norte, an electric utility,
completed the construction of a 5 MW biomass-powered
thermoelectric plant, using bagasse (sugarcane waste) to
provide power to a sugar mill and feed excess electricity
back into the grid.40 Reliance Industries, India’s largest oil
firm and an operator of gas-based captive power plants,
launched pilot projects to implement solar power–based
mini-grids to 38 villages in Maharashtra, offering a notable
instance of a large, private company making a significant
investment in off-grid microenergy.41
54 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Reliance Industries, India’s
largest oil firm and an operator
of gas-based captive power
plants, launched pilot projects
to implement solar power–based
mini-grids to 38 villages in
Maharashtra.
However, examples of utility-led investments in off-grid
microenergy are few and far between. Utilities, and
particularly privately owned utilities, typically have little
financial incentive to pursue rural microenergy projects. In
developing countries in particular, utilities are generally
resource-constrained and governed by a culture of risk
aversion.42 Diverging from the traditional model of
centralized generation presents a significant risk,
especially in low-income, low-demand areas where high
transaction costs are less likely to be recouped. Even
when offered incentives such as concessions (which grant
effective monopolies to service providers for periods
ranging from 10 to 20 years), experience in Argentina and
Africa illustrates that utilities typically allow smaller,
specialized companies to pursue rural markets.43
In addition to the financial risk, urban-based utilities do not
often maintain established operations in rural areas
beyond the reach of the grid. Utilities’ disconnect from the
communities in these regions makes continued upkeep
and maintenance of operating systems difficult and costly,
putting utilities and local end-users at a disadvantage.44 As
a result, except for the cases in which utilities are
mandated by government to pursue rural electrification
programs (such as in Brazil), few traditional power
providers have pursued microenergy.
SMEs
SMEs include individual entrepreneurs, NGOs, and local
private power producers. They range in size from several
to several hundred employees and can manage assets
ranging from several thousand to several millions of dollars
in value. In contrast to utilities, SMEs typically possess a
deep understanding of the local context; they are often
founded and operated by individuals from, or familiar with,
the local communities in which they operate. As a result,
SMEs can build strong relationships with existing rural
networks more easily, drawing support from local
suppliers, community leaders, and end-users to deliver
services that are cost-effective and tailored to local needs.
Consider, for example, the case of Fabio Rosa, an
individual entrepreneur in Brazil who has built a business
providing solar home systems to poor municipalities in Rio
 Case Study: Adapting Solar Home Systems
to Local Context in Rural Brazil
Fabio Rosa has built a business providing small solar home systems to residents in six rural, low-income munici-
palities in Rio Grande do Sul The business began in 2003 with 77 families; it has since grown by nearly 200% and
has led to the development of a replication model that has been applied in other areas of the Brazilian Amazonian
region. The program is successful because Rosa built close ties with the community and took a bottom-up ap-
proach to business development, which enabled him to provide access to energy in a way that is attractive, af-
fordable, and manageable for the specific client base.

Responding to Local Demand

Before launching his program, Rosa and his team conducted a thorough demand analysis, tracking the typical en-
ergy use of 77 homes for eight months. This up-front groundwork enabled Rosa to identify the specific end-uses
that could be served by electrification, as well as the costs residents would be willing to bear to receive such serv-
ices. Finding that lighting was the primary end-use, and that residents typically spent $11 per month on non-re-
newable energy resources, Rosa was able to conclude that solar home systems would both meet a demonstrated
demand and present an economically affordable option.

Tapping into Local Human Resources

A large contributor to Rosa’s success was his ability to partner with local stakeholders. As he launched his busi-
ness, Rosa met with community leaders to educate them about the program and its potential benefits to the com-
munity. These leaders—trusted voices in the community—then disseminated communications about Rosa’s
electrification program, enabling his project to gain buy-in from a previously skeptical community. He also part-
nered with well known local electricians to provide installation and maintenance services, using local integration to
achieve the dual objectives of lower costs and local credibility.

Adjusting to the Social Context

In addition to partnering with local leaders to ensure the community trusted his team and his business, Rosa
adapted the solar systems themselves to adjust to the local context. Realizing that the accompanying recharge-
able batteries were at risk of misuse and failure, he provided the batteries with protective cases. In addition, rec-
ognizing the strong Catholic faith of the community, Rosa attached miniature saints to each box in order to
encourage clients’ responsibility for and maintenance of their systems.

Case Adapted from: Bornstein, David. “Making the Sun Shine for All.” 7 February 2006 Global Envision. 13 July 2008. http://www.globalenvision.org/library/10/954 and
Rosa, Fabio. E-mail interview. 11-12 August 2008.

Grande du Sul. Rosa’s success was predicated on his
ability to tap into local human resources and adjust his
services to the specific economic and social context of his
client base, achieving a level of responsiveness far above
that typically demonstrated by a large utility.45
While SMEs are typically better positioned to respond to
local conditions than are large utilities, these enterprises
often struggle due to lack of operational capacity.46
Though these SMEs operate small facilities, the range of
responsibilities that these organizations must fulfill is
broad. SMEs must conduct demand analyses, secure
financing, establish and maintain supply networks,
construct generation systems, manage marketing and
distribution, navigate often ambiguous and unsupportive
regulatory systems, and provide maintenance and
troubleshooting assistance, in addition to identifying
further markets and opportunities for growth. Carrying
out these responsibilities effectively is complicated by
the fact that many rural areas lack developed physical,
communication, and institutional infrastructures.47 For a
large utility, these challenges present significant risk; for
an SME, they can be overwhelming. It is no surprise,
then, that the need for further capacity building is one of
the most often repeated themes in the literature detailing
the experience of SME energy entrepreneurs.

Essays on Major Themes | Section 2 55

An equally daunting challenge for SMEs is accessing
capital.48 Investments in microenergy infrastructure vary
widely in size, from tens of thousands to millions of
dollars, but all share a common characteristic:
disproportionately high up-front costs.49 As such, projects
nearly always require significant financing. Several
obstacles stand in the way. In the first instance, SME
credit profiles are typically weak. Given the nascence of
the microenergy industry, many lack proven track records.
Except for the instances when installed equipment can be
easily repossessed and repurposed, most lack assets that
would qualify as workable collateral. Related to the
capacity challenge, some SMEs do not possess the
business and financial accounting skills to build
sufficiently robust business plans and growth proposals
to attract investment.50
Cooperatives
Local cooperatives play an important role in one niche of
the microenergy field: operating mini-grids. Community
organizations’ vested interest in local ownership and
integration positions them well to operate these systems.
This model first flourished in the United States and has
spread to several developing countries, where renewable
resources have played an increasingly important role. In
Sri Lanka, for example, community-operated mini-hydro
projects have electrified over 5,000 households.
Elsewhere, local cooperatives operate mini-grids powered
by diesel generators. These cooperatives are well
positioned to incorporate renewable energy sources into
existing grids.51
However, similar to SMEs, cooperatives often struggle due
to limited technical and business capacity. In addition, as
individual customer meters are often prohibitively
expensive in rural communities, and established regulatory
institutions are typically lacking in developing areas,
cooperative systems are vulnerable to abuse.
The Critical Role of SMEs
One central question for microenergy is: Which of these
three stakeholders has the greatest potential to drive the
industry forward? While cooperatives will certainly play a
role, their part will most likely remain limited to certain
regions and types of microenergy projects. Local
cooperatives have been most successful in regions with
strong, effective community governance, such as China,
Nepal, and Sri Lanka. However, many communities where
microenergy is appropriate lack such institutional stability.
In addition, the cooperative model has proved to be
effective nearly exclusively in the case of managing mini-
hydro mini-grids, due in part to the limited technical
capacity needed to operate and maintain such operations.
As such, scaling the cooperative model across regions
56 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
and energies would be challenging, requiring active
technical, financial, and regulatory support. Thus, while
cooperatives will likely continue to play a role in a few
regions, they do not stand to be the central drivers of the
global microenergy movement.
The question, then, is whether utilities or SMEs are better
positioned to drive the microenergy industry forward.
Looking back to the microfinance model, SMEs appear to
have greater potential. Small- and medium-sized
microfinance enterprises — NGOs and specialized
microfinance institutions — spent decades experimenting
with new approaches to small-scale finance and developing
methods to make its practice sustainable before large
financial institutions perceived the microfinance risk/return
ratio to be favorable. Today, even with the introduction of
these large institutions, commercial growth in the
microfinance sector has been primarily organic; large banks
have slowly become familiar with the microfinance sector
and only recently learned to how to profit from its
opportunity.52, 53 In essence, the microfinance experience
teaches that it is more difficult for large institutions to adjust
to unfamiliar risks than it is for smaller organizations to
overcome initial hurdles to new opportunities.
This lesson is applicable to microenergy. To adjust to the
microenergy model, large utilities would have to undergo
an institutional and cultural change of great magnitude;
microenergy represents not simply an additional product
line, but an entirely distinct business model.
Undoubtedly, a small number of innovative private
companies, such as Reliance, will prove capable of
exploiting the microenergy opportunity. In addition, a
select few public utilities, such as those in Brazil, will be
mandated by governments to provide microenergy to
meet national rural electrification goals. Even in cases
such as these, however, utilities’ forays into microenergy
promise to meet only a small fraction of the demand.
While the Brazilian government has required utilities to
provide service to off-grid areas, it has also stated that
private companies will be eligible for government
concessions to provide electricity service to non-
electrified regions beginning in 2015, explicitly
recognizing utilities’ inability to meet stated rural
electrification goals.54 This suggests that in the near
term, SMEs could play a dominant role over utilities as
the engine of growth in the microenergy industry.
The Path Forward for Microenergy —
Overcoming Two Key Challenges
The immediate path forward for microenergy relies on the
strengthening, growth, and replication of successful
SMEs. As described above, the two obstacles that most
consistently confound microenergy SMEs are limited
operational capacity and lack of access to financing.
Several key stakeholders must help aspiring energy
entrepreneurs build, sustain, and grow microenergy
enterprises. National governments, NGOs, multilaterals,
existing utilities, and microfinance institutions, among
others, all have a role to play. These two obstacles, and
the distinct roles of relevant stakeholders in overcoming
them, are discussed below.
Challenge 1: Capacity Building and Market Facilitation
As described above, SMEs’ lack of operational capacity
limits the viability, sustainability, and scale of microenergy
projects. SME project leaders must develop knowledge of
appropriate technologies and the ability to draft and
execute bankable business proposals. SMEs also need
skilled management and operations staff. The importance
of the ability to provide ongoing maintenance for
microenergy projects has been overlooked historically;
many projects launched in the early decades of
microenergy failed due to lack of continued upkeep and
maintenance.55 The scope of capacity building extends
beyond the strengthening of SME management skill sets.
More broadly, SMEs would benefit from market-facilitation
services. Few have the capacity to conduct non-core, but
ultimately essential, activities such as demand analysis,
end-user education, fundraising, best practice
identification and knowledge sharing, and policy and
regulatory advocacy.
As a result, microenergy SMEs are in need of both training
and hands-on advisory services. In the traditional energy
model, this support is offered by well-established industry
associations. While such associations exist for some
renewable energy industries, such as wind, solar, and
geothermal, their focus is typically on large-scale
operations. The microenergy industry is not yet sufficiently
mature to support dedicated trade associations. In the
absence of private support networks, microenergy must
rely on governments, NGOs, multilaterals, and,
increasingly, other private enterprises for assistance.
National Governments
Several national governments have proved to be effective
facilitators for fledgling microenergy markets. The Chinese
government offers an example of perhaps the most direct
and hands-on approach to facilitating the microenergy
industry. The government directly owns and operates
locally based power service providers, guiding them
through early-stage development until they become self-
sustaining.56 The Chinese Ministry of Agriculture plays a
supporting role, providing information and technical
support to local providers in rural areas.57 Through these
government-supported power providers, the Chinese
government launched the “Township Electrification
Program,” bringing modern, renewable power to
approximately 1.5 million rural people in 1,000
townships.58
Other national governments offer less controlling models
of facilitation that have also proven to be effective.
Senegal offers a helpful example. Its rural electrification
agency, ASER (mentioned above), was established in
1998 to promote rural electrification by providing
technical and financial assistance to private rural
electrification and renewable energy projects. The agency
offers project-evaluation services, provides information on
technological advancements relative to rural renewable
energy, designs the financial and regulatory tools (such as
concessions) used to promote rural renewable energy
enterprises, assists in securing funding from third-party
sources, and monitors and evaluates the safety and
quality of project equipment and implementation, among
other tasks.59 These services have proven invaluable to
the nascent rural renewable energy industry in Senegal
and have enabled independent service providers to begin
to close the rural electrification gap not filled by Senegal’s
traditional utilities.
NGOs and Multilaterals
NGOs have served as effective agents of capacity building
and market facilitation on a project-by-project basis. In
India, for example, the All India Women’s Conference’s
contribution as a market facilitator was central to the
success of rural biogas and woodstove programs.60 In
Latin America, the non-profit Global Village Energy
Partnership (GVEP) has provided critical up-front services
for microenergy projects in Guatemala, Peru, and
Honduras. In Guatemala, for example, GVEP partnered
with Fundación Solar to conduct a demand analysis, form
alliances with local organizations, develop appropriate
financing mechanisms, and formulate a plan of action to
install solar home systems in rural villages.61 In most
cases, NGOs that offer financing to microenergy SMEs
also provide capacity building and market-facilitation
support, as is discussed in the section below on the role of
intermediary enterprise-development financiers.
Multilateral and regional development banks offer similar
project support, as well as valuable advocacy, information-
sharing, and support services for broader microenergy
markets.62 For example, the Energy Sector Management
Assistance Program (ESMAP), established by the World
Bank and the United Nations Development Program,
draws on the support of a number of national
development agencies to provide strategic advice,
feasibility studies, technical support, and best practice
dissemination across some 100 countries. ESMAP
Essays on Major Themes | Section 2 57
operates a program focused specifically on building the
capacity of SMEs, which has sponsored efforts to
strengthen SME business models and production
schemes, support pilot projects of new technologies, and
facilitate the collaboration of SMEs in countries such as
Haiti and Cambodia.63 On a broader scale, the
organization has conducted strategic market and policy
studies, providing information necessary to facilitate
markets for renewable energy in Nicaragua and
Colombia.64 Such services are critical to accelerate the
development of renewable energy markets, and SMEs in
particular, and must be expanded; development banks’
far-reaching networks and financial flexibility place them in
a unique position to provide this support.
Private Companies
Private companies also have the potential to support
microenergy SMEs profitably. For example, in India, the ICICI
Bank is building a business model in which it would build,
own, and operate power-generation facilities in rural villages,
with a plan to then transfer those operations to local
partners. In the partnership, the local partner would organize
power demand, manage the facility, and eventually install
new facilities on a replicable basis, while the bank would
provide training and financing to enable these activities.65
Market facilitation also presents an opportunity for utilities to
play a more active role in promoting microenergy. Utilities
can leverage their technology know-how and economies of
scale to provide critical services to microenergy SMEs,
including operations and management training and provision
of reliable equipment and spare parts.66
Successful Microenergy SMEs
Finally, successful SMEs can themselves transform into
effective capacity building organizations. In certain cases,
SMEs can even facilitate a reverse path of learning,
helping established utilities build up the capacity to pursue
microenergy initiatives. Brazil provides a useful model.
When the Brazilian government decreed that only utilities
could operate under its rural electrification program, Fabio
Rosa (profiled above for his solar home system enterprise
in Rio Grande do Sul) identified an opportunity to provide
critical services to these companies that had never before
operated off-grid renewable projects. Drawing on the
lessons he had learned operating his microenergy
enterprise, Rosa founded the Center for Learning on
Renewable Energy and Decentralized Generation. To date,
the Center has brought together representatives from five
Brazilian utilities and the Ministry of Mines and Energy to
teach the business, management, financial, policy, and
regulatory models of microenergy. These sessions have
helped to facilitate a culture shift within the participating
utilities, preparing each to pursue microenergy projects in
both rural and urban areas.67
58 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Microenergy Entrepreneur Fabio
Rosa founded the Center for
Learning on Renewable Energy
and Decentralized Generation in
Brazil to bring together
representatives from five Brazilian
utilities and the Ministry of Mines
and Energy to teach the business,
management, financial, policy, and
regulatory models of microenergy.
Challenge 2: Microenergy Financing
The vast majority of microenergy SMEs are funded by a
combination of national governments, multilateral
organizations, and donor programs. The Renewable
Energy Network for the 21st Century (REN21) notes in its
Renewables 2007 Global Status Report that multilateral,
bilateral, and other public financing for renewables in
developing countries reached $600–$700 million per year
from 2005 through 2007, with the largest investments
coming from Germany’s KfW Entwicklumgsbank, the
World Bank, and the Global Environment Facility (GEF).68
While these figures represent record levels of funding for
renewable energy in developing countries, the demand for
financing outpaces available supply.
Tapping into the commercial finance market would provide
a practically unlimited source of investment capital, but to
date, microenergy SMEs have struggled to access
commercial financing. SMEs face difficulty securing
commercial financing due to lenders’ weak assessment of
SMEs’ creditworthiness and bankers’ perception that
there are high risks inherent to microenergy projects.
In the first case, most SMEs do not meet traditional
commercial standards of creditworthiness, given their
limited capacity, unproven track records, and lack of
asset-based collateral.69 In the second, the financial
community’s unfamiliarity with the microenergy sector
contributes to high-risk perceptions.70 In addition, due to
the small size of individual microenergy loans, transaction
costs for financiers are disproportionately high, and
microenergy projects often require long periods before
generating returns. Investors also fear that the
demographic of microenergy end-users — typically poor
and rural — reduces the likelihood that investments will be
fully recouped. As commercial investors do not share the
development motivations that compel other microenergy
financiers to accept lower returns and higher risk in
exchange for greater social and environmental benefits,
Diagram 2.2a Gaps in Microenergy Financing
Upstream Downstream

Start-up capital Operating capital End-user finance

Often Entrepreneur’s Supplier

secured equity credit

Occasionally Grants Bank loans

secured

Gaps and
barriers Lack of consumer/
Lack of Lack of
micro/transaction finance
business development appropriately priced
to pay for microenergy
support growth capital
products and
services

Lack of Lack of
seed and early-stage support from local banks
risk capital in local currency

Lack of
intermediaries/brokers/
platforms to channel
seed finance

Based on work of Phil LaRocco, E+CO and Virginia Sonntag-O’Brien and Eric Usher, “Financing Options for Renewable Energy”

SMEs will likely continue to struggle to access private

commercial financing in the near term.
E+Co has financed 173
microenergy SMEs. In 2006, after
Recent experience suggests that the perceptions of the write-offs, its $152.6 million
commercial investment community do not necessarily
reflect the true potential of microenergy investments. investment portfolio delivered an
Investors’ caution is at least partly borne out of the annual return of 8.2%.
experience of several decades in which donor-sponsored
microenergy projects failed to realize expected returns.
Since that time, improvements in management and Investors like E+Co are few and far between, however, and
investment approaches have righted many of the wrongs the corresponding lack of financing creates significant
that drove those investments off course. Investors are also challenges across the life cycle of SME business
hesitant to invest in microenergy due to their unfamiliarity development, from the business-planning and start-up
with the field; they tend to overrate project risks and phases through to the growth and expansion of successful
overestimate failure rates.71 In contrast to these enterprises. The most critical gaps in this financing
perceptions, a growing number of microenergy projects continuum, as captured by Virginia Sonntag-O’Brien and
have recently demonstrated an ability to deliver Eric Usher, are illustrated in Diagram 2.2a.73
sustainable financial returns. Consider the track record of
E+Co, a development-oriented investment organization The viability of the microenergy industry depends on the
that has financed 173 microenergy SMEs. In 2006, after ability of a combination of key stakeholders to close the
write-offs, its $152.6 million investment portfolio delivered gaps identified above. National governments and
an annual return of 8.2%.72 multilateral and regional development banks have played

Essays on Major Themes | Section 2 59

the largest roles to date, establishing a benchmark of
successful project finance practices. Intermediary
financiers and microfinance institutions have begun to
engage in the microenergy field, and their continued and
expanded support is critical to this nascent sector.
National Governments
Governments play an important role in creating a policy
and regulatory environment that encourages investment in
microenergy SMEs. The tools at their disposal — tax
structures, subsidy programs, loan guarantees, lines of
credit, and concessions, among others — are similar to
those that have been used to support the growth of the
traditional and large-scale renewable energy industries. In
the case of microenergy, combinations of these policy
tools are typically bundled under the banner of rural
electrification programs. In China and Brazil, for example,
government-mandated rural electrification has led to the
spread of off-grid technologies, strengthening microenergy
markets and infrastructure and laying the groundwork for
future growth.
Multilateral and Regional Development Banks
Microenergy enterprises typically cannot access traditional
sources of private seed financing, such as venture capital,
due to their comparatively low returns. Instead, they must
turn to donor-funded, development-oriented institutions,
such as multilateral and regional development banks, to
access start-up capital. To date, these organizations have
been the primary financiers of early-stage microenergy
SME development. They have also played a central role in
arranging public-private partnerships to provide operating
capital and second-stage growth funding to established,
expanding SMEs.
As the microenergy industry grows, however, the role of
these apex institutions must evolve. Directly financing
individual microenergy SMEs is a resource-intensive
endeavor, requiring an active presence on the ground and
an intimate understanding of the technical, political,
economic, and social circumstances in each instance.
Microenergy financing is also most effective when coupled
with capacity-building services, suggesting the need for
additional time and resource investment for each project.
While apex financiers have developed a strong track
record managing demonstration projects in the
microenergy field, they are not designed to engage fully in
the business of SME financing and development. Instead,
these institutions would be best leveraged as upstream
financiers, directing funding to intermediary financing
organizations that are better positioned — with on-the-
ground resources, knowledge of local communities, and
expertise in the energy field — to manage investments in
microenergy SMEs.
60 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Intermediary Enterprise Development Financiers
Development banks have recognized the opportunity to
achieve broader energy-development objectives through
partnerships with specialized SME financiers. The Inter-
American Development Bank (IDB), for example, manages
investments in SMEs and small business projects through
the Multilateral Investment Fund (MIF), an independent
fund managed by the Bank. The IDB has also partnered
with NGOs and regional banks to establish revolving
funds, which these intermediaries leverage to provide
loans to local SMEs. For example, with the financial
backing of the IDB, the non-profit Soluciones Practicas
(“Practical Action”) established a line of credit in rural Peru
that has provided 31 loans totaling $880,000 for 28
microhydro projects and 50 single-family solar home
system schemes.74
With the financial backing of the
IDB, the non-profit Soluciones
Practicas (“Practical Action”)
established a line of credit in rural
Peru that has provided 31 loans
totaling $880,000 for 28
microhydro projects and 50 single-
family solar home system schemes.
Still, the scale of microenergy financing operations pales in
comparison to the potential opportunity. One central
obstacle is the dearth of financial intermediaries. There are
a handful of organizations — E+Co, Root Capital, GroFin,
and the Shell Foundation — that specialize in providing
seed and growth financing to development-oriented
SMEs, but E+Co is the only one that invests specifically in
microenergy. These organizations offer a model for
providing socially responsible, economically sustainable
financing to a growing asset class that is, as Root Capital
defines it, “caught in the gap between microfinance and
traditional banking.”75 The development of more such
intermediaries, and financial support for these
organizations from development banks and other
upstream development financiers, will be critical to the
growth of the microenergy industry.
These intermediaries have drawn important lessons from
both microfinance and commercial project finance to
devise an investment model suited to the specific risks
and opportunities associated with SME financing. For
example, microfinance teaches that project-based loans
to poor entrepreneurs can be administered effectively
without requiring the loan recipients to offer asset-based
collateral. E+Co borrowed this concept and applied it to
microenergy: Since most microenergy SMEs are not able
to provide traditional levels of collateral (typically about 1.5
times the size of the loan), E+Co accepts lesser ratios.76 In
addition, many rural residents do not hold title to their
land, which otherwise would serve as an important source
of collateral. In some cases, intermediary financiers have
worked with microenergy SMEs to help them obtain land-
ownership rights, thereby establishing sufficient collateral
to administer loans.77
As described above, at an aggregate level, the
microenergy model inherently leads to the development of
a diverse energy portfolio, encompassing projects across
different natural, economic, political, and social
landscapes. Successful enterprise-development financiers
embrace the concept of diversification: By investing in a
well-balanced selection of projects across a diversified
spectrum, microenergy investors minimize the risks
associated with individual SMEs.
While portfolio diversification across geographies and
technologies is helpful (and likely inevitable), perhaps more
important is diversification across potential project
outcomes: social, and environmental, and economic.
Experience illustrates that not all microenergy projects are
immediately attractive from an economic standpoint and
indicates that achieving all three objectives in a single
project is extremely rare. By pursuing a portfolio balanced
across expected outcomes, financiers grant themselves
the freedom to invest in enterprises that provide significant
economic return with minimal development impact, as well
as those that are less financially lucrative but offer
significant development results. In other words, a
diversified approach enables financiers to achieve
economic, social, and environmental returns while
reducing the pressure on any single investment to meet all
three criteria.
One important feature of intermediary financiers is their
ability to complement financial investments with
capacity-building and market-facilitation services. In
Latin America and elsewhere, E+Co has partnered with
the United Nations Environmental Program (UNEP) the
United Nations Foundation (UNF), and local NGOs to
pioneer an approach known as “rural energy enterprise
development” (REED). This approach is characterized by
a multiple-stage process of business development, of
which financing is but one step. First, the intermediary
financier, referred to as a “REED partner,” helps potential
SMEs gather the necessary information to test the
feasibility of their business proposals. REED partners
then work with the most promising SMEs to refine their
business plans, and provide seed capital at the stage of
initial implementation. As SMEs grow, REED partners
offer management support and development, provide
financial structuring and advisory services, help conduct
market assessments and customer analyses, and,
eventually, assist their SMEs in securing second-stage
financing from outside investors.78 The integrated
approach to financing and capacity building is critical to
ensuring the sustainability, growth, and replication of the
SME model.
If intermediary enterprise financiers find efforts to secure
and consolidate funding from development banks and
other upstream lenders to be daunting, the microfinance
industry offers a useful paradigm for further institutional
stratification. Some microfinance financiers have found a
niche between enterprise lenders and apex institutions,
serving as fund aggregators. Through aggregation, these
organizations are able to achieve greater size and
diversification than individual enterprise financiers,
improving their creditworthiness and reducing portfolio
risk, and thus making them more attractive investments for
upstream investors. For example, Blue Orchard, a
microfinance investment firm, has secured investments
from large commercial banks: It co-manages the Saint-
Honoré Microfinance Fund, a 12 million Euro fund that
invests in an array of microfinance funds and is sponsored
by the Compagnie Financière Edmond de Rothschild
Banque. At this point, the small number of microenergy
enterprise financiers would not support this type of
organization. But as the industry grows, this model may
prove to be a useful one.
Carbon Financiers
The development of carbon-market tools, such as the
CDM, has opened the door for carbon financing to play a
role in supporting microenergy investments.79 Specifically,
microenergy projects reduce greenhouse gas emissions
and are thus eligible to generate carbon credits, which
can be sold in international markets under programs such
as the Clean Development Mechanism. The sale of such
credits offers a revenue stream that complements the
returns generated from end-user contracts, theoretically
improving microenergy projects’ attractiveness to
potential financiers.
In practice, however, the opportunity to leverage carbon-
market financing in support of microenergy is currently
limited. Complicated application processes and high
application costs create obstacles to carbon financing for
SMEs, many of which lack the capacity to manage project
implementation and carbon financing simultaneously.80
Moreover, the small size of microenergy projects limits the
potential returns from carbon financing. Unlike the capture
of landfill or agricultural gases, which in and of themselves
Essays on Major Themes | Section 2 61
Diagram 2.2b Mutually Supporting Relationships between Microenergy SMEs, Microfinance, and Microenterprise

Microenterprise

Microfinance: Microenergy SMEs:

• Provides credit for power systems, • Provides electricity for business
tools, machines, and working capital • Improves the local environment
• Provides technical and business
development training

Microenterprise: Microenterprise:
• Leads to greater viability of microfinance • Constitutes an enormous
institutions through economic development potential market for ME SMEs

Microfinance Institutions Microenergy SMEs

Microenergy SMEs Microfinance:

• Makes microenterprises more profitable • Creates bridge between ME SMEs and market
• Provides a loan item with potentially • Provides financing for ME SMEs
low transaction costs • Brings a gender-conscious approach
to ME marketing

Source: Allderdice, April and Rogers, John. “Renewable Energy for Microenterprise.” National Renewable Energy Laboratory. November 2000.

qualify as profitable carbon finance investments, the penetration into a single market (based on credit), rather
carbon finance benefits of microenergy projects are than superficial penetration of several markets (limited by
typically small and secondary.lxxx Programmatic CDM, the number of residents who can afford cash sales), thus
which enables the bundling of multiple, similar projects in reducing the need to duplicate operations and lowering
the application process, has the potential to aggregate the marginal costs.
carbon benefits of microenergy initiatives while reducing
overall transaction costs. However, this practice is When leveraged in the service of small entrepreneurs,
relatively new, and the current lack of standardization microenergy and microfinance can also support a self-
across microenergy projects limits the number that qualify reinforcing cycle of development. A study of the use of
for the programmatic process. At present, few renewable energy for microenterprise, published by the
microenergy SMEs are able to leverage carbon financing National Renewable Energy Laboratory, illustrates the
to cover up-front costs, where the gap in financing is synergies among these three fields,83 as depicted in
currently greatest.82 Diagram 2.2b.

Microfinanciers and Consumer Lenders Other than a few institutions that offer both microenergy
The growth of the microfinance sector offers a unique and microfinance services, such as Grameen Bank and its
opportunity to microenergy, particularly the sector of related energy-supply company, Grameen Shakti, most
microenergy enterprises engaged in the distribution of microfinance institutions have little experience dealing in
home-based energy systems. These systems, such as microenergy.84 As such, realizing the full potential of the
home solar systems, are typically rented for synergy between microfinance and microenergy will
approximately $10–$20 per month or are sold for a few require an educational effort to improve microfinance
hundred to a thousand dollars. The availability of credit lenders’ familiarity with microenergy’s products and
to low-income clients significantly expands the potential financing needs. Local microenergy SMEs as well as
market for such systems. It also enables microenergy market facilitators — including development banks,
SMEs to build a business model based on deep NGOs, and national governments — can all play a role in

62 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

providing microfinance institutions with the information
and education necessary to encourage increased
collaboration.
Conclusions and Recommendations
The traditional energy model will fail to alleviate energy
poverty and exposes customers to energy security and
environmental risks. The microenergy model, grounded in
a development orientation, decentralized infrastructure,
and diversity of energy resources, presents an alternative
energy paradigm that has the potential to deliver
enormous development and environmental benefits. In the
near term, the growth of microenergy will not likely be
driven by large, risk-averse utilities, but by small and
medium-scale enterprises able to adjust to the unique
challenges posed by rural, off-grid electrification.
The success of many microenergy enterprises around the
world, and the ability of investors like E+Co to make
profitable investments in microenergy portfolios, prove
that the microenergy model is viable and scalable. Still, the
nascent sector faces significant obstacles to its
expansion. SMEs’ lack of operational capacity jeopardizes
their ability to sustain, expand, and replicate successful
projects, and gaps in microenergy financing constrain the
industry’s rate of expansion. Accelerating the growth of
microenergy via SME development will require national
governments, multilateral and regional development
banks, NGOs, utilities, and intermediary enterprise-
development financiers to focus on several key objectives:
industry. To the extent that multilaterals leverage their
broad reach and deep resources to provide capacity-
strained SMEs with technical assistance, market analysis,
policy advice and advocacy, business development and
management training, and knowledge and best practice
sharing, they will lift many of the heavy burdens that the
microenergy industry cannot yet fully bear on its own.
Development banks must also help to close the gaps in
the microenergy financing continuum, recognizing that
they are best positioned to do so, not as direct investors,
but as funders of intermediary financiers. In contrast to
multilateral development banks, SME-focused affiliates,
such as the MIF, and third-party organizations, such as
Soluciones Practicas and E+Co, posses the on-the-
ground resources, local understanding, and energy-sector
expertise that are key to identifying viable microenergy
projects and building sustainable project investments.
Today, the small number of intermediary financiers
presents a significant challenge to microenergy SME
financing. Development banks can help to close this gap
by actively spurring the growth and development of
additional intermediaries; the creation of a fund designed
specifically to support microenergy-oriented intermediary
financiers would be a powerful way to stimulate much-
needed expansion in this area.

• Establish and expand channels to offer capacity-building

and financing services side-by-side, particularly through
the development and support of intermediary enterprise-
development financiers.
• Embrace an approach to financing that recognizes the
unique collateral and credit requirements of microenergy
SMEs and pursues the development of SME portfolios
that produce environmental, social, and economic
returns.
• Maintain a strong focus on collaboration with local
communities to achieve market responsiveness and
operational sustainability.

Development banks, in particular, must play a central role

in supporting the nascent microenergy industry and must
continue to offer it assistance as it develops. For one,
multilaterals must continue to provide and expand
capacity-building and market-facilitation services, both for
individual projects and for the broader microenergy
industry. Such work is not new for multilaterals, which
helped build capacity and drive growth in the microfinance

Essays on Major Themes | Section 2 63

64 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
2.3 Improving Energy Security:
A Portfolio Approach to Energy
Resource Management
The conventional wisdom that governs energy resource
management needs rethinking. Traditionally, energy
planners have applied a “least-cost” approach to energy
investments, comparing the expected costs of individual
generating technologies and pursuing the options
projected to be least expensive over their lifecycle. For the
better part of a century, this straightforward method
worked reasonably well. However, in today’s increasingly
risky energy markets, strict adherence to the least-cost
model exposes national power infrastructures to significant
threats to price, supply, and environmental stability. As
energy planners consider future energy investments, they
would serve their national energy markets well by adopting
a portfolio approach. Just as financial investors reduce risk
through diversification, energy planners who diversify
national generating mixes can insulate their countries from
threats to energy and national security.
In practice, diversifying a national energy portfolio is more
difficult than diversifying a stock portfolio. Generating assets,
unlike stocks, are not easily tradable or exchangeable.
Moreover, stock portfolios are typically managed by a single
investor, while in liberalized energy markets, energy portfolios
reflect the decisions of many independent investors, all
concerned with their own costs and risks rather than those
of the national energy market. Despite these hurdles, the
principles of portfolio theory offer a compelling and useful
alternative to the traditional energy-planning paradigm, and
national energy policymakers can employ a number of tools
to promote the aggregate benefits of diversification while
offsetting its costs to individual energy producers.
This paper examines the application of portfolio theory to
energy resource planning. It highlights the key role that
renewables play in achieving energy portfolio optimization,
the challenges of applying portfolio theory to practice, and
the role of policy in capturing the benefits and mitigating the
costs of energy resource diversification. The analysis
focuses primarily on diversification of energy-generation
technology in the power sector, though a brief examination
of portfolio theory’s application to the transportation fuel
market is included.
A Brief Overview of Portfolio Theory
Portfolio theory was first introduced by Harry Markowitz in
1952. It is based on the idea that every investment must
be characterized not only by its expected return, but also
by its expected risk. Markowitz found that by combining
multiple assets in a single investment portfolio, investors
can minimize risk for any given level of return (or
conversely, maximize return for any given level of risk).1
The defining characteristic of portfolios that minimize risk
while maximizing return is diversification. In a fruit market,
if you invest only in apples, and the value of apples falls,
your entire portfolio value falls. But if you invest in apples,
oranges, bananas, and pomegranates — and if the prices
of those fruits do not rise and fall in perfect unison — a
decline in the value of apples will not have as great an
impact on the overall value of your portfolio; your
exposure to apple price risk is reduced. What’s more, the
value you lose in falling apple prices could well be offset
by a run on pomegranates. While the mechanics of
portfolio theory are somewhat more complicated than
fruit-market economics suggests, the example illustrates
the central concept: Diversification insulates portfolios
from risk. The notion recalls the old adage: Don’t put all
your eggs in one basket.
Portfolio investors value each individual investment
according to its impact on the expected return and risk of
the overall portfolio, not in direct, stand-alone comparison
to other potential investments. As a result, at any given
time, a portfolio will almost certainly include investments
that offer different expected rates of return and levels of
risk. Notably, there is no “optimal” mix of investments;
there is no ideal level of risk or return. Rather, investors will
adjust their portfolio according to their individual
preferences, evaluating whether each individual
investment enables the portfolio to achieve maximum
return for a preferred level of risk.2
Traditional Energy Planning, Undiversified
Portfolios, and Energy Security Risks
Energy planners have not traditionally applied a portfolio
approach to energy resource management. Instead, they
have employed what is known as a “least-cost” model. In
essence, energy planners compare the expected life-cycle
costs for different energy-generation technologies and
make investments in the technologies that are projected to
provide energy at the lowest cost over the life of the
facility. Planners base estimations of life-cycle costs on
assumptions about future fuel costs and operations and
management (O&M) expenses, among other factors.3
This approach proved to be reasonably effective for most
of the past century, when energy planners had only to
choose among coal, oil, or gas-powered plants, and when
the costs associated with each were generally stable, and
Essays on Major Themes | Section 2 65
therefore relatively predictable.4 In other words, the least-
cost model worked well when all available technologies
faced similar, low levels of risk, and energy planners could
thus make accurate assumptions about future costs.
From today into the foreseeable future, however, the defining
characteristic of energy markets is risk. Fuel prices are
increasingly volatile, heavy import dependence heightens the
threat of supply shocks, and environmental instability both
threatens and is threatened by heavily reliance on fossil fuels
and, in some regions of Latin America, hydropower.
Moreover, the wide range of generating options available to
energy planners, including fossil fuels, large-scale
hydropower, and renewable technologies, have very different
levels of exposure to these risks. In this situation — when
there are many risks to which distinct energy options are
unevenly exposed — the traditional energy-planning model
breaks down. In short, the least-cost model fails to function
because there is no such thing as least-cost option, only a
least-cost option for a particular level of risk. Adherence to
the traditional planning model ignores the second half of this
equation, encouraging heavy investment in a small number
of fossil-based technologies that, while cheap, are highly
exposed to risk.
The traditional energy-planning
model breaks down when distinct
energy options are exposed to
This poses significant threats to energy and national
security. Each of the distinct risks to energy markets in the
Americas, and the threats to energy security posed by
undiversified energy portfolios, are examined in the
following sections.
Economic Risk: Price Volatility and Carbon Pricing
Threaten Growth and Development
Price stability in energy markets has rapidly eroded. As
can be seen in Chart 2.3a, since 2000, natural gas prices
have become increasingly volatile, sharply spiking in 2000
and 2001, 2006, and again in 2008. In addition, since
2003, oil prices have similarly broken with steady patterns,
as seen in Chart 2.3b.
Traditional energy-planning methods have left electricity-
generating markets in countries across the Americas
disproportionately exposed to this increase in fossil fuel
price volatility. Compared to the world, which, on
average, produces 4% of its electricity from oil,5 Central
America and the Caribbean are highly dependent on oil
for power: All but a handful of countries in the region rely
on oil for at least 25% of their total generating capacity.6
A few, such as Cuba and Jamaica, rely almost
exclusively on oil.7 In many cases, countries that are not
heavily reliant on oil are highly dependent on gas.
Mexico and Argentina, for example, each derive
approximately half of their electricity from gas-fired
generation.8

dissimilar risk.

Chart 2.3a Natural Gas Futures 1994-2008 ($/Million BTU)

$16

$14

$12

$10
$/Million BTU

$8

$6

$4

$2

0
94

95

96

97

98

99

00

01

02

03

04

05

06

07

08
19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

Source: NYMEX

66 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

While in some cases, price controls, government subsidies,
and preferential trade agreements protect these fossil-
dependant energy markets from immediate price
pressures,9 in the long term, these countries’ continued
reliance on fossil fuel–dominated portfolios will exert an
irrecoverable drag on their economies. Unexpected
changes in fossil fuel prices have a demonstrated negative
impact on macroeconomic performance; this is known as
the “oil-GDP effect.”10 Oil-price increases retard economic
growth by creating wealth transfers from oil importers to
exporters, reducing production output and wages, inducing
inflationary pressures, raising interest rates, and slowing
demand.11 Evidence suggests that a 10% rise in oil prices
contributes to GDP losses of 0.5% to 1.0%, likely for
several quarters and possibly permanently.12 Increases in
natural gas prices place a similar, if somewhat smaller, drag
on the macroeconomy.13 While the declining energy
intensity of the global economy has likely served to limit the
magnitude of this energy-GDP effect, and will continue to
do so, the threat to economic growth posed by sudden
energy-price increases remains present. Notably, even
absent baseline price increases, the amplification of
volatility in fossil fuel prices creates economic uncertainty
that reduces wealth and stifles investment.14
The likely prospect that nations will devise an international
emissions-reduction agreement and a global carbon-
emissions trading market creates another risk for nations
with fossil fuel–heavy generating portfolios: a
discontinuous and irreversible increase in the cost of
power generation. This risk is dissimilar from traditional
Chart 2.3b NYMEX Light Sweet Crude 1998-2008 ($/Barrel)
$150
$130
$110
$90
$/Barrel
$70
$50
$30
$10
98
99
00
01
02
03
19
19
20
20
20
20
Source: NYMEX
price volatility, as it emanates not from unpredictable shifts
in market dynamics, but from deliberate changes in public
policy that can be anticipated and planned for. In this
sense, the transition to a carbon-efficient global economy
might be most accurately described not as a risk to energy
markets, but as a paradigm shift within them.
This shift holds dire economic consequences for the fossil
fuel–dependent countries of the Americas. A global
carbon market would, in effect, generate enormous
wealth transfers from these fossil fuel–dependent
countries to those heavily invested in clean power. (A
similar effect would hold within regions of the same
country in the case of a national emissions-trading
scheme.) To this point, few in the Americas have studied
the potential impact of this development on the cost of
electricity generation or economic growth more broadly,
generating little sense of urgency for a course change
among the region’s energy planners. However, given that
generating assets’ average lifecycles typically range from
30 to 50 years or more, countries that fail to make
forward-looking energy investments today will find it
difficult to mitigate the high cost of fossil fuels in a
carbon-efficient economy.
Of course, the shift to a carbon-efficient economy
represents as great an opportunity for the Americas as it
does a risk. Countries heavily dependent on hydropower,
such as Paraguay and Brazil, would stand on the receiving
end of a carbon-based wealth transfer system. Should
fossil fuel–dependent countries leverage their extensive
04
05
06
07
08
20
20
20
20
20
Essays on Major Themes | Section 2 67
natural, renewable resources to achieve low-carbon power
infrastructures, they, too, would position themselves to
profit from this new energy paradigm.
Supply Risk: Import Dependence,
Market Concentration, and Instability
Price stability is just one aspect of energy security. Kevin
Stringer, adjunct professor of security studies at the Baltic
Defense College, observes that in addition to affordability,
“the availability of energy needed for stable economic and
social development [and the] freedom from interruption of
the energy supply” are critical pillars of a secure, stable
energy market.15 The International Energy Agency (IEA), in
turn, confirms the centrality of energy dependence to
security of supply. Of the conventional variables the IEA
uses to measure supply security, three relate directly to a
nation’s dependence on foreign energy sources: import
dependence and substitutability, market concentration (the
dominance of a small number of producing countries in
the trade of any one fuel), the and share of politically
unstable regions in imports.16
By these measures, the traditional energy-planning model
has left much of the Americas woefully insecure. The
Caribbean, lacking hydrocarbon resources, relies almost
exclusively on imports to provide the oil it uses to
generate power.17 Central America faces a similar
situation, as rapidly rising demand and limited refining
capacity have forced even Guatemala and Belize — the
two Central American countries with accessible oil
reserves — to turn to imports.18 Import dependence is not
limited to oil; many South American countries find
themselves dependent on imports of natural gas. Chile
offers a notable example: By 2006, the country relied on
imports for 70% of its primary energy consumption, and
more than 30% of its electricity was generated by natural
gas supplied by Argentina.19
By 2006, Chile relied on imports
for 70% of its primary energy
consumption, and more than 30%
of its electricity was generated by
natural gas supplied by Argentina.
Though much of the energy trade in the Americas is
confined within regional borders, market concentration is
high, as is the share of politically and economically
unstable exporters, which serves to exacerbate energy
security concerns. Consider Venezuela, the region’s
primary supplier of oil, which it offers to its Caribbean and
Central American neighbors under heavily subsidized
68 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
contracts. While Venezuela boasts the largest oil reserves
in the hemisphere, its output declined fo 10 consecutive
quarters, and industry analysts predict that significant
investment in capacity is needed to maintain current
production levels.20 Should Venezuela find itself unable to
meet the full oil demands of its neighbors — or worse, fall
victim to social, economic, or political turmoil that
interrupts either the flow of oil or financing — the region’s
energy markets would suffer immensely. Bolivia has
suffered such supply-disrupting instability, to the detriment
of its natural gas importers. In 2006, President Evo
Morales’s nationalization of the country’s natural gas
reserves created a precarious investment environment that
slowed foreign investment, curtailing production and
significantly raising energy costs for neighboring Argentina
and Brazil.21 Today, limited investment and capacity
continue to prevent Bolivia from fulfilling its contractual
gas agreements with these countries, and on September
10, 2008, domestic political instability in Bolivia severed
the country’s gas exports to Argentina altogether.22
As demand for energy increases across the region,
countries that continue to rely on imports originating from
a select few, politically unstable markets open themselves
to significant threats to energy security.
Environmental Risk: Climate Change,
Severe Weather, and Hydropower
Least-cost planning gives little consideration to the
environmental risks associated with energy investments.
These risks, however, are real: Both climate change and
severe weather patterns threaten energy, economic, and
national security in the Americas.
Overwhelming scientific evidence indicates that climate
change is a direct result of human activity and that fossil
fuel–fired power generation is a leading contributor to
global warming.23 While Latin America has thus far
contributed comparatively little to global carbon
emissions,24 the region’s continued — and, in many cases,
increasing — reliance on oil and gas will only serve to
compound its environmental challenges.
The Americas in particular stand to suffer from an irreversible
rise in global temperatures.25 In a warming world, natural
disasters will hit the region with increasing frequency and
intensity, causing widespread hardship and doing long-term
damage to infrastructure, industry, and agriculture.26
Changing rainfall patterns and increased drought may well
lead to massive demographic and land-use shifts, reducing
crop yields and hampering economic and social
development.27 Public health crises, in the form of
epidemics, are likely to accompany the severe weather
events associated with a changing climate as well.28
Chart 2.3c Correlation Between Oil and Natural Gas Prices ($/Barrel)

70 8

West Texas 7
60 Intermediate Crude

US Natural 6
50 Gas Wellhead

$/Thousand Cubic Ft.

5
40
$/Barrel

4
30
3

20
2

10 1

0 0
1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Source: EIA

Global warming, exacerbated by generating portfolios

skewed toward fossil fuels, threatens South American
countries with energy mixes skewed toward a different
energy source: hydroelectric power. Hydropower is
pervasive across South America, accounting for 100% of
power generation in Paraguay, 84% in Brazil, and 79% in
both Peru and Colombia; Chile, Uruguay, and Venezuela
all rely on hydropower to generate more than 50% of their
electricity.29 Warming temperatures have accelerated the
melting of the region’s tropical glaciers, placing these
countries’ national power grids — and the people and
businesses that depend on them — in an increasingly
precarious situation.30
Hydropower-dependent countries in Central America, less
vulnerable to the threat of glacial melt, are nevertheless
exposed to the environmental risks associated with severe
weather patterns. In 1997 and 1998, extreme weather due
to El Niño caused widespread electricity shortages across
Central America, forcing both Costa Rica and Honduras to
declare states of emergency.31 Brazil suffered a similar fate
in 2001, when a drought wrought the virtual breakdown of
the nation’s power system, forcing the government to
institute a six-month period of energy rationing that
contributed to a 1.5% reduction in the country’s GDP.32
These cases illustrate that fossil fuel–heavy generating
portfolios are not the only ones to suffer heightened
exposure to energy market risks; any undiversified energy
portfolio, regardless of the dominant energy, places
national and economic security at risk.
In 2001, drought wrought the
virtual breakdown of Brazil’s
national hydropower system,
forcing the government to institute
a six-month period of energy
rationing and causing a 1.5%
reduction in GDP.
Portfolio Approach: Strengthening Energy
Security through Renewables
The risks to economic, national, and environmental
security, as described above, will persist until energy
planners adopt an approach to resource planning that
sees beyond the narrow objective of minimizing
generating costs. Portfolio theory offers an alternative,
more holistic approach: Against cost, it weighs the price,
supply, and environmental risks inherent to investments in
each distinct generating technology. This more
comprehensive valuation method encourages energy
planners to balance the objective to minimize costs with
the imperative to insulate national energy markets from
risk. As Stringer writes, applying a portfolio approach to a
country’s energy resources “enables decisions to be made
concerning adjustment of the energy mix to achieve the
optimal sourcing of energy while reducing risks in the
failure of any one source or supplier.” 33

Essays on Major Themes | Section 2 69

However, a portfolio approach offers limited benefits when
energy planners are constrained to a choice among
conventional, fossil fuel–based generating technologies. The
reason is that these technologies are subject to the same
fundamental risks: unpredictable fuel price fluctuations,
import dependence, and exposure to the regulated cost of
emissions in a carbon-efficient economy. As such, while
combining multiple fossil fuel technologies in a single
generating portfolio mitigates the specific risks associated
with each in isolation, from a systemic perspective,
diversified and undiversified fossil fuel portfolios are exposed
to the same broad set of risks. Moreover, in some cases, the
specific risks associated with distinct fossil fuels are highly
correlated. Price risk for oil and gas generation is a good
example. As seen in Chart 2.3c, oil and gas prices have
historically moved in close unison, thus largely negating the
benefit of diversifying across these two options, at least in
terms of mitigating price risk. In financial terms, diversifying
across conventional fossil technologies is roughly analogous
to building a portfolio comprised only of stocks, without
bonds, gold, or currency. While the stock-based portfolio
may combine several assets to reduce risk, the overall
portfolio is not truly diversified.
To be truly diversified, generating portfolios must include
alternative energy sources. Passive generation
technologies, such as wind, hydro, solar, and geothermal,
offer the greatest opportunity to offset the systemic risks
inherent to their conventional counterparts. For one, they
do not share the fuel-price risks associated with fossil fuel
technologies. In fact, they face no price risk at all: Once
tapped, wind, water, sunshine, and the Earth’s heat are
free. In addition, these renewable alternatives eliminate the
supply risks associated with import dependence, as they
are produced domestically. Finally, they create no
environmental risks, and as such, they face no risks from
future efforts to regulate carbon emissions.
It is important to note that wind, solar, and geothermal
options also mitigate the natural supply risks to which
large-scale hydropower is exposed (barring a catastrophic
event during which the sun goes dark, the wind ceases to
blow, or the inner-Earth cools down for an extended
period of time). Moreover, many countries in the Americas
with access to large-scale hydro resources are already
heavily dependent on them for power; a situation that, as
demonstrated above, has exposed those countries to
serious economic and security risks. Given the
comparatively improved risk-mitigating characteristics of
wind, solar, and geothermal technologies, as well as the
region’s arguable overexposure to the risks associated
with large-scale hydropower, further diversification in the
Americas’ generating portfolios will require increased
investment in these alternatives.
70 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Biomass power generation shares some of the risk-
mitigating benefits of their passive renewable
counterparts. Like wind, solar, and geothermal, biomass
provides an opportunity to offset fossil fuels’ price risks
and import dependence, as well to as reduce carbon
emissions. However, depending on the feedstock,
biomass power generators can face significant price
risks, as well as other risks, such as uncertain availability
of feedstock and arable land for feedstock cultivation.34
Nuclear power also offers a potential opportunity to
diversify generating portfolios in the Americas. It does not
share the same fuel-price risks as do traditional fossil
fuels, and though uranium must be imported, its sources
are not overly concentrated in politically sensitive regions,
as is the case with fossil fuels. However, nuclear power
carries its own set of risks, including very high up-front
construction costs, ongoing management challenges, and
complicated fuel-waste-management issues.35
Nevertheless, as the Americas seeks to diversify its
energy portfolio, both biomass and nuclear should be
considered alongside passive renewable technologies as
potential options.
Why Diversifying via Investment in Passive
Renewables Does Not Raise Costs
The primary objection to pursuing greater diversification
via investment in passive renewable technologies, such as
wind, solar, and geothermal, is that their addition to
national generating portfolios increases the overall cost of
power generation. Such assertions reflect the assumption
that the addition of a generating asset with a higher stand-
alone cost necessarily increases the cost of the overall
generating portfolio. On the surface, this assumption
seems to be intuitive and reasonable. But portfolio theory
proves that it is wrong.
The assertion that renewables
increase the cost of power
generation is based on the
assumption that, because
renewables have higher stand-
alone costs, they will increase the
cost of the overall generating
portfolio. Portfolio theory proves
that assumption is wrong.
If you turn to the pages of any financial textbook, you
will find in the section on portfolio theory an interesting
conclusion: All optimal portfolios must include a riskless
asset. Without getting into the mathematics, the reason
is that adding a riskless asset to a portfolio of
diversified, risky assets improves the efficiency of the
portfolio.36 In other words, the addition of a riskless
asset improves returns at any given level of risk.
Importantly, and counterintuitively, this effect holds true
even if the expected return of the riskless asset is lower
than any of the assets already in the portfolio.37 In
finance, U.S. Treasury Bills (T-bills) function as
essentially riskless assets, because their expected
return, guaranteed by the government, holds steady
regardless of fluctuations in the overall market. As such,
despite the fact that T-bills offer lower returns than most
stocks or bonds, investors must include T-bills in their
portfolios to achieve optimal results.38
Passive renewable energy technologies — wind, solar,
and geothermal — serve essentially the same role in
energy portfolios as do T-bills in financial portfolios. As
described above, their costs are essentially fixed.
Because passive renewables do not have fuel expenses,
their year-to-year costs remain flat, entirely independent
of unexpected price fluctuations in the conventional
energy market. In other words, passive renewables
function as riskless assets.
Of course, in practice, no energy technologies are
entirely risk-free. New investments in passive renewables
face fluctuating construction costs and potential
setbacks, and existing facilities can suffer from
unexpected system failures and changing operation and
management (O&M) costs.39 Moreover, there is always a
risk — at least for short periods of time — that the wind
will not blow or the sun will not shine, thus creating
capacity risk for systems dependent on these potentially
intermittent resources.
However, at an aggregate level (i.e., on a national scale),
these risks are effectively mitigated: Thousands of
geographically dispersed wind farms, solar panels, or
geothermal plants are not subject to the same risks as a
single turbine, panel, or heat pump. Thus, though
individual renewable systems are exposed to risks, in the
context of national generating portfolios, renewable energy
technologies present, for all intents and purposes, a
riskless investment opportunity.
Because renewables such as wind, solar, and geothermal
are risk-free, though they appear to be more expensive
than conventional generating options compared on a
stand-alone basis, adding these technologies to a
generating portfolio actually serves to reduce the overall
cost of power. By diversifying energy portfolios via
investment in renewables, energy planners can thus
improve energy security at no extra cost.
Challenges to Portfolio Theory Application
Managing energy generating portfolios to capture the
security and cost benefits of diversification is complicated
by a number of practical constraints. For example, the
principles of portfolio theory, designed to govern the
management of financial assets, are based on several
assumptions about the market that do not smoothly
translate when stocks and bonds are replaced with wind
farms and coal plants. In addition, the cost- and risk-
related benefits of energy diversification on a national
scale are not uniformly realized by individual energy
producers or consumers, many of which would in fact
incur significant costs. This creates a misalignment in
incentives at the individual and national levels, and as a
result, the gap between theoretically optimal and
practically feasible portfolios can be quite wide.
Importantly, these constraints do not negate the fact that
national policymakers can deliver material cost and
security benefits by optimizing national energy portfolios
through diversification. This section examines these
practical constraints in greater detail and discusses the
tools that national policymakers can use to promote the
diversification of national energy resources.
Portfolio Theory Assumptions Do Not Fully Translate
to Energy Markets
As described, portfolio theory was originally devised as a
strategy to guide investments in financial assets. While
many studies have since applied portfolio theory to the
management of tangible assets, it is important to
recognize that the assumptions underlying the mechanics
of portfolio optimization do not necessarily translate from
ideal markets to energy markets.40
Portfolio theory rests on the assumption, for example,
that assets are traded in a perfect market, characterized
by low transaction costs, perfect information, and a
normal distribution of returns.41 The energy market,
however, is far from perfect. Generation facilities cannot
be easily bought, sold, or exchanged. While a financial
investor may be able to substitute two stocks for a
minimal fee, a utility cannot decommission a nuclear
facility to replace it with a wind farm without incurring
significant transaction costs.
Portfolio theory also hinges on the fact that financial
securities are highly divisible: It is possible for financial
portfolio consisting of two assets to contain 100% of
either or virtually any combination in between.42
Generating assets, in contrast, are not perfectly divisible,
which creates a “lumpiness” that can distort portfolio
analysis. While the impact of energy assets’ indivisibility is
reduced as the portfolios in question grow to regional or
Essays on Major Themes | Section 2 71
national levels (and thus more and more assets are
included), the impact within small service areas can be
quite large.
Another critical difference is that unlike financial
securities, which are effectively fungible, energy assets
are not necessarily substitutable. Though energy
technologies can be compared in price and risk, they
differ in many other ways. One thousand megawatts (MW)
of wind power cannot necessarily replace 1,000 MW of
coal power, because coal generation supports base-load
demand while wind power does not. (Other alternative
options, such as nuclear, do not face this challenge.)
Additional costs and risks related to siting and grid
connection also place limits on the substitutability of
distinct generating sources. Turning again to the example
of wind, replacing 1,000 MW of coal power with wind
power would require the construction and siting not of a
single or several plants, but of thousands of wind
turbines. Moreover, these turbines, typically constructed
in areas far from the reach of established power lines,
would have to be serviced by sizable investments in new
transmission infrastructure. In the U.S., for example, the
Midwest Independent Transmission System Operator
estimates that the addition of 5,000 miles of new
transmission lines, at a cost of $13 billion, is necessary to
connect potential new wind resources to centers of high
energy demand.43 Such additional variables go
unaccounted for in portfolio theory, limiting the
applicability of its theoretical findings to practice.
Competing Interests Create Disincentives to
Diversification
Portfolio theory also fails to account for the fact that power
markets operate according to a range of interests, many of
which compete with the imperative to diversify national
generating portfolios. Both political interests and the
interests of individual power producers create
disincentives to the diversification of energy-generation
resources.
Entrenched interests often shape energy planning. In the
U.S., for example, the coal lobby’s strong political
influence in the Southeast and Midwest makes any
significant shift away from coal-fired generation
exceedingly difficult, regardless of the potential benefits
of further diversification to the national energy portfolio.
And in Mexico, state-run utilities are required to purchase
the lowest-cost electricity available irrespective of the
potential price risks, thus limiting the viability and
competitiveness of renewables.44 In such cases,
policymakers have compelling reasons to take such
policy stances, such as maintaining stable electricity
prices for consumers or protecting jobs and the strength
72 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
of local economies. Portfolio theory, strictly applied,
ignores any ancillary value of inefficient portfolios, though
clearly such non-economic objectives must be assigned
some weight.
These challenges to the practical application of portfolio
theory to energy resource management apply across the
board, regardless of the individual portfolio in question.
When considering the special role of renewables in
portfolio theory, an additional practical challenge arises:
the misalignment of incentives. In deregulated
environments, energy planning and investment decisions
are made by independent utilities and power producers,
each of which weighs the specific opportunities, costs,
and risks associated with potential investments. While
portfolio theory demonstrates that investments in high-
cost, low-risk renewables produce benefits for the broader
portfolio, individual utilities investing in renewables incur
their higher costs without fully capturing their risk-
mitigating benefits, which are distributed at an aggregate
level. As a result, portfolio theory offers individual utilities
little incentive to invest in technologies such as wind, solar,
and geothermal.
Utilities’ ability to pass higher costs through to consumers
also reduces their incentive to make investments in
diversified portfolios, particularly in renewables. This is not
surprising. By passing on fuel-price increases to
consumers, utilities effectively reduce their exposure to the
intrinsic price riskiness inherent to conventional
technologies. This reduces their perception of the value of
energy technologies, such as renewables, that offer the
primary benefit of long-term price stability. It is important
to recognize that, in the aggregate, such practices do not
actually reduce overall risk; they simply redistribute it,
exposing customers, rather than utilities, to the negative
economic impacts of fuel price volatility.
While most individual consumers cannot actively hedge
against such price risks, as they have little control over
their energy-consumption portfolios, a growing number of
large industrial and commercial consumers (and some
affluent individuals) are pursuing renewable power as a
means to diversify their energy consumption and hedge
against volatile energy costs — as well as to achieve
“green” objectives. For example, retailers such as Wal-
Mart are installing solar panels to diversify the generation
portfolios of individual stores, leveraging fixed-price
contracts to insulate those stores from long-term and
seasonal electricity price fluctuations.45 However, such
efforts, pursued by few and on a comparatively small
scale, do not stand to impact the composition of national
energy portfolios materially. A study by several
Cambridge and MIT faculty members on the use of
nuclear power to hedge against uncertain gas and carbon
prices finds that consumer-driven diversification is highly
unlikely, as “the bulk of electricity consumers (even
industrial consumers) are not well-informed about the
electricity market, and … [attach] minor importance to
hedging electricity price risks.”46
Retailers such as Wal-Mart are
installing solar panels to diversify
the generation portfolios of
individual stores, leveraging fixed-
price contracts to insulate those
stores from long-term and
seasonal electricity price
fluctuations.
Capturing the Benefits of Portfolio Theory
through Policy
There exists a clear tension between the national benefits
of energy diversification and the very real obstacles that
prevent energy planners’ practical application of portfolio
theory. Countries that continue to allow energy resource
management to continue on the path charted by business-
as-usual will miss an opportunity to significantly improve
the overall cost-effectiveness and security of their national
energy resources. On the other hand, those that push for
greater diversification must find ways to manage the
significant costs associated with a deliberate shift in the
balance of generation technologies.
Policymakers increasingly agree that the benefits of
building a more diversified energy portfolio merit the
costs. The following quotation from an article written by
U.S. Senator Peter Domenici illustrates the degree to
which the concept of energy-portfolio diversification
has captured the attention of key energy policymakers
in the U.S.: “Diversifying our energy portfolio is the
critical next step we must take to move us away from
existing technologies toward cleaner, affordable
technologies.”47 Domenici’s sentiments have been
echoed by national policymakers on both sides of the
aisle, who have repeatedly called for an “all of the
above” solution to the U.S.’s energy challenges. In
China, President Hu Jintao has acknowledged that
energy diversity is key to the country’s energy security;
similar sentiments prevail among policymakers in the
UK, Brazil, Mexico, and elsewhere.48 Independent,
objective observers have also lauded the national
benefits of energy diversification. Regina Nunes,
Standard and Poor’s chairwoman in Brazil, observed,
“Diversity of energy sources in Brazil and the
development of new technologies in this area make the
country’s sovereign rating stronger.”49
“Diversifying our energy portfolio is
the critical next step we must take
to move us away from existing
technologies toward cleaner,
affordable technologies.”
—U.S. Senator Peter Domenici
There is no uniformly appropriate means to redirect energy
portfolios from the trajectories charted by business-as-
usual to the paths toward more efficient generation mixes.
Policymakers have a range of tools at their disposal to
promote diversification in energy markets. One tool that
has been applied in several countries is a renewable
portfolio standard (RPS). An RPS requires utilities to
provide a certain portion of their power via renewable
sources, which can be satisfied with the utility’s own
investment in renewable generation technology or with the
purchase of renewable energy certificates from
independent renewable generators. A range of financial
and tax incentives directed at renewables also support
portfolio diversification. For example, feed-in-tariffs and
feed-in-premiums (FITs and FIPs) have become
increasingly popular, particularly in the EU and South
Korea. FITs offer a fixed, preferential price for renewable
generation, usually guaranteed over a long time horizon
(typically 10–20 years), while FIPs offer a similar, premium
bonus on top of standard electricity proceeds.50 The fixed,
higher prices offered by these mechanisms help to remove
the disincentive for power producers to invest in
renewables; they effectively ensure that renewable power
producers are able to secure compensation for the risk-
mitigation benefits that their investments provide to the
energy market as a whole. Map 2.3a indicates where
portfolio-encouraging policies have been established
worldwide in both a mandatory and a preliminary,
voluntary manner, differentiating between RPS policies
and FIT/FIP incentive programs.
Importantly, different countries will inevitably diversify their
energy-resource portfolios in different ways. The
availability of distinct natural resources, composition and
age of the current generation portfolio, and capacity of the
existing transmission infrastructure, among other factors,
will determine the spectrum of possible energy choices
and composition of theoretically optimal portfolios. Based
on these factors, the starting point for a discussion of
Essays on Major Themes | Section 2 73
Map 2.3a Portfolio-Enhancing Policies: Renewable Portfolio Standards and Feed-In Tariffs
Source: Garten Rothkopf
portfolio diversification will be different, for example, in the
U.S. as compared to Mexico, India, or China. In addition
to the physical parameters that define the range of
potential technical possibilities, market and political
realities — the structure of the energy market, strength of
entrenched energy interests, and the health of the overall
economy, for example — will further define the practically
and politically feasible range of options. Just as few
investors’ portfolios are identical, few nations’ energy
portfolios will be similar.
Application of Portfolio Theory to the
Transportation Fuel Market
Most studies of the application of portfolio theory to
energy markets focus exclusively on the power sector;51
to date, little has been written about the usefulness of a
portfolio approach to the transportation fuel market.
However, there is certainly a great need for diversification
in transport fuel portfolios; near-exclusive reliance on oil
exposes both nations and individual consumers to
tremendous levels of price and supply risk.
When applying a portfolio approach to transport fuel
markets, it is helpful to remember that to achieve the
74 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
benefits of diversification, investors must hold multiple
assets simultaneously, not simply replace one with
another. Wholesale substitution — for example, replacing
all of the oil-powered cars on the road with cars fueled
with natural gas — would simply exchange, rather than
counterbalance, the risks of oil and natural gas. True
diversification implies that the transport market must be
able to support a balance of multiple fuels.
There are, at least in theory, a number of potential fuels
that can complement oil, including biodiesel, ethanol,
natural gas, electricity, and hydrogen. These fuels stand
at different stages of development. Biodiesel and ethanol
are commercially available, achieving varying degrees of
penetration across distinct markets; Brazil, in particular,
has achieved high utilization of ethanol-based transport
fuels. Natural gas has also been commercialized,
primarily for use by small commercial fleets.52 Electric
cars have occupied a very small niche in the automobile
market for several decades, and the first commercialized
plug-in hybrids are scheduled to reach showrooms in
2010. Hydrogen fuel cell vehicles essentially remain in
the research, development, and piloting phases. Pushing
one or several of these fuels to broad-scale
commercialization is critical to enable diversification in
the transport markets. Two primary hurdles stand in the
way: limited infrastructure and single-fuel engines.
Several distinct fuels require separate distribution
infrastructures; for example, oil, natural gas, and hydrogen
cannot be pumped through the same pipelines. Building
parallel distribution infrastructures is a costly endeavor. In
some cases, prohibitively so: The Argonne National
Laboratory at the University of Chicago estimated that
building an infrastructure to fuel 100 million hydrogen fuel
cell vehicles in the U.S. could cost over $600 billion.53
While the costs for other fuels are not likely to be as high,
they are formidable nonetheless. For example, building a
natural gas distribution infrastructure in the U.S. equal in
size to the existing system of conventional gas stations
would require the construction of some 117,000 natural
gas service stations, each of which can cost over
$300,000, totaling an investment of more than $35
billion.54 Notably, this estimate does not include the costs
associated with other necessary development, such as the
extension of natural gas pipelines and the purchase or
lease of land for fueling stations. Though the potential to
install home-based natural gas fueling stations may
reduce the need for a centralized, public fueling
infrastructure, individual systems are also costly, typically
ranging from $4,500 to $5,000, and require additional
remanufacturing investments after approximately 6,000
active hours (500 six-gallon fill-ups).
A second hurdle to the commercialization of alternative
fuels is the predominance of single fuel–dependent
engines. As long as the vast majority of cars and trucks
on the road run on engines compatible only with
gasoline, the potential market for each individual fuel is
limited to the number of consumers who purchase cars
specifically designed for that fuel. In many cases, such
cars cost a premium price. For example, the 2009 Honda
GX, a natural gas–powered car, costs $6,830 more than
its gasoline-powered counterpart;55 GM’s anticipated
electric car, the Volt, is expected to retail for
approximately $40,000.56 Though low fuel prices for
these alternative vehicles make them cost-competitive
over their lifecycles, their comparatively high sticker
prices place them out of reach for most consumers.
Accordingly, the market share for such vehicles — and
for their corresponding fuels — is currently small. This
constraint on market size obstructs investors’ ability to
recoup the significant upfront costs associated with
building the infrastructure to distribute alternative fuels,
making such investments unlikely.
The challenges to fuel-market diversification suggest two
paths of least resistance: fuels that leverage existing
infrastructure, and the commercialization of engines that
support multiple fuels. According to these parameters,
biodiesel appears to present a promising option: It is
distributable through the existing gasoline infrastructure
and is compatible with conventional diesel engines.57
However, limited production capacity and price inflation
due to competition over food-based feedstock present
challenges to biodiesel’s widespread expansion.58 Ethanol
offers another compelling, if imperfect, opportunity. Unlike
biodiesel, ethanol cannot be transported through the
same pipelines as gasoline, but existing service station
equipment can be modified to handle ethanol at costs as
low as $3,300.59 Moreover, the advent of ethanol-
compatible flex-fuel vehicles (FFV) enables the market for
ethanol to grow independent of the rate of expansion for
its infrastructure. The FFV market in California offers a
striking example: In 2007, there were an estimated
257,000 FFVs in the state, despite the fact that there was
just one publicly accessible E85 fueling station.60
In the future, plug-in electric hybrids may also overcome
the hurdles to diversification in the fuel market, given
their ability to leverage both the existing power grid as
well as conventional gasoline (and, ideally, ethanol as
well). Their feasibility will depend on the costs associated
with fortifying and adapting the current electricity
infrastructure to bear the burden of the addition of
vehicle-based demand. A study conducted by the
Pacific Northwest National Laboratory suggests that the
U.S. power sector has sufficient available capacity to fuel
up to 84% of the nation’s cars, pickup trucks, and SUVs
for an average daily drive of 33 miles.61 However, such
demand would stretch the grid to its full capacity, and it
is questionable whether the power sectors across the
rest of the Americas would be able to support a similar
strain on less-stable systems.
Policymakers have encouraged the development of
alternative fuels through much of the same means as are
used to create incentives for diversification in power
markets. Renewable fuel standards (RFSs), for example,
function in a similar way as the RPS. The RFS in the U.S.
mandates the production of a minimum amount of
biofuels each year, ensuring that there is a market for
these fuels as they scale; the required production for
2008 is 9 billion gallons.62 In complement to this policy,
the federal government has offered a number of
production tax credits to biofuels producers.63 Looking
forward, however, policies to encourage the
manufacturing of FFVs may be a more effective tool to
encourage diversification in the fuel market. The addition
of FFVs to the market will enable growing demand and
the forces of the free market and competition, as
opposed to government mandates and incentives, to
drive the expansion of the alternative fuel market.
Essays on Major Themes | Section 2 75
 Conclusion

Investors have long applied a portfolio approach to

mitigate risk in uncertain financial markets. Today, as price,
supply, and environmental risks make energy markets
increasingly uncertain, it is increasingly important that
energy planners take a portfolio approach to resource
management. This is particularly true in the Americas,
where highly undiversified portfolios expose much of the
region to serious threats to economic, environmental, and
national security.

The commercialization of renewable energy offers energy

planners an opportunity to mitigate these risks through
broad diversification. Importantly, though traditional least-
cost planning methods conclude that renewables are not
cost-effective, portfolio theory illustrates that renewables
such as wind, solar, and geothermal in fact decrease the
overall cost of power generation.

It must be acknowledged that, in practice, there are

significant costs inherent to changing the energy
generation mix. It is also critical to recognize that
deregulated markets do not create incentives for individual
power producers to invest in renewable technologies.

As a result, to capture the benefits of diversification,

policymakers must actively encourage greater investment
in alternative energies. To this end, they can employ
investment-spurring tools such as renewable portfolio
standards and feed-in-tariffs. In the transport market,
where overwhelming reliance on a single fuel precludes
diversification, policymakers can apply similar incentives
to support the development of alternatives that may
eventually enable the true application of a portfolio
approach.

76 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

2.4 The Culture of Green
In an 1855 letter to U.S. president Franklin Pierce,1 Chief
Seattle, patriarch of the Squamish Indians of Washington,
made the following plea: “Whatever befalls the Earth
befalls the sons of the Earth. Man didn’t weave the web of
life: he is merely a strand in it. Whatever he does to the
web, he does to himself.”2 These words, while insufficient
to prevent environmental degradation in the 19th century,
serve as a prescient reminder of the challenge mankind
faces today in global climate change. Many indigenous
cultures see themselves as inextricably connected to the
natural world because they depend on it for survival; by
contrast, industrial society views nature as a “resource” for
human use. This false dichotomy of man versus nature
has led humankind to a new state of crisis. However, we
can look to these values to inform our actions moving and
begin to rethink how we approach the threat of global
climate change.
The language of indigenous ecology — metaphor,
imagery, and spirituality — differs markedly from the
scientific language we have come to embrace. Yet, the
principles of mutual dependency and harmony with nature
promoted by many indigenous societies can now be
articulated in modern scientific terms. These implicit
principles enabled indigenous societies to thrive for
thousands of years — to live “sustainably.” While we
understand these ideas in our own terms, the crucial task
lies in fully integrating them into development objectives.
This requires large organizations charged with formulating
and executing climate change policies to re-imagine their
approach.
Despite a wide disparity in geography and cultural
practices, many indigenous societies around the world
share similar attitudes toward the environment. This paper
examines the environmental beliefs of several indigenous
cultures in Latin America and globally. A set of four common
principles emerges: a belief in the interconnectedness of all
living and non-living things, the notion of ecological
balance, a long-term and cyclical view of time, and the
need for active stewardship of the land. These indigenous
principles, reinforced by some modern ideas, form a useful
framework through which current climate change policies
can be assessed.
Indigenous ideas about environmental stewardship
underscore that the concept of sustainability is not new
at all. However, multilateral development banks (MDBs)
have faced significant barriers to integrating
environmental considerations into their development
goals. Many of these barriers arise from the way in
which large organizations are structured and the way the
“culture” of these organizations dictates behavior.
However, despite these differences, development
organizations may be able to integrate and
“mainstream” climate change considerations by
applying the indigenous principles of the countries they
are dedicated to serve. Merging indigenous ideas of
environmental stewardship with modern organizational
theory presents possible solutions to this problem and
produces a plan for integrating climate change and
sustainability issues fully within the framework of a
development bank’s mission.
Four Common Indigenous
Ecological Principles
Interconnectedness
Indigenous cultures across the Americas and throughout
the world share the belief that living and non-living
beings are intimately connected. For people who
depend on the land for survival, the notion that humans
are inextricably linked to the flora, fauna, mountains, and
rivers reinforces cultural beliefs and sustains their way of
life. This is especially true for the Kuna people of
northeastern Panama, for whom life and survival are
intimately bound to the forests. According to Kuna
legend, the Earth is the body of the Great Mother, who
engendered the plants, animals, and humans. The trees
— brothers and sisters of the Kuna — renew the energy
given to them by the Earth by drawing water in through
their roots. The Great Mother then drinks the sap
produced by the trees, giving herself strength. The trees
also provide sustenance to animals and medicine to
humans, fusing all components of the forest ecosystem
to one another. Thus, the Kuna may not harm the trees,
lest they harm Mother Earth and themselves. This belief
informs the Kuna’s restorative “slash-and-burn”
horticultural practices, which return nutrients to the soil
and prevent more rampant wildfires. They also surround
agricultural plots with planted trees, which demarcate
plot ownership and protect crops from the wind and
predators.3
Trees also play a critical cultural role to the Mapuche
Pewenche people of the Chilean Andes. The Auaucaria
araucana tree — often called the “Monkey Puzzle” tree in
English and the pewen tree to the Mapuche Pewenche —
is considered a sacred creation of the deity ngünemapun4
and a symbol of the people themselves. The trees are
thought to form linkages akin to human relationships: Male
and female trees marry one another, linking their roots and
reproducing through their extensive root systems. Thus, a
pair of older pewen trees protects the younger pewen
family.5 The tree is then a physical expression of the
Pewenche culture and way of life. This deference to the
Essays on Major Themes | Section 2 77
trees informs the Pewenche’s care for them: When
collecting seeds, they are careful to leave younger, green,
seed-containing cones on the tree, allowing them to
regenerate in the following years.
The principle that living and non-living beings are
intimately bound to one another is shared by cultures far
beyond North America. The Gimi-speaking people of
Eastern Highlands Province of Papua New Guinea
believe that “people and forests will be — and have
always been — in a constant transactive relationship,
making and remaking each other over time.”6 The Gimi
concept of the environment extends beyond the flora
and fauna to include the web of social relationships that
connect generations past, present, and future. There is
no distinction between man and environment, and thus
the Gimi do not “value” ecosystem functions as a means
to an end, but rather as an end unto itself. Like the Gimi,
aboriginal Australians do not differentiate between
elements of the natural world and the people who
inhabit it.7 This principle offers practical solutions to
ecosystem management. The Aboriginal practice of
firestick farming, at first rejected by European settlers,
has proven necessary to maintaining ecosystem
function in Australia — even to this day. Firestick
farming involves burning vegetation surrounding forests
after the wet season to prevent rampant wildfires. While
setting controlled fires is now a more commonplace
practice, Aboriginal Australians’ belief in the
interconnectedness of different living and non-living
ecosystem components has allowed them to pursue this
practice for tens of thousands of years.
Balance
In scientific terms, “balance” means a stable condition
within an open or a closed system. Within an organism,
this property is called “homeostasis”; within a larger
system, it is called “equilibrium.” It is this state of
equilibrium that many indigenous cultures refer to when
they discuss the balance of humans and nature. For
example, the Tukano people of the northwestern Amazon
in Colombia and Brazil view the world as a limited system
with finite resources. These resources are created by the
Sun-Father, who lends his energy to the system. This
energy must flow continuously from one being to another,
forming a circuit. Because this energy is limited, it must be
conserved and reincorporated into the circuit to maintain
balance.8 The Tukano thus established rules that govern
the removal of energy from the system in accordance with
what the system receives: One may not hunt or fish more
than he needs to sustain himself, lest the system’s balance
be disturbed, and punishment befall the people.9 The idea
of balance between man and nature is therefore not
merely a lofty ideal, but a principle of survival.
78 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
The idea of balance between man
and nature is not a lofty ideal, but a
principle of survival.
Like the Tukano, the Maasai of Sub-Saharan Africa envision
a distinct role for humans in maintaining ecosystem vitality.
As nomadic herders, the Maasai assert that northern and
southern grazing areas are held in a delicate balance — akin
to a “spider’s web”10 held together by complimentary
threads. During the wet season, the Maasai raise their flocks
in the plains, which are otherwise arid. During the dry
season, they shift grazing areas toward wetter climes that
contain permanent and semi-permanent bodies of water.
While this nomadic grazing system is forged from necessity,
it also allows both regions to restore themselves so that
they may be grazed again, maintaining the balance that
supports the Maasai. The Maasai maintain that all humanity
derives its spirit from Mother Earth, and therefore that all
humanity has a right to roam and a responsibility to protect
the land by maintaining its balance. This principle is
informed by an acknowledgment of resource scarcity: As
elders explain, “You can never increase the land, only God
can do that.”11
For some cultures, maintaining this balance goes beyond
environmental stewardship and becomes an issue of life-or-
death. The U’wa, a group of 5,000 people, inhabit the cloud
forests of the Colombian Andes. The U’wa believe it is their
collective responsibility to maintain the balance between
man and nature: If this balance is disrupted, the universe will
come to an end.12 Thus, when Occidental Petroleum signed
an agreement with the Colombian government to begin
drilling in the region in 1992, the U’wa feared that the
environmental degradation and social disruption would
throw the world out of balance. In response, the U’wa
threatened to commit mass suicide if the project were
carried out, sparking debate and unrest for the Colombian
government and the oil company. For the U’wa, oil, or ruiria,
is the blood of Mother Earth — to extract it would tear the
world apart. Berichá Kubar’uwa, president of the traditional
U’wa council, explained in 1998 that the U’wa “can’t give
permission to develop oil. You can’t sell Mother Moon. We
don’t even sell our timber or cattle, so why would we want
to try to sell the blood of Mother Earth? … We believe that
the sun and the moon only work with the Earth because she
has blood. If you take out the blood, then you damage the
Earth and cause imbalance.”13 After 14 years of struggle,
the U’wa succeeded: Occidental Petroleum announced its
withdrawal from the land in March of 2002.
Active Stewardship
The belief that all beings are connected to one another
and thrive in a delicate balance confers a special
responsibility to humans to maintain and uphold the health
of the land. Many cultures delegate this burden to a
particular member of the community, while others see
environmental stewardship as a collective obligation. The
U’wa people believe it is their duty as a people to maintain
and protect the earth, lest it fall into ruin. The Tukano, by
contrast, confer this responsibility on the local shaman, who
helps to maintain system equilibrium by delineating the
actions that should be taken and when. Contemporary
Nahua of Central America ask permission before cutting
trees to plant corn. They say that “because the tree is the
brother of Cemanahuac [that which surrounds us], one must
ask permission before using its wood. If this is not done, the
substance that lives within the tree and in the forest can do
harm to the peasant or his family by causing disease and
even death. If the gifts of the forest are overexploited, there
will come a time when the forest will cease to produce,
because all living beings become tired.”14
The belief that all beings are
connected to one another confers
a special responsibility to humans
to maintain and uphold the health
of the land.
The Cree of James Bay, in Quebec, have practiced
sustainable hunting and gathering for approximately five
millennia.15 Their hunting practices rely on the direction of
their leaders, or tallymen, who “walk the land” and
determine the appropriate catch rate to sustain the natural
resources without overexploiting them.16 Under the
tallymen’s guidance, Cree hunters simultaneously manage
beaver populations on a four- to six-year scale, lake fish
on a five- to ten-year scale, and hunt caribou on an
80–100 year scale. Knowledge of the local environment
enables a long-term approach to ecosystem
management.17 [See Box 1]
The Maori, the indigenous population of New Zealand,
advocate the principle of active stewardship in both local
communities and as a means to inform national climate
change legislation.18 The Maori emphasize that
stewardship of the land is their duty, or kaitiakitanga
(“obliged stewardship”). The term, which derives from tiaki,
incorporates notions of guarding, keeping, conserving,
fostering, sheltering, and watching over resources. The
kaitiaki — keepers or caretakers of knowledge relating to
those natural resources — are appointed by the Tängata
Whenua. The duty of kaitiakitanga arises from the
principles that all beings are interconnected and that
genealogy, or whakapapa, can be traced back to the
creation of the Earth. This lineage that connects the Maori
to past generations obliges them to maintain the land for
use by future generations.19 Thus, kaitiakitanga is both an
inherited privilege and obligation that cannot be separated
from the people.
Maori traditions have helped to shape modern ocean-
management policy in New Zealand. In 1986, the country
introduced the Quota Management System (QMS), which
collects information to determine total quantities of fish
that may be caught each year (or Total Allowable Catch
(TAC).20 In 1989, the Maori Fisheries Act included a
provision for taiäpure, or local costal fisheries that hold
particular significance to Maori groups, either as a food
source or for cultural reasons. The Act allows the local
Maori authority to nominate a management committee to
recommend fishing practices and restrictions for the area.
In 1992, these customary fishing rights were furthered
through the Treaty of Waitangi Settlement Act. The act
recognizes customary use and management practices for
non-commercial fishing and defines the roles and
responsibilities of the Tängata Whenua in non-commercial
fisheries management.
Cyclicality of Time
Modern society tends to conceive of the progression of
time as linear: Time marches inexorably forward, informed
by and contingent on the past, but not necessarily
beholden to it. By contrast, a number of Pre-Colombian
civilizations, including the Aztec of Mesoamerica and the
Maya of the Yucatan Peninsula, held a cyclical conception
of time. The Aztec calendar begins afresh every 52 years,
repeating the same series of year names without
distinguishing among 52-year cycles. Thus,
anthropologists note, “It has been assumed that the Aztec
interpretation of an event — for example, the landing of
Hernan Cortes on the eastern shore of Mexico in 1519 —
was determined by the historical associations of the
event’s year in previous 52-year cycles.”22
The Maya also believed that time is in a constant state of
repetition, corresponding to the seasonal rhythms of the
natural word.23 The Mayan calendar, or katun round, is an
endlessly recurring sequence of 13 20-year periods. Their
calendar and system of time were connected to the
cosmos and informed their management of natural
resources. For example, the calendar reveals annual
cycles of forest regeneration, which the Maya integrated
into a system of shifting agricultural cultivation, or milpa.
Under this system, crops are managed on a one- to three-
year scale, and forestry products on a 30-year scale.
Transmission of the milpa script, still in existence today, is
passed down to children, sustained by cultural beliefs,
myths, and yearly festivals.24
Essays on Major Themes | Section 2 79
 Case Study: The Little Red River Cree Nation
and the Government of Alberta, Canada21

The Little Red River Cree Nation (LRRCN) is located south of the Caribou Mountains in the Lowe-Peace River region
of north-central Alberta, Canada. Three communities are home to approximately 2,500 members, roughly 75% of
whom are under the age of 30. This demographic is expected to expand dramatically if the population doubles in the
next 25 years as projected. However, few wage-earning opportunities exist in these northern areas: In 2002, 85% of
eligible community workers aged 15–65 were unemployed, and 70 percent received some sort of social assistance.
This lack of external economic opportunities requires community members to rely on their natural resources for
subsistence and survival. Thus, the ecological vitality of the land and its resources is critical to the economic, cultural,
and social sustainability of the LRRCN.

The LRRCN is a signatory of the 1988 Treaty Eight, which ensures them the rights to hunt, trap, and fish in all
seasons on all unoccupied crown lands. However, since the 1950s, the rights to much of this land have been
awarded to petroleum and forestry companies. This steady increase in industrial expansion, combined with Cree
demographic trends, threatens to compromise the livelihood and vitality of the LRRCN. Recognizing this, the LRRCN
leadership entered into negotiation with the provincial and federal government to determine how to balance these
competing claims. While many of the younger members of the LRRCN see the potential economic opportunities
available for them if industrial expansion is allowed to continue, older LRRCN members believe that activities like
commercial timber harvesting conflict with the values and long-term interests of the Cree.

In light of these concerns, the coalition of government, industry, NGO, and community representatives developed a
set of local criteria and indicators of forest sustainability specific to the region. The coalition eliminated superfluous
national indicators and augmented insufficient ones, creating a set of principles that extended beyond provisions of
sustainable timber yield. Unlike many attempts to “engage the community,” the principles that govern community
engagement arose from extensive community consultation, research, and interviews. They therefore provide an
adaptive approach to community-based management that responds to the values, expectations, and shifting needs
of community members. The criteria that emerged are as follows:

Contemporary philosophies of industrial design are tongue to tail.” Yet, the perception that a product finds no
beginning to assume this long-term, cyclical view of time “end” implies shifting our perception of time from one that
as well. As articulated by U.S. designer William is linear to one that is cyclical.
McDonough and German chemist Michael Braungart, the
“cradle-to-cradle” concept (versus “cradle-to-grave”)
denotes that material use and industrial methods of
“To eliminate the concept of waste
production should not flow from beginning (generation) to means to design things — products,
end (waste) in a linear fashion, but rather products should packing and systems — from the
re-enter production processes in a cyclical way. This
approach distinguishes between conventional recycling, in very beginning on the understanding
which materials are “downcycled” into lesser products that waste does not exist.”
due to material degradation inherent to the way current
products are made. Rather, sustainable product design
–William McDonough & Michael Braungart,
requires a fundamental shift in perception: “to eliminate authors of Cradle-to-Cradle
the concept of waste means to design things — products,
packing and systems — from the very beginning on the Modern industries are beginning to operate with the idea
understanding that waste does not exist.”25 This that “waste does not exist” in order to cut down on
philosophy of design is akin to “the way Native Americans operation costs. For example, Shaw Industries, Inc., a
used a buffalo carcass, optimizing every element, from maker of carpet and wood flooring, uses much of its 25

80 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

 (1) Modify forestry-management operations to reduce negative impacts on wildlife species; (2) Modify forestry
operations to ensure community access to lands and resources; (3) Provide protection to all areas identified by
community members as having biological, cultural, and historical significance; (4) Recognize and protect aboriginal
and treaty rights to hunting, fishing, trapping, and gathering activities; (5) Increase forest-based economic
opportunities for community members; and (6) Increase the involvement of community members in decision-making.

Because the process was designed to respond to the changing needs and priorities of community members, the
evaluating framework is somewhat more complex. Each criterion is associated with a “sustainability matrix,” which
serves as a feedback loop through which to provide management recommendations. It also serves to translate
these goals from indigenous beliefs into practical management actions. Each of the six criteria is divided into five
components:

1. A critical element, or the principle that needs to be promoted or maintained in modern scientific or managerial
terms. For example, spices diversity and availability.
2. A local value, or the area of importance for the community. For example, healthy populations of bison in the
Caribou Mountain lowlands and drainages.
3. A goal, representing what needs to happen in order for local values to be preserved. For example, limiting clear-cut
activity along the Caribou Mountain slope to ensure turbidity of drainage is not adversely affected by erosion and
sedimentation.
4. An indicator, or something to be measured to determine whether progress toward the goal is being made. For
example, the percentage of timber that has been harvested along the Caribou Mountain slope.
5. An action, or the executable directive that needs to be undertaken to achieve the goal. The action will be based on
the indicator. For example, reducing harvesting along the Caribou Mountain slope and increasing streamside
buffers to no less than 300 meters to offset increased runoff caused by clear-cuts.

This framework has proven effective in linking ecological, social, and cultural components of the environment, and it
allows for ongoing participation, consultation, evaluation, and improvement to the management process. Because
the needs of indigenous groups are highly localized, applying a singular set of principles from the top down can be
challenging. However, applying those principles within this kind of adaptive framework can remove some of the
barriers to implementing effective policy.

million annual pounds of waste to produce power, instead
of filling a landfill. At its new power plant in the U.S. state
of Georgia, Shaw gasifies extra pieces of carpet and
sawdust to generate roughly 50,000 pounds of steam per
hour, which is essential for drying carpet. This process
also sequesters the otherwise harmful emissions into the
ash that results from the gasification process. This process
has saved Shaw around $1 million per year.26
Companies in Latin America are working together to
leverage these synergies as well. In March 2008, energy
services company Energy Quest, Inc. (EQI) formed a joint
venture with a corn farmers’ association in southern Chile,
Etanol del Pacifico Sur S.A. (EPSSA). Under the joint
venture, the two groups will construct an 82,000-liter-per-
day waste biomass gasification synthetic diesel plant in
Las Cabras, Chile.27 Under the terms of the agreement,
EQI is to provide the proprietary technologies and
equipment for the plant, and EPSSA will provide the
feedstock of waste biomass from their existing corn-
growing operations. This means that the “waste” that
results from corn farming and ethanol production will not
be treated as waste at all and instead will be used to
provide power.
The American agribusiness giant Cargill has undertaken
several methane-to-energy projects, both in Latin America
and at its own plants. In 2006, Cargill, worked with
Mexico’s largest commercial pig producer, Granjas Carroll
de Mexico (GCM), and UK-based project developer
EcoSecurities to complete a recovery and electricity
generation project under the Kyoto Protocol’s Clean
Development Mechanism (CDM). According to the UN-
approved methodology, the project called for the
construction of a covered, in-ground, anaerobic reactor to
convert animal waste into biogas. This energy source can
then be used to generate clean electricity on the sites to
power the plant operations.28 Cargill has duplicated this

Essays on Major Themes | Section 2 81

process in its own Illinois facilities: Waste water from its
pork processing flows into a 19-million-gallon lagoon,
where bacteria feed on the waste and produce methane.
That methane then generates steam and hot water used
for sterilizing instruments; the company saved $10 million
in natural gas costs last year.
How Do These Principles
Relate to Climate Change?
The first paper in this series, “The Green Urgency,” makes
a compelling case for how climate change has begun to
affect Latin America and the Caribbean. Climate change
threatens the region and the planet as a whole with
exacerbating floods in wet regions and drought in dry
ones, increasing the intensity of natural disasters, reducing
biodiversity, altering precipitation necessary for agriculture,
melting equatorial glaciers that support entire regions and
ecosystems, and spreading the range of infectious
disease. At the same time, population and urbanization
continue to grow exponentially, deforestation and land-use
change affect the agricultural sector, and oil prices are on
the rise. Unless development agencies can realign their
goals to recognize that climate change is as much a
human-development problem as it is an environmental
one, the effects of these changes will prove catastrophic.
Unless development agencies can
realign their goals to recognize
that climate change is as much a
human development problem as it
is an environmental one, the
effects of these changes will
prove catastrophic.
Interconnectedness: Climate Change Affects
Everything
The indigenous principle that all living and non-living beings
are intricately connected to one another is firmly rooted in
science. Scientists can now assert with confidence that the
gradual heating of the earth’s climate will produce myriad
effects — all of which have a profound impact on
development policies, especially in Latin America. For
example, changes in precipitation and river flow that result
from global warming produce significant development
challenges. Globally, the number of people living in water-
stressed regions (i.e., having supplies less than 1,000
m3/capita/yr) will increase from an estimated 22.2 million in
1995 to between 12 million and 81 million in the 2020s, and
to between 79 million and 178 million in the 2050s.29 Over
the past 30 years, Latin America has been subjected to
82 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
numerous to climate-related impacts on precipitation and
river flow. According to the IPCC, increased precipitation
has been observed in southern Brazil, Paraguay, Uruguay,
north-eastern Argentina (Pampas), parts of Bolivia, north-
west Peru, Ecuador, and north-western Mexico. This higher
precipitation heightened the frequency of floods by 10% in
the Amazon River at Obidos; increased stream flow by 50%
in the rivers of Uruguay, Panama, and Paraguay; and
prompted more floods in the Mamore Basin in Bolivian
Amazonia. At the same time, precipitation has been
declining in Chile, south-western Argentina, north-eastern
Brazil, southern Peru, and western Central America (e.g.,
Nicaragua). This current vulnerability to water issues will be
exacerbated by growing demand for water supply and
irrigation that results from an increasing population.30
Changes in precipitation have profound consequences for
agriculture production, and therefore development policies
must account for these changes when implementing
policies. Globally, more than 80% of agricultural land is
rain-fed. In arid and semi-arid regions, agricultural
production is very vulnerable to climate change.
Furthermore, while only 18% of global agricultural land is
irrigated, irrigated crops yield on average 2–3 times that of
rain-fed crops. Irrigated land accounts for one billion tons
of grain annually — about half the world’s total supply.
Therefore changes in precipitation and available water
supply are critical for both types of crop production. On
the one hand, too little water can lead to vulnerability of
production and decreased yields; on the other hand, too
much water can affect soil properties and cause flooding.
In Latin America, models predict that moderate warming
(1–3°C) in high-latitude regions would benefit crop and
pasture yields; however, even modest warming in low-
latitude areas (areas that are seasonally dry), would reduce
yields of major cereal. Any warming beyond that would
have a detrimental effect at all latitudes.31
These same effects that will alter agricultural yields will also
have deleterious effects on electricity production. Many
countries in South America, such as Brazil, Bolivia,
Ecuador, and Colombia, are heavily dependent on
hydroelectric power as their primary energy source. Brazil,
for example, received 84% of its electricity from
hydropower.32 However, glacial retreat has restricted river
flow, compromising generating power. Some tropical
glaciers have already disappeared; others are likely to do
so within the next few decades. Further retreat is projected
to affect power generation in countries like Colombia and
Peru and has already affected generation in the cities of La
Paz and Lima. Changes in rainfall can also alter generating
capacity, as observed during El Niño and La Niña events
observed in Argentina, Colombia, Brazil, Chile, Peru,
Uruguay, and Venezuela. The combination of increased
electricity demand, retreating glaciers, and changes in
precipitation will all have compounding impacts on
electricity generation, which in turn will affect GDP and
poverty-alleviation goals. For example, the convergence of
increased demand and droughts in Brazil caused “a virtual
breakdown” of most of the country’s hydroelectricity in
2001, contributing to a reduction in GDP.33 In planning
future hydroelectric projects, development agencies must
account for these anticipated changes in the hydrologic
cycle, which will affect generating capacity.
The combination of increased
electricity demand, retreating
glaciers, and changes in
precipitation will all have
compounding impacts on electricity
generation, which in turn will affect
GDP and poverty alleviation goals.
While development agencies tend to sideline climate
change goals, changes in precipitation and river flow are
intimately connected to development goals of increased
food production and electricity generation. These goals,
integral to development agencies’ missions of economic
growth and poverty alleviation, cannot be separated from
the goal of mitigating climate change. Indigenous cultures
use a different set of terms and ideas to express this
concept of interconnectedness, but modern science and
recent experience reveals that this principle is a simple
truth with which we must deal. Promoting development is
an aim inseparable from reducing global warming.
Balance: Greenhouse Gas Emissions
Must Be Controlled
The Tukano believe that the energy removed from a
system must be commensurate with the energy put into it,
in order for balance to be maintained. If this balance is
upset, punishment will befall the transgressor. This
metaphor is, in many ways, an apt description of climate
change: Both principles are governed by the law of
conservation of energy. The earth’s temperature is
maintained by a property called “radiation balance.”
Shortwave solar radiation — the energy input — enters the
earth’s atmosphere and is reflected back as long-wave
radiation (heat). Without any greenhouse gasses
surrounding the earth’s atmosphere, the surface
temperature would be an unlivable -18°C. However,
greenhouse gasses trap some of this radiation and warm
the earth’s surface. This warming is the earth’s way of
maintaining balance with incoming solar energy. While
global warming is a natural and necessary effect in and of
itself, the current climate crisis — a state of enhanced
global warming — has occurred due to human activity.
The amount of energy entering the earth from the sun has
not increased; however, by emitting more heat-trapping
gasses, we are effectively altering the equation.
Like the Tukano and so many other indigenous cultures
avow, humankind must act to restore the balance it has
upset. The Stern Review on the Economics of Climate
Change maintains that action to restore this balance must
be swift and substantial: If we do not act, “the overall
costs and risks of climate change will be equivalent to
losing at least 5% of global GDP each year, now and
forever.” The cost of inaction in the long term, according to
Stern, would be roughly five times that of immediate
action. Maintaining “balance” and avoiding the worst
impacts of climate change can be achieved if we stabilize
atmospheric GHG levels to between 450 ppm and 550
ppm CO2 equivalent (CO2e). The current level is 430 ppm
CO2e and is rising more than 2ppm annually. In order to
meet these stabilization requirements and achieve
balance, emissions must be reduced to at least 25%
below current levels by 2050. However, because the
effects of GHG buildup in the atmosphere increase over
time, long-term stabilization will require emissions to be
reduced more than 80% below current levels.34
“The overall costs and risks of
climate change will be equivalent
to losing at least 5% of global GDP
each year, now and forever.”
—The Stern Report on the
Economics of Climate Change
Active Stewardship: Latin America Has a Role to Play
The effects of climate change might be seen by the
Tukano as punishment for upsetting the natural balance.
However, the punishment does not befall only the
transgressor: Climate change affects everyone, including
those who have done least to further it. Therefore, all
actors that play some role in governance — including all
levels of government, the private sector, non-
governmental actors, and civil society — have a distinct
role to play in addressing climate change. Specifically,
Latin America and the Caribbean can lead the world in
combating a critical area of climate change: deforestation.
Tropical deforestation worldwide released approximately
1.5 billion metric tons of carbon throughout the 1990s,
accounting for 20%–25% of anthropogenic GHG
emissions.35 Without effective policies to slow
deforestation, that amount is expected to increase
Essays on Major Themes | Section 2 83
dramatically: Scientists project that clearing of tropical
forests will likely release an additional 87 to 150 billion of
carbon by 2100.36 The majority of forest loss has come
from the Americas: According to the FAO, from 1990 to
2005, the Americas accounted for over 60% of global
primary forest loss.37
National governments have helped and hindered efforts to
reduce deforestation. Take, for example, Brazil — a
country that is home to 14% of all the forests in the
world.38 The Brazilian government has formulated a
number of policies to reduce deforestation. The country
adopted a Plan to Combat Deforestation, which specifies
measures to be taken by various ministries. The
Environment Ministry has expanded the National System
of Protected Areas and has intensified enforcement
operations in critical areas, and has dismantled corruption
schemes within the federal environment agency (IBAMA)
with the help of the Federal Police.39 The National Institute
of Space Research (INPE) has developed a satellite
monitoring system. The Ministry of Agrarian Development
has begun to halt the progress of illegal occupation of
public land (grilagem) and has tightened requirements for
land titles and documentation.
Latin America and the Caribbean
can lead the world in combating a
critical area of climate change:
deforestation.
Brazil has also pursued contradictory policies. The
Ministry of Agriculture has increased resources for
providing incentives to expand agriculture into forest
areas. The expansion of paved roads into previously
inaccessible areas of the Amazon has accelerated the rate
of deforestation. Tax credits, transport subsidies, and price
supports for selected crops have pushed agriculture onto
frontier lands. These cleared areas are typically poor
agricultural lands, incapable of sustaining yields in the long
term.40 Furthermore, government incentives, credit
subsidies, and overvalued exchange rates have tended to
favor large-scale, mechanized agriculture over manual
labor.41 Precisely these types of contradictory policies
arise when governments cordon off “environmental”
policies from larger “development” ones.
Cyclicality of Time: Projects Require Longer Lifespans
The impacts of climate change occur over the long term;
our actions today will have a far greater impact on future
generations than they will for the present ones. The notion
that time is cyclical and recurring invokes the idea that
many of the problems we face today will persist. It is
84 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
therefore equally critical that projects are evaluated over
longer time horizons. Under the IDB project cycle, “a
project is considered ‘completed’ in operational terms
after disbursement is complete and its activities have been
fully carried out.”42 However, the notion that a project is
ever “completed” needs to be challenged in order to
adopt a long-term approach to development.
The IDB project “cycle” is more like a pipeline, because it
moves from conception to completion without continual
re-evaluation and adjustment. The project pipeline below
lists the documents required at each phase of the project’s
development.
Projects begin with collaboration between the IDB and the
host-country government to determine how the IDB’s
development strategies can help promote country
priorities. Proposed projects undergo cost-benefit
analyses and feasibility studies before they are approved.
Once approval of the loan and its implementation plan is
Diagram 2.4a IDB Project Cycle
Preparation
• Country Stragegy
• Project Profile
• Project Abstract
• Environmental Assessments
Approval
• Proposal for Loan Approval
• Environmental & Social Management Report
• Procurement Plan
• Loan Contract or TC Agreement
Implementation
• Procurement Plan (Updates)
• General Procurement Notice
• Specific Procurement Notices
Completion & Evaluation
• Project Completion Reports
granted, the project moves to the implementation phase.
The host country is responsible for implementation, but
the IDB retains a supervisory role. Once a project is
complete, the IDB country offices and borrowers
collaborate to produce a completion report, which may be
accompanied by additional evaluations by the IDB. While
lessons learned from these evaluations inform the
planning of future projects, they do not improve the
existing project. The IDB asserts that “evaluation activities
are incorporated into every phase of the project cycle,”
which provides a necessary tool for implementing effective
programs. However, projects still progress linearly from
beginning to end — the lessons learned from their final
evaluations do not produce a plan of action for
improvement of the project.
An alternative model begins with the idea that projects are
never “complete.” As long as they are providing useful
services, they will need to be maintained and can be
improved. Furthermore, projects that rely on natural
systems, such as agriculture, forestry, and power
generation, are particularly beholden to natural cycles.
Therefore, like many indigenous concepts of time, project
timelines would be cyclical rather than linear. One such
timeline might look like the diagram below. In this
scenario, a final “assessment” of the project’s strengths
and weaknesses informs the preparation of an “action
plan,” much like that which begins the project’s life.
Why Can’t Organizations Mainstream
Climate Change Goals?
Multilateral development banks have demonstrated the
capacity to undergo significant institutional change.
However, much of this change was either fomented by
Diagram 2.4b Cyclical Project Assessment
Action Plan
Assessment Approval
Monitoring Implementation
drastic external shocks, such as the U.S. decision to go
off the gold standard, or achieved through massive, top-
down reorganization, such as the World Bank’s
restructuring under President Robert S. McNamara in the
1970s.43 In recent years, MDBs have enhanced their
efforts to integrate and “mainstream” climate change
considerations into their lending policies. Yet, these
programs tend to be tacked onto existing goals, leading to
competing mandates and mixed records of performance.
If mainstreaming climate change considerations requires a
more fundamental re-conceptualization of development
priorities, then the policy question at hand is as follows:
Does this kind of paradigm shift require organizational
changes of a grand magnitude, or can it be achieved
through smaller, coordinated, and incremental changes?
Business-as-Usual: Environmental Lending at MDBs
MDBs today exist to promote international development
and alleviate poverty — goals distantly related to those
originally promoted at Bretton Woods in 1944, bearing
testament to the organizations’ capacity to undergo
profound institutional change. Since then, the World Bank
has become the largest multilateral source of funding for
environmental projects (including the Global Environmental
Facility, or GEF).44 World Bank support was largely limited
until the mid-1980s, when external pressures expanded
the scope of projects.45 These efforts expanded further
after the 1992 UN Earth Summit in Rio de Janeiro, in
which the World Bank adopted a fourfold agenda for
mainstreaming environmental concerns. The World Bank
Group’s first environmental strategy wasn’t approved until
2001, since which activities have expanded, including “a
range of financial and nonfinancial services, private sector
investments and guarantees and regional and global
programs and partnerships.”46 From 1990 to 2007, World
Bank commitments totaled $401.5 billion in 6,792
projects, 2,401 of which were identified as “environment
and natural resource management” projects and included
commitments on the order of $59 billion.47
A 2008 report by the World Bank’s internal watchdog the
Independent Evaluation Group (IEG) reveals significant
gaps between mandate and performance.48 Despite
substantial financial commitments toward environmental
initiatives, the report finds that the World Bank Group
“has been far less able to integrate these efforts
centrally into country programs, incorporate them as
requirements for sustainable growth and poverty
reduction, and provide lending to help countries address
environmental priorities — often because of lukewarm
interest in such support from the countries
themselves.”49 The World Bank report recommends that
the bank “increase the attention to environmental
sustainability by ensuring environmental issues enter
Essays on Major Themes | Section 2 85
fully in the discussion.” The principal mechanism by
which to achieve this, the report suggests, is by
reforming the 2001 Environment Strategy. Yet, if the
strategy had been largely sidelined and tacked onto the
Bank’s development goals seven years ago, there is little
evidence to suggest that it would be more fully
incorporated now without a more fundamental cultural
re-orientation toward pursuing a “greener” mission.
Tepid reviews of “mainstreaming” environmental and
climate change policies are not restricted to the World
Bank: Regional development banks have also promoted
environmental sustainability with mixed results. A 2008
report by the World Resources Institute (WRI) compares
climate change consideration in energy pipelines at the
World Bank, IFC, ADB, and IDB. The report categorizes
considerations as “ignored, mentioned, and integrated,”
based on a set of four criteria: Greenhouse gas (GHG)
emissions accounting, identification of lower-emission
alternatives, climate-specific indicators or targets, and
consideration of marginal cost and financing.50 In 2007,
the World Bank and IFC devoted a combined $518.2
million to projects that fully integrate climate change
considerations, constituting 17.3% of World Bank funds
and 5.4% of IFC funds.51
Multilateral development banks
have demonstrated the capacity to
undergo significant institutional
change; however, much of this
change was either fomented by
drastic external shocks or achieved
through massive top-down
reorganization.
Environmental lending at regional development banks
produced more varied results, but initial analysis indicates
that the creation of new programs geared toward
sustainability has increased funding for projects that
integrate climate change considerations. However, more
progress is needed. The Asian Development Bank led the
group in overall funding with $982 million dedicated to
projects that integrated climate change, representing
61.9% of the bank’s total funding activities. This may be
due to a recent surge in environmental initiatives at the
bank: In 2005, the ADB established a $1 billion energy-
efficiency initiative that involves screening projects for
energy-saving measures. In 2008, the ADB announced a
new fund for climate change measures with an initial
capitalization of $40 million.52 Yet, the ADB is also
86 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
expanding its funding for conventional coal-fired power
plants, which may offset other environmental policies.
In 1979, the Inter-American Development Bank (IDB)
became the first multinational bank to adopt an
environment policy. However, of the development banks
surveyed, the IDB devoted the least funding to projects
that fully integrate climate change at $40 million,
constituting 11.7% of total funds. The bank only began
devoting funds toward sustainability initiatives in 2006,
with the introduction of Sustainable Energy and Climate
Change Initiative (SECCI). Prior to the initiation of SECCI,
no funds were dedicated to projects that integrated
climate change considerations, with the exception of a
spike in projects that mentioned climate change in 2001.
While SECCI’s record of success has yet to be proven, it
has the potential to facilitate the integration of climate
change considerations.
The European Bank for Reconstruction and Development
(EBRD) has had a stronger record than other development
banks on integrating climate change considerations into
lending practices. Outgoing bank president Jean Lemierre
opened the EBRD’s 2008 sustainability report with a
simple statement: “The EBRD is a sustainability bank.”53
To its credit, the bank has attempted to imbue projects
with “all aspects of sustainability,” which the EBRD states
consists of concern for the environment, health and safety,
labor, and social issues. Furthermore, it conducts GHG
emissions accounting for all aspects of a project, not just
those portions funded by the EBRD.54 In 2007, it
committed $2.1 billion (€1.35 billion) to environmental
projects ($1 billion toward projects with a specific focus on
the environment, and $329 million on environmental
improvements to other projects). Of this, $1.4 billion (€934
million) came from the Sustainable Energy Initiative (SEI), a
program launched in 2006 that focuses primarily on
improvements in energy efficiency. Between 2006 and the
end of the first quarter of 2008, the program had
committed close to $3 billion (€2 billion).
While the data indicate an increasing volume of funding
dedicated toward sustainability and climate change
issues, these programs tend to be compartmentalized:
They constitute one aspect of a development bank’s
overall mission but are not fully integrated into all projects.
While this is a positive first step, there remain significant
barriers to integrating and mainstreaming climate change
considerations. For indigenous cultures, stewardship of
the planet forms an inherent part of one’s worldview and
thus informs everyday action toward the environment. In
order for development organizations to adopt a similar
stance, they must first confront the obstacles inherent to
the way large organizations are structured.
Problem 1: Institutions Are Resistant to Change
Bureaucracies are typified by a specialization of tasks
and a clearly delineated chain of command. The strength
of bureaucracy lies in its prevention of arbitrary rule and
institutional stability; yet, this stability prevents barriers to
organizational change. The roles of individual offices and
departments within a large organization are highly
specialized, which increases efficiency in some respects,
but poses a tremendous obstacle toward integrating
larger goals and policies. Further, the nature of
institutions and the design of organizations results in
bureaucratic inertia, which stymies organizational
change. While changing the formal structures and rules
of an organization pose an immensely complicated task,
changing the latent culture of an institution — the
unspoken rules that govern behavior — can be even
more challenging.
The reorganization of the World Bank under President
Robert S. McNamara offers an illuminating example.
Enacting sweeping reforms, McNamara not only changed
the World Bank’s formal strategy, he sent signals to his
employees about how the bank should operate. When
McNamara entered the bank, he reoriented its mission
toward poverty alleviation and initiated large-scale
structural reorganizations. He altered the Bank’s formal
strategy, which had an impact on the organization’s
observable output over time55 — for example, vastly
increasing bank funds. But McNamara also inculcated a
culture of pushing through high-volume loans focused on
poverty alleviation and economic development.56 This
informally articulated strategy produced a more
generalized set of ideas about the organization and how it
worked, and how it ought to work.57
McNamara created the Office of Environmental and
Scientific Affairs (OESA) to review projects when the
Bank’s lending practices became the subject of attack
from environmental groups. Yet, because this office was
tacked onto the new bank policies as a reactionary
afterthought, the office’s enthusiasm for environmental
issues never permeated the rest of the World Bank’s
institutional culture.58 The new environmental provisions
included in all loan agreements were viewed as
formalities: Implementation was inconsistent, and follow-
up evaluations — when they occurred at all — were
hurried and incomplete.59 The new requirements were not
buttressed by any additional incentives for employees to
exceed the minimum compliance standards, as there is
no evidence to indicate that the bank rewarded staff
members who pursued environmentally friendly
projects.60
Because the OESA was tacked
onto new bank policies as a
reactionary afterthought, the
office’s enthusiasm for
environmental issues never
permeated the rest of the World
Bank’s institutional culture.
Indigenous cultures might not have much to offer large,
multilateral organizations in the way of combating inertia:
For indigenous societies, that “inertia” forms the basis of
cultural preservation. However, what indigenous societies
can offer is an ideology in which all members value the
environment that supports them. These values are
transmitted both through older generations and through
their peers; that is, the principle of sustainability governs
everyday life. So, too, must sustainability be a way of life
for development banks. It must be inseparable from the
bank’s formal mission and reinforced through informal
channels so that all bank employees share a common
vision and sense of purpose.
Problem 2: Development Organizations Reflect
Western Values
The largest development organizations came into
existence under the pretext of Western Liberalism. Facing
a decimated post-war Europe, the Bretton Woods
institutions set out to craft a new world order. In so doing,
the values they espoused have permeated into the
cultures of many multinational development organizations,
even those that do not operate in the Western world. This
is partly because Western powers, such as the United
States, control a significant portion of the funding of
development organizations. But is also because, as
organizations evolve, they grow more and more similar.
Classical economic theory dictates that this would not be
the case: As the number of organizations increases, they
should become more distinct in order to be competitive
with one another. But heavily bureaucratic organizations
are constantly bombarded with new information and have
a particularly complex way of processing it.61
Even as organizations move closer toward addressing
climate change concerns, these founding Western ideals
prevail. The recent announcement of the World Bank’s
Clean Technology Fund (CTF) elucidates this idea. In
February 2008, the governments of the U.S., the UK, and
Japan announced that they would pool resources in the
CTF to “ensure the widespread adoption of clean
technologies in the developing world.”62 The World Bank’s
executive board approved the CTF, to which the U.S. has
Essays on Major Themes | Section 2 87
pledged $2 billion, pending congressional approval. While
few have lauded this as a much-needed commitment from
the U.S. (the only country that has yet to ratify the Kyoto
Protocol), the fund’s timing and design represent
distinctively Western values. These values include the
following:
• Reliance on technology: The CTF rests on the notion
that technology can save the planet from climate
change, and that GHGs can be reduced “by globally
deploying the most advanced clean-energy
technologies.”63 While the fund focuses on large-scale
reductions, it does not delineate any clear principles for
determining which technologies are appropriate in
different instances, and it risks applying more costly
technologies for the sake of innovation in places where
greater efficiency would suffice. While there may be
great gains in mitigating global climate change through
technology, the fund’s exclusive focus on this aspect
neglects potentially more cost-effective emissions-
reduction opportunities.
• Expansion of markets: U.S. Treasury Secretary Henry
Paulson and Senator Richard Lugar (R–IN) appealed to
the American public by stating, “The program will offer
U.S. companies a new market for their technologies in
countries that will be searching for cleaner
alternatives.”64 In other terms, the Treasury Secretary
and Senator seek to reassure the American people that
this fund will not exclusively benefit foreign nations but
will promote and expand enterprise. Certainly, using a
market-based approach to climate change presents one
of the best mechanisms for engaging the developed
world in climate change-mitigation activities.
Economists, scientists, and policy-makers alike have all
argued for the use of emissions trading and offset
projects as a market-friendly approach toward emissions
reduction. However, focusing exclusively on clean
technology may generate more profits than it does
emissions reduction and may not be the most effective
market mechanism available.
• Finance over regulation: Classical economics rests on
the notion that markets are most efficient when
regulations are limited. From that standpoint, a
technology fund is preferable to a regulatory regime like
the Kyoto Protocol as a mechanism to reduce emissions.
Skeptics fear that the CTF could “undermine or
predetermine the outcomes of global negotiation on
technology transfer and financing taking place as part of
the UNFCCC.”65 While the finance ministers of the three
countries have stated this will not be the case,66 the fund
was not designed with explicit mechanisms for oversight
and coordination.
88 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
But what might the fund look like if it were modeled on
indigenous environmental values?
Promoting technological innovation may seem inimical to
indigenous beliefs, yet there are some points of
congruence between indigenous principles of
sustainability and the projects the CTF might support. The
World Bank detailed several “illustrative investment
programs” at a meeting about the funds in Potsdam,
Germany, in May 2008, including demand-side
management programs for energy efficiency,
improvements to the transport sector, concentrating solar
power, integrated gasification of combined-cycle power
plants, large-scale wind power, and residential lighting
initiatives. These types of programs have the potential to
spur large-scale emissions reduction in developing
nations. In order to integrate these activities into larger
development operations, we can begin by examining the
CTF in light of the four indigenous principles:
• Interconnectedness: The premise of the CTF is that
large-scale technological innovations can have the
greatest impact on reducing global warming. But just as
the Kuna, Mapuche, and U’wa believe that all beings
are dependent on one another, clean technologies may
be mutually reinforcing. Funding might then prioritize
projects that achieve emissions reductions across a
number of sectors, including those not explicitly
covered by the CTF. For example, a company in
California (with independent venture capital backing) is
developing a technology that uses flue gas from power
plants and seawater to make cement. This allows
emissions from power generation to be sequestered in a
material that normally requires significant emissions to
produce. These two industries might usually be
considered separately, but technology has the potential
to leverage synergies and realize these connections.
Policy in other areas of development might gain from
doing so as well.
• Balance: In a balanced system, outputs find equilibrium
with inputs; that is, you do not reap more than what is
sown, use more energy than can be produced, or create
more waste than can be disposed of properly. The
Tukano believe that all energy derives from the sun, and
that whatever energy is withdrawn from a system must
eventually return to it. Industrial waste accumulation,
then, is an indication of a system out of balance.
Development funding should thus seek to “close the
circuit” through promoting technologies that utilize waste
in environmentally productive ways, such as waste
gasification. This kind of closed-loop production can be
applied to any number of industries and also cut down
on electricity demand.
• Active Stewardship: Local communities should feel
some sense of ownership over projects they host; thus,
the CTF might include measures to teach members of
the community not only how to operate and maintain
projects, but why the technology is helpful and how they
can best use it for their own ends. The principle of
“active stewardship” thus has two components: The
bank funds must guide local communities as to
maintaining and using technologies effectively, but in so
doing, the communities become guardians of the
projects themselves.
• Cyclicality of Time: At the heart of this principle lies the
idea that future generations will reap the benefits or bear
the brunt of our actions today. The success of clean
technology investments must therefore be measured on
a larger timescale: Will the technology still be “clean”
and useful in 100 years? If not, will it provide the
springboard for future technologies to develop? If the
answer to both of these questions is “No,” then the
technology is not truly sustainable.
While the CTF may reflect Western values, its overall aim
— to promote green technology — is in line with the goal
of reducing climate change. The larger point is not that the
CTF must change to reflect indigenous values, but that
there are potential efficiencies to be gained if all
programmatic aspects of development reflect these
values, recognize connections, and leverage synergies.
Problem 3: Fear of Mission Creep Impedes
Addressing Climate Change
One of the commonly cited explanations for the gap
between mandate and performance in multilateral
organizations is “mission creep,” or when multiple
organizational goals can hamper the success of a
particular mission. In the case of MDBs, the dual missions
of development and poverty alleviation confront the
inescapable fact that a bank is a financial institution, the
goal of which is to generate returns. When the vague idea
of “sustainability” comes into play, organizational
responsibilities are complicated further still. The
organizational mission needs to be rearticulated to
incorporate environmental sustainability. In other words,
sustainable development — development that considers
the impacts of climate change — is the mission itself, not
a mandate that competes with it.
Sustainable development is the
mission itself, not a mandate that
competes with it.
Conclusions and Recommendations:
Integrating Indigenous Principles
in Bank Operations
Multinational development banks have largely tacked on
climate change policies as an afterthought because
climate change was not the problem they were created to
fight. However, as evidence of the threat of global warming
becomes more widely accepted and understood, it is clear
that the poorest of the world’s communities will be the
hardest hit, effectively making climate change one of the
greatest development problems we face today. As such, it
is critical that development banks begin to pursue climate
change considerations not just as additional programs that
augment business-as-usual, but as a wholly integrated
aspect of all lending policies. To solve the problems of
today, MDBs can look to indigenous values. Throughout
the world, and especially in Latin America, indigenous
cultures have promoted an all-encompassing worldview in
which humans thrive in harmony with the environment that
supports and sustains them. The four indigenous
principles of sustainability offer insights that yield practical
solutions for integrating climate change considerations
into development policies.
It is clear that the poorest of the
world’s communities will be the
hardest hit, effectively making
climate change one of the
greatest development problems
we face today.
Interconnectedness
Examine the Connections
Applying the principle of “interconnectedness” begins with
the acknowledgment that every development project has
myriad consequences for the natural environment, the
people, and the economy. The IDB already requires some
projects to submit an environmental impact assessment
(EIA) before receiving approval. However, these
assessments are only required for a limited number of
projects, i.e., “those that may pose substantial
environmental risks and challenges.”67 Projects that
currently fall under this subhead include “large
infrastructure projects, projects based on extraction of
natural resources, projects with transboundary
implications, projects that may affect protected areas,
critical cultural sites, or internationally recognized fragile or
unique ecosystems, and projects that may pose health and
physical vulnerability risks to people.” To apply the principle
Essays on Major Themes | Section 2 89
of interconnectedness is to recognize that all projects —
not just those listed above — will have an effect on the
environment, be affected by the environment, or both.
1. Where will the energy used to power this project come
from?
2. How will the project alter local ecosystems and
biodiversity?
3. Are materials procured from local sources?
4. How much waste will the project create, and where will
it go?
5. What other sectors is this projected connected to?
The goal of addressing these questions is to recognize
that all projects have some sort of impact and are
connected to other sectors. The next step that follows in
this process is to leverage these connections in order to
make projects more efficient. This has the potential to
reduce the stress on the environment as well as project
costs. For example, can the waste generated by the
project be used for energy? Can using products from local
sources employ more people? Will the project require the
disruption of natural systems that provide services to U.S.,
like flood and fire control? For indigenous people, the fact
that life and livelihood are bound to the environment is an
implicit truth; for a large organization, this can become the
case by thinking systematically about how projects affect
the world around them.
What You See Depends on Where You Sit
Integrating this idea of interconnectedness is not
necessarily a line of thought with which large development
organizations are immediately familiar. One way to address
this issue is simply to hire people from a broad range of
backgrounds who have been trained to think about the
world and development in different ways. People from
different backgrounds can contribute innovative solutions
to familiar problems by challenging embedded ways of
thinking about development projects. Banks employ an
arsenal of specialists in finance, economics, and
engineering, but they could also employ more
professionals in fields such as ecology, hydrology, design,
business entrepreneurship, and information technology.
The EBRD’s sustainable energy initiative (SEI), for
example, “has 16 specialists who work with bankers to
make sustainable energy part of mainstream banking
activities. The team includes experienced professionals in
banking, engineering, climate policy and carbon
finance.”68 However, this is still just part of an isolated
program within the EBRD; this kind of collaboration needs
to be part and parcel of every project. Namely, this
includes ensuring that individuals with an eye toward
energy and environmental issues are examining projects
that are not strictly related to energy and the environment.
90 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
People from different backgrounds
can contribute innovative solutions
to familiar problems by challenging
embedded ways of thinking about
development projects.
Take an example from the private sector. When Bill Ford
invited McDonough and Braungart to overhaul the design
of Ford Motor Company’s plant in River Rouge, MI, their
first step was to create a forum — a physical room in
which different sector representatives could meet and
discuss ideas. The team aimed to spur dialogue among
traditionally isolated sectors of the plant, including
manufacturing, supply-chain management, purchasing,
finance, design, environmental quality, and regulatory
compliance. McDonough and Braungart also brought in
outsiders like chemists, biologists, engineers, and
designers to redesign the plant from the ground up. The
authors note that “their primary agenda was to create a
set of goals and ways of measuring progress, but they
also just needed a setting that rendered visible their
thinking process and encouraged them to raise the difficult
questions.”69 The authors note that there was an initial
degree of resistance, but that the tension gave way to truly
innovative thinking about how to “green” the plant. This is
the kind of collaboration that can produce truly innovative
solutions to the pressing environmental problems.
Balance
Account for Greenhouse Gas Emissions
The concept of balance refers back to the state of
equilibrium of a natural system, of how system inputs relate
to outputs. Climate change results from a significant
change in system inputs — emissions — caused by human
activity. Thus, to restore balance, policies must seek to
reduce GHG emissions. To pursue environmentally sound
development policies, the IDB must first integrate lifecycle
GHG accounting into all of its projects, not just those
aimed at reducing emissions. Measuring and documenting
emissions presents the first step in beginning to reduce
them. To ensure that accounting is done with analytical
rigor and according to industry standards, the IDB may
establish a set of procedures and oversights. Further,
independent, third-party verification will ensure
transparency to allow opened and informed decisions.
These decisions must then inform project choice in a real
and substantive way; for example, by allowing managers to
compare projects based on the total life-cycle emissions
released. Naturally, this should not provide the only
criterion for judging a project’s viability: The IDB remains a
development bank, and human development comes first.
However, economic development over the long-term
depends on the well-being of the global climate system;
thus, total emissions represent a critical condition in the
project-approval process.
Active Stewardship
Improve Environmental Governance
in Member Countries
The Maori of New Zealand view themselves as guardians
of the land, based on the principle of kaitiakitanga, or
obliged stewardship. The U’wa believe the universe will
unravel if they do not protect the earth. While MDB
policies may not be able to impart this philosophy of
collective responsibility to member countries, they can
help governments become better stewards. Previous
analyses have identified lack of member-country interest in
climate change activities as one of the principle barriers to
mainstreaming.70 Development banks can help member
countries see the urgency by examining the economic
impacts of climate change and identifying key sectors that
will require the most immediate action. For example, the
IDB might press the urgency of climate change adaptation
measures for nations that rely heavily on hydroelectric
power, whose capacity is severely threatened by the
melting equatorial glaciers of the Andes. Development
agencies can both offer preferential financing terms for
these kinds of projects and work closely with member
states to improve the capacity of environmental agencies.
Member countries, too, must re-imagine governance to
integrate climate change considerations in all facets of the
government, not just the environment ministry or some
other external agency. Development agencies can help
enable this transformation.
Engage with Citizen Stakeholders
The global and far-reaching nature of climate change raises
the imperative to engage citizen-stakeholders in devising
and implementing solutions. Given the often localized
nature of formulating sustainable-development problems,
local communities (indigenous or otherwise) should play a
prominent role in informing and shaping the way policy is
implemented. In the example of the Little Red River Cree
Nation, different levels of government, industry, NGOs, and
community representatives developed a set of local criteria
and indicators of forest sustainability specific to the region.
This could not have been achieved without soliciting the
input of the local inhabitants, and then incorporating those
concerns into program goals.
Cyclicality of Time
Practice Adaptive Management
Development is a linear goal: Countries move from being
underdeveloped, go through a one-way process
(industrialization), and become developed. However,
development organizations can assume a longer
trajectory; if development is not achieved in a sustainable
manner, then it is not truly development in the long term.
As discussed above, pursuing a project cycle that is truly
“cyclical” would help development organizations assume
this trajectory. One way to achieve this is through
practicing adaptive management, which acknowledges
that natural systems and the needs of individuals and
communities change over time, and allows for changes in
the management of projects to occur accordingly.
International organizations have already begun to assume
this kind of management philosophy, specifically regarding
the management of ecosystems. The international
Convention on Biological Diversity (CBD) takes an
“ecosystem approach” toward managing biodiversity,
where an ecosystem is “a dynamic complex of plant,
animal and micro-organism communities and their non-
living environment interacting as a functional unit.”
Processes and functions within ecosystems are complex
and variable, giving way to a level of uncertainty that
complicates the task of management. Further, as global
climate change persists and its effects become more
pronounced and severe, these natural systems will
become even harder to predict, and thus projects will
become harder to manage. Therefore, managing projects
that rely on the natural environment and the services it
provides — nearly all development projects — must be
designed to be flexible and adjust to the unexpected.
Managing projects that rely on the
natural environment and the
services it provides — nearly all
development projects — must be
designed to be flexible and adjust
to the unexpected.
The CBD acknowledges that ecosystem management
“should be envisaged as a long-term experiment that
builds on its results as it progresses.”71 In order for this
kind of management to be tenable, the monitoring
activities of development agencies must be strengthened.
As the IDB project cycle is currently structured, projects
are monitored continually, but the final project evaluation is
useful only in learning and improving for future projects.
Under a more cyclical, adaptive project cycle, these
evaluations will be incorporated into a plan of action for a
particular project so that it can continue to deliver its
intended services for the intended community in the long-
term. This is particularly critical given the impacts of
climate change, both those that are already discernable
and those that are yet to come.
Essays on Major Themes | Section 2 91
92 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
2.5 Energizing Qualities of
Green T[echnology]
We are in the midst of a green revolution. With a perfect
storm of threats to our energy security, economic security,
and environmental security, deployment of green
technologies and investment in sustainable energy
increased to record levels in 2007. Worldwide, $148.4
billion of new investment was made in sustainable energy,
an increase of 60% since 2006 and more than a fourfold
increase since investment first began to take off in 2004.1
Of that, $117.7 billion of investment was made in
technology.2 This is undoubtedly just the beginning.
Energy policy is likely to change more in the next five years
than in the last 50, and these policy changes will
significantly impact public and private investment in green
technology, research and development pathways, and the
pace at which demand and commercialization of new
technology grows. Of this, we can be fairly certain, but
what of the larger implications of these changes? Beyond
the soaring rhetoric, work is just beginning on
understanding the energizing qualities of green
technologies.
There is a strong temptation to believe that a green
revolution launched by new technology would create
tens of millions of jobs globally and pull just as many
people out of poverty. The Apollo Alliance, a U.S. labor-
environmental partnership, estimates that U.S.
investment of $30 billion per year for the next 10 years
in renewable energy will create myriad economic,
employment, environmental, national security, and
social justice benefits, including the generation of 3.3
million jobs and an increase in national GDP of $1.4
trillion.3 In 2006, the Stern Review on the Economics of
Climate Change predicted that by 2050, 25 million
people would be working in the green sector
worldwide.4 There are many individuals and
organizations echoing these beliefs and championing
the new green revolution as the silver bullet to solve
economic, environmental, and energy security issues all
at once. Many recent studies have even compared the
likelihood for disruptive technological innovation in the
green revolution to that which occurred during the
information technology revolution. Additionally, these
studies have pointed to the potential for green
technology to fundamentally change the energy
industry and have far-reaching consequences for the
broader socio-economic system.5
These ambitious projections set high expectations that
may not be possible to achieve — we simply do not have
the data or foresight on policy to determine this
definitively. In setting such expectations, green
technology could inadvertently be set up for a loss of
public and investor confidence, which would cast doubt
on the viability of green technology to make a strong
contribution to energy needs and would translate into a
loss of support among policymakers for the facilitation of
widespread commercialization of green technology.
Despite skepticism, technological breakthroughs are a
real possibility, and the benefits that accompany them
would have significant and far-reaching consequences for
green growth — both in establishing its reputation and
determining its future. A recent report for the World
Economic Forum stated that innovative and emerging
technologies have the potential to shift the energy
paradigm in numerous ways: by empowering alternative
energy (solar, PV, fuel cell capabilities), spurring
efficiencies and conservation (less energy-intensive
semiconductors), developing new biofuels and biofuel
feedstocks (cellulosic biomass conversion), and
expanding energy storage (battery technologies,
hydrogen fuel cells). Smart grids, e-commerce, and the
use of digital products such as videoconferencing and
electronic databases all increase energy efficiency and
conservation.6 But green technologies have the power to
do more than that, and planning adequately for the future
necessitates taking stock of the benefits of green
technology as a central piece of the green revolution.
What does this mean for the Americas? Countries in the
region have witnessed many of the benefits of green
technology applications in the biofuel and renewable
energy industries, but much more can be gained. There
are many good reasons to invigorate the pursuit of green
technologies in the Americas. Off-grid regions in the
Americas provide vast opportunity for the installation of
new infrastructure. The region offers a plethora of
opportunities for the development of microenergy
technologies and has the potential for technological
leapfrog effects to occur. The pervasive sense that
addressing energy efficiency and mitigating climate
change is the responsibility of only a handful of
countries conceals the opportunities present and
impedes motivation to pursue green technology. If
countries in the Americas do not take the initiative in the
pursuit of new green technologies, they will likely be in a
less powerful negotiating position when it comes to
distribution and licensing of such products.
Furthermore, many experts argue that in developing
markets, green technologies have the most potential to
impact society and the most room for disruptive
innovation. These markets are not constrained by
existing energy infrastructure, and opportunities for
technological leapfrog effects abound.7
Essays on Major Themes | Section 2 93
 Energizing the Economy
The effects of technology and technological innovation on
an economy have long been acknowledged to contribute
to economic well-being. There is a significant academic
literature focused on determining an exact equation with
which nations can calculate the contribution of technology
to GDP. A recent U.S. Congressional Research Service
report identified technological knowledge and
improvement as the “engine” that drives long-term growth
and sustains improvement in the U.S. economy.8 Green
technology is not an exception to this rule. Its economic
benefits are numerous and can be categorized in several
areas: investment, job growth, international trade and
cooperation growth, consumerism, cost savings, and
industry improvement.
Investment
The pursuit of research and development (R&D) and
deployment of green technology requires and attracts
both domestic and foreign investment, which stimulates
economic growth opportunities. Investments in venture
capital and private equity and the creation of investment
funds targeting green technology have increased in the
last few years. Companies in both developed and
developing markets are seeking opportunities to invest in
green technology in other economies. The growth in
investment has not occurred across the board. It is
centered on specific countries and companies that have
emerged as leaders, including in developing markets like
Brazil and India. However, there are myriad uncertainties
associated with such investments, and certain industries
are more amenable to taking the risks associated with
such investments.
Green technology has been a magnet for investments
from global billionaires and venture capitalists like
Vinod Khosla and Bill Gates who want to tackle social
and environmental problems with technology.9 U.S.
venture capital investment in green technology has
doubled in the past year, generating exciting, new
alternative and renewable energy technologies and
solutions. Advances in solar, wind, biofuels, energy
efficiency, and fuel cell design create the potential for
technology-driven energy and cost efficiencies that can
revolutionize industries.10
Green investment has also entered the mainstream for
fund-management groups like Deutsche Asset
Management’s DWS Invest fund, whose investments in
clean technology account for 55% of the fund.11 It
provides an opportunity for increased foreign direct
investment for developing countries. In 2006, $70.9 billion
was invested globally in clean energy (including renewable
94 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
energy and energy efficiency), and in 2007 that number
climbed to $110 billion. The U.S. and Europe still account
for most of the investment (averaging 70% of total
investment between 2004 and 2006), but investment
growth rates have been very high in developing countries,
particularly China, India, and Brazil.12
In 2006, $70.9 billion was invested
globally in clean energy (including
renewable energy and energy
efficiency), and in 2007 that
number climbed to $110 billion.
Many foreign companies are investing in green technology
in the Americas or looking at opportunities to do so. In
June 2008, Germany’s solar cell maker, Q-Cells,
announced that it would invest $3.5 billion over the
medium to long term in a new production plant in Mexico.
In addition to the investment, the new plant is expected to
create 4,500 new jobs for qualified workers in Mexico.13
Major players in the wind industry are exploring
opportunities for investment in Mexico — Gamesa,
Iberdrola, GE Wind, and Endesa.14 Enel SpA, Italy’s largest
utility company, bought the rights from German SoWiTec
Group to develop up to 1,000 MW of Brazilian wind
projects.15 In addition, French utility company Suez is
looking at adding to its existing investment in
thermoelectric projects in Chile by $800 million to $1
billion.16 The presence of these foreign companies and
their investments will stimulate local development in green
technology, but it may also supplant viable local
entrepreneurial players.
Brazil has long been a leader in green energy, both in
the Americas and around the globe. Its technological
successes in the ethanol and hydropower industries
have attracted the substantial green energy investments
in the region. In 2007, Brazilian investment accounted
for $8 billion (roughly 5% of the global total) of total
global investment in sustainable energy. Of that, venture
capital and private equity investment accounted for
$658 million of investment in sustainable energy in
Brazil, almost all of which was geared toward ethanol
production expansion.17 However Brazil is not the only
country in the region garnering these resources. From
the third quarter of 2007 to the third quarter of 2008,
investment in project acquisitions in Central and South
America totaled $1.82 billion.18 Of that total, $1.26 billion
was invested in biofuels, $0.53 billion in mini-hydro, and
$.03 billion in wind.19
In 2007, Brazilian investment
accounted for $8 billion (roughly
5% of the global total) of total global
investment in sustainable energy.
Some countries in the region have proven to be valuable
launching points for new technologies. U.S.-based Algenol
has a licensing agreement with Mexico’s BioFields and an
$850 million project with S.A.P.I de C.V. (a wholly owned
subsidiary of BioFields). The deal includes a production
facility in Mexico to create an anticipated 10,000 gallons of
ethanol per acre per year for sale to the Mexican
government.20 However many investments in the region
are primarily geared toward expanding production and
manufacturing plants and are less likely to create
breakthrough contributions to research. Latin America and
the Caribbean need more indigenous investment to
pursue innovative green technology.
A key reason for countries in the Americas to pursue
greater investment in green technology is that emerging
markets are able not only to launch a successful industry
centered on the growth of one company or type of
technology, but also to enhance economic performance in
a variety of sectors. India is an example of an emerging
market that has done just that. The wind industry in India
began to develop in the 1990s, and the rise of Suzlon, a
global leader in wind technology, has generated even
more domestic and international investment. Tulsi Tanti,
the founder of Suzlon, originally owned a textile business
that was challenged by the lack of availability of power. He
purchased wind turbines to power the textile business and
realized their potential while expanding his business. He
gradually exited textiles to become the chairman and
managing director of Suzlon Energy. Suzlon is generally
regarded as having made India the developing country
leader in advanced wind turbine technology.21 Suzlon’s
reputation spread, rapidly opening the door to other
sustainable energy companies in India. In 2007,
fundraising by Indian sustainable energy companies on
Indian stock exchanges reached $628 million, compared
to no activity in 2006.22 Additionally, these companies
raised $1.4 billion of new capital overseas in 2007.23 The
case of Suzlon shows how one successful company can
create opportunities that launch one domestic industry,
and power the growth of others.
It is also important to consider the uncertainties of
investment in green technology. Some argue that the desire
to invest in tomorrow’s promising technologies is detracting
attention from investments in options that are currently
economically and environmentally viable.24 Others argue
that the risks and amounts associated with such
investments are a strong deterrent. R. Andrew de Pass,
Managing Director and Head of Sustainable Development
for Citi Alternative Investments, cautions that:
Commercialization requires the construction of pilot
plants followed by the demonstration plants and then
ultimately large-scale facilities. Green-tech companies
also face long adoption cycles due to customer inertia
and risk-aversion, particularly when trying to market to
utilities or municipalities. This means that new green-
tech ventures have massive capital needs far beyond
what is typical in areas such as software or
pharmaceuticals, and this is changing not just how
entrepreneurs in the sector function but also how the
private equity community works with them.25
Some industries lend themselves more easily to making
investments in green technology and reaping the rewards
of these investments. For example, the IT industry has
made great strides in investing in and implementing green
technology initiatives. (For more information, see Green
Technologies: Energizing Scientific and Technological
Innovation, below.) However, the electricity industry faces
more hurdles. Given the risks, costs, and lack of incentives
associated with adopting green technologies in the
electricity industry, it is not surprising that the industry is
reticent to embark on these changes.26
Green Jobs
There is a great deal of hype today about a new wave of
green jobs taking the economy by storm. The exuberant
estimates are primarily provided by sources with interests
in the industry, and they polarize industry insiders and
outsiders by making insiders more hopeful and outsiders
more skeptical of the numbers. The lack of clarity stems,
in large part, from varied definitions of “green jobs.” This
definitional issue (combined with uncertain public policy
and investment development, a dearth of government
records in many countries detailing green job growth, and
uncertainty regarding the absolute number of new jobs
created by green technology — factoring in positions that
were eliminated from other sectors as a result of the shift
to green technology), leads to questionable estimates of
job growth potential. In the U.S. and Europe, there is
concern about whether job growth would actually benefit
domestic economies, which it does, but in a variety of
industries and through direct and indirect means. Even
beyond these challenges, the growth of the industry may
well be hampered by the employment sector’s inability to
train and supply adequate numbers of skilled employees.
However, with adequate preparation and planning,
economies can take advantage of new jobs that green
technology has to offer.
Essays on Major Themes | Section 2 95
The definition of a “green job” allows for flexibility.
Alternative Energy News defines a green job as one that
involves products and services that are environmentally
friendly. This includes any jobs that involve design,
manufacture, installation, operation, and/or maintenance
of renewable energy and energy-efficient technologies.27 A
case study for the city of Berkeley’s Office of Energy and
Sustainable Development takes a decidedly broader
definition, categorizing 22 sectors of “green jobs,”
including bicycle repair and delivery services and printing
with non-toxic inks and recycled papers.28 If green job
growth is to be credible, it must not reclassify existing jobs
in other industries as “green” simply to generate interest
and pad the numbers.
Various and conflicting estimates regarding existing and
potential growth in green jobs inject confusion and
uncertainty into the equation and create doubt regarding
the rigorous pursuit of accurate data. Brazilian President
Lula da Silva recently underscored the ethanol industry’s
positive effect on generating jobs, as compared to the oil
industry. He stated that in Brazil, the ethanol industry has
created one million direct jobs and six million indirect
jobs.29 However, another estimate differed greatly in the
ratio of direct to indirect jobs created, asserting that for
every one million tons of sugarcane planted (of which
approximately 54% goes to ethanol production), on
average 1,000 direct jobs and 3,000 indirect jobs are
created.30 The lack of clarity extends to estimates of job
growth and creates a global problem in terms of what to
expect. One article lists the following varying estimates for
Europe alone:31
• European Commission, Impact Assessment for 10 Jan.
2007 Action Plan on Climate and Energy, 2007: 300,000
biomass jobs by 2020
• European Commission, EU Renewables Energy
Roadmap 2006: 650,000 renewables jobs by 2020
• European Commission, Monitoring and Modeling
Initiative on the Targets for Renewable Energy, 2003: 2.5
million jobs in renewables in 2020
• Ecotec/European Commission, Renewable Energy
Sector in the EU: Its Employment and Export Potential:
900,000 renewables jobs by 2020
Of course, projections often incorporate estimates
regarding policy and investment decisions that may fall
through in the interim, so it is also informative to look at
current estimates. What do we know about green jobs?
A study produced by the Worldwatch Institute estimates
that 2.3 million people worldwide work either directly in
renewables or indirectly at supplier industries.
Furthermore, the study breaks down the total number
into estimates by industry: Wind power accounts for
96 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
300,000 jobs, solar photovoltaics accounts for 170,000
jobs, and the solar thermal industry accounts for 624,000
jobs. Other major contributors are the biomass and
biofuels sectors, which account for more than one million
jobs combined.32
A study produced by the
Worldwatch Institute estimates
that 2.3 million people worldwide
work either directly in renewables
or indirectly at supplier industries.
Many people interpret the words “green revolution” and
“green jobs” as being synonymous with corn- or
sugarcane-based ethanol and increased agricultural
development and employment. Brazil is the classic
example, and recent increases in the price of ethanol and
food have created global skepticism about the industry.
There is concern in the U.S. and Europe, particularly, that
employment growth would be limited to agriculture and
would mostly mean more jobs for emerging markets. In
fact, in many places new jobs do not hinge on
agricultural positions but on other types of employment
(for example, electricians, carpenters, construction
workers, wind analysts, turbine technicians, and heat-
pump installers). These positions must be filled at the
domestic level, and the involvement of domestic labor
groups (like the United Steelworkers in the U.S.) in green
technology advocacy is a testament to this potential.
Furthermore, growth is spurred on by the fact that
investing in renewable energy technology creates more
jobs than fossil fuels industries. Recent research shows
that four times as many jobs are created per megawatt of
installed capacity for clean energy as natural gas, and
that 40% more jobs are created per dollar invested than
in coal.33
Finding and creating the skilled pool of employees with
the experience necessary to make these pursuits a
success is a challenge because green jobs are just
beginning to enter the radar screen for many students or
young professionals. Industries like eco-tourism, green
education and training, green IT, and green law are not
often thought of in terms of their contributions to green
jobs, but require a new set of skilled workers. These new
opportunities will be challenged by a dearth of older,
experienced management in the industries.
In spite of these challenges, green job opportunities are
expanding in a variety of industries and there is a range
of talents and skill levels required for these positions.
There are opportunities for construction workers, truck
drivers, accountants, IT specialists, and engineers. There
are new jobs and new investment in existing jobs to
expand skill sets. The range of skills needed for green
jobs makes employment in green growth a reality for
workers with many levels of experience.
Investment in any industry is a strong indicator of job
growth. Similarly, the record levels of investment in clean
technology are a good indicator that the number of green
jobs will continue to grow. However, despite these
indications, green job growth will continue to be
challenged by the hurdles enumerated above.
International Trade and Cooperation
Green technology has also been a stimulant for
international cooperation and trade. The promise of
green technology has increased global awareness of
environmental and climate change issues. Green
technology has encouraged better dialogue on these
issues and their urgency in the form of conferences and
forums. Green technology has stimulated coordinated
research efforts on the part of governments and other
institutions, and it has provided new opportunities for
international trade and mutual economic benefit.
International forums on climate change and green
technology, like the recent Climate Change Science &
Technology Innovation held in Beijing in April 2008, are
occurring more and more frequently. Forums like these
aim to leverage global knowledge and expertise in the
fight against climate change by exploring the role of
green technologies.34 They also increase visibility of the
issues and can be a jumping off point for collaborative
endeavors.
Such dialogues and forums have opened the door to
increased cooperation among governments,
corporations, and universities in pursuit of R&D. The IEA
launched the Energy Technology Collaboration network,
where participating G8 countries allow more than 60
non-IEA countries access to their databases of scientific
information.35 One example of green technology
cooperation that was a platform for international
cooperation is the FutureGen Alliance. FutureGen is a
U.S.-led public-private partnership that aims to develop
a coal-fired CCS plant. The project is being restructured
after the January 2008 announcement that the U.S.
Department of Energy would withdraw the funding, but it
still serves as an example of the desire and momentum
to work together internationally.
The IEA launched the Energy
Technology Collaboration network,
where participating G8 countries
allow more than 60 non-IEA
countries access to their databases
of scientific information.
Green technology already has provided more pathways for
international trade and investment and will continue to do
so. Manuelita, a Colombian agribusiness corporation, has
been an early mover in integrating ethanol production into
its sugarcane operations and is expanding its presence in
Latin America. Limited by available land in Colombia, the
company is looking to strengthen its operations abroad,
which will mean more investment and development in the
industry in Peru and Brazil.36
China and India, relative newcomers to green technology,
have advanced green technologies, which they market
around the globe. (India’s Suzlon Energy, a leader in wind
technology, is discussed in Green Technologies:
Energizing the Economy, Investment section above.)
China’s Suntech Power is a worldwide pioneer in solar cell
development. These companies already compete with
established Western companies, even though they are
somewhat new to green technology. Over a period of
10–15 years, they have developed advanced capabilities
in solar and wind technologies, which they market around
the globe. They are proof that countries that pursue the
development of green technology may have similar
opportunities to capture a share of the market, and patent
and sell their products across the globe.
Technology sharing offers the opportunity for mutual
benefit. This is due in part to the multiple applications of
some technologies and largely due to a need to market
the technology to potential buyers. For example, in 2006,
American company Westinghouse Electric won a bid to
build nuclear reactors in China. The multi-billion dollar
contract is expected to generate 5,000 jobs in the U.S.
The Chinese purportedly chose Westinghouse over
competitors due to its technology, its agreement on
transferring expertise, the style of cooperation, and the
prospects for developing locally based technology.37
Thus, technology sharing among nations can increase
benefits to both participants. It gives the seller immediate
profits and the opportunity to market itself more widely,
and it gives the buyer efficient access to modern
technology without R&D investment, allowing the buyer
to jump-start its technology learning in the industry.
Essays on Major Themes | Section 2 97
Consumerism
New green technology sparks consumer interest, and
consumers are increasingly promoting its development. As
many technologies become accessible and affordable for
residential, commercial, and industrial consumers, these
customers are becoming more active in accessing their
own energy rather than passively relying on the existing
grid.38 Due to the scale and nature of the energy industry,
consumer involvement in developed countries is limited in
its potential impact in the short-run. In emerging markets
by contrast, where there is less established infrastructure,
this limiting factor is removed, and technology may be
applied in new and different ways that contribute to the
cycle of innovation.
Consumer involvement is driving both large and small
purchases of green technology. One example of this is the
commercialization and popularization of hybrid vehicles
and alternative fuels. Sharp increases in the sales of
Toyota’s hybrid vehicles from 2005 to 2007 allowed it to
surpass one million cumulative hybrid vehicle sales in May
2007.39 Reports of celebrities owning hybrids and of long
waiting lists to purchase the vehicles heighten consumer
interest by making these technologies symbols of status.
Consumers have also embraced small-scale energy-
efficient technologies like compact fluorescent bulbs.
Sales of the ENERGY STAR bulbs in 2007 totaled 290
million units, which was not only double 2006’s sales but
accounted for 20% of the U.S. light bulb market.40 The
dramatic increase in sales and market penetration of this
technology illustrates consumer thirst for more green
technology.
2007 sales of the ENERGY STAR
bulbs totaled 290 million units,
which was not only double 2006
sales, but accounted for 20% of
the American light bulb market.
Not only do these green technologies create and expand
new markets, but they can also generate more consumer
consciousness. One report gives the following example of
this trend: “The dashboard of the Prius allows drivers to
monitor their fuel efficiency in real time, sensitizing them to
the specifics of energy demand and encouraging them to
drive in ways that reduce fuel use.”41 Green technology’s
ability to appeal to consumers will keep them coming back
for more and demanding better technology, which will
continue the cycle of investment and innovation. Major
corporations are modeling investment and development
on these trends. Swedish home furnishing company IKEA
98 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
recently announced plans to invest $77 million into clean-
technology start-ups over the next five years with the hope
that resulting products (for example, solar panels,
efficiency meters, and lighting) could be sold in its stores.42
These plans demonstrate a realization that developing and
selling these technologies to residential consumers is a
lucrative business.
Interestingly, many executives identify the promise of
consumers in emerging markets as a key to green
technology development. In less-developed markets,
consumerism and marketing green technologies to current
non-consumers holds great promise in generating new
ideas. In appealing to these non-consumers and emerging
markets, local innovators will be forced to improvise on
technology, improve upon it, and apply it in new ways.
These consumers are likely to play a vital role in driving the
cycle of technological innovation and development.43 This
is yet another example of the reciprocal relationship
between consumers and green technology.
Cost Savings
The benefits of cost savings from green technology are
highly dependent on a number of factors. Much can be
gained from small-scale technologies that help to increase
energy efficiency. For a residence, energy-efficient
dishwashers, refrigerators, freezers, washers, dryers,
water heaters, timers, windows, and doors are all
affordable ways to use green technology that will add up
to substantial savings in the long run. In the life of a green
building, cost savings are an important factor in the
benefits associated with building green or retrofitting an
existing building with efficient technologies. Over the life of
a green building, the total financial benefits are over ten
times the average initial investment in design and
construction.44
On a larger scale, cost savings is more complicated. The
bigger the investment, the more R&D that goes into it,
the longer the testing and deployment cycles must be,
and the greater the allocation for maintenance and
transition costs must be. Many larger-scale technologies
have yet to prove cost savings, and therefore investors
are hesitant. But that does not mean that they do not
hold promise.
The International Trade Administration of the U.S.
Department of Commerce recently released a study titled
Energy in 2020: Assessing the Economic Effects of
Commercialization of Cellulosic Ethanol. While the study is
not entirely accurate or comprehensive (for example, it
states that ethanol is currently the only substitute for crude
oil in transportation fuel, omitting mention of biodiesel and
bio-butanol, and it creates the impression that ethanol is
only available from corn), it does provide a useful,
quantified breakdown of the benefits that could be reaped
if cellulosic ethanol technologies become commercially
viable, and if total ethanol production in the U.S. reaches
30 billion gallons by 2020. The study asserts that, given
these conditions, in 2020:
• Crude oil imports would be 4.1% lower than projections
• U.S. fuel prices would be 2% lower than projected
• Annual benefits to U.S. consumers would be $12.6 billion
• There would be an increase of $5.9 billion in investment
• There would be a decrease of $16.8 billion in exports
• There would be a decrease of $3.0 billion in imports
• There would be an increase of $4.7 billion in GDP
• There would be an increase of 20,350 agricultural jobs
• The average overall change in output for industries
affected both positively and negatively by the change
would be 0.04%
• The value of reductions in GHG emissions would be
about $2.5 billion per year45
Less-quantifiable effects include that replacing U.S. oil
imports with domestic ethanol production would reduce
U.S. expenditures on imports, resulting in a stronger
dollar and increased prices for U.S. exports as well as
lower world oil prices. Furthermore, if the technology for
making ethanol from cellulose is developed in the U.S.,
it could be licensed and exported to other countries,
generating significant revenue as well as further
diminishing global oil demand and prices.46 However,
this study does not factor in the one-time “transitional
costs” such as infrastructural changes to shipping,
service stations, and costs of R&D. It states only that by
2020, the benefits will exceed the transitional costs and
that the impact on food prices would be minimal, but it
does not calculate that impact or factor it into these
savings. Despite these weaknesses, the study is helpful
in providing a breakdown of different factors that can be
measured in terms of the benefit derived from green
technology, and in providing a picture of what the cost
savings would be and where they would occur.
Industry Improvement and Breaking Barriers
Green technology is challenging the energy industry in
ways that major global players did not anticipate. It has
provided the opportunity for start-ups to fill gaps, merge
with other players in the industry, and emerge as
substantial market players. This has created an incentive
for traditional energy companies to pursue their own
research into green technology. It has also created an
incentive for researchers in energy technology to reach
across traditional boundaries and coordinate R&D
activities within and among institutions. This collaboration
between leading multi-billion dollar energy enterprises, the
current “energy incumbents,” and green tech newcomers,
“market transformers,” entering the industry will be critical
for the future of energy innovation.47
Market transformers are essential for bringing forward new
clean technologies that will be economically competitive,
but they will quite likely depend upon the distribution
systems and customer base of the incumbents.48 This
scenario is creating a dynamic of both competition and
cooperation — both of which are energizers for growth and
development. Oil and gas majors like Royal Dutch Shell
and BP are adapting to the interest in green technology by
investing in their own R&D in green technology. Companies
like Cisco Systems have grown by acquiring smaller
companies that develop new and strategic technology in
their field.49 Marquiss Wind Power, a small, U.S.-based
company, recently acquired Cirrus Technologies and is
looking to grow abroad with license marketing and
distribution in Chile and Malaysia particularly.50 In this way,
green technology is driving mergers and acquisitions, the
emergence of bigger companies in the field, and the
spread of technologies globally.
Energy technology and the pursuit
of green technology have broken
down barriers by shifting the
locus of innovation, providing
new venues for cooperation
(for example, the Internet), and
creating a common motivating
factor for pursuing R&D.
Energy technology and the pursuit of green technology
have broken down barriers by shifting the locus of
innovation, providing new venues for cooperation (for
example, the Internet), and creating a common motivating
factor for pursuing R&D. In the energy industry, the locus
of innovation of new technologies is beginning to shift
from inside the organization to within the “community” that
surrounds it.51 The new engagement and partnerships
formed from these efforts are contributing to the
innovation cycle. An example of this is the hybrid engine.
According to Michael Warren, National Manager Americas
Strategic Research & Planning Group for Toyota North
America:
“The hybrid engine, of course, didn’t develop in a
vacuum. Innovation outside the automotive industry —
especially in semiconductor technology — allowed
Toyota to leverage these technological changes in the
Essays on Major Themes | Section 2 99
 development of an electrical and fossil-fueled powered
engine. . . . We expect the shift to electric power to
quicken as the electronics and electrical systems
replace mechanical processes in automobiles.
Moreover, innovation in power-chip technology, which
allows for more precise and reliable control of
electricity, is enabling this transformation.”52
These new applications of technological breakthroughs
are substantial energizing factors in and of themselves —
for both the industries within which they are developed
and those to which they can be applied. The willingness to
work across private and public organizational boundaries
generates more creative ideas and opens new doors for
green technology.
The recent agreement between an association of medium
scale Chilean farmers, Etanol del Pacifico Sur S.A.
(EPSSA), and Energy Quest, Inc., an emerging alternative
energy company, is another example of cross-industrial
cooperation. In March 2008, Energy Quest and EPSSA,
agreed to pursue technological innovation in a joint
biomass gasification project to produce synthetic diesel.
The effort will spur the development of ecological fuels,
allow an important reduction in global warming emissions,
and ease dependence on imported oil.”53
Some industries will be significantly challenged in their
ability to commercialize and make green technologies
accessible to the public. Green technology may even force
an industry to alter its structure. The electricity industry is
an example of one where drastic changes will be needed
to alter the grid and incorporate the energy created from
sustainable green sources into supplies. Moreover, the
downstream gas industry will need to accommodate the
growing demand for supplies of E85 or hydrogen fuel. The
industries’ reticence to embark on these changes reflects
ambivalence about how widespread adoption will actually
be. However, it creates a gap for competitors and
microtech companies to fill, usurping a portion of market
share of existing industries.
Energizing Scientific and Technological
Innovation
Developments in green technology have contributed to
scientific and technological innovation as a whole. These
developments are occurring more rapidly, and with
additional investment that has been made in recent years
will likely continue to do so. However, uncertainties and
disagreements regarding what is feasible in terms of the
timeframes and cost of technological development, create
contentious debates within and across industries.
100 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Green technologies are already contributing to the cycle
of innovation, making further R&D possible, inspiring
policy changes and attracting investment. As such, the
depth and breadth of such technologies is expanding
into new territory. These innovations include products or
technology-enabled engineering, design, and
manufacturing approaches that drive changes in
products, business processes, and systems to achieve
energy efficiency and preserve the environment.54 These
innovations can be either “sustaining innovations” in
product technology (those that occur in response to
consumer needs) or “disruptive technologies,” which
have the potential to be game-changers, moving outside
the current value chain.55 As discussed in the Industry
Improvement section above, innovations that occur are
not limited in application to green energy. Innovation is
occurring in new energy alternatives and in traditional
energy services, and this competition among
technologies will provide the fastest trajectory to a
robust marketplace and reasonable prices for the
consumer.56
Disagreements regarding any new technology — for
example, about its development timeframe, its potential to
perform, and its potential to be accepted by consumers —
are to be expected. Scientists and industry experts are
divided, frequently along industrial lines, regarding their
expectations for green technology. The following
paragraphs offer expert perspectives along this spectrum.
On one side, representatives from traditional energy
industries offer a sobering perspective rooted in the
realities that will delay implementation of green technology
even after it has been developed. Jeroen van der Veer,
chief executive of Royal Dutch Shell, argues that the
changes that energy technology causes will be the result
of evolution, not revolution. He counters those who
compare advances in green technology to the IT
revolution, arguing that energy technology is
fundamentally different from consumer electronics
technology for three reasons: the scale of the industry, the
length of the adoption curve (investments last for
decades), and the similarity of the product (which is
essentially the same, just delivered differently).57
In the middle are other experts, like James E. Rogers,
president and CEO of Duke Energy, who offer limited
optimism regarding innovation in green technology.
Rogers identifies smaller-scale technologies, such as
“smart” meters, solar photovoltaics, and micro control
systems, as the most fertile ground for rapid innovation.”58
These sustaining innovations and small improvements
have the potential to make a difference and even enable
major breakthroughs.59
 Example Case: Green Technology and the IT Industry
Green technology in the IT industry has companies clamoring for more, not just because it is economical, but also
because it has also helped improve performance. According to a Tech News World report, leading IT companies
are crafting ambitious green technology programs and enacting them throughout their own transnational organiza-
tions and along their supply chains, as well as promoting them to customers. Ravi Shekhar Pandey of Spring-
board Research states, “A leading global telecommunications provider used virtualization to reduce the number of
its servers from around 1,350 to 100, even as it deployed more than 1,700 new applications.”62 Pandey says the
provider was able to save around one million dollars annually from reduced power consumption (a decrease of
880 kilowatts), two million dollars from reduced floor space consumption of fewer servers, and spent about 70%
less on server management. High-performance virtualization tools have also made significant contributions to per-
formance speed. WebSphere DataPower SOA has performed XML and Web services security processing as much
as 72 times faster than standalone server-based systems, while IBM Cell Broadband Engine (which is used in the
Mayo Clinic) speeds processing of 3-D images for use by radiologists up to 50 times faster than traditional
processor configurations.63

On the other side of this debate are many experts who are
outwardly optimistic about the opportunities that green
technology holds. R. Andrew de Pass, Managing Director
and Head of Sustainable Development Investment at Citi
Alternative Investments, thinks that scientists and
engineers are just scratching the surface of research on
alternative energy and the deployment of mature clean
technologies such as wind, utility-scale solar thermal
plants, or hybrid electric drivetrains.60
There is also disagreement regarding the direction from
which technological innovation is likely to emerge. Many
experts think that developed markets, with extensive R&D
spending and advanced laboratories, will always be at the
forefront of green innovation. Others eye the developing
world as more likely to spur the unexpected changes that
innovation requires. However, the Global Network on
Energy for Sustainable Development learned the following
lessons in importing technologies to emerging markets:
In almost every case, attempts have been made to
import sophisticated electricity-producing technologies
in an ad hoc manner, with heavily subsidized or donor
sponsored projects working well while support lasts but
failing once it is withdrawn. Two lessons can be drawn
here: first, the initial costs of the sophisticated RETs on
average have been far beyond the ability of poor
individuals and communities to purchase and maintain
them; second, if communities are not consulted as to
their real needs and capacities, there will be a mismatch
between what is provided and what is actually required.
Inappropriate technologies which local skills are not
adequate to operate or maintain do not, generally, drive
development. . . . RETs projects have typically been only
fragmented R&D efforts, most often carried out in
isolation from other development challenges such as
health, poverty, education and regional development,
and, above all, without the guidance of integrated
programs and policies. . . . Furthermore, a concentration
on RETs for residential supply to low income
households, rather than for productive uses, has made
financial institutions shy of RETs, considering them as
risky and of low profitability.61
While on the surface, the debate regarding where
innovation will emerge from may seem meaningless, in
reality it frames investment patterns and the foci of R&D
programs.
The gap in perspectives can be perplexing. It is important
to factor in the realities that van der Veer delineates
regarding the long-term nature of energy infrastructure. In
the short term, Rogers’s suggestions take this into
account, making green technology possible in the existing
infrastructure. In the long term, however, as societies
begin to replace and upgrade infrastructure, de Pass’s
ambitions may be a commercializable reality. But the
existence and vigorousness of the debate surrounding
green technology’s potential and lack of certainty on which
markets will breed the innovation necessary to address the
scale of the energy technology dilemma foster a
competitive industry. The debates also illustrate that green
technology is on the radar screen to stay. Furthermore, the
dialogue involves leaders in a variety of sectors, illustrating
the prominent position that green technology occupies in
the academic, government, and corporate arenas.

Essays on Major Themes | Section 2 101

 Energizing National Security
Green technologies offer the opportunity to energize
national security in several ways. They will facilitate the
diversification of energy supplies, reduce funding being
transferred to unsteady states and terrorist
organizations, enhance military capabilities, meet
energy demand without exacerbating resource
competition, and support existing social and political
structures by generating employment and economic
opportunities for the population. The combination of
these factors will contribute to the decoupling of
economic performance (which is critical to all nations’
security) from its dependence on traditional energy
resources.
Green technologies present new alternatives to diversify
energy supply. Diversification will diminish the risk of an
interruption in supplies and increase energy
independence. Energy is critical to a nation’s economy,
and a strong economy is critical to a nation’s security.
Diversification means less reliance on foreign energy
imports and more energy independence, which will also
mean lower prices globally. Most Latin American and
Caribbean countries are energy importers, making them
vulnerable to both fluctuations in price and interruptions
in supply. To the extent that green technology can
contribute to energy production and diminish the need
for energy imports, it can empower these countries and
offset the effects of price volatility.
Green energy technology could reduce the amount of
funding being channeled into terrorist organizations and
unstable states. It is widely accepted that revenues
from Saudi Arabian oil exports fund jihadism.64 By
increasing diversification of supplies, green technology
will reduce indebtedness to nations that might not
otherwise be desirable to support and will enable more
vocal opposition to their policies.65
Green technology can fundamentally change military
capabilities — both in terms of war-fighting capabilities
and the ability to conduct disaster-recovery and -relief
operations. Vulnerable supply lines requiring protection
would be diminished, and logistical security would be
increased. In addition, the liberation of individual
soldiers from electric supplies to support electronic
devices, such as GPS, would increase their mobility
and thereby their advantage on a battlefield and in a
disaster area. Technologies such as portable power
generators are critical in supporting disaster-afflicted
areas, as well as helping with reconstruction in Iraq and
Afghanistan. For these and many other reasons, the
U.S. military is at the forefront of investing in and
102 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
deploying mobile green technologies, particularly high-
efficiency solar cells, advanced batteries, portable fuel
cells, and water filtration.66
Global energy demand is increasing, and new
technologies offer innovative and non-traditional ways
to meet demand without compromising international
relations or economic performance over resource
competition. Many emerging markets in the Americas
and across the globe can meet electricity needs of
remote communities by means of green technology.
Realistically, most countries will continue to compete
over energy resources. However, some markets can
diminish increases in traditional energy needs and avoid
additional competition over energy resources.
Finally, green technologies can generate both
employment and economic opportunities that increase
social satisfaction and thereby contribute to national
security. By engaging a portion of the unemployed
population and expanding economic opportunities,
green technologies may stabilize social and political
structures and help national crime rates to decrease. In
China, officials encouraged the adoption of green
industries and technologies because these helped to
mobilize farmers, engaging them in common prosperity
and strengthening the stability of local social, cultural,
and political structures.67
Energizing Social Development
Another key benefit of green energy technologies is that
they are making access to energy and electricity
feasible for rural and poor communities that could not
afford it, are remote and difficult to access, or are in
protected environmental areas. To these populations,
green technology is the primary means of accessing
electricity. It is a path to health improvements (gained
from hot water and better hygiene practices), education
improvements (enabling lighting in schools and the
opportunity to conduct night classes and do homework
in the evenings), infrastructure improvements,
communication improvements, and quality-of-life
improvements.
According to a recent study by the Global Network on
Energy for Sustainable Development, titled “Poverty
Reduction: Can Renewable Energy Make a Real
Contribution?” new technologies foster the development
of expertise in growing appropriate crops and in mastering
the processes that allow an industry to develop. In
addition, jobs are created in rural areas, and biodiesel
plants become growth centers for economic
empowerment of the poor, leading to rural development.68
For example, in Vila Soledade (in Para state, Brazil), the
use of vegetable oil in diesel engines resulted in the
development of night training classes that were attended
by the whole community and became a forum for learning
and socializing. In addition, the replacement of the
community’s generator has eliminated technical failures
and increased the overall energy supply.69
To [remote and rural populations],
green technology is the primary
means of accessing electricity. It is
a path to health improvements
(gained from hot water and better
hygiene practices), education
improvements (enabling lighting in
schools and the opportunity to
conduct night classes and do
homework in the evenings),
infrastructure improvements,
communication improvements and
quality-of-life improvements.
Many Latin American countries adopted photovoltaic (PV)
technologies in rural areas in the 1980s as a means of
remote communications systems. The systems began to
be used for domestic electricity needs, such as ice making
and refrigeration, for community electricity needs in
schools, and for water pumping.70 Along the way,
organizations implementing the new technologies learned
that in order to derive maximum benefit from new
technologies, they needed to focus on technological and
institutional issues, promoting partnerships, local capacity
building, quality technical design, and monitoring and
evaluation.71 In Brazil, solar PV technology had been under
development for almost two decades by the military and
telecommunications sectors. Recently, the potential for
using it to generate electricity in off-grid areas is rapidly
increasing dissemination of the technology, allowing
lighting, water pumping, refrigeration, and other services in
remote areas.72
Energizing Policy
The roles of government policy, incentives, and funding
cannot be overstated in their effects on green technology’s
development at every stage of the pipeline — from
investment in basic R&D, to mass commercialization and
deployment. Green technologies also afford policymakers
new opportunities to boost investment and employment in
their districts. Across the globe, green technology has
inspired policymakers to articulate ambitious policies in
order to benefit from its growth potential. Some examples
of these policies are:
• In March 2008, Chile signed a new energy law that
requires electric utility companies to invest in and supply
nonconventional energy sources (NCES). It mandates
that NCES account for at least 10% of Chilean electric
utility supplies by 2024.73
• The U.S. Green Jobs Act of 2007, which is pending
Congressional funding appropriation, is an initial pilot
program to identify needed skills, develop training
programs, and train workers for a variety of green jobs in
a range of industries. Another initiative in the U.S., the
Green Jobs Campaign, aims to create 820,000 new jobs
in 12 states.74
• The Canadian Labour Council Constitutional
Convention’s Document No. 9, “Climate Change and
Green Jobs: Labour Challenges and Opportunities.” The
document argues that major public investments are
needed to stimulate the growth of green jobs and
suggests that if the federal government invests $29.6
billion over ten years in climate change adjustments, the
economic benefits would include creation of 330,000
jobs and an additional $138.45 billion in GDP75
• British Prime Minister Gordon Brown recently launched a
$199 billion green revolution plan in need of private
investment. The plan calls for thousands of wind
turbines, and it is expected to create 160,000 green jobs
and stimulate domestic economic growth in clean
technology.76
• In Scotland, the green revolution has already created
80,000 jobs and is expected to create another 50,000
over the next decade.77 The Scottish government has
ambitious targets of generating 50% of its electricity
from renewables by 2020, meaning that demand for
engineers, plumbers, wind-turbine technicians, boiler-
maintenance technicians, electricians, welders, wind
analysts, and solar panel and heat pump installers will
increase.
Technology has also paved the way for policies on
incentives, feed-in tariffs, and alternative energy subsidies.
Government incentives have helped drive the adoption of
technologies like hybrid cars. Many buyers of the Toyota
Essays on Major Themes | Section 2 103
Prius have received tax breaks, and in California, Prius
drivers have been allowed to drive in the carpool lanes,
minimizing their commutes. In countries including Spain,
Germany, and Greece, feed-in tariffs and alternative
energy subsidies have led to a growth in technology by
creating incentives for companies to develop alternative
energies at a lower price.
Technologically motivated policy can also carry risks,
especially when data are thin or erroneous. Policies based
on incomplete data on technology can create negative
backlash. Experts also caution that technologically-
inspired policy development will likely result in a selection
of technological winners and losers. Such selections run
the risk of over-funding certain kinds of research and
under-funding promising alternatives.
Energizing the Environment
Lastly (but certainly not least), green technologies
energize the environment. People expect that green
technologies have the ability to mitigate pollution and
contribute to a better quality of life for people, plants,
and animals in the many communities that are
dramatically affected by pollution. But not everyone
expects green technologies to create energy resources
out of waste. And not everyone expects green
technologies to reduce the need for combustion of
waste material and to leave more room in landfills. The
combined benefits of green technologies on the
environment have the potential to achieve significant
gains in improving long-term environmental
sustainability.
The derivation of energy resources out of waste is a
boon to the environment. Cellulosic fuels are primarily
created out of waste matter (for example, from crops
and timber) that already exists in many economies and
is having a negative impact on the environment. Using
waste matter as a source of energy addresses both
waste and energy problems and would be a significant
factor in energizing sustainable living conditions. For
example, Dynamotive Energy Systems Corporation, a
second-generation biofuels company, is jointly pursuing
a project with TECNA, an Argentine engineering firm,
that will invest $105 million to fund the construction of
two biofuel-to-electricity complexes in rural Argentina.
Dynamotive has said that the focus of the project is to
“tackle environmental issues arising from vast stockpiles
of decomposing wood waste and substantially increase
electricity generation capacity in [Corrientes, a] forested
region of Argentina.”78
In addition to the conversion of regular waste matter into
104 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
energy, hazardous waste is being reduced by using green
technology. For example, IBM recently succeeded in
creating a silicon wafer–reclamation process that turns
scrap semiconductor wafers into a form used in the
manufacture of silicon-based solar panels.79 This
technology not only reuses silicon and protects the
environment, but when the wafers are resold to solar cell
manufacturers, the manufacturers can save between 30%
and 90% of the energy they would have needed if they
had used new silicon.
The IEA estimates that using
technologies that already exist,
or are in an advanced state of
development, global CO2 levels
could be brought back to current
levels (after projected increases
in the short term) by 2050 if
investments of approximately
$17 trillion are made globally.
Green technology makes possible significant
achievements with regard to emissions and pollution
reduction. By reducing GHGs and improving the
environment, some catastrophes attributable to global
warming can be eliminated. The IEA estimates that by
using technologies that already exist, or are in an
advanced state of development, global CO2 levels could
be brought back to current levels (after projected
increases in the short term) by 2050 if investments of
approximately $17 trillion are made globally.80 The
energizing effects that these changes would have on the
environment are simply incalculable.
Snapshot of Promising Technologies
There is uncertainty about the particular technologies
that will evolve most rapidly, and those that will have the
greatest consequences for global energy use. While
there is not a silver-bullet technology, this section
features three particular technologies that have the
potential to be game-changers in different ways —
carbon capture and sequestration (CCS), fuel cells and
batteries, and solar.
Carbon Capture and Storage
Carbon capture and storage (CCS) technology is
contentious as it is the object of both praise and scorn in
terms of its potential. The technology would be applied
mostly to certain industries, like electricity and
manufacturing (for example, cement), which use large
amounts of coal and natural gas in their production and
generation processes.
CCS technologies are uniquely poised to benefit the
environment and mitigate climate change because they
offer current energy producers the ability to incorporate
their function without completely altering existing
energy infrastructure. According to the IEA report
Energy Technology Analysis: Prospects for Carbon
Capture and Storage, CCS technologies offer the
opportunity not only to continue using fossil fuels
without significant emissions, but also to enhance
output — captured CO2 may be used to enhance the
output of oil and gas in the respective fields (which may
partially offset the costs of additional energy use).81 In
addition, if combined with hydrogen production from
fossil fuels, they would result in a fuel that could
achieve substantial emissions reduction in the
transportation sector. The report identifies capture
technologies, such as membrane separation,
oxyfuelling in combination with new oxygen-production
technologies, chemical looping, and fuel cells as
promising opportunities where energy use and cost
could be halved, which would address a major concern
associated with adoption of the technology.
There are various estimates of CCS technologies’
economic potential. At a recent conference on energy
supply and demand in the 21st century, Masahiro Nishio,
an expert from Japan’s National Institute of Advanced
Industrial Science and Technology, said that most
scenarios indicate that the economic potential of CCS
technologies would amount to 220–2,200 GtCO2
cumulatively, meaning that CCS technologies would
contribute 15%–55% to the cumulative mitigation effort
worldwide until 2100.82 Another recent study, using
economic-modeling results by MIT researchers, comes to
the conclusions that coal technology with carbon capture
offers a cost-effective, long-term source of low-carbon-
emitting electricity, and that CCS technologies would
result in increased electricity production and lower
electricity prices.83 Using CCS technologies to constrain
carbon would affect the prices of production inputs like
fuel and electricity. Benefits of using CCS technologies
include increased welfare for the Earth and population, a
reduced carbon price, and an expansion of output in
other sectors of the economy.84 Another potential
improvement could be a combination of coal gasification
power generation and CCS technologies to realize zero-
emissions coal-fired power generation. This would help
address the roughly 30% of global emissions produced in
the industry.85
Fuel Cells and Electric Batteries
Fuel cells use hydrogen or hydrogen-rich fuels and
oxygen to produce electricity and heat.86 They can be
used in stationary power and heat generation and are
often cited as one of two promising technologies (along
with electric batteries) that could help significantly reduce
vehicle emissions (which account for 20% of global
emissions) and potentially realize a zero-emission
automobile sector.87
In addition to significantly reduced emissions, fuel cells
offer many benefits. To start with, they can save fuel.
According to the U.S. DOE, fuel cell APUs in Class 8
trucks can save 670 million gallons of diesel fuel per
year.88 And that is in only one type of vehicle. They are
also effective for power generation. Fuel cell cogeneration
systems can reduce facility energy service costs by
20%–40%.89 Fuels cells offer a reliable way to back up
power grids and can achieve up to 99.99% reliability.90
They are very efficient. Distributed power generation with
direct fuel cells is 47% efficient in the generation of
electrical power and 80% efficient overall in combined
heat and power applications, compared to fossil fuel
plants, which typically operate at 35% electrical power
generation efficiency.91 Fuel cells are also versatile (they
can use a variety of fuels), responsive to electrical loads,
scalable, durable, and long-lasting. These benefits,
combined with an anticipated decrease in the price of fuel
cells, are expected to enable savings across the
economy, in healthcare, homeland security, and
sustainable development.92
In terms of fuel cell potential in transportation, IEA’s
Energy Technology Perspectives 2008 report asserts that
electric batteries and hydrogen fuel cells are the main
alternatives for cars, but it is difficult to judge at this stage
which of these technologies — or which combination of
them — will be most competitive. Based on fairly
optimistic assumptions about technology progress and
cost reductions, electric and fuel cell vehicles are
expected to cost around $6,500 more in 2050 than
conventional vehicles.93
Recently, Stanford researchers
found a way to use silicon
nanowire lithium-ion batteries to
produce ten times the amount of
electricity of existing lithium ion
batteries.
Essays on Major Themes | Section 2 105
Electric batteries are cells that store electric energy in the
form of chemical energy and deliver electric energy when
needed. These cells come in a variety of forms, including
mercury cells, silver oxide primary cells, lead-acid cells,
cadmium cells, nickel-iron cells, and lithium-ion cells.94
Recently, Stanford researchers found a way to use silicon
nanowire lithium-ion batteries to produce ten times the
amount of electricity of existing lithium-ion batteries.95
These technologies currently offer energizing options for
electronics — a laptop could run for nearly two days, and
an electric car could drive from New York to Chicago on
a single charge.96 The new technology is safer as well,
giving the batteries a better reputation that the regular
lithium-ion batteries that have exploded in laptops in
recent years.
Smaller electric and battery-operated transportation
technologies are gaining popularity, especially in
crowded urban areas. Electric bicycles — which can cost
over $4,600, get as many as 62 miles without recharging
and weigh as little as 44 pounds — are experiencing
increased sales. Other technologies that are changing
the face of urban transportation include Segways, which
can carry one person and go up to 12.5 miles per hour.
They, too, have seen huge sales increases in recent
years, with many airports and police departments
(including those in Chicago and New York) adopting
them as part of routine patrols in efforts to cover a
broader area, provide better emergency response, and
reduce carbon emissions.97 Both of these battery-
operated vehicles are energizing transportation and
security in unexpected ways.
Little research exists regarding what the overall impact of
these new technologies could be; however, breakthroughs
like the silicon nanowire lithium-ion batteries could mean
significant changes in small and large consumer products.
Solar Technology
Solar technology, particularly solar photovoltaic (PV)
technology, has witnessed great advances in the last few
years, and few believe that this surge of innovation will end
soon. (For more information, please see Section 4.5.
Global Trends: Solar and Section 5.3.4. Emerging
Renewable Power Technologies – Concentrating Solar
Power.) According to the IEA’s report Energy Technologies
at the Cutting Edge 2007, the annual growth rate of
cumulative installed photovoltaic capabilities has been by
40% since 2000.98 Since 2002, PV production has grown
by an average of 48%, doubling every two years and
making it the fastest-growing energy source.99 The market
has welcomed major new players onto the stage recently,
and there will continue to be incredible opportunities to
meet demand.
106 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Many of the energizing qualities of solar technology derive
from its ability to supply power to rural populations (as
discussed in Energizing Social Development and in more
detail Section 5.2.6. Social and Economic Impacts of
Renewable Power: Rural Electrification and Green Jobs).
But it also offers many opportunities in developed markets
and urban areas to provide power and substantial job
growth. Many jobs are created in the manufacturing,
installation, and servicing of PV systems.100 For example,
according to the German government, the German solar
industry employed 40,200 people in the solar industry in
2006 and expected 49% growth between 2006 and
2010.101 In some places in the U.S., if residents have solar
technology installed, they can sell excess capacity back to
electricity companies to reduce costs. While PV systems
are very expensive, the Appraisal Institute estimates that a
PV system increases a home’s value by $20,000 for each
$1,000 in annual reduced operating costs.102
According to the German
government, the German solar
industry employed 40,200 people
in the solar industry in 2006 and
expected 49% growth between
2006 and 2010.
There are many promising areas of technological research
with regard to PV. One area of interest is PV-based hybrid
electricity generation and distribution systems that would
include energy generators, storage systems, and
distribution networks. A recent press release announced a
joint effort by RoseStreet Labs Energy and Los Alamos
National Laboratory (a U.S. government laboratory) to
produce cutting-edge technology called ENABLE, which
comprises “the use of an energetic neutral atom beam to
synthesize high quality thin films critical to the
development of full spectrum photovoltaics.”103 According
to RoseStreet Labs, the technology offers the opportunity
for improved performance and lower costs, which would
enable successful commercialization. However, for now,
PV technology is expensive to purchase and install, is
high-maintenance, and lacks the storage capacity
necessary to be a reliable power source, making it
impractical for many communities. Other solar
technologies, such as solar thermal technology and
concentrating solar power systems, are promising options
that have encountered barriers because of cost-
competitiveness and market development. However, with
new investments to meet demand growth, rapid progress
in solar technology is very possible.
 Conclusion

There is a great deal of room for optimism when it comes

to green technology and its effects on society. However, it
is clear that these benefits are complex, understudied,
and still emerging. While many of green technology’s
energizing qualities will be shared globally, the companies
and nations most involved in fostering the development of
the industry will benefit the most. The U.S., the EU,
Japan, China, India, and Brazil are ahead of the pack
when it comes to pursuing these technologies. However,
even within these countries and regions, benefits are
localized with specific states (for example, Wisconsin,
Nevada, and Pennsylvania) and specific countries (for
example, Germany and Spain). These locales will benefit
domestically and internationally by developing
technologies that are suitable to their own climates and
weather patterns and can be marketed to other regions.

The uptick in investment in green technology is just

beginning. Government actors and consumers have to be
patient for the benefits of developing technologies to
come to fruition. However, in the interim, there are benefits
to be reaped with existing technologies. As green
technology develops, modeling efforts to quantify and
measure these effects will be increasingly sophisticated.
Quantifying the effects of green technology is difficult
because of a lack of certainty regarding numerous factors,
including policymaking and investment, which will be
crucial in determining exactly how much society benefits
from this new technology. Counting dollars invested and
jobs lost or gained will be the easy part. Evaluating the
short- and long-term benefits to social and national
security will be more of an obstacle. Some tools104 are
already being used to quantitatively measure the impact of
energy policies on energy security, economic
sustainability, environment protection, and climate
mitigation.105 Countries in the Americas can use the
lessons learned by the current leaders in green technology
to identify gaps and help them navigate the road to
successful innovation.

Essays on Major Themes | Section 2 107


Endnotes Section 2.1
1 Tuckman, Jo. “Latin America Hit by Record Number of Disasters, UN Says.”
Guardian, 28 Dec. 2007.
2 “Thousands Flee Flooding in Mexico.” CNN, 2 Nov. 2007.
3 “Mexico Flooding Affects 700,000.” BBC News, 1 Nov. 2007.
4 “Bolivia Suffers Worst Floods for 25 Years.” Reuters, 6 Mar. 2007.
5 Ribeiro, Cristiane. “Brazil’s Drought Made Corn and Soy Harvest Fall.” Brazzilmag,
30 June 2005.
6 “Amazon Drought Emergency Widens.” BBC News, 15 Oct. 2005.
7 Rohter, Larry. “Record Drought Cripples Life Along the Amazon.” New York Times,
11 Dec. 2005.
8 “Amazon’s Worst-Ever Drought in 2005 Caused by Global Warming.”
9 IPCC, 2007: Summary for Policymakers. In: Climate Change 2007: The Physical
Science Basis. Contribution of Working Group 1 to the Fourth Assessment Report of
the Intergovernmental Panel on Climate Change [Solomon, S., D. Win, M. Manning,
Z. Chen, M. Marquis, K.B. Averyt, M. Tignor, and H.L. Miller (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and New York, NY, USA, p. 7.
10 Candel, Filomeno Mira. “Climate Change and the Global Insurance Industry: Impacts
and Problems in Latin America.” The International Association for the Study of
Insurance Economics, The Geneva Papers, Vol. 32, 2007, p. 29.
11 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” p. 78.
12 “IPCC Latin America: The Regional Impacts of Climate Change.” p. 2. and “Global
Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” p. 40.
13 “Up in Smoke?” p. 2.
14 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 2.
15 Caspary, Georg. “China Eyes Latin American Commodities.” Yale Global, 18 Jan.
2008.
16 Rio Declaration on Environment and Development
17 Stevens, William K. “Lessons of Rio: A New Prominence and an Effective
Blandness.” New York Times, 14 June 1992.
18 “Estadísticas del Medio Ambiente en América Latina y el Caribe: Avances y
Perspectivas.” CEPAL, Aug. 2005, p. 14.
19 Germanwatch Climate Change Performance Index.
20 Madrigal, Alexis. “Bali Meeting Ends; Mexico Emerges as a Leader on Climate
Change.” Wired, 14 Dec. 2007.
21 Nicoll, Fergus. “Seeking an Amazon Solution.” BBC News, 15 May 2008.
22 “Brazil Launches Rainforest Fund.” BBC News, 1 Aug. 2008.
23 McPhaul, John. “Costa Rica Pledges to be ‘Carbon Neutral’ by 2021.” Reuters, 08
June 2007.
24 Dickerson, Marla. “Oil Prices Threaten Latin America’s Economic Gains.” Los
Angeles Times, 18 July 2008.
25 Lapper, Richard. “Latin America Pays the Price for Fuel Subsidy.” Financial Times,
16 June 2008.
26 Gould, Jens Erik. “Mexico Government Will Set Oil Price in Budget Plan.”
Bloomberg, 8 Sept. 2008.
27 “Climate Change Hits Hard on Latin America and the Caribbean.” UN Environmental
Program Press Release, 6 Apr 2007.
28 Honty, Gerardo. “América Latina Ante el Cambio Climático.” El Observatorio de la
Globalización, Mar. 2007, p. 4.
29 UNEP Global Environmental Outlook 2007, p. 147.
30 “The Unexpected Catarina Hurricane.” Friends of the Earth, Nov. 2005, p. 1.
31 Simms, Andrew and Reid, Hannah. Up in Smoke? Latin America and the Caribbean:
The Threat from Climate Change to the Environment and Human Development. The
Working Group on Climate Change and Development, August 2006.
32 “Climate Change and the Global Insurance Industry: Impact and Problems in Latin
America.”
33 See “US Helicopters Play Vital Role in Venezuela’s Flood Recovery.” CNN, 28 Dec
1999; Nexry, Edmond et al. “The Devastation of Venezuela by Heavy Rains in
December 1999: Assessment of the Situation using ERS InSAR Tandem Data and
SPOT Images.” PRIVATEERS N.V.; and Moreno, Ana Rosa. “Climate Change and
Human Health in Latin America: Drivers, Effects and Policies.” Regional
Environmental Change, Vol. 6, 2006, pp. 157–164.
34 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” UNEP, p. 146.
35 “Worst Flooding in 50 Years Hits Uruguay.” Reuters, 11 May 2007.
36 “América Latina Ante el Cambio Climático.”
37 Josephs, Leslie. “Peru’s Mountain Glaciers Are Melting Away.” Associated Press, 16
Feb. 2007.
38 “Up in Smoke?” p. 17.
39 “Climate Change 2007: Synthesis Report.” IPCC, 17 Nov. 2007, p. 50.
40 Candel, Filomeno Mira. “Climate Change and the Global Insurance Industry: Impacts
and Problems in Latin America.” The International Association for the Study of
Insurance Economics, The Geneva Papers, Vol. 32, 2007, pp. 29–34.
41 “Up in Smoke?” p. 8.
42 “Countries Hit by Hurricane Mitch on Long Road to Recovery.” Food and Agriculture
Organization News, 22 Jan 1999.
43 “Hurricane Mitch Damages Agriculture in Honduras.” USDA Assessment of
Hurricane Mitch on Honduran Agriculture, 26 Apr. 1999, p.1.
108 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
44 “Cambio Climático Ahonda la Desigualdad en América Latina y el Caribe.” Informe
Sobre Desarrollo Humano 2007/2008, Programa de las Naciones Unidas para el
Desarrollo, 27 Nov. 2007.
45 “Countries Hit by Hurricane Mitch on Long Road to Recovery.” Food and Agriculture
Organization News, 22 Jan. 1999.
46 “Health Agenda for the Americas: Presented by the Ministers of Health of the
Americas in Panama City.” June 2007.
47 CIA World Fact Book
48 Charvériat, Céline. Natural Disasters in Latin America and the Caribbean: An
Overview of Risk, Inter-American Development Bank, Oct. 2000, p. 52.
49 “Flood-Ravaged Venezuela Focuses on Avoiding Epidemics.”
50 See Anderson, Mason. “American Red Cross Aids Venezuela Flood Victims.”
American Red Cross, 5 Aug. 2002 and “Thousands Flee Venezuela Floods.” BBC
News, 24 July 2002.
51 “Driven to Extremes: Health Effects of Climate Change.”
52 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 3.
53 “Cambio Climático Ahonda la Desigualdad en América Latin y el Caribe.”
54 Energy Information Administration.
55 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 2.
56 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” UN Environmental Program, p. 84.
57 Elustondo, Georgina. “El Cambio Climático Amenaza al 50% de las Tierras Agricolas
de América Latina.” Clarín, 7 Apr. 2007.
58 “Up in Smoke?” p. 40.
59 “UN Human Development Report.” 2007/2008, p. 1.
60 “China Eyes Latin American Commodities.”
61 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 3.
62 “Driven to Extremes: the Health Effects of Climate Change.” p. 199.
63 “Climate Change and Human Health in Latin America: Drivers, Effects and Policies.”
p. 160.
64 “Climate Change and Human Health in Latin America: Drivers, Effects and Policies.”
65 “World Health Organization Climate and Health Fact Sheet.”
66 “Up in Smoke?”
67 Tibetts, John. “Driven to Extremes: Health Effects of Climate Change.”
Environmental Health Perspectives, Vol. 115, No. 4, Apr. 2007, p. 199.
68 “Climate Change and Human Health in Latin America: Drivers, Effects and Policies.”
p. 160.
69 Marino, John. “Dengue Fever Epidemic Hits Caribbean, Latin America.” Reuters, 5
Oct. 2007.
70 Pan American Health Organization.
71 Vergara, Walter et al. “Visualizing Future Climate Change: Results from the
Application of the Earth Simulator.” Latin America and Caribbean Region
Sustainable Development Working Paper 30, Nov. 2007, p. 4.
72 “Driven to Extremes: Health Effects of Climate Change.”
73 “Climate Change and Human Health in Latin America: Drivers, Effects and Policies.”
p. 160.
74 “Climate Change Hits Hard on Latin America and the Caribbean.”
75 Eaves, Elizabeth. “Two Billion Slum Dwellers.” Forbes, 11 June 2007.
76 “Up in Smoke?” p. 26.
77 UN Population Division.
78 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 3.
79 Campbell-Lendrum, Diarmid and Corvalán, Carlos. “Climate Change and
Developing-Country Cities.” Journal of Urban Health: Bulletin of the New York
Academy of Medicine, Vol. 84, No. 1, 2007, p. 111.
80 “World Health Organization Climate and Health Fact Sheet.”
81 “Climate Change and Human Health in Latin America: Drivers, Effects and Policies.”
p. 158.
82 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” p. 111.
83 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” p. 135.
84 “Urban Environmental Challenges in Latin America.” From Desfíos de un Continente
Urbano, Inter-American Development Bank, 2004.
85 Pielke, Roger A. Jr. et al. “Hurricane Vulnerability in Latin America and the
Caribbean: Normalized Damage and Loss Potentials.” Natural Hazards Review, Aug.
2003, p. 112.
86 “Flood-Ravaged Venezuela Focuses on Avoiding Epidemics.” CNN, 21 Dec. 1999.
87“Climate Change and Human Health in Latin America: Drivers, Effects and Policies.”
p. 160.
88 “Up in Smoke?” p. 26.
89 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” p. 53.
90 Global Environment Outlook 3: Fact Sheet, Latin America and the Caribbean.”
United Nations Environment Program, 2002, p. 1.
91 “Global Forest Resources Assessment.” UN Food and Agriculture Organization,
2005.
92 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” p. 163.
93 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” p. 58.
94 “Visualizing Future Climate Change.” p. 7.
95 “Amazon Rainforest at Risk from Initiative to Connect South American Economies.”
96 “UN Human Development Report.” 2007/2008, p. 38.
97 “Climate Change, Deforestation and the Fate of the Amazon.” p. 169.
98 Perry, Michael. “Untouched Forests Store 3 Times More Carbon.” Reuters, 4 Aug.
2008.
99 “Climate Change, Deforestation and the Fate of the Amazon.” p. 169.
100 “Infrastructure, Integration and Environmental Preservation in the Amazon.” p. 10.
101 “Global Environment Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” p. 82.
102 “Up in Smoke?” p. 33.
103 “Brazil, Alarmed, Reconsiders Policy on Climate Change.”
104 “Brazil Feeling the Result of Climate Change.”
105 “Up in Smoke?” p. 36.
106 “Brazil Soy King See Amazon as Food Solution.”
107 Fergie, Jorge A. and Satz, Matias. “Harvesting Latin America’s Agribusiness
Opportunity.” The McKinsey Quarterly, 2007 Special Edition: Shaping a New
Agenda for Latin America, 2007, p. 2.
108 “President of Brazil Launches Programme to Boost Economic Growth.” Global
Insight, 23 Jan. 2007.
109 “Harvesting Latin America’s Agribusiness Opportunity.” p. 4.
110 See “Harvesting Latin America’s Agribusiness Opportunity.” p. 5.
111 “Climate Change, Deforestation and the Fate of the Amazon.” p. 170.
112 “Harvesting Latin America’s Agribusiness Opportunity.” p. 4.
113 “Harvesting Latin America’s Agribusiness Opportunity.” p. 4.
114 “Up in Smoke?” p. 6.
115 “Global Climate Change: Implications for International Public Health Policy.” p.
236.
116 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 2.
117 “Cambio Climático Ahonda la Desigualdad en América Latina y el Caribe.” UNDP,
27 Nov. 2007. p. 2.
118 Stern Review: The Economics of Climate Change, p. 443.
119 “Cambio Climático Ahonda la Desigualdad en América Latina y el Caribe.” UNDP,
27 Nov. 2007. p. 2.
120 Stern Review: The Economics of Climate Change, p. 434.
121 “Up in Smoke?” p. 12.
122 Snow, Anita. “Lesson from Ike: Nobody Does Evacuations Like Cuba.” Associated
Press, 11 Sept. 2008.
123 “Up in Smoke?” p. 8.
124 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” p. 82.
125 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 3.
126 Energy Information Administration
127 “Up in Smoke?” p. 29.
128 “Up in Smoke?” p. 8.
129 “Global Environmental Outlook: State of the Environment in Latin America and the
Caribbean, 1972-2002.” UNEP, p. 84.
130 Charvériat, Céline. Natural Disasters in Latin America and the Caribbean: An
Overview of Risk, Inter-American Development Bank, October 2000, p. 65.
131 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 3.
132 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 2.
133 “Climate Change, Deforestation and the Fate of the Amazon.” p. 169.
134 “Harvesting Latin America’s Agribusiness Activity.” p. 2.
135 “Climate Change Hits Hard on Latin America and the Caribbean.” p. 2.
136 Mongabay.
137 IPCC Latin America: The Regional Impacts of Climate Change.
138 “Up in Smoke?” p. 8.
139 “Up in Smoke?” p. 7.
Endnotes Section 2.2
1 International Energy Agency. World Energy Outlook 2004. Paris: IEA, 2005.
2 Butler, Rhett. “Cell Phones May Help ‘Save’ Africa.” 18 July 2005. Mongabay. 19
Aug. 2008. <http://news.mongabay.com/2005/0712-rhett_butler.html>.
3 Butler, Rhett. “Cell Phones May Help ‘Save’ Africa.”
4 International Energy Agency. World Energy Outlook 2004.
5 United Nations. “End Poverty 2015: Millennium Development Goals.” 10 Oct. 2008.
<http://www.un.org/millenniumgoals/bkgd.shtml>.
6 International Energy Agency. World Energy Outlook 2004.
7 UN-Energy. The Energy Challenge for Achieving the Millennium Development Goals
New York: 2005, p. 2. Cited in: REN21. “Energy for Development: The Potential Role
of Renewable Energy in Meeting the Millennium Development Goals.” Washington,
D.C.: Worldwatch Institute, 2005.
8 International Energy Agency. World Energy Outlook 2004. Paris: IEA, 2005.
9 International Energy Agency. World Energy Outlook 2004.
10 International Energy Agency. World Energy Outlook 2002. Paris, IEA, 2003.
11 International Energy Agency. World Energy Outlook 2002. Cited in International
Energy Agency. “30 Key Energy Trends in the IEA and Worldwide.” 2005.
12 Global Network on Energy for Sustainable Development. “Reaching the Millennium
Development Goals and Beyond: Access to Modern Forms of Energy as a
Prerequisite.” 2007. 13 Aug. 2008.
<http://www.gnesd.org/Downloadables/MDG_energy.pdf>.
13 REN 21.“Renewables 2005 Global Status Report.” Washington, D.C.: 2005.
14 “Alliance for Rural Electrification. “Some Facts and Scenarios.” 24 July 2008.
www.rurelec.org.
15 Martinot, Eric, et al. “Renewable Energy Markets in Developing Countries.” Annual
Review of Energy and the Environment. Vol. 27. 2002.
16 Global Network on Energy for Sustainable Development. “Reaching the Millennium
Development Goals and Beyond: Access to Modern Forms of Energy as a
Prerequisite.”
17 Global Network on Energy for Sustainable Development. “Reaching the Millennium
Development Goals and Beyond: Access to Modern Forms of Energy as a
Prerequisite.”
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<http://www.csnsm.in2p3.fr/JSPS-
CNRS/presentation/080306_Presentation04_M_Nishio.pdf>.
88 Fuel Cells 2000. “Fuel Cell Basics: Benefits.” Fuel Cell.org. 18 Sept. 08
<http://www.fuelcells.org/basics/benefits.html>.
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<http://www.fuelcells.org/basics/benefits.html>.
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<http://www.fuelcells.org/basics/benefits.html>.
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<http://www.fuelcellenergy.com/benefits-fuel-cell-technology.php>.

114 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
SECTION THREE
SCENARIOS

Scenarios | Section 3 115

3.1 Scenarios for Green Energy
in the Americas
In the first quarter of 2008, Garten Rothkopf and the Inter-
American Development Bank (IDB) convened three
day-long, invitation-only scenarios devoted to technology,
investment, and policy trends in green energy. These
sessions brought together 150 leading experts from
throughout the Western Hemisphere to game out the likely
impact of three possible scenarios for our energy future: a
baseline “Pale Green” scenario, an “Out of the Blue”
shock scenario, and a “Bright Green” scenario for
unprecedented international cooperation on climate
change. During the sessions, participants took part in
anonymous polling to frame our discussion and gauge the
sentiment in the room. The discussions and polling results
together produced new insights into the key challenges
faced by this hemisphere in the coming years, the areas of
greatest opportunity, and how the Inter-American
Development Bank can best support countries in the
region to adapt to the changing energy and climate future.
The Scenarios
The Scenarios for Green Energy in the Americas Series
was conceived of as a joint effort between Garten
Rothkopf and the IDB to convene high-level meetings of
academic, business, and policy leaders from throughout
the hemisphere to determine the future of green energy. In
addition to energy and environment ministers and other
high-level government representatives from throughout the
region, participants were chosen for their expertise and
leadership in a given field of green energy, whether in
research, business development, or the policy arena. In
the end, experts from more than 20 countries in the
Americas and Europe gathered to discuss these scenarios
at the IDB headquarters in Washington, D.C. Garten
Rothkopf designed the scenarios after exhaustive research
into the potential for green energy development in Latin
America and the Caribbean.
Pale Green
In the first scenario, participants were asked to explore a
future in which the next 10 years look very much like the
last five. This "steady state" energy future is categorized
by increasing energy demand in industrialized countries,
growing greenhouse gas emissions, a lack of global
political will to address climate change, annual 10%
increases in renewable energy capacity, and growth in the
number and diversity of countries investing in renewables.
But industrialized and developing countries fail to agree on
global climate change policy and emissions targets. As
116 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
energy demand growth outpaces growth in supply of
renewables, the extent to which the world continues to be
reliant upon fossil fuels to meet increasing energy demand
becomes more apparent. The concentration of energy
demand growth in developing countries is due to the
energy intensity of the process of industrialization and the
introduction of new populations to conventional energy
supplies due to urbanization. As such, oil remains the
most utilized energy source, and coal is the fastest-
growing energy source worldwide, ensuring that fossil
fuels continue to drive increases in greenhouse gas
emissions and that emissions continue to increase into the
coming decades.
Garten Rothkopf found that the key obstacles to green
energy that must be overcome under such circumstances
are government regulation (35%), lack of investment
(25%), and a lack of political will (24%). A strong majority,
69%, said that the perceptions regarding the cost-benefit
calculations of such projects are the most important to
overcome.
The continued dominance of coal as the world’s fastest-
growing source of energy in this scenario, experts
believed, would strain the ability of policymakers to
develop effective and wide-reaching emissions-reduction
programs. This was reflected in the belief by almost 80%
of participants that carbon-sequestration technology
would not be commercially viable until 2020 or later,
placing significant limitations on the extent to which
policymakers would be able to reduce emissions while still
utilizing vast coal resources.
Promising technologies might also be able to meet
increasing energy demand. According to 32% of
participants, biofuels could, in some cases, make an
important contribution to alternative development
strategies throughout Latin America and the Caribbean,
while 30% said that wind might also play an integral
role. There was greater agreement that there is strong
potential for small-scale renewables to meet the urgent
demands of rural and underdeveloped communities. In
this context, 45% of participants said that biofuels hold
the greatest promise for enhancing rural development in
the region.
There was no consensus as to the institutions that would
be best positioned to facilitate this technology roll-out.
According to 39%, government was best suited to play
such a roll, while 24% said that the private sector was
equally suited and 22% said that NGOs and microfinance
institutions would play the greatest role. The experts were
much more decisive about the most influential policy for
enhancing the potential for green energy in Latin America
Chart 3.1. World Primary Energy Demand (Mtoe), 2000–2030
20000
18000 Nuclear Other renewables
Gas Biomass/waste
16000
Oil Hydro
14000 Coal
12000
MToe
10000
8000
6000
4000
2000
0
2000 2005
Source: World Energy Outlook 2007
and the Caribbean: Half said that an increase in tax
incentives would do the trick.
Out of the Blue
The second scenario, envisioning a shock to the system in
2009, was designed to explore the effects of a major and
sustained increase in the price of traditional energy
sources. The scenario begins with the outbreak of war
between the U.S. and Iran, prompting initial jumps in the
price of oil, followed by more consistent price increases as
the confrontation becomes protracted. As the war
continues, Western relations with Russia grow tense, as the
country continues to sell military equipment to Iran. The
uncertainty created by this relationship pushes up the price
of natural gas, prompting nations to begin to stockpile
petroleum. With the ongoing war and the hike in oil and gas
prices, a terrorist group enters a nuclear facility in the
Western Hemisphere and successfully steals radioactive
material. A public backlash against nuclear power
generation ensues as security becomes a paramount
concern, highlighting the important drivers of national
security, energy security, the economic impact of such an
energy price spike, and nuclear risk in this scenario.
Participants were optimistic about the green energy
sector’s prospects during this scenario. According to 85%,
countries in the Western Hemisphere would dramatically
increase green energy programs in the face of such a
crisis. Most of those polled said that biofuels and
conservation and efficiency efforts in the region are the
two sectors that would benefit the most from such a
scenario, garnering 38% and 28%, respectively. The
2015 2030
development of such sectors, however, would not
necessarily be without risk. According to 72%, this
scenario could allow biofuels producers to collude to raise
prices, just as OPEC has done with oil. Perhaps taking this
into account, and also recognizing the time it would take
to develop a strong renewables market, 63% believed that
traditional fossil fuel sources, like coal, would play a
greater role than renewables in helping countries to
weather the crisis.
In a similar context, the extent to which this scenario
would lead to international cooperation was uncertain. The
group was almost evenly divided on this front: According
to 52%, a crisis would lead to greater international
cooperation and technology transfer, whereas 48%
claimed that more nationalization and exclusive access
would come about. Even so, over 62% believed that such
a crisis would accelerate cooperation to develop green
energy technology within the Western Hemisphere. The
finding implies that the region might be particularly well
suited to cooperation regarding the promotion and
development of green energy as compared to other
regions of the world.
Bright Green
In this scenario, political will, energy-demand growth, the
rate of increase of the Earth’s average temperature, and
the pace of technological innovation drive enhanced and
coordinated efforts to directly tackle global climate change
in order to produce a new energy paradigm of innovation
and leadership. President Barack Obama vows to
accelerate the Bali process, join other countries in setting
Scenarios | Section 3 117

A PATH TO GREEN GROWTH
69% of respondents believed that
biofuels and energy efficiency
technologies have the greatest
potential to contribute to economic
growth in the region.
aggressive carbon emissions-reduction targets, and
increase investment in green energy technologies. With
the U.S. firmly committed, international cooperation to
fight global warming reaches new heights. Developing
and developed countries agree on ways to share
responsibility for emissions reductions and work together
to establish a functional and internationally administered
greenhouse gas emissions regulatory authority and
trading system. In the Western Hemisphere, a Summit of
the Americas is convened to produce a hemisphere-wide
commitment to achieving global leadership in green
energy. Mechanisms are established to promote
technology transfer, to finance innovation, and to create
incentives for efforts in energy efficiency and renewables.
Special focus is placed on infrastructure projects that
ensure that renewable technologies are utilized as
efficiently and effectively as possible.
This movement would lead to more than just political
change. Experts agreed that because the world has
entered a period of dramatic policy change in this
scenario, there is also a unique opportunity for the
proactive harmonization of standards and energy
cooperation. A clear majority, 77%, said that a new
commitment to environmental goals would lead to the
liberalization and meaningful expansion of global markets
for renewable energy and carbon credits within the next
five years. Most, 72%, felt that this process would be
irreversible once begun. Still, the extent to which this
transformation is driven by policy remained questionable:
A very skeptical 52% of participants said that a
catastrophic event directly linked to global warming would
need to happen in order for this scenario to play out.
Both the creation of carbon markets and the deployment
of renewables would benefit from this scenario.
Regarding carbon markets, 77% said that a global cap-
and-trade or carbon tax regime would come about by
2015 or sooner. Additionally, 80% of participants
anticipated binding GHG emissions-reduction
requirements for developing countries in a post-Kyoto
international climate change treaty.
118 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Renewables would also benefit in this context, though it
was less certain how. Experts were split as to the most
effective policies for the promotion of renewables: While
32% said that guaranteed loans and preferential financing
would be the most effective policy, a significant 28%
believed that tax incentives would do the trick, and 21%
said subsidies. At the same time, however, many noted
the expected value chain lag that could continue under
such a scenario. According to 49%, the region’s energy-
distribution network would play the greatest role in this
lag, while 35% said production. Perhaps reflecting upon
this expected lag, 70% of participants believed that
advanced grid technologies would play a meaningful role
in developing regions in the decade ahead.
Key Findings
The purpose of a scenario exercise is not to predict the
future, but rather to allow a group of leaders to consider
collectively how they might be affected by different
outcomes, what their vulnerabilities and risks are, what
their comparative strengths are, and what approaches
make the most sense. Across scenarios and sessions, the
vast majority of participants identified three critical gaps as
the most significant barriers to green energy development
in the hemisphere — policy, infrastructure, and technology
— as well as proposals for how the IDB might help
address them.
Participants consistently and overwhelmingly identified the
policy gap as the greatest barrier to green energy in the
Americas, followed by technology and innovation issues.
Policy, according to 42%, is the greatest gap, and another
24% cited R&D, while 51% cited political will as the
greatest challenge to green energy. Lack of technology
was the response from 19%. It was nearly unanimous
(94% and 88%) that countries in the region lack sufficient
energy and climate change planning and have insufficient
resources dedicated to these issues. The issue extends
beyond a mere lack of will or interest; 68% of participants
said policymakers in the region lack the understanding
and knowledge necessary to develop sound policies in
this area. Multilateral financial institutions, however, were
seen as having an important role to play in addressing
these gaps, with 86% of participants agreeing that
institutions like the IDB should work with countries to
develop new models for green energy in developing
countries. A number of very specific proposals were
offered:
• The IDB should sponsor a study of the economic
impact of climate change on the hemisphere, at a
regional, sub-regional, or national level to increase
 knowledge on the costs of climate change and support
sound decision-making and allocation of resources by
governments.

• The IDB should focus special attention on the islands

and shorelines uniquely exposed to the impact of
climate change.

• The IDB should consider enhancing the environmental

and energy economic analysis capacity at the Bank
and establish a clearinghouse for regional data.

• The IDB should continue activities like the scenario

series, with a more specific regional or even national
focus.

As stated above, local innovation and access to

technologies were seen as the next most important barrier
to the development and deployment of renewable energy
in the Americas. Only 9% of participants did not perceive
the region as dependent on technology imports, with
experts time and again citing multi-year waiting lists for
capital-equipment imports such as wind turbines and the
lack of tailored solutions for local conditions. Again,
specific ideas were given for how the IDB could help
address these issues, including the facilitation of south-
south technology transfer and investment through
coordination with other regional development banks. With
regard to catalyzing local R&D, participants pointed first to
providing financial and technical support for the
development of appropriate policy frameworks (42%),
followed by the direct funding of centers of excellence
dedicated to green energy in the region (23%).

Finally, participants predicted the need for massive

investments in new energy infrastructure over the next five
years, with 75% of those polled expecting the bill to be in
the range of $50 billion to $100 billion. The focus here was
on the power-generation sector, particularly connecting
the 40 million people living in the Americas today without
access to electricity. In this context, 45% said that
transmission lines to rural areas should be the priority
infrastructure gap addressed in the region, with an
additional 30% citing upgrading existing grids. What was
not captured in these raw numbers, but pointed to
consistently throughout the sessions, was the potential for
renewables to play a role in leapfrogging existing systems
and providing off-grid power to rural communities.

Scenarios | Section 3 119

120 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
3.2. Scenarios
3.2.1 PALE GREEN
The first scenario, Pale Green, assumed a steady state in
which investment continues to increase at roughly the
same pace as today, international climate change policy
remains superficial or non-existent, the international
energy matrix remains roughly similar, and technological
innovation continues at current rates. Envisioning this
steady state, Garten Rothkopf asked experts at three
different events what the future of renewable energy would
look like, including a view to potential hurdles that
renewable energy could face and the areas in which
renewables would likely make the most progress. The
discussions highlighted areas of significant consensus as
well as areas of considerable variance in opinion.
Discussions in the Pale Green scenario of all three
sessions — technology, investment, and policy — focused
on four broad categories: policy issues, infrastructural
concerns, problems of scale, and methods of
development of particular concern to Latin America.
Key Obstacles
Participants highlighted the central role that
governments will play in the development of renewable
energy policy and the subsequent commercialization of
Chart 3.2a World Primary Energy Demand, 1980–2030
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1980 1986 1992
Coal Oil Gas
Source: World Energy Outlook 2008
green energy. In this context, they discussed the lack of
government preparedness in developing appropriate
and effective policies, the education gap between
developed and emerging economies with regard to
renewables, and the implications of these
considerations on energy security.
While experts agreed that governments will play the
greatest role in the development of renewable energies,
they also conceded that today they are woefully
unprepared to do so. A staggering 94% of those who took
part said that governments in the Western Hemisphere do
not have sufficiently well developed energy or climate
change plans.
Given these shortcomings, 35% of experts determined
that the key obstacle to green energy is government
regulation, while about one-quarter said that political will
and lack of investment, respectively, are the greatest
hurdles to be overcome. According to 68%, policymakers
do not have a strong enough understanding of the
complex issues associated with sound energy and climate
change policy. This lack of understanding could lead to
legislation that is at best superficial and at worst
misguided, the latter a reflection of concerns that policy
could potentially steer investment toward ineffective or
inappropriate technologies. Several noted that policies to
date have left too much uncertainty to garner public
support or investor confidence, and as such have not
been worthwhile.
1998 2004 2010 2016 2022 2028
Nuclear Hydro Biomass/waste Other renewables
Scenarios | Section 3 121
 Perceptions of Green Energy
Education of both policymakers and the public will play a
central role in altering the damaging perceptions that
some now have of green energy. In order for effective and
useful legislation to be passed, legislators need to have a
better understanding of the full extent of climate change,
the effects of greenhouse gas emissions, energy costs and
energy security, and the interplay of all of these
considerations.
Education will also play a key role in the public’s
perception of renewables and climate change policy. Many
do not understand the macro effects that climate change
and energy policies have; instead, they base their
perceptions on how they are affected, usually monetarily.
Because expanding the understanding of climate change
and energy-related issues is likely to deepen support for
green endeavors, the direct effects of energy policy —
including, but not limited to, monetary effects — must be
fully understood given that future green energy laws will
probably require a monetary cost to the consumer.
“Education is a fundamental
concept for the legitimacy of this
movement.”
– Pedro Gamio Aita,
Vice Minister of Energy, Peru
Chart 3.2b Obstacles to Green Energy
Government Regulation
Political Will
Investment
Technological Development
Other
Source: Garten Rothkopf
122 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Before such projects can be implemented, the public needs
to be made fully aware of the reasoning behind additional
expenditures. Cost-benefit calculation, cited by 69% of
experts, is by far the greatest perception that needs to be
overcome in order to move beyond obstacles to green
energy in the Americas. Doing so will be difficult, however,
given that the costs associated with renewable energy
legislation tend to be more tangible to the public than the
longer-term benefits of dealing with climate change.
One potential method for overcoming these perceptions is
through technologies that aid in economic development.
Half believed that an increase in tax incentives for
renewables would alter these cost-benefit calculations
enough to make the public feel that investing in
renewables is worthwhile. But determining who or what is
best positioned to facilitate the technology roll-out of
renewables was not as easy. Though 39% said that
governments are best suited to facilitate this roll-out, a
significant 24% felt that the private sector would be better,
and another 22% cited NGOs and microfinance
institutions as the best equipped for such an undertaking.
Regardless of who implements them, participants said
they hope that such technology transfer issues will be
incorporated into any post-Kyoto international agreement.
Still, they were skeptical about the international context.
With the Kyoto Protocol set to expire in 2012, and the Bali
process producing very little substantive change, there is
concern that international indecision with regard to climate
change issues in this scenario will lead to waning interest
35%
24%
25%
15%
1%
in renewable technologies. The belief that only superficial
international agreements, without binding stipulations, will
be reached seems to highlight the uncertainty among
experts regarding even well-intentioned policy changes.
Promising Technologies and Development
Throughout the scenario, participants continually linked
investment and development. Most countries in the region
have little capital with which to invest in renewable energy.
Because they cannot afford to subsidize renewables to the
degree that the U.S. or other governments can, it is
unlikely in the steady-state scenario that many countries in
the region will be able to provide the incentives needed to
develop widespread use of renewables.
Participants were convinced, however, that pursuing
development goals and the usage of renewables are not
mutually exclusive undertakings. They noted that the
biofuels sector, for example, has great potential for job
creation. And while the extent to which such “green collar”
jobs can boost the economies of emerging markets
remains to be seen, experts agreed that room must be
created to pursue both ideas so that policies can be
effective in Latin America.
“Efforts to improve global warming
have to be in line with other
general policy issues within each
country.”
– Arturo Infante-Villareal,
National Coordinator, Sustainable
Development for Biofuels, Colombia
Of particular interest was the possibility for increased
rural development in Latin America. Major investments in
infrastructure expansion will be necessary in order to
bring rural areas on par with urban ones. Investment in
road infrastructure will be particularly important for the
development of renewable energy, in terms of moving
component parts, while investment in distribution
networks for liquid fuels will be a key infrastructural
component for biofuels distribution. This could be a very
significant consideration, given that 45% of participants
felt that biofuels would be the best technology for
development, and 24% felt that solar would best
enhance development. Participants also agreed that
there is great potential for small-scale renewables, such
as small hydro, to meet the urgent demands of rural and
underdeveloped communities.
Continued Dominance of Coal
The capacity to bring renewable energy up to scale will
play a significant role in the ability of renewables to
supplant fossil fuels. Because the amount of energy
derived from fossil fuels that renewables would have to
replace in order to have a significant impact is so
substantial, renewables have not yet reached the scale
necessary to be price-competitive.
Time is an issue in developing renewable energy
infrastructure. With the need to meet growing energy
demand in real time, many countries lean toward options
that can be developed fastest to provide the most energy
in the shortest term. That means relying on tried and
proven methods of energy generation, mainly from fossil
fuels. Incidentally, the options that can be developed
fastest — such as coal and natural gas, for example —
are also less expensive than renewables. Largely because
it is scalable for power generation, comparatively cheap,
and abundant, 73% of participants felt that coal will
remain the fastest-growing source of energy in the
coming decades.
This finding did not seem to drive participant thinking
regarding how coal’s negative atmospheric effects would
be handled. According to 40% of participants, carbon
sequestration will be not be an option until after 2020,
limiting the scope that policymakers will have in which to
meet energy demand quickly and in an environmentally
friendly way. With coal usage continuing to grow, and
carbon sequestration not yet commercially viable, global
greenhouse gas emissions will continue to grow apace.
Summary of Findings
Such a steady-state scenario will be characterized by the
region’s ability or inability to find policy consensus. It will
also be marked by individual countries’ policy choices,
how these choices aid or harm development in the
region, the extent of infrastructure development, and the
region’s ability to scale up the use of renewables to
replace fossil fuels. Participants felt that this scenario
would mean continued progress to some degree, but
with renewables continuing to make only a minor impact
worldwide.
While this scenario is disappointing on the climate change
front, it may be the easiest for Latin American countries to
handle in terms of what it would mean for the continued
use of fossil fuels. As most countries in the region already
rely on fossils for such a large portion of their energy
matrix, continuing in this way would likely be the most
Scenarios | Section 3 123
cost-effective for them. Change, on the other hand, would
be costly, and with the region’s focus on development,
continuing the status quo may be the path of least
resistance.
3.2.2 OUT OF THE BLUE
In Out of the Blue, participants examined what could result
in the aftermath of some dramatic event that would reduce
access to traditional fossil fuels and nuclear technology,
and that would also shift the course of energy policy,
investment, and technology. While this could be caused
by a wide range of events, the discussion focused on what
would happen in the wake of an armed conflict with Iran
that involved a small- to medium-scale nuclear event in its
wake. In this scenario, traditional fossil energy sources are
not as readily available, and nuclear energy suffers from
public perceptions of its danger. To that extent, alternative
fuels could become viable options for meeting future
energy demand. Thus, participants discussed which
energy sources would best replace conventionals and how
this might be achieved.
This type of scenario has occurred in the past: Several
participants remarked that the 1973 OPEC oil embargo
produced a similar shock, altering the course of Western
energy policy toward exploration and conservation. The
magnitude of the shock was so pronounced that research
and development in energy technologies by the U.S.
Department of Energy peaked in 1978, followed by two
decades of decline.1 Participants noted that the oil shocks
offer useful insights into what might occur in future shock
scenarios. In the scenario of war with Iran, those taking
part discussed the likely effects on the world’s
dependence on liquid fuels, climate change policy and
greenhouse gas emissions mitigation, and development
goals in Latin America.
Impact on Green Energy
The first part of the discussion revolved around the effect
this scenario would have on green energy. Even though
some 63% of participants believed that traditional fossil
resources, like coal, would play a greater role than
renewables in such a crisis, 85% said that countries in
the Western Hemisphere would dramatically increase
their green energy programs as the result of the crisis. In
fact, many felt that this scenario would lead to such a
situation whereby the market shift would be permanent.
Participants expressed concern that existing policy
frameworks are wildly inefficient, and investments
misdirected: 94% of them felt that countries in the
Western Hemisphere do not have sufficiently developed
124 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
energy or climate change plans. If confronted with an Out
of the Blue crisis, politicians might enact policies that
unintentionally backfire with negative effects, such as
insisting on unrealistic mandates of inefficient fuels or
devoting funding to scaling up the most well-developed
energy of the moment rather than promoting research
and development of better energy alternatives for the
longer term.
“This scenario leads to game
changing technologies that will
make it difficult to go back to a
market that resembles what we
have now.”
– Edward Hoyt, Senior Vice President,
Econergy International Corporation
Of these programs, 38% of participants maintained that
biofuels would benefit the most from such a negative
event, followed by 28% who said that technology to
increase energy efficiency would garner the most
investment. As biofuels begin to replace oil for
transportation, the world will see an enhanced
international biofuels trade. Most participants (72%)
believed that as this occurs, there will be scope for
biofuels producers to collude and hence control global
prices, creating a group similar to OPEC in form and
function.
Several key points arose surrounding the world’s
dependence on liquid fuels, namely for transportation.
These liquid fuels are a key driver of economies, as they
are utilized for moving products over land and by sea. As
oil prices rise, so does the cost of getting goods to
market; however, despite high oil prices today, producers
and consumers are willing to pay because there is
currently no scalable alternative to oil.
Given the price inelasticity of oil, participants agreed
that scarcity, not price, would incite the shift from oil to
renewables. Though some would argue that the world
has already reached peak oil, optimistic assessments
project that oil will peak oil sometime in the 2020s and
fall steadily thereafter. This timeline will depend on the
quantity of available oil in sources like oil sands and
deep-water wells, as well as the development of
technology that will provide access to them. A majority
of participants (62%) believed that scarcity would not
come into play in the near future, and thus that
conventional energy sources would dominate use. This
was because, in part, biofuels have not yet reached a
high enough stage of development to replace
conventional fuel at full scale. Every participant believed
it will take more than 10 years for renewables to
supplant nuclear power, and 74% felt it would take more
than 20 years. These participants said that scaling up
biofuels would require a major overhaul of infrastructure
and vehicle design, rendering it a nearly impossible
alternative in the short term under an Out of the Blue
scenario. It was an interesting finding that seemed to be
at odds with the feeling that biofuels would benefit most
from such a shock.
One worry is that fuel scarcity could drive political
instability and subsequently produce a public uprising or
security threat. There is already discontent as prices
continue to rise, but a permanent shortage would have
more serious political implications. Scarcity would have an
impact on military and security forces and their ability to
function to their full extent.
International Cooperation
Many participants felt that security concerns would drive
policymakers toward nationalism, especially given the
potential problems for military forces. Participants
disagreed, however, about whether a supply shock would
lead to increased international cooperation on energy
policy. While 52% of participants felt that a supply shock
would enhance international cooperation and technology
transfer in the Western Hemisphere, they disagreed as to
whether this would mean more South-South cooperation
Chart 3.2c Which Technology Would Benefit Most?
Biofuels 38%
Conservation and Efficiency 28%
Clean Coal 15%
Nuclear 10%
Wind 6%
Solar 3%
Source: Garten Rothkopf
or more North-South cooperation. Participants who felt
that there would be increased North-South cooperation
cited lack of capital for development of renewable
technologies in the emerging economies, which would
further the emerging economies’ dependence on the
developed world for technology imports.
Magnifying the uncertainty that such a scenario would
bring about greater cooperation, an almost equal portion
of participants felt that the scenario would not only lead
to less cooperation, but also to even more nationalization.
Some 48% remained skeptical of international
cooperation and said that such an event would even lead
to more nationalization and exclusive access among
countries. Taking it one step further, to the logical
conclusion that countries are likely to consolidate and
protect resources, almost three-quarters (72%) said that
this scenario would allow for biofuels producers to
collude to raise prices. Again, it was a stark reminder of
the pitfalls of relying on any one technology, especially
considering that the participants felt that biofuels would
be best placed to benefit in such a context.
Emissions Reduction Policy
Another key discussion in this scenario was the outcome
for climate change policy: Would carbon-reduction efforts
continue, cease entirely, or fall somewhere in between?
Participants maintained that in a time of crisis,
environmental considerations, like global warming, will not
drive energy policy.
Scenarios | Section 3 125
A total of 62% of participants felt that, under a supply
shock, countries will return to relatively inexpensive coal.
The developing world, in particular, will turn to coal, given
the relative ease of building coal plants. A total of 77% of
participants felt that this scenario would lead to a
relaxation of federal environmental regulations, and several
cited instances in which the U.S. Environmental Protection
Agency (EPA) may ease regulation in the event of such a
need, like drilling in protected areas.
“Coal will remain emperor.”
– Kelly Fletcher, Advanced Technology
Leader, Sustainable Energy Program, GE
Expense was a key factor with regard to carbon in this
scenario as well. As non-polluting technologies are
expensive, they would need to be rolled out with such
speed in this scenario that it would be cost-prohibitive. As
such, participants felt that there would be little room for an
emissions-reduction policy.
Development Policy
Participants also discussed development policy as a
critical issue in an Out of the Blue scenario. Mirroring the
finding from the Pale Green scenario, countries’ energy
matrices will need to include a variety of technologies in
order to meet demand, including several options for
electricity generation and transport fuels. Because each
energy source has its own associated infrastructure
requirements, this will mean significant energy
infrastructure investments and construction. Diversification
on such a small scale will be incredibly difficult and
expensive.
“This situation would lead to
innovation in all countries, which
needs to be seen as an opportunity
for development.”
– Alvaro Amaya,
President, Cenicaña, Colombia
Participants felt that such diversification may be beyond
the means of some of the smaller Latin American nations
and suggested that they may need to combine grids
internationally to create greater total demand; yet, this
represents a host of technical problems in and of itself.
Island nations will most likely be hit the hardest in this
instance because they have very small economies and
126 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
are unable to link grids with larger ones. Participants
disagreed on the feasibility of integrating international
grids: Some felt that it would be necessary to diversify
production and provide reliable sources of energy; others,
however, maintained the earlier argument that security
reasons would prevent such integration.
Some experts felt that in spite of the challenges that
today’s grids represent, an Out of the Blue scenario could
be beneficial to small, distributed production —
particularly if there were a threat to centralized generation.
For example, if such a scenario included a hostile strike on
a nuclear plant or some other sort of aggressive disruption
of energy generation, decentralized generation from small-
scale producers could be favored for security reasons. As
previously discussed, many participants felt that emerging
economies would look to developed nations for more
North-South cooperation rather than to their neighbors for
South-South cooperation.
Summary of Findings
This scenario is particularly dire for Latin America because
of its implications for development and smaller-scale
economies. Indeed, 85% of the participants felt that this
scenario would lead to a rapid increase in the rate of
development of biofuels, but only 11% felt that this was a
situation with which their organization was best prepared
to deal. This context is also the most likely to bring about
a rapid retreat from policies to reduce greenhouse gas
emissions — a stark reminder of the extent to which
negative events can have even greater long-term negative
consequences.
3.2.3 MYTHS, MISCONCEPTIONS,
AND X-FACTORS
The renewable energy sector is growing strongly, fueled by
41% growth in investment in 2007 and record energy
prices.2 In spite of more widespread public discussion
about renewable energies, misconceptions remain
concerning the necessity for further development, the
extent of existing capabilities, and the potential for
renewable energy development. Participants identified
several areas where public knowledge is incorrect, lacking,
or obscured by contradictory information. The most
notable of these are: misinformation about the existence
of climate change, a lack of understanding regarding the
scope and scale of renewables needed to supplant fossil
fuels, and the environmental impacts associated with
renewable energies.
 #1 Myth Concerning Climate Change
The number-one misconception with regard to climate
change is that it is a myth. Scientists have debated both
sides of this argument for many years, but it is now widely
accepted that climate change is a reality that we must
confront. According to the United Nations, temperatures at
the top of the permafrost layer have increased by up to
3°C since the 1980s, and the area of Arctic sea ice has
shrunk by 2.7% per decade.3 The Intergovernmental Panel
on Climate Change now concludes with very high
confidence that human activities since 1970 have had a
warming effect on the planet.4
Despite this evidence, much of the public, for a host of
reasons, refuses to believe that global warming is not part
of a naturally occurring Earth cycle. They do not, therefore,
see immediate focus and significant investment in the
development of renewable and alternative energy sources
as a necessity. Participants pinpointed this as the number-
one myth concerning renewable energies. They expressed
fear that the ubiquitous and deep-rooted nature of this
misunderstanding was significant enough that if it were
not clarified and addressed properly, it would inhibit the
potential for renewable energy. Such obstacles would
make it virtually impossible for renewable energy to
supplant a sufficient amount of fossil fuel energy and slow
or reverse the effects of climate change.
The climate change “myth” is of particular concern to the
small island nations of the Caribbean. According to the
UN, “temperatures in excess of 1.9 to 4.6°C warmer than
pre-industrial [temperatures, if] sustained for millennia will
lead to [the] eventual melt[ing] of the Greenland ice
sheet.”5 This would raise sea levels by roughly seven
meters, which, for island nations, would mean a
considerable loss of territory. While such a gigantic event
is still a long way away, the island nations of Latin America
see themselves as being on the front lines of climate
change and are increasingly concerned with the
perception that climate change is separate from human
livelihoods and activity.
One Size Fits All
Another significant concern that participants highlighted is
the myth that there will be one renewable energy solution
for all countries, or one replacement for all fossil fuels.
Given the environmental diversity among and within
countries, and varied technological and financial
capacities, it is unrealistic to expect that this will be the
case. Garten Rothkopf and the Inter-American Develop-
ment Bank have long recognized that the future of energy
will be in building a diverse energy matrix rather than
reliance on one energy source. Certain geographic regions
are more conducive than others to generation of electricity
from specific kinds of renewable energies. Mexico, for
example, has begun to develop areas suitable for wind
power generation, while Chile has focused on developing
hydroelectric power. There is great potential for the
generation of power from varying sources depending on
countries’ own unique resources. Additional capacity
could be created in the expansion of nuclear or coal
resources, or the pursuit of other alternatives (based on
the compatibility of power-generation technologies with
electricity needs and availability of resources).
Participants noted that many people have only a limited
understanding of the scale of energy usage, and
mistakenly believe that one renewable technology will be
the silver bullet for the globe’s energy problems. This
misconception leads to the belief that technology alone
will be able to solve the energy crisis. It encourages
complacency on the part of consumers, who expect that
new technologies will address current and future
problems, and therefore see no need to adjust current
consumption patterns. In reality, there is not a one-size-
fits-all solution, and any comprehensive solution must
incorporate changing consumer energy use to address the
problem. The culture of energy consumption, as it is today,
leads people to the unrealistic beliefs that renewables will
replace fossil fuels, and that humans will continue their
current energy-usage habits.
“The world needs technology,
investment and education to tackle
renewables on a local scale.”
– Robert Thresher,
Director, National Wind Technology Center,
NREL, USA
Even among countries that realize that energy-expenditure
habits will need to be changed, there is no agreement as
to who should change, to what degree, or how it will be
regulated. This is a critical sticking point for many
emerging economies, as they feel that developed
countries are primarily responsible for today’s climate
challenge patterns. These emerging nations argue that
they should not be subject to energy and emissions
restrictions that may hamper their economic growth, when
developed nations have been able to grow without such
restrictions. Furthermore, they posit that as the main
contributors to energy consumption and emissions,
developed countries should fund initiatives to address
climate change.
Scenarios | Section 3 127
At the same time, developed nations charge that they
should not bear an unfair portion of the expense in
addressing the effects of climate change while developing
nations continue to pollute. Developed countries point to
major polluting economies like China and India and argue
that any adequate attempt to address climate change
must include involvement from these countries. They also
dispute the notion that it is their sole responsibility to fund
further research and development when countries like
China have massive amounts of foreign exchange
reserves. These fundamentally different viewpoints have
led to a standstill on emissions regulation and renewables
agreements. These significant hurdles will need to be
overcome in order for a meaningful international
agreement to come to fruition.
The Environment
Another pervasive myth is that renewables have little or no
impact on the environment. Participants were concerned
that the public does not understand the full implications of
renewable energies and their possible impacts. In the zeal
to diversify energy sources and mitigate the effects of
climate change, this important fact has been overlooked.
Comparatively speaking, once green technologies are
deployed and functional, they emit fewer pollutants than
traditional energy sources. Little thought is typically given,
however, to the emissions associated with the
manufacturing, production, shipping, and initial
implementation of renewable energy machinery. These
factors must be considered when assessing how “green”
a technology actually is.
Aside from emissions, there are other environmental
effects associated with production of renewable energies.
For example, in China, solar panel factories have been
known to dump silicon tetrachloride, a byproduct of
polysilicon production, into fields near towns,
endangering health and making the land infertile. Wind
energy, though it produces no carbon emissions in the
production of energy, has other impacts, including being
a hazard for local wildlife. Large-scale hydroelectric
installations have downstream implications, including
warming water that could harm fish populations and
changing the natural flow of water downstream. Changed
water flows would affect both wildlife relying on the
natural rise and fall of river water and humans relying on
arable land surrounding the water.
The participants were particularly concerned about the
pervasive misconception that ethanol and biodiesel have
no negative impacts on the environment. They singled out
corn ethanol, voicing doubts that the carbon intensity of
128 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
farming corn is fully understood. As farming emissions are
often overlooked, the public may have misconceptions
about the net effects of ethanol on carbon reduction.
Another poorly understood impact of biofuels is the extent
to which strain feedstock production can affect water
supplies and farmland. This could have grave implications,
given that the amount of land for feedstock production
may continue to rise.
Technology
Significant technological developments will need to take
place in order for renewables to supplant a significant
portion of fossil fuels. There was disagreement among the
participants as to whether technological advancements
would take place exclusively in the developed world or in
the emerging world as well.
Several participants cited the example of Brazil’s
development of biofuels, saying that the need for
electricity for development would drive expansion and
evolution of these technologies in emerging economies.
These participants felt that not all technological
advancements would necessarily be in the developed
world, and that this assumption could potentially hinder
research in the rest of the world. Green technology growth
in India and China support this claim. One study, for
example, has found that emerging economies that “do not
have the legacy energy infrastructure that locks in current
energy forms, are fertile ground for the development of
disruptive innovation in energy. . . . Solar electricity and
wind are examples of new technologies with the potential
to create such a ‘technology leapfrog effect’ in many
developing countries that lack electricity infrastructure.”6
Furthermore, some analysts argue that green
technological innovation, and the opportunity for new
value networks, is most ripe in the emerging world where
current non-consumers can be targeted with developing
technologies, and a process for improvement can be
established based on feedback.7
Other participants dissented, citing the dearth of
investment in technology research in the developing world
as the main inhibitor of technological breakthroughs in
these areas. In the developed world, funding is less of a
problem, making more riskier research possible. The fact
that the U.S. and Europe accounted for 70% of
investment in clean technology between 2004 and 2006
supports this claim.8
Technology-transfer issues were also a critical part of the
discussion. Private-sector participants spoke of the
barriers precluding massive technology transfer. They
stated that if technological breakthroughs are made in the
developed world, they are likely to come from the private
sector rather than the public sector. Issues like
copyrighting and other intellectual property concerns will
be more central to the private sector if technology is to be
given to the developing world. Private sector participants
cited the fact that companies with patents on certain
technologies will want compensation for their massive
investments in R&D, meaning that such technology could
not merely be given to developing countries.
Many public sector participants disagreed, however, citing
the increase in collaborative research efforts and green
technology’s ability to break boundaries between
industries. They argued that green technology may
increasingly occupy a unique position vis-à-vis technology
transfer, since in the end, all participants will benefit from a
shared effort to address climate change and to minimize
consumption of traditional fossil fuels. They gave
examples of organizations, such as NREL in the U.S.,
which have begun to develop programs to make
technology transfer appealing to private sector companies
by providing government-funded incentives.
Summary of Findings
With such varied opinions among experts, it is no wonder
that the general public is confused about the realities of
climate change, the effects of renewable energy, and the
possibilities for technological development. There is
reason to believe that public consciousness of these
issues has increased in recent years, as media coverage
and investment in R&D have dramatically increased. It will
take a more unified and consistent effort, though, to
convince the dubious public (and their lawmakers) of the
necessity to address climate change and also to
incorporate renewable energy technologies into the energy
mix sooner rather than later.
3.2.4 BRIGHT GREEN
The Bright Green scenario assumed a fundamental shift in
policy toward the aggressive adoption of renewable
energy worldwide. The scenario also posited an incoming
U.S. president who accelerates the post-Kyoto Protocol
negotiations and the adoption of aggressive international
measures to combat climate change. In essence, the
world goes “green.”
Participants identified several measures that could occur
in this scenario, as well as several hurdles that would
have to be overcome. Much of the discussion focused
on modes of production, challenges in infrastructure, and
costs associated with a transition to renewable energy.
This scenario resulted in the greatest variation of
opinions among participants with regard to the future of
Bright Green.
Beyond Political Change
One of the principal disagreements among participants
was the catalyst that would move the world toward Bright
Green. The three main proposals to this effect all varied
greatly, from a massive natural disaster, to a substantial
technological breakthrough, to a consumer-driven Bright
Green revolution.
Some 52% of the participants said that the “bright green”
nature of this scenario is more likely to come about as a
reaction to a shock to the system — more specifically, a
massive natural disaster with evidentiary support linking
the disaster to climate change, such as a hurricane or a
monsoon. Several participants felt that even this would not
be an adequate driver, however, given that the world has
experienced destructive hurricanes and monsoons that
did not result in the development of an aggressive climate
change policy.
Other participants felt that a technological breakthrough
would be the most likely driver of this scenario. These
experts speculated that the invention of an
environmentally friendly, cost-effective, national-security-
enhancing technology would satisfy the three most
important criteria to launch the globe into the Bright
Green era.
Several participants felt that mere political will, embodied
by a U.S. president actively engaged in climate change
policy, would not suffice to move the world toward a Bright
Green future. Still, 77% felt that a new commitment to
environmental goals would lead to the liberalization and
meaningful expansion of global markets for renewable
energy and carbon credits within the next five years.
Some felt that the policy change taking place in this
scenario would not be driven from the top down by
politicians, but rather from the bottom up by voters who
are the consumers of these products. Several experts
stated that the Bright Green scenario would most likely
occur as the result of a consumer lifestyle choice. This
potentially would make renewable energies more of a
luxury, however, and hence less likely to be widespread in
emerging markets.
These differing factors illustrate the widely varying views of
what Bright Green will entail, and they serve to indicate the
Scenarios | Section 3 129
 Chart 3.2d What Else Would Need to Happen to Achieve Bright Green?
Catastrophic Event 52%
Linked to Global Warming
Technological Breakthrough 29%
Influx of Investment 17%
Other 3%
Source: Garten Rothkopf
difficulty with which policymakers will have to seek a
consensus on the issue. Even so, there were various
factors that the participants agreed would need to be
considered in such a scenario.
Deploying Renewables
Regardless of the primary driver, participants felt that there
would be certain changes and advancements associated
with regard to the production, cost, and overall
deployment of renewable energy products.
In the case of renewables that are heavily reliant upon
technology, like solar and wind power, there was
consensus that future streamlining of production would
reduce the time and cost associated with manufacturing.
The specific example highlighted was the expansion of
thin-cell photovoltaics and its application to small-scale
power generation in rural areas of Latin America for
electricity and heating water. Participants speculated that
increased demand by this sector would ultimately result in
a decrease in costs and the ability of technologies to be
more readily available.
Several people, however, cautioned that such
advancement would not be possible, even in Bright Green,
without an international body to certify the sustainability of
such undertakings. Regarding biofuels, for example, the
body would prevent countries from using inefficient and
unsustainable methods for biofuels production. This idea
is particularly relevant to Latin America, as countries in the
130 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
region continue to seek profitable sustainable fuels in
order to compete with Asian producers in the global
market. In order to do so, many countries already are
making drastic land-use changes that will affect their local
environment for decades to come.
Another important aspect of production in the Bright
Green scenario will be the reduction of costs associated
with more advanced production methods. The price tag
for converting to renewables will play a role in how
bright this scenario actually becomes. This is true
especially in Latin America, where smaller countries may
have a hard time incurring the higher associated costs.
The group was fairly evenly split among three options
regarding the most effective policies for promoting
renewables.
Some suggested that larger entities, such as oil
companies, would have an advantage in this respect
because of their capital resources to further such large
ventures. As few of these companies exist in Latin
America, the group suggested one of two options: that
companies in developed nations would supply developing
countries, or that developing nations would have to turn to
their governments and state-owned enterprises in order to
attain the necessary capital for the expansion of
renewables. In either case, the transition to renewables,
even in the Bright Green scenario, will have a high cost
associated with it. There was agreement that this would be
the case, even with spectacular advancements in
technology and production.
Chart 3.2e Most Effective Policies for Promoting Renewables
Guaranteed Loans/ 32%
Preferential Financing
Tax Incentives 28%
Subsidies 21%
Grants 10%
Special Economic Zones 4%
Other 4%
Source: Garten Rothkopf
Infrastructure
Necessary improvements to infrastructure would be a high
cost associated with the Bright Green scenario. Based on
the sheer scope of infrastructure necessary for such a
massive transition, some participants suggested that
technologies would need to function within existing
infrastructure in order to enable electricity transmission
through existing grids or pipeline distribution for liquid
fuels. To this end, 70% of participants believed that
advanced grid technologies will play a meaningful role in
emerging economies in the coming decade.
Other concerns regarding the difficulty of dealing with
infrastructure in this scenario were the transmission grid
and pricing differentiation for potential renewable energy
sources. If there were to be a differentiation between the
price paid per kilowatt of electricity produced, participants
figured that drastic changes would need to be enacted in
order to compensate for the paradigm shift created by
renewable energy incorporation. It was also suggested
that the Bright Green scenario would encompass a shift to
electric vehicles. In such a case, grids would have to
absorb a much higher load capacity as the result of this
paradigm shift.
Carbon
With climate change seen as a primary driver of such
increased usage of renewable energies, participants were
interested in the effects of carbon pricing. There were
widely differing views on this, particularly with regard to its
effect on coal. Many participants entirely discounted coal
in this scenario as a thing of the past, feeling that
aggressive carbon pricing would constrain its use.
Several other participants, though, reiterated earlier
infrastructure discussions concerning the use of fuels that
the technology sustains. Given that carbon regulation
would be in place, these participants felt that, rather than
constrain coal technologies, the scenario would lead to
significant investments in clean coal and carbon-
sequestration technology. Such investments would enable
countries that already heavily rely on coal to meet their
future energy needs by modifying today’s infrastructure
rather than reconfiguring it completely.
Regulating carbon emissions was also thought to be
central to the efforts of the Bright Green scenario, and not
only for the richest nations. Four-fifths of participants
anticipated binding greenhouse gas emissions-reduction
requirements for emerging economies in a post-Kyoto
international climate change treaty. Participants were
close to evenly divided on the timeframe for the roll-out of
such an agreement, with 36% saying that a global cap-
and-trade scheme or a carbon tax would come about by
2012, and 33% saying the same would happen by 2015.
Finally, the question of whether nuclear would supplant
coal also arose. Some participants felt that given a price
for carbon, coal would remain a vital part of the energy
matrix, should advancements made in clean coal
technology be made. Others countered that nuclear
Scenarios | Section 3 131
power’s zero carbon technology would certainly be an Endnotes Section 3.2
appealing option to supplant coal-fired generation,
1 US Department of Energy, Energy Information Administration (EIA), International
regardless of advancements in technology. The ever Energy Outlook 2008 (Washington: EIA, 2008).
difficult issue of extremely high up-front costs and long 2 US Department of Energy, Energy Efficiency and Renewable Energy (EERE), “Clean
Energy Investment Exceeds $117 Billion in 2007.” 06 Feb 2008.
time spans to implement nuclear power, however, led 3 “Useful Climate Change Statistics.” United Nations, 2008.
some to caution that nuclear would be a great option in a <http://www.un.org/climatechange/background/usefulstats.shtml>.
4 “Useful Climate Change Statistics.” United Nations, 2008.
carbon-constrained world but that it might not actually 5 “Useful Climate Change Statistics.” United Nations, 2008.
play a large role for decades. 6 World Economic Outlook and Cambridge Energy Research Associates, Energy
Vision Update 2008: Solving the Energy Puzzle Through Innovation. Geneva: 2008.
<http://www.weforum.org/pdf/energy_industry/EnergyVision.pdf>.
7 Christensen, Clayton. “The Need for New Value Networks.” 14 July 2008.
<http://www.egovmonitor.com/node/19762>. See also World Economic Outlook and
Summary of Findings Cambridge Energy Research Associates, Energy Vision Update 2008: Solving the
Energy Puzzle Through Innovation.
8 World Economic Outlook and Cambridge Energy Research Associates, Energy
The Bright Green scenario was clearly one that Vision Update 2008: Solving the Energy Puzzle Through Innovation.
participants felt had the potential to dramatically alter the
path that the world is currently on. Still, many were
skeptical that even concerted action by a wide array of
interest groups would have such a bright effect. Inherent in
the arguments was an uncertainty regarding how effective
and forward-looking policy actually could be in the
absence of a disaster to prompt it. As such, one of the
most important, and also most dispiriting, findings of this
scenario was that policy actions to deal with climate
change will necessarily be weak without the urgency that
is needed to address the issue properly. In fact, even with
the needed urgency, policymakers will still have a difficult
time reconciling national interests and capabilities with
international goals and necessities.

132 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
SECTION FOUR
GLOBAL
TRENDS

Global Trends | Section 4 133

4.1 Drivers of Global Energy
Markets
Introduction
A review of the world’s leading energy information
sources points to a period of substantial transition and
turbulence in the global energy sector. With demand,
supply, and environmental considerations currently
undergoing transformational change, and the world
economy in a recession, the future composition of the
energy system remains highly uncertain. Economic
growth in the developing world is causing an
unprecedented increase in energy demand, with greater
industrialization, urbanization, and population levels
driving much of the exponential growth. However, given
the global economic crisis, emerging markets have
begun to falter, and leading economic indicators in the
U.S., the EU, and China all point downward. Further, the
availability of future supply is even more uncertain;
several leading energy information sources predict
insufficient supply levels. However, as the world
scrambles for solutions to the current energy dilemma,
and environmental concerns rise higher on national
agendas, many countries are likely to maintain recent
Chart 4.1a Marketed Energy Consumption 1990–2030 (Mtoe)
20,000
18,000
OECD
16,000
14,000
12,000
Mtoe
10,000
8,000
6,000
4,000
2,000
0
1990 2000
Source: U.S. Department of Energy
134 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
policy proposals not only to reduce greenhouse gas
emissions and their environmental impacts, but also to
diminish dependence on fossil fuels through the
diversification of energy supplies.
The global financial crisis is likely to exacerbate stress
on energy systems in the near future. Central banks
have flooded capital markets with liquidity, and
coordinated fiscal stimuli are in the works, but
projections of economic distress from the IMF, the
OECD, and the Conference Board are increasingly dire.
The current economic panic has caused, and continues
to cause, fundamental shifts in the energy and
environment landscape for all stakeholders, including
governments, businesses, and investors. The seizing up
of credit markets, the breakdown of the global financial
system, and the economic turmoil that followed have
impelled national policymakers to pursue
unprecedented levels of intervention in the markets.
Slowing global growth, tight credit markets, and falling
commodity prices have forced energy businesses to
postpone planned investments, in some cases
indefinitely. Heightened risk has steered private
investors, previously infatuated with technology-driven
clean-tech opportunities, toward value-oriented
investments. As such, energy policy may focus more on
efficiency and job creation than it has in the past.
Non-OECD
2005 2010 2015 2020 2025 2030
 Energy Demand
Leading energy information sources estimate that global
energy demand will increase significantly in the next 20
years. Projections for total growth in energy demand
through 2030 range from 40% to 57%; annual average
increases are expected to measure from 1.3% to 1.8%.1
Most of the increase in global energy demand will be
driven by developing countries, which will account for
between 60% and 74% of the projected global energy
demand increase (see Chart 4.1a).2
Non-OECD countries are projected to experience faster
growth rates in energy demand relative to the developed
world, though these projections may be tempered by the
financial turmoil. While demand in OECD countries is
projected to increase between 0.6%3 and 0.7%4 on
average per year, the projected average growth in demand
for non-OECD countries ranges from 2.5%5 to 3%6
annually. The International Energy Agency (IEA) and the
U.S. Department of Energy estimate that most of the
growth in demand will occur in Asia,7 which will account
for more than 65% of the total increase in energy
consumption in the developing world.8 China and India
alone are projected to contribute up to 45% of the
increase in global energy demand through 2030.9 The
global financial crisis is likely to exert downward pressure
Chart 4.1b Projected World Energy Demand 1980-2030 (Mtoe)
6,000
5,000
4,000
Oil
Mtoe
3,000
2,000 Coal
Gas
1,000
0
1980 2000
Source: IEA
on near-term growth in energy demand, potentially
resulting in slower long-term growth trends as well.
In the context of this rising energy demand, leading energy
sources estimate that fossil fuels will drive most of the
growth in energy use, with oil and other petroleum
products continuing to comprise the largest share of the
global energy matrix. In light of the financial crisis, however,
the IEA has revised its 2008 projections from those of the
previous year, noting that higher energy prices and slower
economic growth will suppress demand, as seen in Chart
4.1b.10 While fossil fuels today supply 86% of the energy
used in the world,11 some foresee a decrease in their share
of overall energy demand in the medium term. Even so,
fossil fuels are likely to continue to account for the largest
portion of primary energy requirements through the next
four decades.12 Through 2030, they will continue to supply
between 80% and 90% of total commercial energy
needs,13 and they are expected to account for about 80%
of total primary energy demand.14
Oil is expected to remain the single most demanded fuel in
the world in the forecast to 2030, though its share of
global demand will fall from 34% to 30%.15 Estimates for
growth in demand for oil vary from 1.1% to 1.3% annually
during the forecast period. Total demand is expected to
rise from 84 mb/d in 2006 to 113 mb/d in 2030, an
Actual
2007 Projection
2008 Projection
2006 2015 2030
Global Trends | Section 4 135
increase of 34%.16 This projection is down more than 4
mb/d, compared to OPEC’s 2007 projection, a decrease
the organization credits to increases in efficiency and
higher oil prices.17 Transportation will be the principal
driver of oil demand growth in most regions, with its share
of total primary oil use projected to rise from 47% in 2005
to 52% in 2030.18 This, in turn, will likely drive global oil
demand growth by 1% annually to 2030.19
Demand for gas is projected to grow between 1.7% and
2.1% annually through 2030, with imports in Europe
accounting for the biggest increase, at 122%. By the end
of the forecast period, North America and Europe will
account for 30% of all consumption worldwide, as
countries in these regions look to diversify their energy
matrices and decrease their dependence on carbon-
intensive resources.20 The divide between the developed
and developing worlds will remain stark, however, as
natural gas consumption in non-OECD countries will grow
more than twice as fast as in OECD countries. On the
production side, the difference is even more pronounced,
with non-OECD countries accounting for over 90% of
growth in world production of gas through 2030.21
Despite slower growth in energy demand due to the
economic downturn, growth in demand for coal is expected
to remain high at 4.9% per year through 2030. As the
world’s second-most important source of energy next to oil,
coal accounts for 26% of global energy demand.22 While
five countries—the U.S., India, Japan, China, and Russia—
account for 72% of global coal demand, growth in China
and India accounted for 85% of the global increase in coal
from 2000 to 2006.23 Coal will remain the largest source of
power through 2030 and will see the biggest increase in
demand of all fossils fuels, jumping 74%. By that year, coal
is expected to account for about 40% of global power
generation, and its share of total global energy demand is
expected to increase to 29%, from 26% in 2005.24 Coal will
be the fastest-growing energy source worldwide in the near
term, growing 3.1% annually through 2015 on the back of
increasing energy demand from developing countries.
However, as more climate mitigation policies are enacted,
the IEA projects that growth will slow to 1.3% annually to
2030.25 A prime reason for the global demand growth in
coal is China, whose share of global coal consumption will
rise from 39% today to 46% by the end of the forecast
period. In India, it will remain the country’s most important
fuel, with usage nearly tripling from 2005 through 2030.
Together, the two countries will account for 84% of the
increase in coal demand through 2030.26
Population Growth
The United Nations estimates that the world population
will increase by approximately 40% from 2005 to 2050,
136 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
from 6.5 billion individuals to approximately 9.1 billion.27
Most of the increase will occur in the developing world,
where the population is projected to rise by 50%, leading
those regions to account for over 86% of the world’s
population by 2050.28 Much of the population growth in
the developing world will occur in the 50 least-developed
countries, where population is projected to more than
double to 1.7 billion.29 In contrast, the population of
industrialized countries is projected to remain largely
unchanged. Lower fertility rates and increased lifespan,
reflected in a rapidly ageing population, will lead to a
population of about 1.2 billion by 2050.30 However, this
ageing population will not be limited to the developed
world. While the populations in the least-developed
countries will grow considerably, those of the less-
developed countries are projected to experience rapid
population ageing as economic growth leads to improved
standards of living.31 The United Nations notes that half of
the increase in population growth between 2005 and
2050 will be accounted for by those aged 60 years or
older. Despite the increase in world population, global
population growth rate is projected to decrease due to
increasing availability of contraceptives and a rising age
of marriage.32
China and India, which together make up 40% of the
world’s population, will experience diverging population
growth paths. China’s population growth rate is likely to
slow during this period. While the country’s population
has expanded by 136% in the past 50 years, it is
projected to increase by just 7.3 by the year 2050.33
Conversely, India’s population is projected to grow by
approximately 46%, enabling it to become the world’s
most populous country by 2050.34
Economic Growth
Economic growth is perhaps the most crucial factor in
projecting energy demand. The International Energy
Agency estimates that from 1991 to 2001 each percentage
increase in world GDP was accompanied by a 0.4%
increase in energy demand.35 Looking ahead, in the near
term, the IMF has revised its global economic growth
projections to reflect a more protracted global financial
crisis, predicting that growth will moderate from 5.0% in
2007 to 3.8% in 2008 to 3.0% in 2009, as seen in Chart
4.1c. Longer-term projections, however, remain more
optimistic: Annual global economic growth through 2030
is projected to average 3.3% annually, compared to 3.2%
from 1990 through 2006.
The world’s financial anchor, the United States, has
experienced significant economic challenges in the past
year. Long-term economic growth is expected to continue
but at a slower pace, averaging 2.5% annually from 2005
Chart 4.1c Revised World Economic Growth Projections 1991-2013 (%)

6
Projection

4
Percent

0
91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13
19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20

20

20

20

20
July 2008 Projection October 2008 Projection
Source: IMF World Economic Outlook, October 2008

Chart 4.1d Economic Growth in Developed and Developing Economies 1980-2012 (%)

8 Projection

5
Percent

0
80

82

84

86

88

90

92

94

96

98

02

04

06

08

10

12
0
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

Advanced economies Emerging and developing economies

Source: IMF World Economic Outlook, October 2008

Global Trends | Section 4 137

Chart 4.1e Industrial-Sector Delivered Energy Consumption, 2004–2030 (Mtoe)44
5,000
4,500 OECD
Non-OECD
4,000
3,500
3,000
2,500
Mtoe
2,000
1,500
1,000
500
0
2004 2010
Source: U.S. Department of Energy
through 2030, compared to 3.1% from 1980 through
2005.36 The U.S. Department of Energy’s Energy
Information Administration still projects that the country’s
economy will recover by 2009, though it appears to be a
lone voice of optimism among a chorus of more
pessimistic projections.
Both the International Monetary Fund and the United
Nations report that long-term economic growth in
developing economies will be largely sustained despite
the global financial turmoil, due to improved
macroeconomic fundamentals, the growing
interdependence of developing countries with China and
India, and increased domestic demand.37 The IEA
projects that India will overtake China as the world’s
fastest-growing economy around 2020; as a result, India’s
average growth from 2006 through 2030 of 6.4% exceeds
China’s 6.1%.38 As robust economic growth in developing
countries has been a primary driver of the increase in
energy demand over the past decade, the sustained
economic development of developing countries over the
forecast period should support long-term growth in
energy demand, in spite of slower short and medium-
term economic growth projections.
Industrialization
Energy-intensive industrialization has driven much of
the economic growth in developing countries. Attracted
138 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
2015 2020 2025 2030
by lower costs and fewer environmental constraints,
several companies have moved their operations to
developing countries, causing a major shift in
production trends. At the same time, an increase in
international trade has caused a shift among developed
countries toward a less energy-intensive mix of
economic activities, as demand for energy-intensive
materials is increasingly met by imports.39 While
developed economies have moved toward light
manufacturing and services, developing countries have
experienced an increase in the heavy manufacturing
sector.40 This shift has led to a faster growth rate in
industrial-sector energy use in the developing world
relative to that in the developed world.
Industrial sector energy demand for OECD countries is
expected to remain relatively flat in the projected
period, with an increase of 0.6% per year through 2030.
Meanwhile, non-OECD countries are projected to
experience an annual growth rate of between 1.9% and
2.5%.41 Globally, industrial sector energy demand is
projected to grow on average between 1.2% and 1.8%
per year.42 Industrialization in the developing world will
drive much of the increase in global liquids use through
2030, with the industrial sector accounting for 27% of
the increase, behind only the transportation sector,
which will account for 68% of the total projected
increase.43
Chart 4.1f Urban and Rural Populations of the World, 1950–2050
10,000,000,000
9,000,000,000
8,000,000,000
7,000,000,000
6,000,000,000
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
0
1950 1960 1970 1980
Source: United Nations
Urbanization
The year 2007 marked the first in history that more
people in the world lived in cities than in rural areas.
Global urbanization is expected to continue: by 2030,
some five billion people (of a global population of 8.1
billion people) may be living in cities.45 Developing
countries will host the vast majority of urbanites
globally, accounting for perhaps as much as 80% of the
world’s urban population by 2030.46 In order to achieve
this level of urbanization, it is projected that developing
countries will account for 93% of the total urban growth
in the world through 2030.47 Much of the urban
population growth is projected to occur in Asia and
Africa; together, the combined urban population of the
two continents is expected to double, from 1.65 billion
to 3.38 billion.48
The global jump in urban population globally will have
serious implications for energy and environmental
sustainability. The IEA projects that by 2030, 75% of total
global energy use will come from urban areas.49 Urban
population growth is a key driver of environmental
degradation, and increasingly crowded cities are likely to
contribute to air and water pollution and add to solid
waste production.50 The negative environmental effects
of urbanization are likely to continue as countries
develop. Researchers have found that urbanized nations
produce more greenhouse gases for a number of
reasons, including higher standards of living and greater
Urban
Rural
1990 2000 2010 2020 2030 2040 2050
demand for transportation energy and other resources.51
With studies estimating that a threshold of about $20,000
per capita must be reached in any given country for
environmental quality to improve seriously, the fact that
most countries have not yet reached this threshold
indicates that greenhouse gas emissions are likely to
continue their intense growth in the developing world.52
Additionally, increased rates of consumption in urban
areas will lead to added pressure on energy resources,
as demand for motor fuel and electricity generation
continues to grow.53
Transportation Sector
While energy demand from all sectors will increase
significantly due to economic growth and rising incomes,
the transportation sector will fuel the fastest-growing
sector demand. Most sources agree that transportation
will have the most dramatic impact on energy trends
through 2030, as it will be the principal driver of oil
demand in most regions.54 The U.S. Energy Information
Administration estimates that the sector will account for
nearly all the growth in demand for liquids in OECD
countries from 2004 to 2030.55 The same organization
estimates that the United States will account for 54% of
the OECD’s total transportation energy demand in
2030.56 ExxonMobil, however, predicts a much more
modest growth in the country’s fuel demand, due to
projected gains in fuel economy and modest growth in
the country’s total light-duty vehicle fleet.57
Global Trends | Section 4 139
Chart 4.1g OECD and non-OECD Transportation-Sector Delivered Energy Consumption, 2005–2030 (Mtoe)
2,000
OECD
1,800 Non-OECD
1,600
1,400
1,200
Mtoe
1,000
800
600
400
200
0
2005 2010
Source: U.S. Department of Energy
With greater urbanization and higher per capita incomes,
global demand for vehicles is projected to increase.
Estimates as to the number of vehicles on the road in
2030 vary considerably. Low estimates expect the global
base of 700 million vehicles today to grow to as many as
1.2 billion in 2030. Higher estimates put the figures at 900
million today and an expectation of 2.1 billion in 2030.58
Differences in nominal projections aside, experts agree
that two-thirds of the increase in car ownership by 2030
will pertain to developing countries.59 This proliferation of
personal transportation in developing countries—non-
OECD demand will grow about 3% per year, or five times
faster than OECD countries—will drive global
transportation energy use from 2.5% to 2.9% annually
during the forecast period.60
Transportation growth in the developing world will be so
rapid that by 2025, there will be 30% more automobiles on
the roads of developing nations than on those of
industrialized ones.61 China alone is projected to have
between 100 million62 and 140 million private cars by
2020. Current estimates are that more than 1,000 new
cars are added to the country’s vehicle fleet every day.63
Average growth in non-OECD transportation-sector
energy use will be approximately three to five times higher
than the growth rate in OECD countries: about 3% annual
growth rate over the projected period, compared to 0.6%
140 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
2015 2020 2025 2030
in OECD countries.64 Again, China and India are expected
to lead the way and to experience the fastest expansion in
transportation energy in the world, with annual average
growth of 4.9% and 3.3%, respectively.65
Energy Intensity
Energy intensity is defined as the amount of energy
needed to produce one unit of GDP. Projected efficiency
gains are slated to lower average global energy intensity
between 1.6% and 2.3% annually from 2004 to 2030.66
ExxonMobil estimates that while 2.5 barrels of oil
equivalent were necessary to generate $1,000 of
economic output in 1980, gains in efficiency have reduced
energy intensity by 1% per year; in 2030, energy intensity
is projected to be almost 50% below the 1980 level,
increasing a projected average of 1.6% annually.67 The IEA
attributes this decline to structural economic changes in
OECD countries, which are expected to continue to move
away from heavy industry and into light manufacturing and
service activities, as well as economic growth in non-
OECD countries. A noticeable decline in energy intensity
has been especially evident in transition economies, which
have incorporated energy-efficient technologies and
energy waste reduction strategies to contribute to less
energy-intensive economies.68 The U.S. Department of
State notes that, for the first time in history, economic
growth in developing countries has begun to outpace the
growth in energy use, suggesting that less energy is being
used to support more economic and social activity.69 As
faster growth in income generally leads to a faster rate of
decline in energy intensity, economic growth in developing
countries will likely contribute to the future decline in
global energy intensity.70 Despite decreasing energy
intensity, however, projections about higher energy
demand still hold, as economic growth is likely to offset
the decline in energy intensity.
Energy Efficiency
As countries face restricted access to capital, weaker
currencies, larger bailout packages, and declining
employment rates, the concept of “getting more for less”
has never been so attractive. As a climate change
mitigation policy, efficiency has tended to fall by the
wayside in favor of renewable technologies and market-
based reduction mechanism. However, in the current
economic climate, efficiency may feature more prominently;
as countries face restricted access to capital, weaker
currencies, and declining employment rates, the concept of
“getting more for less” is likely to be very attractive. As an
economic policy, efficiency presents a clear way to reduce
fuel costs, which the IEA projects will rise, as restricted
access to capital could stymie efforts to increase supply.
Several countries have already enacted energy-efficiency
policies in an effort to reduce energy demand, and as
suggested above, a protracted economic crisis increases
the likelihood that more will follow. The United States has
recently enacted the Energy Independence and Security
Act, aimed at reducing U.S. dependence on oil by
increasing fuel-economy standards by 40% (35 miles per
gallon) by the year 2020. China, which has set a target of
reducing energy consumption by 20% from 2006 through
2010, recently announced an increase in spending of 78%
on energy-efficiency schemes, which would include
investments in ten energy-saving programs.71 The European
Union has already adopted a series of measures to increase
energy efficiency, including directives on energy
performance of buildings (2002), promotion of combined
generation of heat and electricity (2004), eco-design of
domestic appliances (2005), and energy end-use efficiency
of electricity, gas, heating, and fuels (2006).72 Energy
efficiency became an EU priority in 2007, and several
member states subsequently submitted national energy-
efficiency action plans to a commission responsible for
making new proposals on energy savings scheme in 2008.73
Although big consumer countries have enacted policies
aimed at increasing energy efficiency, in practice there are
several obstacles that limit adoption and implementation.
The World Bank reports that the main obstacles
precluding most countries from investing in energy-
efficiency technologies are inadequate organizational and
institutional systems and lack of access to funding—
trends likely to be exacerbated by the global credit
crunch.74 A recent IEA report also named several market
barriers to energy efficiency technologies in buildings,
which currently are responsible for 40% of the world’s
total primary energy use.75 These included: difficulties in
accessing capital, low priority of energy issues,
information asymmetries, and diverging interests between
investors and energy end-users.76 In other words,
investments in efficiency, though cost-effective, are
investments nonetheless. As such, while the economic
downturn makes improvements to efficiency attractive, it
may slow investments in that area, just as it has in other
energy sectors.
Supply Side Overview
As energy projections point to a continued reliance on
fossil fuels through 2030, a central question remains
regarding the ability of future proven oil reserves to meet
such growing demand adequately. Debate exists over the
size of remaining reserves and future production capacity.
Some analysts argue that investments in new technology
will allow greater accessibility to unknown reserves, as
evidenced by the deepwater technology that led to the
discovery of the offshore Tupi and Jupiter fields in Brazil.
Others point to the decline in output and excess capacity,
the industry’s potential to access promising areas for
development, the inadequate rate and timing of
investment, and technology and infrastructure
development. The IEA argues that although greenfield
investments are expected to increase over the next five
years, it is uncertain whether such expansion will be
sufficient to keep pace with the projected increase in
demand, noting that a supply crunch by 2015 cannot be
ruled out.77 Royal Dutch Shell argues that growth in the
production of easily accessible oil and gas will not match
the projected growth rate in demand by 2015, which will
lead companies to search for fields in more remote and
less easily accessible locations.78
OPEC Supply
Looking ahead, OPEC member states will hold an
increasingly large share of the world’s proven fossil fuel
reserves. This is especially true of countries in the Middle
East, which currently hold about 62% of the world’s
proven oil reserves.79 As shown in Map 4.1.a, the Middle
East is projected to account for the greatest source of oil
exports from 2005 to 2030.80 Simply put, the Middle East
holds the most sustainable production in the world. The
EIA expects OPEC producers to account for 65% of the
increase in production during the projected period,81 and
Global Trends | Section 4 141
more than two-thirds of production in 2030.82 Meanwhile,
OPEC’s share of total global supply for oil will grow from
42% today to 52% in 2030.83 OPEC production is
projected to increase by an annual average growth rate of
between 2.0% and 2.2%.84
OPEC’s share of total global supply
for oil will grow from 42% today to
52% in 2030.
Such growing dependence on OPEC and Middle Eastern
fossil fuels raises the question of security of supply. OPEC
countries have experienced increased political instability,
ranging from attacks on energy facilities in Saudi Arabia
and Nigeria, Iran’s nuclear ambitions, political instability in
Iraq, and resource nationalism in Hugo Chavez’s
Venezuela. Apart from political instability, OPEC countries
have also undertaken a policy of supply restraint, which
some analysts claim partly contributed to higher oil prices
in the past, and may do so again in the future.85
Non-OPEC Supply
Today, non-OPEC countries account for about 56% of
total world oil production.86 Seven of the world’s 15 largest
Map 4.1a Change in Oil Import and Export by Region, 2005–203 (million barrels/day)
Source: National Petroleum Council
142 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
oil producers are non-OPEC countries: Russia, the United
States, China, Mexico, Canada, Norway, and Brazil.87
While non-OPEC production is projected to rise slowly, it
is expected that output growth from Russia, Central Asia,
Latin America, and Africa will be unable to compensate for
the consistent decline in conventional OECD output.88
According to the EIA, production in the North Sea and
Mexico peaked in 2001 and 2004, respectively, having
experienced consistent declines in production ever
since.89 Russia has become one of the world’s biggest oil
producers and exporters, ranking second behind Saudi
Arabia in 2006.90 However, the country’s growth in oil
output has declined considerably, falling from a peak rate
of annual growth rate of 10.9% in 2003 to 2.27% in
2006.91 A Brookings Institution report attributes this
decline to Russia’s overexploitation of Soviet-era oil fields
in Western Siberia and insufficient development of new
fields in Eastern Siberia and Arctic areas.92
The Environment
Countries must begin to regulate emissions aggressively in
order to mitigate the dire effects of global warming—and
must do so quickly. In November of 2008, United Nations
Intergovernmental Panel on Climate Change (IPCC) Chair
Rajendra Pachauri stated, “If there’s no action before 2012,
that’s too late. What we do in the next two to three years
will determine our future. This is the defining moment.”93 In
their 2007 report, the IPCC concluded that climate change
is an “unequivocal” phenomenon caused by human-
induced greenhouse gas emissions.94 If policymakers do
not act quickly, the consequences of global warming will
be myriad and profound. Some of these effects include
rising sea levels, which threaten to engulf coastlines and
low-lying areas; altered agricultural yields and threats to
food security; more severe weather events; the spread of
vector-borne disease; and diminished biodiversity.95 These
consequences are projected to have equally wide-ranging
economic and political effects as well. The Stern Review
estimates that a failure to act will cost the world the
equivalent of between 5-20% of GDP annually in climate
change-induced costs and risks.96 A separate report by
several retired U.S. admirals and generals maintain that
global warming will exacerbate living conditions in
politically volatile countries, posing a threat to national
security.97 The combination of environmental, economic,
and security risks associated with global warming has
compelled many nations to begin to address their
emissions.
“If there’s no action before 2012,
that’s too late. What we do in the
next two to three years will
determine our future. This is the
defining moment.”
— Rajendra Pachauri, IPCC Chairman
Progress, however, has been slow. Recent data released
by the UN’s climate secretariat reveal that the governing
international climate agreement—the Kyoto Protocol—
has had mixed results in mitigating climate change, and
that emissions globally are rising. The Kyoto Protocol,
an amendment to the United Nations Framework
Convention on Climate Change (UNFCCC), requires
participating industrialized countries to reduce
emissions from 1990 levels by an average of 5% from
2008 to 2012. However, the emissions of 40
industrialized countries that have greenhouse gas
reporting obligations under the Convention remained
below the 1990 level by about 5% in 2006, but rose by
2.3% from 2000 to 2006.98 For the smaller group of
industrialized countries that have ratified the Kyoto
Protocol (Annex I countries), emissions were about 17%
below the 1990 baseline in 2006, but still growing after
the year 2000. This initial decrease and recent increase
can be credited to former Soviet nations, which were far
below 1990 baseline emissions levels after economic
collapse, but have been rising steadily and total a 7.4%
rise between 2000 and 2006.99
New Regional Policy Developments
While progress to date has been variable, the next few
years are likely to bring about a sea of change in climate
change policy, heralded by a new administration in the
United States. President Barack Obama has remained firm
in his campaign commitment to reduce greenhouse gas
emissions by 80% by 2050—an aggressive target even by
international standards. There remains uncertainty as to
whether a U.S. domestic cap-and-trade regime will be
enacted through a new law or through the existing 1990
Clean Air Act. There is evidence to suggest that either—or
both—is a politically viable option. A 2007 U.S. Supreme
Court ruling (EPA vs. Massachusetts) allows the U.S.
Environmental Protection Agency (EPA) to regulate carbon
dioxide as a pollutant under the Clean Air act, which could
potentially avoid the possible obstacles in getting a new
climate bill passed through Congress. Even so, with a
Democratic majority in the House and the Senate, a new
climate bill may be enacted through an act of Congress.
Barbara Boxer (D-CA), Chair of the Senate’s Environment
and Public Works committee, has said she will introduce
new legislation to further the President’s goal, and newly-
appointed House Energy and Commerce Chair Henry
Waxman (D-CA) is speculated to be more sympathetic to
the President’s agenda than his predecessor, John Dingell
(D-MI), who has been sympathetic to Detroit automakers.
Any climate change bill would need to pass through these
two committees before it can become law.
While the U.S. may represent the largest global shift in
policy aimed at mitigating climate change, the EU still
leads the world in climate change and emissions reduction
policy. Having pioneered carbon dioxide trading under the
EU’s Emissions Trading Scheme (ETS), the bloc is now in
talks about a successor regime. In March 2007, the EU
endorsed an integrated energy and climate change policy
which set ambitious targets for 2020. Further, the EU has
explicitly stated its aims to increase its security of energy
supply as well as strengthening its global competitiveness.
Key targets of the EU energy policy include cutting
greenhouse gases by 20%, saving 20% of energy
consumption through increased energy efficiency, meeting
20% of energy needs from renewable sources, and
increasing tenfold (to at least 10%) the share of biofuels in
overall petrol and diesel consumption.100 Facing economic
recession, several countries (notably Italy and Poland)
have objected to the emissions caps. However, despite
global economic downturn, the EU has stated it will
continue with its new climate policy as planned.
International Climate Talks Lagging
Global Trends | Section 4 143
Chart 4.1h Change in World Primary Energy Demand in 2030 in 550ppm and 450ppm Scenarios (Mtoe)
1,000
500
Coal Oil
0
-500
Mtoe
-1,000
-1,500
-2,000
-2,500
-3,000
Source: IEA, World Energy Outlook 2008
While regional schemes in the U.S. and EU are moving
forward, international climate talks have stalled. The Kyoto
Protocol—the existing international climate accord—must
be renewed by 2012, when its mandate expires. In
December 2007, UN-sponsored talks in Bali, Indonesia,
launched a two-year negotiation process on a successor
treaty to Kyoto, which would bind both industrialized and
developing countries to reduce greenhouse gas emissions
from 2013 onward.101 Current negotiations have revealed
pronounced differences of opinion between developed
and developing countries over the size and base year of
binding targets, as well as funding for clean energy
technology to poor nations.102 The U.S. remains unlikely to
join an international agreement without China and India,
countries which have some of the highest total emissions
(highest and fifth highest, respectively), but some of the
lowest per-capita emissions (99th and 140th,
respectively).103 China has suggested that developed
nations allocate 1% of their GDP toward green technology,
to be transferred to the developing world. However, given
intellectual property laws in the U.S. and elsewhere, and
given widespread political opposition to this plan, a direct
transfer of technology remains unlikely. As a result, outlook
for the 2009 talks in Copenhagen, Denmark are gloomy.
144 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Gas
Nuclear Other
Hydro Biomass
Renewables
550 Scenario
450 Scenario
Climate change policy will have substantial effects on
energy markets. If total atmospheric carbon dioxide levels
are kept below 550 parts per million (ppm), the IEA
projects that world primary energy demand will expand by
roughly 32% between 2006 and 2030, an average annual
increase of 1.2% compared to 1.6% in the reference
scenario.104 This will induce changes in primary energy
demand, lowering demand for fossil fuels and increasing
demand for renewables. Chart 4.1h shows the change in
demand in Mtoe from the reference scenario in the year
2030. Notably, demand for coal is projected to fall 27%,
whereas demand for nuclear and other renewables will rise
20% and 34%, respectively. Under a more aggressive
global climate regime, targets aim to keep carbon dioxide
from exceeding 450ppm. Under this 450 scenario, world
primary energy demand grows at an average of 0.8% per
year to 2030—half the growth rate in the reference
scenario. Accordingly, changes in demand for different
energy sources are more dramatic, with coal demand
falling 51%, nuclear rising 51%, and renewables rising
95%.105 Thus, global climate change policy will be a
significant driver of energy policy in the near and long-
term, but the extent to which the world primary energy mix
will change depends largely on the aggressiveness of
policies that are enacted worldwide
4.2 Small Hydropower (SHP)
Introduction
Humans have harnessed the power of moving water to
perform work since the Greeks used it for flour milling
more than two thousand years ago, and its ability to
generate electricity helped industrialize and modernize
countries around the world in the late 19th and 20th
centuries.1 Today, hydropower remains the largest
source of renewable power in the world, with 843 GW
installed globally, roughly 770 GW of which comes from
large-scale hydropower installations ranging from tens
or hundreds of megawatts to more than 10 GW. The
remaining 73 GW consists of small hydro installations,
usually classified as facilities with a capacity of 30 MW
or less.2
While large hydropower makes a valuable contribution to
global energy supplies, the large dams and reservoirs
that normally accompany these plants can have
significant social and environmental impacts, including
displacement of affected populations, greenhouse gas
emissions resulting from the buildup of decomposing
plant matter in reservoirs, degradation of aquatic
habitats, and danger to plant and animal life in affected
regions.3 Concern about these effects has caused large
hydropower to be viewed as a less “green” renewable
energy source than smaller-scale renewables like solar,
wind, and the other technologies discussed in this report.
Although this energy source remains of considerable
importance, this report will focus only on small
hydropower (SHP).
SHP Utilization: SHP installations account for
approximately 73 GW of installed capacity worldwide,
although comprehensive data on this segment is quite
limited due to varying definitions over the definition of
“small,” a lack of any distinction between large and
small hydro in many official statistics resources, and
generally inconsistent availability of data for very
small-scale and off-grid applications.7 China is the
world leader in SHP, accounting for roughly two thirds
of all of these installations with 47 GW installed. China
has been developing SHP since the 1970s, and since
2000 it has added an average of more than 2 GW
annually.8 The EU accounted for 12 GW combined,
followed by 3.5 GW in Japan, 3 GW in the US, and 1.9
GW in India.9
In the Latin America and the Caribbean region, we have
identified 2664 MW of projects using data from the World
Energy Council, New Energy Finance, and information
gathered in case studies.10, 11 Over 70% of this was
located in Brazil, with 1.9 GW, and over 90%, or 2.4 GW,
was located in South America, reflecting its greater size
and greater utilization of hydropower in general.
Technology
Description of Technology
Components
As with large hydropower plants, SHP converts the kinetic
energy of moving water into mechanical energy at the
turbine, which is then converted to electricity with a
generator. The turbine and generator are normally located
in a powerhouse.

Defining SHP
The definition of SHP varies from country to country. The European Small Hydropower Association defines it as
installations of 10 MW or less, the US and Brazil include systems of up to 30 MW, and China extends the term to
installations of 50 MW or less.4 In general, SHP plants are distinguished by their lack of large reservoirs. Most
require little or no storage capacity and integrate easily into existing ecosystems. The large majority of SHP
projects are “run of river”, meaning that the turbine only produces power when there is sufficient flow from the
river, with no effect on the natural flow of the river.5

Within the broad category of small hydropower are further distinctions for even smaller installations, generally
referred to as mini-, micro-, and pico- power. Mini-hydro generally refers to systems below 1 MW; micro-hydro to
systems below 100 kW; and pico-hydro to systems less than 5 kW. In general, micro- and pico-scale systems are
used in developing countries to provide power for isolated communities where no grid connections are available,
while mini- and larger-scale SHP systems are usually grid-connected.6

Global Trends | Section 4 145

Chart 4.2a Small Hydro Capacity, LAC Region
2,000
1,800
1,600
1,400
1,200
MW
1,000
800
600
400
200
0
Brazil Peru
(Source: New Energy Finance, World Energy Council, case studies) 12, 13
Water Conveyance: Water is usually first funneled
through a series of channels and pipelines that focus the
flow and remove debris.14 These components can be
constructed from plastic piping, cement, steel, and even
wood. As discussed below, the type of conveyance used
depends on the characteristics of the water resource.
Dams and other diversion structures are rarely used for
SHP projects, and in some cases a river or stream may be
able to support a SHP installation, particularly a smaller
one, with no significant added equipment for
conveyance.15
Turbine: The water flows to a hydraulic turbine, similar to
those used in large hydropower installations, that
converts the water’s kinetic energy into mechanical
energy. Turbines used in SHP projects are normally either
impulse or reaction turbines. The appropriate turbine for a
given site is determined by the characteristics of the
water resource.
• Impulse: Impulse turbines employ the simplest design.16
They are not submerged and use the velocity of a water
jet spraying through the air to turn their rotors. Water is
funneled into a pressurized pipeline with a narrow
nozzle at one end, spraying out of the end and hitting
curved buckets on the runner (the rotating wheel). Water
is thus at atmospheric pressure before hitting the
turbine and discharges back into the open air. There are
several available models, including the Pelton and the
Turgo, and they are simple, low-cost, and easily
maintained.17
146 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Argentina Guatemala Mexico Chile Honduras Ecuador Colombia
• Reaction: In contrast to an impulse turbine, the rotor of a
reaction turbine is completely submerged and enclosed
in a pressure casing, with profiled blades to create ‘lift’
from water pressure in the same way that aircraft wings
generate lift from air flow.18 The reaction turbine is driven
by water pressure instead of velocity, and the blades of
the turbine remain in constant contact with the water.
Reaction turbines are more complex, expensive, and
harder to maintain than impulse models, but they are
also highly efficient and are the only type of turbine
suitable for certain applications.
Generator: Generators convert the mechanical energy of
the turbine into electrical energy. The movement of the
turbine drives a spinning rotor, which generates a
magnetic field that creates an electrical current through
the conducting wiring of the stationary element
surrounding it. As discussed below, generators may be
either synchronous or asynchronous, depending on
whether the system will be grid-connected and the quality
of power required.
While these components are common to all facilities, SHP
systems are highly site-specific and vary in design much
more than large hydro facilities.19 The Resource
Requirements section, below, discusses how different
water resource characteristics can affect conveyance
system design, and the Infrastructure Integration section
discusses ways in which grid connectivity and power
requirements can influence generator choice. Generally,
micro- and pico-scale plants can be designed on a per-
household basis or at the village level and can usually be
installed with manual labor. Mini- and larger-scale SHP
installations often use traditional engineering processes
and require access roads for construction equipment and
materials.20
Performance Characteristics
Capacity: The power produced by a hydropower station is
determined by flow of water (measured in m3/s), and head,
defined as the difference in altitude between the water
intake and the lower water level (in meters). The power
capacity of a given installation is calculated as P = Q
(m3/s) x H (m) x Eff x 9.81, where P is equal to power in
kW, Q is equal to discharge, H is equal to head, Eff is
equal to the generating efficiency of the system, and 9.81
represents the force of gravity.21
While installations as large as 20-30 MW may be
considered small hydropower, the great majority of
projects are between 50 and 500 kW.22
Efficiency: The efficiency with which turbines convert the
kinetic energy of the water to mechanical energy varies by
turbine design, with reaction turbines generally yielding
slightly higher efficiencies. In almost all cases, the turbines
used in SHP applications demonstrate efficiencies between
80% and 90%.23 Generally high conversion efficiencies for
electrical generators result in overall generation efficiencies
that can be approximated at 80%.24
Resource Requirements
Plant output is determined therefore by head and flow. A
given water resource can produce a given amount of
power with either a substantial head and little flow,
commonly referred to as a high-head plant, or with a low
Diagram 4.2a High-Head Scheme
Source: Original graphic based on ESHA 30
head and a high rate of flow, referred to as a low-head
plant. Definitions of “high” and “low” vary, with the cutoff
point for “high” systems placed anywhere between 50
meters and 100 meters.25, 26 High-head systems are
generally found in mountainous regions with smaller
streams, and low-head systems tend to be located on
larger rivers in lowland regions.27
Systems typically include equipment to concentrate the
water flow towards the turbine. High-head plants may
require an intake structure leading to elevated channels
that guide the water to either a pressure pipe or a
penstock similar to large hydropower installations,
although the latter is generally uneconomic given the scale
of SHP plants.28 As an alternative, high-head plants may
convey water via a low-slope canal running alongside the
river, depending on the topology and morphology of the
terrain. Low head plants often rely on weirs and open
water channels to guide the water towards the
powerhouse, although a pressurized pipeline or penstock
may also be necessary. The diagrams below illustrate
possible configurations for high- and low-head systems.29
The type of turbine is also determined by the head and
flow of the site. Impulse turbines are best suited for high-
head, low-flow sites, as they can take advantage of the
falling water’s high velocity. Reaction turbines are generally
used for low-head, high-flow sites to take advantage of
the water pressure provided by steadier flows.32
SHP projects can also be integrated into the operations of
existing water systems, including dams and reservoirs
built for other purposes, irrigation canals, and water
treatment and supply facilities.33 Although economic and
technical viability varies widely by site, these applications
can add a power-generation component with little or no
impact on operations or local environments.
Diagram 4.2b Low-Head Scheme with Penstock
Source: Original graphic based on ESHA31
Global Trends | Section 4 147
Infrastructure Integration
SHP projects are frequently connected to the grid when
available, but can also be used to supply users and small
communities in isolated areas with no grid connection.
Because there is no grid to control the frequency and
voltage of electricity supplies, off-grid installations require
a local load controller.34 A battery bank may also be added
to enhance the reliability of off-grid systems.35
A grid connection offers power even when there is
insufficient water flow, easier control of electrical system
frequency, and the potential to sell electricity to the grid.
However, the grid connection can result in power being
tripped off due to grid blackouts.36
Grid connectivity determines the type of generator
appropriate for a project.37 Synchronous generators are
more expensive and complex, as they can regulate their
own frequency and voltage and can thus provide high-
quality, stable power without a grid connection or work in
conjunction with the grid as required. Asynchronous
generators are simpler and cheaper but require a grid
connection to provide voltage and frequency control,
although they may be used without a grid connection if
high-quality power is not required.
Beyond connecting to the grid, small hydropower plants
also offer the unique potential for integration with existing
water infrastructure, including existing hydropower dams,
reservoirs, irrigation canals, water treatment and supply
facilities.38 By taking advantage of existing waterways,
SHPs can reduce costs as well as minimize environmental
impacts, making these types of projects a key early target
for the sector’s development. Mexico’s Comexhidro has
already developed 52 MW of capacity across three of these
types of projects, and in October 2007 Chile’s Rivers
Commission identified potential for more than the 772 MW
of potential for SHP projects integrated with existing
irrigation channels and dams.39, 40
Environmental Impacts
SHP systems provide a renewable, emission-free source
of electricity that can offer significant emission reductions,
particularly when the power is replacing fossil fuel-based
electricity from the grid. For rural electrification projects,
electricity from SHP systems is far cleaner than power
derived from diesel generators or traditional biomass.41
Because they rarely use dams, SHP plants have few of the
local land and water issues associated with large
hydropower, including negative impacts on wildlife
habitats, fish migration, water flow, and water quality.42
However, even small impacts on local environments should
be considered and addressed during the design phase.
148 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
In particular, certain SHP systems may pose a risk to local
fish populations, depending on the location and
configuration of the system.43 Water conveyance
equipment may divert a stream of as many as several
kilometers to produce gains in head, reducing flow
between the diversion point and the powerhouse and
affecting the spawning, incubation, rearing, and passage
of fish. This issue can usually be addressed by ensuring an
adequate reserved flow that remains in the streambed, or
through the construction of a fish pass based on a wide
range of designs, including weir-and-pool designs, fish
ladders and elevators, pumps, and natural bypasses.
Systems located in mountainous regions that require high
heads generally have more negative impacts than low-
head schemes, which can be more easily integrated into
the natural flow of rivers.
It should be noted that SHP systems can also benefit
local water resources through the removal of waste
materials in the water.44 Grills and filters in the water
conveyance apparatus, called the trashrack, remove
plastic bags, cans, bottles, and other human debris as
well as carcasses, dead plants, and other natural
detritus. Moreover, developers can be enlisted to help
support important environmental initiatives that can
improve project performance and benefit local
communities. As discussed in the Guatemala case
study, Latin American subsidiaries of Italy’s Enel as well
as the Guatemalan firm Hidrosecacao have participated
in reforestation efforts in the areas surrounding their
SHP projects, in an effort to stem erosion that threatens
reliable water flows for the project as well as nearby
communities.45, 46, 47
The integration of well-planned and constructed SHP with
existing hydropower dams, reservoirs, irrigation canals,
water treatment and supply facilities as noted above,
generally offers an opportunity to minimize environmental
impacts.48
Applicability
Resource Evaluation
SHP projects require a careful evaluation of the water
resource being drawn upon, as this will determine the
amount of electricity generated – and hence the economic
viability – of a project. As discussed above, the two critical
characteristics to evaluate are the head and flow of a
potential water resource. A layperson using relatively
simple methods in SHP project guides can normally
assess these factors.49, 50 It should be noted that while
water flows are constant when compared to solar or wind,
they do vary. Flow measurements should be plotted to
show how frequently the flow equals or exceeds values
necessary for the operation of the turbine, permitting an
estimate of the system’s availability over the course of a
year.51 Information on the overall flow of the river and an
evaluation of area catchments can also enhance planning
and influence system design.
Professional surveying techniques can yield more precise
measurements of the head, and local water authorities or
engineers may have data on water flow. Public resources
such as the U.S. Geological Survey, when available, can
provide accessible and accurate information. Another
potentially useful resource is the RETScreen Small Hydro
Project Model, developed by Natural Resources Canada in
collaboration with NASA, UNEP, and GEF. The model is an
innovative software application that can be used free-of-
charge to evaluate the energy production, life-cycle costs,
and emissions reduction for both on- and off-grid small,
mini, and micro-scale hydro.52 The software includes SHP
product as well as hydrology databases that cover a wide
range of manufacturers and regions.
Other Energy Uses
Electricity generation is not the only use for small-scale
hydropower. Small hydropower plants may be built without
an electricity generator to provide mechanical energy for
mills, pumps or other applications. Moreover, local
communities that depend on a river for fishing, washing,
and other water needs will need to be assured that a SHP
system will not interfere with these uses.
Technological Evolutions
The basic turbine technologies for SHP systems are well
established and unlikely to evolve substantially. Their
simplicity allows them to be easily understood and
operated in a wide range of contexts. However, advocates
emphasize that there is room for efficiency improvements
through the testing and design of new models, particularly
for the more complex low-head reaction turbine designs.53
The development of specialized turbine designs for
integration with existing irrigation channels, water supply
systems, and sewage networks is also an area of special
focus.54 In both cases, these new turbine designs are
geared towards micro- and pico-scale generation in
applications with little or no environmental impact.
System efficiencies can also be improved through the
insertion of electronic speed increasers and control systems
between the turbine and the generator. These systems can
synchronize the work of the different system components to
achieve optimal performance without active oversight of the
system.55 State of the art systems can allow operators to
check on the performance of the plant and monitor it
remotely, via computers, PDAs, and even telephones.
Economics
Overall Generation Costs:
Taking into account all costs over the life of a small hydro
project as well as the expected amount of power
generated, grid-connected small hydro projects of 1-10
MW produce electricity at an average estimated cost of 4-
7 U.S. cents per kilowatt-hour. Generating costs increase
as the scale of plants decrease, with off-grid pico-scale
(0.1-1 kW) systems costing an estimated 20-40 cents.
Table 4.2a SHP Generation Costs
SIZE COST
(U.S. cents/kWh)
Grid-Connected
1-10 MW 4-7
Off-Grid
0.1-1 MW 5-10
1-100 kW 7-20
0.1-1 kW 20-40
Source: REN2156
Capital Costs: Because they offer fewer economies of
scale, SHP plants are more expensive per unit of generating
capacity than large hydropower projects.57 However, on a
per kilowatt basis, these systems are usually less expensive
than other renewables. A survey of data on new small hydro
project financings from New Energy Finance reveals a cost
of $1,000-$4,100 per kilowatt of installed capacity across
disclosed financing deals completed between 2005 and
2008, with an average of $2,110 per kilowatt.58
Operating Costs: As with other renewable energy
technologies, most expenses for SHP systems are up-
front investment costs, since the system runs on a free
and renewable resource. Moreover, due to the simplicity of
the technology involved, maintenance costs are expected
to be negligible.59
Socio-Economic Impacts
Rural Electrification: An estimated 50 million households
and 60,000 small enterprises in developing countries are
served by SHP projects at the village level and through local
grids.60 Many of these are micro- and pico-scale systems
that account for a small portion of total SHP capacity but
provide essential electricity services to remote regions that
would have no access to grid electricity otherwise. Rural
electrification with SHP has a number of advantages.
Beyond the environmental benefits from replacing traditional
fuels or diesel generators, the use of electricity for
economically productive applications can provide direct
economic benefits through increased quality of power as
well as greater efficiency and reliability of supplies. In terms
Global Trends | Section 4 149
of both cost and reliability, SHP can be a superior option for
these applications compared to other renewables such as
solar and wind. It should be noted, however, that
hydropower generation is vulnerable to periodic reductions
from droughts, such as those associated with El Niño
events in many areas of Latin America.
This ability of SHP to support a fuller spectrum of rural
economic development than smaller, single-household
systems is powerfully illustrated by the 165-kW Chel micro-
hydro station in Guatemala, a project organized by the NGO
Fundación Solar and supported by a number of Guatemalan
and international stakeholders. The reliable power provided
by the project for this rural, indigenous community in the
country’s war-torn north has helped to increase its number of
small businesses from 10 to 40, including a butcher shop, a
hardware store, an automobile repair shop, and
bookstores.61 As of June 2008, there were also plans to open
a bank, a hotel, and a coffee processing plant. Fundación
Solar has characterized the changes in Chel as the
transformation of “an 18th century Mayan Indian village to a
21st century micro-metropolis,” and reports that a growing
number of communities are studying the potential for similar
projects, including some community groups that had
previously been opposed to hydropower development.62
Local Industrial Development: In addition to the well-
known development benefits of access to electricity, the
growth of SHP has spawned small-scale equipment
manufacturing and installation industries in many
developing countries, including China, India, and Nepal in
Asia and Brazil and Peru in the Americas.63 These
companies are often located in rural regions, an important
focus for development efforts in these countries.
Rural communities also have a greater opportunity to
participate in the construction and maintenance of small
hydro projects than with other technologies, given their
relatively straightforward and well-established technology.
In addition to creating jobs, the use of local labor in these
projects offers the chance to reduce construction and
maintenance costs and ensure ongoing buy-in for the
project from the community.
Outlook
Given its relatively low costs and the region’s long experience
with hydropower, small hydropower has unsurprisingly seen
more development in Latin America than any of the
alternative renewable resources studied in this section.
Although much of this development has come from
preferential prices granted under Brazil’s fully-subscribed
PROINFA feed-in tariff program, small hydro is increasingly
150 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
competitive with grid power without subsidies in many areas
due to rising fossil fuel costs. Brazil and Chile in particular are
expected to see strong growth due to regional gas shortages
as well as renewable policies that encourage the
development of low-cost sources – a new renewable power
auction system in Brazil, and a renewable portfolio standard
in Chile. Costs can be further lowered through integration of
SHP projects with existing waterways for larger hydro
facilities, irrigation canals, or water treatment plants, an
approach which has been successful in Brazil, Mexico, Chile,
Colombia, and other countries. Indeed, Chile alone has
identified 772 MW of untapped potential small hydro projects
of this type, indicating great potential for similar “low hanging
fruit” throughout the region’s hydraulic infrastructure.
In the context of rural electrification, micro-scale hydro
systems are increasingly proving their worth despite initial
skepticism in some areas owing to the problematic past of
larger-scale hydro facilities. While these smaller scale
installations are more expensive than grid-connected
small hydro units of 1 MW or more in size, they produce
power significantly more cheaply and at a larger scale than
either small-scale solar or wind for off-grid communities in
Latin America. Moreover, projects can often be combined
with local environmental initiatives, which can serve to
improve generation performance as well as create jobs
and enhance relations with local communities. Greater
support for the use of small- and micro-hydro in rural
electrification programs could help to expand their
economic development benefits while simultaneously
increasing the use of this widespread renewable resource.
However, despite the benefits associated with the low cost
renewable power provided by SHP systems, they are also
distinctly limited in their ability to address Latin America’s
energy security concerns. Because of their lack of
significant reservoir storage, SHP projects are even more
vulnerable to drought-induced shortages than large hydro
facilities, which have historically been a major concern for
the many hydropower-dependent countries in Latin
America. While increasing the hydropower base is helpful
in some ways because it increases the amount of
electricity generated even during dry seasons, it also
reinforces these systems’ tendency towards severe,
periodic volatility during cyclical El Niño events and other
drought-inducing weather patterns. Given the substantial
regional economic impacts of these periods in the past
and the potential for even greater impacts in the future due
to global climate change, the development of SHP will
likely play only a supporting role in the region’s drive for
long-term energy security.
4.3 Geothermal Power Mexico and Central America, with no geothermal used for
power generation in South America despite periodic
exploration of promising sites since the 1960s. More than
Introduction two thirds of this existing capacity is located in Mexico,
with 960 MW of installed capacity that ranks as the third
Heat emanating from the interior of the Earth is the source largest geothermal generation base in the world. In line with
of geothermal energy, and it is essentially limitless.1 global trends, geothermal generation is growing much
Geothermal is a particularly attractive renewable energy more slowly than wind – while wind has seen 334 MW, or
because it is one of the few that can provide baseload two thirds of its total, built since 2005, only 26.5 MW of
electricity production, and it has a longer track record geothermal capacity has been built over the same period.
than any renewable power technology aside from
hydropower. Unlike most renewable sources, geothermal
generation can operate every hour of the day, regardless Technology
of changing weather.2
Description of Technology
However, despite the unique characteristics of this Components
technology, geothermal power presently provides just 10 Upon locating a geothermal heat source reservoir and
GW of generating capacity worldwide, most of which is assuring its viability, a “hot well” 1-4 kilometers (km) deep
concentrated in Italy, Indonesia, Japan, Mexico, New is drilled into the ground near the epicenter of the reservoir.
Zealand, the Philippines, and the United States.3 While A “cool well” is drilled some distance from the initial well,
geothermal has been established as the most reliable and piping is inserted into both, although the piping does
source of baseload renewable power in these and other not connect the wells. Each well is then used to transfer
countries for decades, limited opportunities for geothermal fluid, which is generally water in various phases
deployment and high risks and up-front costs have also to and from the thermally active subterranean region below.
made it the slowest growing renewable source, growing at
an average of just 2-3% per year. If the temperature and pressure of the hot well are high
enough (over 235ºC), the fluid can spin a turbine-generator
In Latin America and the Caribbean, geothermal power is system and produce electricity. This is referred to as a
not only the most established but it remains the largest vapor-dominated system. If the temperature in the hot well
source of non-hydro renewable power, with 1402 MW of is somewhat lower (150-300ºC), a “flash-steam” system
installed capacity. However, all of this capacity is located in can convert the warm water to steam by reducing the

Chart 4.3a Geothermal Capacity, LAC Region

1,200

1,000

800
MW

600

400

200

0
Mexico Costa Rica El Salvador Nicaragua Guatemala
Source: International Geothermal Association,4 Geothermal Resources Council,5 Polaris Geothermal,6 Business News Americas7

Global Trends | Section 4 151

pressure in the hot well before the fluid is used to spin a
turbine generator. If the hot well temperature is between
100-150ºC, this fluid can be passed through a heat
exchanger with another fluid (such as isopentane) that has
a low boiling temperature. As these two fluids pass each
other in the heat exchanger, the water boils the
neighboring fluid, which in turn spins the turbine-
generator. This process is referred to as a binary-cycle.
Flash-steam and binary-cycle plants are often combined
in series to extract the maximum energy from the
geothermal fluid. These geothermal-electrical systems are
highly modular and can be assembled quickly on an as-
needed basis.8 Systems that generate 0.5–10 MW require
as little as six months to become operational, and plants
of 250 MW and greater need only one to two years.9
Lower-temperature geothermal fluids can also be used for
direct heating, as noted below under Other Energy Uses.
Performance Characteristics
Unlike hydro, wind and solar plants that depend on
renewable resource that vary in availability by season and
by time of day, geothermal plants operate steadily around
the clock as baseload power. This is measured by its load
factor or capacity factor, a measure of the percentage time
a power source operates at maximum output.
Capacity Actual amount of power produced over time
Factor =
Power that would have been produced if turbine
operated at maximum output for 100% of above
time period
Geothermal capacity factors are generally 89-97%,
depending on the type of geothermal system utilized.10
These high values indicate that geothermal plants often
operate at near-maximum electricity output, a favorable
quality for any renewable energy source. Moreover, the
potential for manufacturers to manipulate capacity factors
(as seen in wind energy production) is greatly reduced
because geothermal resources are more consistent than
wind. A manufacturer has no incentive to place a large
geothermal turbine on a small electric generator to raise
the capacity factor value because those same values can
be achieved with appropriately sized turbine-generator
combinations that produce far more electricity.
Finally, one can compare energy sources by the availability
factor, which indicates the robustness of the physical
machinery.
Availability Amount of time unit is able to produce electricity
Factor =
Amount of time in above period
Geothermal plants generally have availabilities of 95%11 or
greater, meaning that the electrical and mechanical
152 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
components within these devices are durable enough to
go without repair for more than 95% of the operational
period analyzed. This value is quite impressive for a
renewable energy technology and well within the range of
conventional power generation technologies.
Resource Requirements
Geothermal energy requires relatively few resources aside
from a reservoir of sufficiently high temperature – which, as
discussed below under Resource Evaluation, can be
difficult to precisely locate. External water requirements are
minimal because the water required is extracted from an
underground reservoir and then returned to the reservoir to
maintain pressure and source longevity.12 As a result,
geothermal plants can operate in areas that have little
water available for cooling a conventional power plant.
In addition, geothermal plants require little land relative to
the power produced and the land usage of other
renewable energy sources. This quality is due to the small
footprint of wells and turbines, the modular quality of
geothermal components, and the absence of feeder fuels.
The U.S. Department of Energy found that geothermal
technology used less land than any other energy source
–fossil fuel or renewable.13 Geothermal plants are
estimated to use approximately 4.04x10-7 km2/MWh, an
order of magnitude less than a coal facility.14
Infrastructure Integration
The infrastructure required for the installation and
operation of geothermal power generators exists in most
regions that can support the oil and gas industry. Vehicles
and other technologies designed for the oil and gas
industry have proven useful in the geothermal sector and
can sometimes be rapidly deployed to explore geothermal
reserves. Still, there are significant differences between oil
and gas exploration techniques and those employed by
geothermal energy, and these differences constitute an
important obstacle.
Road infrastructure requirements are similar to those of oil
and gas, and upgrades to local transit routes may be
necessary in some locations. Geothermal turbines are
heavy and generally need robust transport networks. The
health of onshore power grids is also critical, as
geothermal plants are generally used to provide base-
load, utility-scale power. Remote or distributed generation
options may be possible in some cases.
Environmental Impact
Carbon dioxide is a natural by-product of geothermal
energy and would be released into the atmosphere
whether or not harnessed by a power plant, although
the rate of release would be slower under natural
diffusion.15 Because geothermal processes do not add
to the carbon cycle in the way that burning fossil fuels
does, geothermal energy (including binary-cycle and
flash-steam plants) is considered “net zero” in total
emissions.16
Due to the closed-cycle nature of
geothermal power production,
external water sources are normally
not required.
External water sources are normally not required due to
the closed-cycle nature of geothermal power production.
Well pipes are made of steel or titanium and augmented
with cement enclosures to prevent contamination of
superficial ground water and soil layers, and water
pollution from geothermal plants is highly unlikely.17
It is possible for geothermal resources to be over-
produced. The Geysers field in California, the largest
geothermal development in the world, was shut down in
1989 due to low well pressure. The site was later reopened
when technological advances allowed waste water to be
pumped into the well to increase pressure. Many of the
long-running geothermal power plants in Central America
and Mexico, including Cerro Prieto in Mexico,
Momotombo in Nicaragua, and Ahuachapán and Berlin in
El Salvador, have also needed rehabilitation due to falling
well pressure in recent decades.
Environmentally Sensitive Areas: While the
construction and operation of geothermal plants has a
relatively minimal environmental impact, particularly
relative to the amount of electricity produced from this
footprint, projects may face opposition from local
stakeholders because of the unique environments in
which they are often built. The largest and most easily
exploited geothermal reserves are commonly located in
areas with extreme geologic and/or volcanic activities,
which are home to unique ecosystems and can be
valued as major tourist attractions as well.
For example, Mexico’s state-owned power company
CFE has been interested in developing a geothermal
power plant in the Bosque de la Primavera ecological
reserve for decades, but has yet to gain approval from
the country’s environmental regulator despite reducing
the size of its proposal from 75 MW to 25 MW and
carrying out reforestation projects in the area in recent
years.18, 19 As noted below under Outlook, however,
rising energy costs may increasingly overcome these
concerns.
Applicability
Resource Evaluation
Few technologies exist for the specific task of locating
geothermal reserves. Equipment and techniques transferred
from the oil and gas industry have not been effective in siting
geothermal plants. Initial siting decisions are normally made
based on known geologic activity or observation of vents
that signal possible geothermal energy beneath the surface.
Many of these locations exist along the boundary of the
Pacific Plate underlying the Pacific Ocean, an area of heavy
volcanic activity known as the “Ring of Fire.” This “ring”
includes most of the world’s largest geothermal power
producers, including Japan, Indonesia, and the Philippines
on the western plate boundary and California, Mexico, and
Central America on the east. This area also includes many
Andean countries in South America that have yet to exploit
their geothermal resources for power generation, suggesting
a significant area of expansion for the industry.20
Two considerations are critical once a potential site has
been located. The area should have a copious supply of
water in a network of permeable, interconnected fractures.
This determines whether the geothermal reserve has a
sufficient supply of fluid in an environment that allows both
the pressure build-up and the transport of fluid within it.
Second, the site should have a caprock, or seal, that
prevents thermal-fluid from escaping and cooling
groundwater from entering.21 A caprock mitigates the
inevitable decrease in fluid pressure and minimizes fluid
leaking into or out of the reservoir.
If these criteria are met, an analysis of the reservoir’s
temperature can help determine the site’s potential. The
resource attributes of the reservoir will define the type of
technology to be employed (steam versus binary) and the
overall efficiency of the system.22 As discussed under
costs, the drilling and exploration activities required to
measure these characteristics are expensive and a major
source of the up-front project risks that have slowed the
development of the industry. Once these analyses have
been conducted, the appropriate technology can be
selected based on the criteria noted at the beginning of
this section, and production drilling can commence.
Other Energy Uses
In addition to generating electricity from high temperature
geothermal resources, lower temperature geothermal
energy can also be utilized for various purposes. If the hot-
well temperature is between 35-150ºC, it can be passed
through pipes to various locations that use the water as a
direct source of heat or to heat air in an enclosed area.
Geothermal fluids are often used to heat water for fish
farming, resorts and spas or to heat air for greenhouses,
Global Trends | Section 4 153
buildings, and the drying of crops.23 Although there are no
large-scale geothermal power generating facilities in South
America, direct use of geothermal applications are well-
established in Argentina, Brazil, and other countries.
Technological Evolutions
The high cost of technology has limited projects to the
highest-grade geothermal resources.24 Advances in
exploration, drilling, and power plant design could open
up other resources and eventually reduce costs to
consumers. Existing devices and methods have been
converted from oil and gas exploration, and advances in
the sector will require customized technologies that can,
for example, help avoid costly “dry wells.”25 These
advances must come from either production profits or
external sources such as government credits, both of
which are currently lacking.
Advanced geothermal technology may eventually permit
the capture of magma heat, something infeasible at the
moment.26 Absent that, developers are seeking ever-
increasing temperatures to boost plant efficiency. One
Icelandic project is harnessing the energy found in water
at approximately 450ºC, the highest temperature ever
attempted.27 Water at this temperature exists in a super-
critical, liquid-gas phase but also poses risks to plant
components.
EGS: Another advance in geothermal energy production is
called an Enhanced (or Engineered) Geothermal System
(EGS) or Hot Dry Rock (HDR). This technology injects a
finite quantity of water from an external source to a
subterranean zone that has existing hot (dry) subterranean
structures, essentially creating artificial hydrothermal
reservoir. Feedwater poured into the rocks creates steam
that can spin a turbine-generator. By eliminating the
reliance on naturally-occurring hydrothermal reservoirs,
EGS promises to dramatically expand the universe of
suitable geothermal resource sites.
A recent study by MIT, later confirmed by the U.S.
Department of Energy, estimated that the U.S. alone could
develop 100 GW of EGS projects by 2050, and that there
are no fundamental technological obstacles to this type of
application. However, the development of commercially
competitive EGS plants will require years of testing as well
as substantial reductions in drilling costs. While the MIT
study estimated $1.1-$1.4 billion in combined public and
private sector R&D funding over the next 15 years could
bring EGS costs to competitive levels, DOE found this
finding overly optimistic, although it did not venture an
estimation of its own.28 Moreover, there is concern that
154 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
some EGS plants could also affect neighboring tectonic
structures. A test EGS plant in Switzerland, for example,
was shut down because of concerns that it had induced
earthquakes, though many believe ill-advised drilling and
siting rather than the EGS concept itself was to blame.29
While Brazil is considered to have negligible potential for
geothermal power generation using current technologies,
recent research indicates that the rift basins on the eastern
border of Brazil, primarily around Potiguar, Barreirinhas,
Tacutu, and Taubaté, have high potential for geothermal
production with EGS technologies due to their location as
flow systems on a regional scale, which are linked to the
deep faults found at the flanks of continental rift systems.
They base their extrapolations on the “Soultz Concept,” a
technique that has been used to explore HDR geothermal
resources in Soultz, France. They believe that eastern
Brazil has similar geological characteristics, and thus the
potential for EGS geothermal power.30
Economics
Hopes for the geothermal sector in the 1970s proved
overly optimistic due to the high costs of exploration,
plant installation and operation. Yet the cost of
geothermal power generation has decreased by 25%
over the last two decades, due to increased plant
efficiencies and lower equipment and construction
costs.31 It is believed that these cost declines will help
revitalize the sector as countries seek to improve energy
security and decrease carbon emissions.
Overall Generation Costs: Taking into account all costs
over the life of a geothermal project as well as the
expected amount of power generated, geothermal power
plants produce electricity at an estimated average of 4-7
cents per kilowatt-hour.32 This is roughly on par with the
cost of small hydro facilities, and less than the cost of
wind or solar power, making it competitive with
conventional grid electricity in many cases.
Exploration Costs: Site exploration and preparation
costs far outstrip the costs associated with actually
producing electricity. Exploration technology that is only
marginally effective means that time and money may be
spent on sites with no production value. With more
accurate technology, these costs could be greatly
mitigated, as discussed in the section on Advanced
Geothermal Resource Location technology.
Geothermal drilling environments are far more caustic
than is the case with conventional petroleum drilling.
Geothermal fluids are often located in hard rock zones
and can be quite corrosive. Each geothermal well can
cost $1-4 million and geothermal fields normally have 10-
100 wells.33 “Dry wells” with no production potential are
an extreme risk for developers and investors. Well drilling
can comprise 30-50% of the overall geothermal project
cost, and the fact that these costs cannot be amortized
until the well is operational is a further disincentive for
investors.34
Capital Costs: In addition to exploration costs, capital
costs can vary widely and depend on resource depth,
temperature, and chemistry as well as site location,
accessibility, and weather conditions.35 Even if
subterranean conditions are optimal, surface
meteorological conditions, a lack of road infrastructure,
and elevation of the potential site can all increase capital
costs. The expansion of an existing field will cost less due
to preexisting infrastructure, proven reserves, and
knowledge of the appropriate technology, yet
development of an untapped field may provide a
substantial relative gain.
The size of the project will determine the economies of
scale, particularly as regards labor costs.36 If an
established labor force exists, expanding a plant or
creating a new one may strain the labor supply and
increase labor costs. For these reasons, a detailed cost-
benefit analysis must be performed to determine the most
economically viable approach.
While there have been relatively few new geothermal
projects developed in Latin America in recent years,
disclosed investment figures for the San Jacinto-Tizate
project in Nicaragua and the Amatitlan project in
Guatemala (both financed in 2006) reveal an average
investment of $2,300 per kilowatt – slightly more than the
average for small hydro plants.37
Operating Costs: As with other renewable energy
technologies, most expenses for SHP systems are up-
front investment costs, since the system runs on a free
and renewable resource. Over the long term, however,
plants may need additional wells drilled or plants
rehabilitated to compensate for the gradual loss of steam
from geothermal reservoirs.
Outlook
Globally, the geothermal power sector is expected to
expand considerably in the coming years due to its unique
ability to provide baseload renewable electricity at
relatively low costs. High energy prices may also help to
reduce hurdles to geothermal development in
environmentally and/or aesthetically-sensitive areas, as in
Costa Rica where the Congress is considering a bill that
would open up areas of its national park system for
geothermal development.38 Moreover, there are many
undeveloped geothermal sites surveyed in previous
decades that have become viable only recently due to
rising power prices as well as incremental technological
improvements that allow newer plants to take advantage
of lower-temperature sources.39
At the same time, the universe of suitable geothermal sites
remains relatively limited compared to wind or small hydro
resources, and this factor along with higher up-front
exploration risks make it likely that the use of this resource
will grow at a slower pace than other renewable power
technologies. While the emergence of EGS power plants
could dramatically expand the map of potential sites and
increase the pace of geothermal development, these types
of applications are estimated to be at least 15 years away
from being commercially competitive.40
Geothermal power in Central
America and Mexico is continuing
to expand slowly but steadily,
with planned expansions to
geothermal capacity in countries
including Mexico, Guatemala,
and Nicaragua.
In line with these global trends, geothermal power in
Central America and Mexico is continuing to expand
slowly but steadily, with planned expansions to
geothermal capacity in countries including Mexico,
Guatemala, and Nicaragua. Growth in Nicaragua is
expected to increase significantly due to its recently-
passed minimum tariff for geothermal projects, which
has already encouraged one private sector developer
to go ahead with major planned expansions of an
existing field.
Perhaps more significantly, there has been a renewed
drive towards developing South America’s geothermal
potential, particularly in Chile, where rich geothermal
resources in the country’s north coincide with the
country’s huge and energy-thirsty mining industry. Under
the country’s recently-developed system for
concessioning geothermal resources, a consortium
including Italy’s Enel, Chile’s state oil company ENAP, and
the Chilean copper-producing giant CODELCO were
granted the first geothermal exploration license to drill at a
site near the El Tatio geysers.
Global Trends | Section 4 155
If built, the El Tatio project would be the first major
geothermal power generation project in South America,
potentially inaugurating a wave of new interest in
developing this resource. Given South America’s
vulnerability to drought-induced regional power shortages
due to its dependence on hydropower, geothermal’s ability
to produce extremely reliable baseload renewable power
would have particular value to enhancing the region’s
energy security. However, much of the exploration as well
as the development of this resource throughout Latin
America to date has been supported by financing and
technical assistance from multilateral and international
sources such as the UN, the World Bank, IADB, and the
U.S., Italian, and Japanese governments. Due to the
persistence of high up-front costs and exploration risks
with current technologies, similar support will likely be
necessary to spur the development of a sizeable
geothermal power base in South America. The World Bank
Geofund program, initiated in November 2006, is an
international program that offers a range of instruments to
reduce information barriers and geological risks, but it is
presently only offering support to Europe and Central
Asia.41

156 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
4.4 Wind
Introduction
After approximately three decades of commercial
experience, the wind turbine industry is now growing at an
unprecedented rate due to the maturity of the technology
and strong interest from international customers, investors,
and advocates. Wind power has become the largest source
of non-hydro renewable power generation worldwide in
terms of capacity, with an estimated 95 GW installed at the
start of 2008. This total includes 21 GW added in 2007
alone, more than any other technology. More than 50 GW
of this is installed in Europe, led by Germany, Spain, and
Denmark, and most of the rest is located in the U.S., China,
and India. Globally, wind capacity grew at an average
annual rate of 25% between 2002 and 2006, more than any
other renewable power technology other than solar, and
capacity is expected to continue with double-digit growth
through 2012, adding annual quantities that will steadily
increase to 36 GW in 2012.1
Wind power has been deployed in at least 10 countries in
Latin America and the Caribbean, although it is at a very
early stage of development in most. 506 MW of wind
power capacity was identified in the region using data
from OLADE, the Global Wind Energy Council (GWEC),
New Energy Finance, and the Latin American Wind Energy
Association. Of this 506 MW, Brazil accounts for nearly
half, with 249 MW, followed by 85 MW in Mexico, 74 MW
Chart 4.4a Global Wind Power Capacity 1996-2007
100,000
90,000
80,000
70,000
60,000
MW
50,000
40,000
30,000
20,000
10,000
0
1996 1997 1998 1999
Source: Global Wind Energy Council2
in Costa Rica, and less than 30 MW each in Argentina,
Chile, Colombia, Cuba, Ecuador, Jamaica, and Peru.
This section begins with an explanation of the
technology components involved in wind energy
production and how electricity is produced utilizing
wind. A follow-on investigation of wind energy
performance characteristics explains how and when
wind energy technologies can be compared to one
another and other technologies. There follows a brief
discussion of land use issues related to wind power
including land usage requirements, road and electrical
infrastructure integration, and the environmental impacts
of wind power generation. Finally, this section covers
the critical and complicated issue of wind energy
economics. Advances in wind technology are reducing
costs, yet the technology still requires incentives in
most cases in order to compete with conventional
power sources.
Technology
Description of Technology
Components
The most common and effective method of generating
electrical power from wind energy is via a turbine-based
generator. The device has three principal components: a
bladed rotor, an electric generator, and a housing platform.
In its simplest form, wind energy is produced when wind
passes the blades of the rotor, creating lift. As these blades
2000 2001 2002 2003 2004 2005 2006 2007
Annual Cumulative
Global Trends | Section 4 157
Chart 4.4b Wind Capacity, LAC Region
300
250
200
150
MW
100
50
0
Brazil Mexico Costa Rica
Source: GWEC, OLADE, LAWEA, NEF 3, 4, 5, 6
experience lift, they rotate around the hub of the rotor that is
connected to a drive shaft. This drive shaft rotates within
the electric generator, causing electromagnetic variations
and producing electricity. The electricity is modified by
various devices to match the characteristics of the local
power grid, after which this corrected electricity is sent to
the grid for consumption. It is important to note that wind
energy can only be considered a supplemental electricity
source, largely due to wind intermittency. Additionally, there
are technical and seasonal limitations discussed later in this
report that preclude wind energy from providing base-load
power to consumers. For these reasons, wind energy
should only be considered as one part of a comprehensive
national energy portfolio.
The above power-generation process can be performed by
wind turbines assembled in either a vertical or horizontal
manner, and each configuration has certain advantages and
disadvantages. The horizontal axis wind turbine (HAWTs)
aligns the axis of the rotor parallel to the flow of wind.
Advantages of this design include increased efficiency, as
well as flexibility in placing the turbine various distances
above the ground. Yet the turbine must be rotated constantly
into an optimal wind orientation, and maintenance must be
performed at the top of the turbine tower, generally 50
meters above the ground. Virtually all utility-scale wind farms
use these horizontal-axis turbines.
Within the HAWT class are “upwind” turbines that have
the rotor in front of the tower in the wind stream, and
158 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Argentina Jamaica Chile Colombia Cuba Ecuador Peru
“downwind” turbines that have the rotor behind the tower.
With the rotor facing into the wind stream, upwind turbines
do not encounter the “wind shadow” of the tower that
affects downwind turbines. Additionally, the upwind
configuration reduces blade fatigue that can be caused by
the tower in a downwind configuration. For these reasons,
the upwind configuration is commercially preferred.
The upwind, HAWT configuration is perhaps most
appropriate in locations where wind direction is consistent
and wind speeds are greater at distances farther above
ground level. These environments also provide the most
likely locations for profitable wind power generation.
Thus, the remainder of this section will focus on the
utilization of upwind, horizontal axis wind turbines. This
section will also focus on onshore installations as opposed
to offshore due to the maturity of the onshore sector
versus the still-emerging nature of the offshore sector.
Significant differences in the two installation types will be
noted where necessary.
In contrast to HAWTs, vertical axis wind turbine (VAWTs)
can capture wind from any direction without the need to
rotate into an optimal, wind-harnessing position.
Additionally, this design allows all power production
equipment (generators and inverters, for example) to be
located at the base of the tower for ease of maintenance.
Disadvantages to this design include lower efficiencies
relative to horizontal axis wind turbines. In addition, rotor
replacement generally requires the entire machine to be
laid on its side. This configuration is recommended for
locations that have highly variable wind direction, such as
within cities, and it is being used in a growing number of
small-scale turbine designs.
Performance Characteristics
Relative to many energy sources in use, wind turbines are
quite efficient. A theoretical principle known as the Betz
Limit states that any wind turbine can achieve a maximum
of 60% efficiency. With this goal in mind, turbine
manufacturers utilize advanced materials and design
techniques to mitigate efficiency losses caused by friction
and turbulence. Each turbine is optimized to operate
within a range of site-specific wind speeds. This
optimization requires customizing the tower, rotor sizes,
and generator components to most effectively capture
wind energy at that location. For this reason, it is difficult
to discuss the efficiency of the technology as a whole, and
one should question the “listed” efficiency ratings
sometimes provided by manufacturers. The measure of
efficiency in the wind turbine industry is the power
coefficient which is the electrical power output of the
turbine divided by the wind energy input.
Power Electrical Power Output
Coefficient =
Wind Energy Input
The power coefficient is generally in the range of 20-45%
though this heavily depends on turbine design as well as
individual wind speeds.7 For this reason, it is difficult to
discuss the efficiency of the technology as a whole and
one should question the “listed” efficiency ratings or
power coefficients sometimes provided by manufacturers.
Capacity factors are an alternative measurement of
relative energy production. These factors divide the actual
quantity of energy produced by the theoretical amount of
energy the device could produce if working at maximum
output for a given time frame.
Capacity Actual amount of power produced over time
Factor =
Power that would have been produced if turbine
operated at maximum output for 100% of above
time period
The percentage of time the device is operating at
maximum power output is an alternative way to
understand the capacity factor. A well designed wind
turbine generally achieves a capacity factor of 25-40%,
although higher values are possible during windy periods.8
Two caveats are important in employing capacity factors.
First, a poorly designed turbine with an overly large rotor
and small generator would yield a significantly higher
capacity factor because the generator would be operating
at its maximum output for greater percentages of time,
even though the quantity of electricity produced may be
quite small. A turbine optimized for maximum electricity
production, as opposed to maximum capacity factor, will
utilize the appropriate rotor and generator sizes to meet an
electricity production goal, even if this produces a low
capacity factor. Optimizing a turbine for maximum
electricity production also minimizes cost per kWh. A
notably high capacity factor may suggest a non-optimal
turbine design and therefore inflated costs.
Second, capacity factor measures the average power
produced over time compared to a theoretical baseline.
A lower capacity factor is due to the wind turbine
producing energy for long periods of time, but at less than
full capacity. For example, wind turbines in the
Midwestern region of the United States are known to
produce electricity for 60-90% of a given time period, yet
in that period they are not producing electricity at
maximum output.
A third form of power plant evaluation is “availability,” a
measure of mechanical reliability. The greater the
availability, the greater percentage of time the power plant
is ready to produce electricity. After years of field
experience and advances in materials science, wind energy
is considered to have an availability of 98%—significantly
higher than most other forms of power production.9
Resource Requirements
Though the footprint of a single wind turbine tower is
relatively small, community power consumption
requirements can require a large wind farm. A tower base
is generally less than 4.3 meters in diameter, largely
constrained by road-access limitations.10 However,
utility-scale wind farms in flat, open terrain require
approximately 0.24 square kilometers per megawatt
(km2/MW), and in ridgeline locations, less than 0.04
km2/MW.11 Thus, a reasonably sized wind farm of 20 MW
in an open area will require roughly 4.85 km2 of land.
Offshore installations have an area requirement on the
order of 0.12 km2/MW.12)
Wind farms can accommodate other land uses, one of
their principal advantages. Generally, only 5% (or less) of
the wind farm land area contains wind turbines, access
roads, or other required equipment,13 allowing the
remaining area to be used for raising livestock, agricultural
farming, and other uses.
Infrastructure Integration
Perhaps the two greatest infrastructure concerns are
equipment transport and electrical grid integration. Roads
Global Trends | Section 4 159
must be wide, durable, and obstacle-free to convey
components as long as 150 meters with a combined
weight of approximately 200 metric tons. Considered
together with the addition of unwieldy installation
equipment, these prerequisites can present a formidable
challenge to the transport infrastructure of a location.
Helicopter transfer and installation is an alternative to
ground transport, although this is generally quite
expensive and adds schedule and physical risks. Road
infrastructure will need to meet transportation and
installation equipment load and dimension requirements or
the road will need improvement.
Much of the transport infrastructure already exists for
offshore turbine installation in the form of deep sea drilling
and service vessels. As with onshore helicopter transport,
extra care must be taken when developing construction
schedules for offshore installations to accommodate
seasonal weather disruptions.
Unlike geothermal power’s
constant generation, wind power is
intermittent and cannot be used as
a baseload power source.
Integrating a wind turbine into the existing power grid
is relatively straight-forward in a technical sense. Due to
advances in modular electrical devices, most turbine
manufacturers have situated all necessary grid-interface
equipment within the turbine super-structure, either in the
nacelle or within the base of the tower. The nacelle is a
large room located on top of the wind turbine tower that
houses the majority of the wind turbine equipment. This
equipment can be configured to allow integration of wind
turbines into existing grids almost anywhere in the world.
Thus, many turbines are grid-ready upon completion of
construction and testing.
A benefit of wind-based energy is its ability to operate
either on or off the grid. On the grid, wind turbine units
can provide electricity that would otherwise be
generated by fossil fuels. This added capacity can
reduce the need to run conventional power generation
facilities, reducing dependence on costly fossil fuels as
well as hydropower reservoir levels and improving price
stability and energy security in the process. However,
unlike geothermal power’s constant generation, wind
power is intermittent and cannot be used as baseload
power source. Thus, wind generation will need to be
backed up by gas turbines or other fossil fuel
generators capable of ramping up and down to match
peaks and valleys in wind generation. The uses of
160 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
various forms of wind power storage to ameliorate this
dependence on fossil fuel backup, including batteries,
flywheels, and pumped hydro storage, are being
explored, but these are not currently considered
economically viable.
Off-grid or distributed generation can also satisfy a
significant amount of the electricity required by small
off-grid communities, though wind generation would
most likely require additional power storage
infrastructure here as well (e.g., batteries and backup
generators). It is estimated that in the United States,
one megawatt can satisfy the electricity requirements of
230 to 300 homes.14 Though most off-grid wind turbines
generally operate in the 1-10 kW range, a series of wind
turbines at this rating could be appropriate for rural,
utility-isolated communities. As discussed below, a lack
of scale increases the generating costs of these small-
scale turbines compared to multi-megawatt units, but
their costs are generally lower than solar photovoltaics,
and unlike solar wind energy can generate electricity
during nighttime hours.
Environmental Impact
The environmental impact of wind-based power
generation is benign relative to other available options.
It produces no emissions during generation and
relatively low emissions during manufacture and
construction.15 The climate change mitigation effects are
also significant. By the end of 2006, installed wind
energy in Europe reduced CO2 emissions by 80 million
metric tons per year.16 Many observers consider wind
energy to be one of the “cleanest” forms of electricity
generation.
As with all generation technologies, however, there are
environmentally negative impacts to be considered. The
European Commission ExternE project found that wind
power had some environmental and social impacts
including noise pollution, the visual intrusion of turbines
and associated equipment, accidents to workers and
the general public during manufacturing, operation, and
construction, and emission release during material
processing and component manufacturing.17 Lesser
impacts include the danger posed to birds, construction
effects on terrestrial ecosystems, and radio
interference.18 Mitigation policies and equipment
currently exist and are employed to help ensure that
wind power is made as environmentally and socially
benign as possible. One example of such efforts is the
2006 British Wind Energy Association recommendation
that no offshore wind turbine be built within five
kilometers of the shore, significantly reducing noise and
visual intrusion.19
 Applicability
Resource Evaluation
There are a number of aspects to consider before
installing wind-based electricity production, with perhaps
the two greatest being resource supply and product
demand. Detailed analyses and measurements must be
conducted to determine if wind energy is viable in the
selected area. Continental wind maps, such as those
produced by the United Nations Solar and Wind Energy
Resource Assessment (SWERA), can provide first-order
evaluations of potential wind-power generation locations.
These maps present data collected from various sources
and integrate the data graphically.
Of particular interest to wind developers is wind-power
density, measured in Watts per square meter (W/m2).
This measurement indicates the amount of wind energy
available for turbine capture and conversion. In general,
wind-turbine installation is considered viable when the
density is at least 400 W/m2 at 30 meters above
ground.20 This threshold correlates to a wind speed
greater than 7 m/s at 50 meters above ground.21
Once these basic appraisals are conducted, additional
site-specific wind flow calculations and terrain analyses
will be required to more accurately estimate the potential.
There are a number of crucial variables in wind generation
that must be considered during this phase. In particular,
the site-specific analyses should investigate the seasonal
and yearly wind variation, as well as the height and
surface roughness of the location.22 A thorough
understanding of historical wind fluctuations and
prevailing wind flow patterns can help determine whether
a site is capable of generating enough power over the
long term to achieve economic viability.
Offshore wind-power generation is also increasingly being
considered in many areas. Ten kilometers from shore, wind
speeds are roughly one meter per second higher.23 This
difference is particularly significant because wind power is
based on the cube of the wind speed. Additionally, much of
the wind turbulence caused by onshore terrain does not exist
over water, reducing stress on the turbine and permitting
longer life cycles. However, this potential must be balanced
against the stresses caused by wind/wave interaction and
more severe weather exposure, and the much higher
construction costs that accompany these challenges.
Other Energy Uses
Wind turbines can harness energy for uses besides
electrical generation. For example, wind turbines can be
coupled with hydraulic pumps to propel water back into a
reservoir for later irrigation use by local farmers or greater
electricity production by a hydropower facility. Turbines
can also be used to draw water from wells for domestic
and industrial water resources.
Technological Evolutions
There are a number of developments in wind-based power
generation that are expected to make the technology more
effective and economically competitive with other power
sources. One area under investigation is turbine
modification. Turbine developers are constantly seeking to
improve rotor blade performance by drawing upon
aerospace industry research. Aerodynamic devices such as
vortex generators and the use of lighter yet stronger
materials allow manufacturers to increase the overall scale
and power output of wind turbines. Larger wind turbines
yield more power with fewer turbines,24 and may lead the
industry toward the development of offshore wind farms.25
For offshore applications, the absence of noise regulations
will allow the deployment of generators in the 3-5 MW
range, reducing needed area while producing more
electricity. Advances in deep-water siting, specifically
foundation construction and transmission efficiency, will
allow developers to take advantage of the higher wind
speeds and reduced turbulence farther from shore.
Finally, concepts such as floating turbines are now being
developed for commercial use.
In addition to turbine structural modifications, advances in
wind resource monitoring and modeling will be critical.
Innovative wind mapping techniques such as the satellite
mapping conducted by the SWERA project will help locate
potential wind sources and site turbines quickly and
accurately. Additionally, advances in computational fluid
dynamics (CFD) will allow better modeling of wind flow
across rotor blades and wind and wave interaction with
turbine towers.
The industry is also aggressively developing low wind-
speed turbine technologies through improved, large
rotors and towers as well as more efficient electro-
mechanical conversion devices, such as generators.
Electrical components must effectively harness the little
mechanical energy available in low wind-speed areas,
particularly in off-grid locations.
LAC R&D: The adaptation of existing turbine designs to
the fierce conditions of Latin America’s best wind power
sites may offer one of the best opportunities for local
renewable energy R&D in the region. Presently, there is
burgeoning interest in public and private wind power
research initiatives in both Mexico and Argentina, where
Global Trends | Section 4 161
Oaxaca and Southern Patagonia respectively feature
some of the strongest, harshest wind regimes in the world.
Because these winds pose both an enormous generation
opportunity and a major operating challenge to many
turbines, research in both countries has been undertaken
to facilitate the testing and modification of existing wind
turbine designs to withstand these conditions. Argentina’s
IMPSA is already producing turbines targeted towards the
Brazilian market, and Argentina’s INVAP and the UNDP-
funded CERTE research center in Mexico have also
embarked on longer-term projects to produce original
turbine designs for high-speed winds.
Economics
The cost of wind energy has decreased tremendously over
the past three decades, which along with wind power’s
relatively short construction time has fueled its tremendous
growth over the past four years. Like most renewable
energy sources, the majority of costs for wind power are
incurred during the design and construction phases and
drop precipitously once facilities are operational.
Overall Generation Costs: Taking into account all costs
over the life of a wind project as well as the expected
amount of power generated, onshore wind power plants
produce electricity at an estimated average of 5-8 cents
per kilowatt-hour.26 This represents a decrease from
estimated costs of more than 80 cents per kilowatt-hour
in 1980, although decreases in costs have slowed in the
past decade.27 This is slightly more expensive than
average generating costs for small hydro or geothermal
power of 4-7 cents per kilowatt-hour, but substantially
cheaper than solar power, which can range from 20-80
cents per kilowatt-hour.
While this may still be competitive with conventional grid
sources in a growing number of areas thanks to rising
fossil fuel costs, most countries that have deployed
substantial quantities of wind power have had to provide
policy incentives for its deployment, such as feed-in tariffs
in Europe and tax credits and state renewable portfolio
standards (RPS) in the U.S. In Latin America and the
Caribbean, nearly half of the region’s operational wind
power capacity and most of its capacity under
construction has been developed under Brazil’s PROINFA
feed-in tariff program.
Offshore Wind: Due the substantial drilling, construction,
and cable installation costs incurred for offshore wind
installations, generation from these facilities is
substantially higher, at an estimated 8-12 cents per
kilowatt-hour.28 However, future offshore generation costs
162 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
may drop significantly (~40% by 2020) relative to onshore
(20-25% by 2020) due to the decrease in offshore
electrical interconnection costs and the construction of
larger turbines.29
Small-Scale Turbines: Finally, while there is little data
available on the performance of emerging small-scale
wind turbines, it is estimated that they have generating
costs of 15-35 cents per kilowatt-hour, with higher costs
reflecting their lack of economies of scale.30
Capital Costs: The main capital costs are manufacturing
and installation of the wind turbine. The table below shows
the wind turbine itself comprising 74-82% of the total cost
of surveyed onshore wind projects in Europe. Grid
connection costs and foundation construction costs are
significantly smaller, although these can comprise a
significantly higher proportion of costs for offshore
installations.
Table 4.4a Cost Structure for a Typical Medium-Sized
Wind Turbine (850 kW-1.5 MW)
Cost Component Share of Total Cost (%)
Turbine 74-82
Foundation 1-6
Electric installation 1-9
Grid connection 2-9
Consultancy 1-3
Land 1-3
Financial costs 1-5
Road construction 1-5
Source: EWEA 31
It is important to note that installation costs are highly site-
specific, which can limit the utility of cost comparisons
between projects. However, for the sake of comparison,
data from New Energy Finance on wind power project
financings in Latin America and the Caribbean since 2005
reveals an average cost of $2,400 per kilowatt of installed
capacity. Costs ranged significantly between projects, from
$1,300 per kilowatt for Mexico’s state-developed La Venta II
project to $4,300 per kilowatt for a 2.4 MW plant built in the
environmentally sensitive Galapagos Islands by international
donors and the Ecuadorian government. This is slightly
more than both small hydro ($2,200) and geothermal
($2,300) costs per kilowatt, and the greater intermittency of
wind resources means significantly less electricity
generated per kilowatt installed.
Operating Costs: Operation and Maintenance (O&M)
costs are traditionally low for wind plants. Turbines are
generally designed to operate for 120,000 hours over a
20-year lifespan and have annual O&M costs of roughly
US$10 per megawatt-hour (MWh).32 Turbines normally
require servicing and inspection once every six months.33 If
individual components fail within the turbine, the turbine
operator can choose to replace the rotor blades, gearbox,
or generator at a cost on the order of 15-20% of original
turbine cost per component.34
Outlook
Wind energy is expected to continue growing at a torrid
pace globally due to the ongoing convergence of
economic as well as policy drivers in key markets. Despite
its intermittency and slightly higher costs, wind power is
growing faster than small hydro or geothermal due to a
much larger universe of potential sites, faster construction
times, and more robust policy support than these relatively
more-established alternatives in many countries. As
offshore installations become more technically and
economically viable, the resource will be utilized at an
even greater rate. Use of offshore resources will also
encourage the research, development, and
commercialization of increasingly larger wind turbines that
can take advantage of unrestricted energy production and
generate more electricity. Small-scale wind turbines are
also expected to proliferate as more small businesses and
homeowners in developed areas as well as rural
communities seek to harness strong local winds for
distributed generation.
This global trend is certainly reflected in Latin America,
which has seen the fastest growth in wind power in recent
years of all non-hydro renewable sources, with 334 MW, or
two thirds of its total cumulative capacity, built since 2005,
compared to only 26.5 MW of geothermal capacity that
has been brought online over this period. However, most
of this new capacity has been built in Brazil due to the
generous feed-in tariffs offered under the PROINFA
program, a uniquely effective incentive in the region that
became fully subscribed this year and thus discontinued
as a source of incentives for future projects.
Because wind power facilities are not as cost-competitive
on average as small hydro or geothermal power, their
development is more sensitive to the existence of
appropriate policy incentives. However, while most of the
world’s wind power to date has been built in European
countries such as Germany, Spain, and Denmark that have
used generous feed-in tariffs to spur its development, the
fastest growing wind power markets in the world in recent
years have been in the relatively lightly-subsidized U.S. and
China, suggesting that the need for incentives is declining
given rising demand and higher electricity prices. At the
same time, rising wind power costs due to accelerating
global turbine demand will at least partially offset these
trends, further underscoring the importance of incentives.
Given the fact that Brazil has just discontinued the most
proven incentive program for wind power in the region, the
sector’s immediate growth prospects face some
uncertainty. While a growing number of countries in Latin
America and the Caribbean have recently enacted
incentives likely to benefit wind projects, including Chile,
Guatemala, Honduras, and the Dominican Republic, they
are still too new to have had a major impact, and none
offer the guaranteed income streams created by Brazil’s
PROINFA in Brazil. Moreover, the development of wind
power by the private sector is limited by failed or partial
reforms in Argentina and Mexico, respectively, both of
which could be regional leaders in wind development
given their world-class wind resources.
Wind power is already cheaper
than retail power prices for major
commercial and/or industrial users
in many countries, leading large
private sector companies to build
or contract directly with wind farms
in Mexico, Chile, and Argentina.
Despite these questions over whether the region’s policy
frameworks will be sufficient to encourage the widespread
deployment of wind power in the near term, as wind
power becomes increasingly competitive with
conventional generation sources these incentives will
become less necessary. Indeed, wind power is already
cheaper than retail power prices for major commercial
and/or industrial users in many countries, leading large
private sector companies to build or contract directly with
wind farms in Mexico, Chile, and Argentina. While the
intermittency of wind power makes it ill suited to supply all
of a firm’s power, the diversification of its power
purchasing portfolio with renewables can help hedge
against rising fossil fuel prices, and the ability of wind
power to be built quickly and at a wide range of scales
and locales often makes it better suited for these
commercial and industrial users than small hydro or
geothermal power.
In Mexico and Argentina in particular, the growing interest
by the private sector in developing its own wind power
powerfully illustrates the way in which renewable
generation developed by decentralized private sector
actors is well positioned to address failures of poorly
regulated, centralized power systems. As discussed in the
section on Electricity Market Structures, this trend echoes
the way in which the emergence of gas turbines built by
Global Trends | Section 4 163
relatively small independent power producers (IPPs) shook
up existing regulated utility paradigms in the 1980s and
1990s. As the least expensive and most widely deployed
by far of the newly emerging renewable energy
technologies of wind, solar, and marine power, the
success or failure of wind will play a major role in
determining whether renewable power ushers in a similar
paradigm change in the 21st century.

164 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
4.5 Solar Power
Introduction
The sun is ultimately the source of most of the renewable
and non-renewable energy on the planet (with the
exception of geothermal power), with an estimated
potential to generate 15,000 times more energy than
current global energy consumption.1 The challenge to
utilizing this potentially limitless resource is capturing the
solar energy efficiently at a competitive cost, as solar cells
presently produce power at a much higher cost per
kilowatt-hour than other renewable sources.
Because of its high costs, virtually all of the grid-
connected solar power in the world has been developed
in countries that have offered incentives targeted
towards this sector. At the end of 2007, Germany had
developed 3.8 GW of solar power – roughly half the
world total – followed by the United States with 903 MW,
Spain with 670 MW, Italy with 108 MW, and South Korea
with 85 MW. The global market also includes 2.7 GW of
off-grid installations, for a total of 10.5 GW from all
sources. Due to a lack of incentives, development of
solar in the LAC region has been minimal, with just 25
MW identified, predominantly found in off-grid systems in
Mexico and Brazil.
This section will review various methods of collecting solar
energy and available technologies, evaluate performance
characteristics useful for comparing solar energy
technologies and examine existing natural resources
necessary for optimal solar power generation.
Technology
Description of Technology
Components
Solar-based electricity generation is the conversion of
solar radiation into electricity, through the use of
photovoltaic (PV) cells or concentrating solar energy to
heat a fluid energy transfer medium. A PV cell is
composed of a semi-conductor like silicon, or in the case
of thin-film solar PV cadmium telluride (CdTe) or copper,
indium, gallium, selenide (CIGS). The semi-conductor is
assembled such that an uneven positive and negative
electronic field exists, facilitating the flow of lose electrons.
Incoming photons (sunlight) strike the semiconducting
material forcing electrons to be ejected from the
semiconductor, which in turn creates a flow of electrons.
Each PV cell can generate a given amount of electricity
based on its rated efficiency of converting sunlight to
energy. PV cells can be connected in series and housed
within a solar array to meet capacity and size restriction or
requirements.
Polysilicon: Conventional solar PV panels are
manufactured using two or more monocrystalline or
polycrystalline silicon wafers sandwiched between
glass plates. Monocrystalline silicon wafers are cut from
pure silicon rods, and are the most efficient for energy
conversion. Polycrystalline wafers are manufactured by
melting and molding silicon onto a specific shape. This
process is more cost effective, allows for more versatile
cell and module construction but suffers efficiency loss
due to the formation multiple crystalline structures
within the silicon wafer. These structures act to deflect
more light, reducing overall electron release and
electricity flow.2
Thin-Film: Thin film solar panels are manufactured by
applying a thin layer of a semi-conductor material, such as
CIGS (copper, indium, gallium and selenium) or CdTe
(Cadmium Telluride) to a sheet of glass, metal or plastic.
Compared with traditional polysilicon-based solar panels
that use 200-300μm thick silicon crystal wafers, a 1-2μm
layer of a semi-conductor is required for thin-film panels.3
The thicker silicon wafers are cut from a silicon crystal block
and laminated between glass sheets, often with spaces
between silicon cells. Alternately, a thin film semi-conductor
is basically painted onto a backing, maximizing usable area.
Thin film solar panels also perform better than silicon-based
PV systems in low light, and higher temperatures. This
relatively simple sounding production process greatly
enhances solar module’s useful applications and greatly
reduces the overall production cost, but is difficult to
implement on a large scale.4 Additionally, the lower costs
are accompanied by lower efficiencies when compared to
conventional silicon solar panels.
Concentrating Solar Power (CSP): Concentrating solar
power (CSP) systems utilize mirrors to focus solar
radiation on a single location. The focused energy is
used to heat an energy transfer medium, like water, for
steam generation. Focusing the sun’s radiation and
applying a multiplier effect increases incident solar
insolation, or the amount of radiation per unit area during
a period of time, commonly denoted as kW/m2/year.
Greater levels of concentrated solar energy yield higher
temperatures and greater energy production potential.
The one drawback of this technology is that it requires
uninterrupted sunlight for the energy transfer medium to
reach that critical, most efficient energy producing
temperature. Because of this, CSP systems are only
suited for remote desert locations where there is little
existing energy transmission infrastructure.
Global Trends | Section 4 165
Performance Characteristics
The wide range of solar technologies and innovative uses
can make comparison difficult. However, three criteria—
electrical efficiency, capacity factor, and availability—do
permit a rudimentary comparison of different solar energies.
Efficiency in the solar energy industry is generally defined
as the amount of electricity produced divided by the
amount of solar radiation striking the solar cell.
Solareff = Electricity Generated
Incident Solar Energy
Photovoltaic modules have the advantage of a single
energy conversion step, yet this single step is still a
challenge using existing technologies.
Polysilicon: Under laboratory conditions, the National
Renewable Energy Laboratory (NREL) has achieved
40.8%5 efficiency in 2008 while researchers at the
University of Delaware (UD) claim to have developed a cell
capable of a 42.8% energy conversion in 2007 with
projections of reaching 50% by 2010.6 Presently the NREL
holds the world record for efficiency due to the fact that
the UD system has not be independently verified. For
commercial production, however, silicon-based PV
modules achieve efficiencies around 15%,7 and may reach
as high as 20% in some cases.
Thin-Film: Today, the commercial efficiency of thin film
solar cells ranges from only 5% to 13%,8 compared with
15-20% for silicon PV cells, while the NREL has achieved
19.9% efficiency for CIGS modules in lab tests.9
Presently, the majority of thin film solar panels are made
with CdTe due to lower costs and resource availability.
These modules have a commercial efficiency of about
10% and a lab efficiency of about 16%.10 While CIGS
modules have a much higher potential efficiency, large-
scale production issues are hampering its commercial
viability.11
CSP: CSP units require the conversion of solar energy
into thermal energy before electricity can be produced.
CSP units thus depend on both the collector efficiency
and the steam-cycle efficiency of the heated fluid.
Conversion from one energy form to another reduces
efficiency as the energy losses are experienced though
conduction, friction associated with mechanical heat
engines. For this reason, overall solar thermal plant
efficiencies are normally about 15%.12
Nevertheless, recent advances in this technology have
achieved efficiencies as high as 30-40% due to focused
insolation. Flat-plat PV modules are considered “one sun
166 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
insolation” systems because they only absorb the ambient
solar radiation that strikes them. The technology that
allows the high efficiency PV systems focuses solar
radiation onto a single solar cell, thus achieving insolation
equivalents of greater than 400 suns.13 CSP arrays that
can utilize both the solar energy directly for PV energy
generation and indirectly for heat generation can achieve
even greater efficiencies, but this technology will not be
viable for some time.
Capacity factors in solar energy are usually given as either
“with storage” or “without.” This distinction can
significantly change the efficiencies reported. One should
generally look at capacity factors without storage to have
a clear understanding of how the solar generator will
perform independent of storage units, which can be
added later to augment the baseline efficiency of the
generator. Generally, commercial solar generator capacity
factors (without storage) are in the 10-20% range14
regardless of whether they are solar thermal or
photovoltaic. Meteorological variations and efficiency
losses prevent the units from operating at maximum
output for the entire time they are in sunlight.
A final performance characteristic to consider is the
availability of solar electricity generators. Where capacity
factors explain the percentage of time a power plant is at
maximum capacity, availability defines how much time the
plant is operationally ready. In other words, availability is
the percentage of time the plant is physically ready for
operation should sunlight be available. Due to the maturity
of the technology, most solar conversion technologies are
available nearly 100% of the time.15
Resource Requirements
The land resource requirements of solar energy are currently
quite significant. For example, generating 100 megawatts
(MW) at 10% efficiency would require 3-10 km2 of land
using a photovoltaic or CSP electric system,16 while the
NREL estimates that land usage for trough-based CSP
generators is roughly 0.02-0.04 km2 per MW-installed
capacity.17 Note that by using units of square kilometers per
megawatt (km2/MW) we are assuming no thermal storage in
this system, whereas units of km2/MW/year would be more
appropriate for facilities with thermal storage.
Regrettably, solar power generation often excludes other
land uses due the fragility of the collector systems and the
need to maximize collector ground space. Nevertheless,
innovative techniques are being used to mount solar
panels to existing buildings and infrastructure so as to
maximize land usage and decrease solar-exclusive land
usage figures. Solar power production also has the added
benefit that it does not require land usage for feeder fuels.
CSP generators can require significant quantities of water
to create the steam that spins the turbine-generator
mechanism. After passing through the turbine, the water is
too cool to provide additional power but too hot to
circulate through the collectors again. Thus, evaporation
pools must be used to cool the water. These evaporation
pools can consume a significant amount of the local water
supply, on the order of 2.4 m3/MWh.18
Infrastructure Integration
One significant benefit to solar energy is scalability and
thus minimal infrastructure requirements compared to
resources such as wind. Solar collectors can be used in
remote locations and transported by a variety of methods,
ranging from pack mules to space vehicles. Significant
road improvements are usually required for the
transportation of either power generation units or
installation equipment of solar energy applications.
The intermittency of solar power can complicate grid
infrastructure. Most electrical grids – as well as
associated generation, usage, and stabilization
equipment – were not designed for power sources with
variable and unpredictable electrical output. As with
wind power, solar grid-connection must be carefully
analyzed so as not to injure the solar generator or the
local power grid.
Solar power equipment is easily
transported and is a scalable
technology, making it suitable for
off-grid applications.
Due to its ease of transport, solar power equipment can
also be used in off-grid applications with few connection
issues due to the scalability of the technology. For
example, if solar electricity or solar heating is used to
power individual, off-grid buildings (residential or
industrial), the electricity demand of that building can be
tailored to meet expected sunlight availability or
occasional “resource outages.” The relative ease of
managing a single load makes solar power units ideal for
off-grid applications.
Expected usage is also important in considering solar power
integration. Solar power production characteristics indicate
that this technology normally cannot be used as a base-load
power source. Source intermittency, lower performance
qualities, and resource requirements make solar power
production a tool for on-grid, peak-loading mitigation. As
such, solar power can complement a comprehensive
portfolio of other base-load power source options.
Environmental Impacts
While solar energy is a zero-emission, renewable resource,
there are still environmental concerns related to cell
manufacturing and the ultimate disposal of toxic materials
used to create photovoltaic solar panels.
If fossil energy is used in the extraction of natural
resources or production of solar cells, carbon dioxide and
other greenhouse gas emissions can be attributed to the
production process. The actual materials used for the
production of the solar cells, which includes silicon for
conventional solar, and cadmium-telluride (CdTe) and
copper, indium, gallium, and selenium (CIGS) for thin film
solar, also raise environmental concerns.19 Compared with
CdTe and CIGS, silicon solar cells require more water and
abiotic inputs (fuel, minerals, etc.). Furthermore, silicon-
based solar cells typically require greater life cycle energy
inputs than thin-film cells and thus result in greater CO2
emissions per kWh generated.20 In general, CdTe is the
most environmentally favorable when compared with
silicon and CIGS. However, its energy efficiency rating is
the lowest at 9% compared with 11% for CIGS and
around 14% for silicon.21 Thin film technologies have a
much lower environmental impact, and an inherent
advantage over silicon, due to their extremely minimal
resource requirements, as mentioned above.
Considering human health in the manufacturing and
disposal of solar cells, silicon itself is relatively inert but it
can be dangerous to workers if it is crushed into powder
and inhaled. The manufacturing process for silicon-based
cells requires the cutting of wafers from silicon crystal
rods, which can create dust. Alternately, thin film
manufacturers print the semi-conductor to a backing like
glass, which can intrinsically minimize the potential for
worker inhalation of airborne particles.
Little is known about the life-cycle toxicity impacts of the thin-
film solar panels, however. While pure cadmium is a toxic
material known to cause kidney and respiratory problems, it
becomes much less hazardous when combined with
telluride. CdTe would have to be heated to at least 1041°C
(less than the 800°C to 900°C of a house fire) before it could
break down and 1700°C to melt.22 With respect to CIGS, the
EPA has identified selenium as a toxin and carcinogen that
can bioaccumulate though the food web. Gallium is also
known to have a low level of toxicity, but compared with
CdTe, CIGS has the lowest overall toxicity level.23
To address the disposal issue, companies like First Solar, a
CdTe manufacturer, have agreed to take back and recycle
solar panels at the end of their usable life.24 Unfortunately,
not all solar producers are participating in recycling
projects at the moment, but they will likely adopt recycling
Global Trends | Section 4 167
policies as consumer pressure for environmentally friendly
products mounts. Additionally, further research is needed
to fully understand the potential health and environmental
impacts that the production of solar PV cells may have.
Despite this uncertainty, however, the environmental and
health impacts of the production and use of solar cells are
significantly less than fossil fuels. Coal emits an
“unavoidable” 14 μ(Cd)/kWh, as compared with 0.06
μ(Cd)/kWh for a CdTe solar system, in addition to mercury,
greenhouse gasses like CO2, SOx and NOx, and
particulate matter.25
Aside from manufacturing and disposal concerns, solar
power poses an ecological challenge in the siting of large
CSP or solar PV energy farms. This issue is slightly
mitigated by the fact that these larger systems are most
effective in deserts and remote regions where there is
comparatively little biodiversity. Additionally, water
requirements for CSP facilities also raise environmental
concerns as these facilities operate optimally in locations
where water resources are often scarce.
Applicability
Resource Evaluation
Regardless of the solar technology to be utilized, certain
site-specific solar characteristics must be considered to
ensure viability. The three main criteria to investigate
when siting solar plants are power density or irradiance,
angular distribution (diffuse or direct components) and
spectral distribution.26 Power density is the amount of
solar energy the sun imparts per given area, often
measured in watts per square-meter (W/m2). The
maximum power density on earth is 1000 W/m2 with an
average power density of 100-300 W/m2.27 The angular
distribution is a measure of the angles at which the sun
will hit the site. Distribution can vary significantly as one
moves north or south. Finally, spectral distribution
measures how fast the photons are moving when they
strike the solar collector, thus helping to determine the
level of power that can be produced from “momentum
transfer.” These three measures will define how well a site
will produce electricity or heating.
Solar site investigations should commence with clear-sky,
solar-power density data (given in W/m2) as well as site
insolation data.28 Recall that insolation is essentially power
density over a given time (for example, kW/m2/year). Solar
insolation data thus describes the overall quantity of solar
energy absorbed by an area per year, while power density
data assesses the concentration of solar energy absorbed.
The insolation data is particularly useful for evaluating the
economic potential of a solar energy project,29 as it
168 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
provides an approximate forecasting of expected average
solar concentrations over the course of a year. Once these
data are collected, sophisticated analyses can be
performed to determine if solar power is technically
possible in a given location.
Other Energy Uses
Solar-based heating, or solar thermal, is the use of solar
energy to increase the thermal temperature of another
medium, generally air or water, for domestic or industrial
use. This is accomplished by utilizing a solar collector, a
thermal storage device, and a distribution system. As the
solar radiation encounters the solar collector, fluid inside
the collector absorbs the thermal energy, resulting in an
elevation of the fluid temperature. This thermally-excited,
“hot” fluid is then transported to a thermal storage unit
until it is required at some remote location. Once
commanded, the distribution system transports the hot
fluid to the requesting location. This system can either be
a closed-loop cycle as found with building radiators used
to replace traditional boilers, or an open-loop cycle where
air is heated and pumped into a room for heating.
Technological Evolutions
Technical advances could have a significant impact on the
practicality of solar-based power. Novel ideas such as the
ability to mimic organic photosynthesis in the production
of hydrogen via artificial photosynthesis30 are valiant
aspirations, but near-term solutions are required for true
progress in this sector. Much research and development
has focused on solar cell photovoltaics, where innovation
is reducing production costs and increasing unit efficiency.
Advanced materials research is helping to increase
electricity output while reducing the need for rare
resources such as silicon. New designs and production
advances have decreased mass-production time frames
and multiplied production centers across the globe. These
trends are expected to continue as photovoltaic power
occupies an increasingly significant portion of both
developed and developing country power production
portfolios.31
Concentrating solar power (CSP) plants are also expected
to become a focus of development and commercialization.
One of the most exciting developments in this field is the
potential for these plants to produce power when the sun
is unavailable. Specifically, these plants will be able to
burn natural gas and neighboring landfill gas to heat the
fluids normally heated by sunlight,32 thus increasing plant
efficiency and capacity factors tremendously.
Alternatively, CSP facilities that use molten salt as the
heated fluid can store this medium in thermal storage
facilities so that it can be utilized at night to run turbine- range from $0.09 - $0.10/kWh by 2010 and $0.06 -
generators. For these reasons, it is expected that CSP $0.07/kWh by 2015.37
plants will be fully competitive with conventional power-
production plants by 2016.33 Capital Costs: The actual installed end-user costs for a
solar power system include a number of components such
Building-Integrated Photovoltaics: Since the as labor, parts, and installer overhead as well as the solar
emergence of more cost competitive thin film technology, panel itself, which usually comprises between 45% and
building-integrated photovoltaic (BIPV) systems have also 60% of the total cost of the system.38, 39 The final, installed
become a viable construction option.34 BIPV systems costs per watt of a typical home power system are broken
incorporate solar technology directly into construction down below.40
materials like roofing shingles and building facades.
These dual purpose materials help decrease the Table 4.5a Solar PV Cost Itemization
installation costs of solar cells as they become integrated
Item Cost % of total Cost
with construction costs.
Solar Panel
Polysilicon $1.50 18.18%
However, contractors may often be wary of these new, Creating the wafer $0.75 9.09%
untested materials due to potentially high replacement Creating the cell from the wafer $0.75 9.09%
costs should there be a defect in the product. Compiling the solar panel $0.75 9.09%
TOTAL SOLAR PANEL $3.75 45.5%
Furthermore, BIPV is only available for new construction or
renovation, which is a relatively small share of all surfaces Other Costs
that could potentially be harnessed for solar generation.35 Inverters $0.50 6.06%
Racks $0.75 9.09%
When solar companies partner with construction firms it
Labor $1.25 15.15%
becomes easier to control for quality and ensure a more Installer’s overhead $2.00 24.24%
efficient product.36 Additionally, offering substantial TOTAL OTHER COSTS $4.50 54.5%
warranties on systems in states with attractive solar TOTAL COST PER WATT $8.25 100%
incentives helps assuage consumer skepticism over Source: Wall Street Journal41
investing in this type of emerging solar application.
Both the installation and solar panel costs are expected to
steadily decline in the coming years, which will bring the
Economics price of a solar system closer to the production price of
the panels.
While the deployment of solar currently faces significant
constraints due to high costs compared to other Polysilicon Panels: According to Solarbuzz, the average
renewables, these costs are expected to fall across the cost of solar PV in September of 2008 was between
industry in the short-term, as silicon supplies expand, a $4.85/watt-peak. This price tag is up from $4.49 in 2005 as
growing number of thin-film producers reach commercial the greater demand for solar power drove the price up.42
levels of production, and the industry as a whole
consolidates technology, production, and distribution to Thin-Film Panels: In September 2008 the lowest price for thin
achieve increasing economies of scale. film solar was $3.47/watt-peak.43 Despite the low commercial
efficiencies of thin film technology, these lower costs per watt
Costs are expected to make them an attractive option over other
The average cost per kWh of solar power may vary solar technologies, especially for large-scale as well as
significantly depending on levels of solar insolation, the building-integrated installations. Currently, thin-film solar
scale of an installation, and the photovoltaic technology panels comprise roughly 20% of the solar energy market,44
used. REN21 broadly estimates solar generation today to and are projected to increase to 26% by 2013 with over 10
cost between $0.20 and $0.80/kWh, depending on the GW of solar equipment production expected by 2012.45
level of insolation (with $0.20/kWh in the sunniest
places). The U.S. Department of Energy estimates Operational Costs: Over the long run, upkeep and
residential solar to cost between $0.28 - $0.30/kWh, maintenance of solar PV systems is relatively low because
while larger-scale commercial solar installations can it is solid-state technology, that is, it does not have moving
produce power for as little as $0.14 - $0.16/kWh. In the parts, unless sophisticated solar tracking technology is
coming years, the DOE estimates that residential solar used. Most, if not all, estimates point out that solar PV
will cost between $0.17 - $0.19/kWh by 2010 and $0.09 - systems have a longevity between 20-30 years, and some
$0.14/kWh by 2015. Commercial costs are expected to even suggest much longer.

Global Trends | Section 4 169

CSP: CSP plants are expected to be less expensive for
utility-scale generation, although these plants have not
been built in decades. According to the NREL and
Sandina National Laboratories, CSP costs about
$0.12/kWh including both capital and operational costs.
This value is expected to drop to $0.05/kWh in the next 10
years.46 The majority of CSP costs come from the massive
up-front investments required to built these facilities to the
appropriate scale. Like solar PV, over the lifetime of a CSP
facility, operational costs are expected to be minimal.

Outlook

While the long-term potential of solar power is virtually

limitless, the near term picture is much more complex, as
growth is expected to remain significantly dependent on
the shifting availability of international subsidy programs,
even as prices begin to decrease and new technologies
emerge in the coming years. A growing number of
jurisdictions throughout the U.S., EU, and Asia have
sought to put incentive programs in place in order to
stimulate the development of the ecosystems of solar
suppliers, developers, and installers necessary to facilitate
the adoption of this resource as costs decline.

In contrast to these other regions of the world, Latin

America and the Caribbean countries have largely failed to
offer significant support for the deployment of solar power
aside from small-scale systems for off-grid users.
Although these rural electrification programs are important
and could be expanded significantly, the region has much
greater potential for the development of this resource
outside of these limited applications, and this potential will
grow significantly with the emergence of building-
integrated photovoltaics (BIPV) and other novel
appliations. The lack of incentives for the use of solar
power by grid-connected consumers could result in the
region being left behind as the solar sector takes off.

170 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
4.6 Marine (Wave/Tidal)
Introduction
The potential energy to be gained from marine-based
power sources is enormous. It is estimated that global
wave power production potential is 8,000-80,000 terawatt-
hours per year (TWh/y) or 1-10TW, roughly the amount of
energy consumed globally each year.1 Tidal power has
equally impressive potential, offering 3,000 gigawatts
(GW).2 Though this sector is still largely in the research and
development phases,3 various technologies are beginning
to emerge commercially. This section will investigate these
developments, the science the technology is based on,
and how decision makers should assess marine-based
power sources.
This section begins with an analysis of the technical
components and performance criteria of marine-based
generation technology. It will then discuss the
infrastructure requirements for marine power units and the
locations at which marine power can be realistically sited.
It will be argued that marine power is ideally suited for
base-load, on-grid applications, though performance-
reducing factors such as seasonal meteorological changes
must be considered. This section will then consider the
environmental impact of marine power, with a particular
focus on water and land requirements.
The next portion of this section will discuss marine-power
siting, describe the necessary resource evaluations, and
explain why certain sites are superior to others. Expected
technological advancements in the sector will also be
considered, with a focus on the potential of marine
thermal variations as a power source.
Finally, this section addresses the cost considerations
associated with marine-based power and the technical
and economic challenges to effective commercialization.
In particular, the obstacles to continuous ocean generation
and transmission of electricity will be emphasized. Devices
for this type of generation must withstand wind, water, and
corrosion. These forces render exceedingly difficult the
siting, installation, operation, and maintenance of this
technology.
This section will conclude with a review of why tidal
power is considered more feasible than wave-based
power, which is still in the research and development
stages.4 As a whole, marine power must not only
demonstrate financial viability versus traditional power
sources, it must also compete with more mature
renewable technologies for a limited supply of research
funding. It is a challenging environment, and marine
power should be viewed as a technology with significant
potential, but not one that should be considered for
immediate, large-scale investment and deployment by
developing countries.
Technology
Description of Technology
Components
Waves are a product of surface wind and seafloor
geologic formations, whereas tidal energy derives from the
gravitational interactions between the sun, moon and
Earth. Useful energy is derived from these sources in
similar ways based on the principles of fluid dynamics that
they share. For this reason, the term “marine” will be
substituted for “wave” and “tidal” when no distinction is
necessary. Until very recently, the largest wave-based
generation facility in the world was located at the cliffs of
Norway with an installed capacity of only 1 megawatt
(MW).5 In September 2008 a 2.25MW wave power system
designed by the Edinburgh-based company Peamis Wave
Power came online, making it the world’s largest wave
power generator. The facility may eventually expand to
21MW and provide electricity to roughly 14,000 homes.6
There are numerous proposals for future facilities around
the world in the 2-4 MWrange, but most are still in the
planning and feasibility stage.
There are only three tidal barrage facilities operational in
the world right now, which utilize huge tidal dams much
like large hydro projects to take advantage of major tidal
differentials. The largest tidal plant is the French dam-type
located in La Rance, France. It has a capacity of 240MW
and has been in operation since 1966.7 The second largest
is a 20MW facility in the Bay of Fundy in Annapolis and is
the only such facility in North America.8
The first commercial offshore tidal turbine, or what can be
thought of as an underwater wind turbine, was installed off
the coast of Northern Ireland in July 2008. Initially the
facility is operating at 150kW, but Marine Current Turbines,
the company that developed the system, expects it to
generate up to 1.2MW, enough to power 1,000 homes,
when fully operational in 2009.9
The two principal marine power generation mechanisms
are turbine-generator devices and oscillation-
harnessing devices. Turbine-based hydrogenerators
operate similarly to wind or geothermal-based
generators. As the tide or wave passes across the
blades of the hydroturbine rotor, the blades experience
lift and rotate around the hub of the rotor. The rotor hub
Global Trends | Section 4 171

is connected to a driveshaft, which is then connected
to a generator. When the rotor rotates under the force of
the water passing over the blades, the driveshaft
rotates inside the generator, producing electromagnetic
variations and thus electricity. It is important to recall
that saltwater is far denser than air, allowing
hydroturbines to produce large amounts of energy
despite the fact that they rotate slower than their dry-
land relatives. Hydroturbines can be free standing on
the ocean floor, or imbedded in tidal dams to harness
energy as the seawater fills the reservoir at high tide
and then drains at low tide.
Oscillation-harnessing devices generally use a hydraulic-
generator to produce electricity. In this form, marine
energy is used to move hydraulic pistons that compress
chambers of fluid (normally oil or water). The pressurized
substance in these chambers is then forced past the
blades of a hydroturbine, which functions as described
above. These oscillating devices can come in various
forms, such as large worm-like, floating structures on the
surface of the water with internal hydraulic-generators, or
oscillating water towers that utilize the rise and fall of the
water level to push air through a shore-based turbine-
generator.
However the device operates, most are secured to the
seafloor in some fashion. These securing structures often
serve the dual purpose of anchoring the generator device
and supporting electric transmission lines. Transmission
lines then run along the seafloor to the local, on-shore
electrical grid.
Performance Characteristics
The performance criteria discussed in this section are
similar to those found in other sections of this report so as
to permit comparison between the technologies. This said,
individual technologies should also be compared to
variants within their own sector, a process that requires a
detailed cost-benefit analysis of each design. One of the
main performance criteria discussed in each of the
preceding sections is the overall efficiency of the
technology. The nascent nature of the marine power
industry makes the acquisition of this information
challenging. Various reports have estimated marine turbine
efficiency at between 30%10 and 50%.11 This range
indicates that decision makers should seek additional
information as to how efficiency calculations were
conducted and whether these methods are considered
reliable in the industry.
Capacity factors are an additional form of comparison that
can be utilized in marine-power decisions. Capacity factor
is defined as:
172 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Capacity Actual amount of power produced over time
Factor =
Power that would have been produced if turbine
operated at maximum output for 100% of the
above time period
Capacity factor is the percentage of time that the power
source is operating at maximum power output. The
capacity factors for most marine power sources are
relatively low compared to other renewable energies. One
report found that the wave technologies evaluated ranged
from 7-25% and tidal technologies ranged from 20-25%.12
These low figures could be due to factors including overly
large generators or small rotors. Alternatively, the devices
could have been appropriately designed for maximum
electrical output but located in an area that simply did not
produce sufficient energy.
An additional method for evaluating reliability is
availability, defined as the percentage of time a device is
physically ready to generate electricity. This measure
normally assesses component durability. Availability for
certain tidal power units has been surprisingly high. One
study found that a dam-type, tidal plant in La Rance,
France and a similar plant in Canada had achieved
impressive availabilities of approximately 97% after initial
modifications and reasonable maintenance
requirements.13 However, because wave power
technology is still largely under development, availability
figures would not be representative of the technology and
therefore are omitted here.
Resource Requirements
Relatively low resource requirements are an attractive
aspect of marine power. The most significant requirement
is land and sea space. Many shoreline technologies
require at least one land-based building in which to house
the turbine-generator and other electronic equipment.
Some reservoir-type installations also require land to flood
with seawater so that it can later be drained for electricity
generation. Although no official statistics exist for how
much land is needed, economies of scale suggest that it is
economically prudent to install more than one shoreline
turbine-generator and maximize the reservoir-basin size.
With regard to sea-based technologies, much of the
concern is with naval traffic. Some wave technologies
discuss using surface areas of approximately 0.125 km2,
thus posing a significant hazard for maritime surface vessels
in the area. Similarly, submarine power generators can pose
a hazard to surface ships and submarines. Therefore,
revisions to navigational charts and explicit warning devices
will be required to mitigate the possibility of accidental
collisions. In addition, response protocols and action plans
will be required for any collisions that do occur.
Infrastructure Integration
Much of the infrastructure required to install marine power
generators already exists in the oil and gas industry.
Vessels specifically designed to transport necessary
equipment and personnel are used daily across the globe,
as are the required anchor-drilling and cable-laying
platforms. This technology has already facilitated the
installation of off-shore wind farms, as discussed earlier in
this report. However, the high demand for these vessels is
producing delays, which could affect marine- and wind-
based generator installations. Decision makers should also
consider the inherent meteorological variability that exists
whenever operating on or near the ocean, especially in
areas where weather is known to be volatile. Though road
requirements will be minimal for most marine-based power
generation technologies, some infrastructure may need
upgrading. Hydroturbines for oscillating water tower and
dam-type generation stations are often extremely heavy
and can require robust transportation networks. Almost all
marine-based power will need some type of shore-based
electrical power devices (transformers, rectifiers, etc.)
housed near the shoreline, sometimes in remote locations.
As with most renewable technologies, marine power will
require healthy onshore power grids that can withstand
sudden interruptions.
Environmental Impact
The environmental impact of marine power depends on
what form the generation device takes. For example,
hydroturbines placed in a tidal dam to capture the energy
of the seawater as it ingresses and egresses can impede
sea life migration and induce silt build-up.14 Additionally,
tidal dams can require a significant amount of shoreline
sand dredging, water pollution due to cement pouring,
and ecosystem disruption. It is reasonable to expect this
type of effect with most marine power technologies
because many marine technologies require some type of
solid-ground foundations from which to operate. This
grounding thus requires drilling, foundation laying, and
other procedures that can affect the environment
surrounding the electricity generators.
Nevertheless, marine power is extremely “green” in terms of
emissions. The majority of marine technologies use water
and air as the only fuel sources and do little to contaminate
either. As with solar, the most significant emissions will
come from the manufacturing of the generating devices.
These emissions will require appropriate legislation
concerning proper use and clean-up. With regard to clean-
up, some oscillating-motion devices use working fluids
besides water or air (normally oil). These technologies could
emit toxins into the environment after prolonged use or
accidental impact, requiring routine maintenance and
effective spill-response procedures.
Applicability
Resource Evaluation
Neither form of marine power is effective without the
appropriate conditions. Evaluating potential marine-power
installations will require detailed wave, tidal, and ocean
current analyses as well as seasonal metrological studies
across multiple years. Wave and tidal maps exist for a few
specific countries and can be used to estimate
preliminarily marine energy potential.
Tidal power is the more location-sensitive of the two forms of
energy because it relies on the difference between high and
low tide, known as tidal range. This difference in turn
depends on season, time of day, and longitudinal location.
Specifically, tidal differences must be greater than five
meters, a condition that prevails in only about 40 sites
around the world.15 Together, these sites could harness just
3% of the 3,000 GW available globally, due to technical
limitations.16 Nevertheless, hydroturbines using tidal power
can generate a significant amount of energy. A hydroturbine
blade diameter of 15 m operating in a 3.6-4.9 knot (6.7-9.1
km/h) flow field can generate the same quantity of energy as
a 60 m diameter wind turbine, assuming similar conditions.17
In addition to a five-meter tidal differential, most forms of
tidal power require a water depth of 20-30 meters.18
Traditionally, barrages or dams are constructed across
estuaries or bays with large natural tidal ranges. The water
flowing in during high tide is captured and released during
low tide to drive turbines. Another form of tidal power
technology is under development that does not require the
use of dams or barrages. Offshore tidal power, or free-flow
tidal power generators utilize underwater “tidal turbines,”
similar to wind turbines, which can harness tidal flow
energy and ocean current energy. These turbines can be
constructed over a wider coastal area because they do not
require an estuary or bay to store the potential energy and
they only require water flowing between 4 and 5.5mph to
be economically viable. Offshore tidal turbines are also
much less environmentally intrusive than tidal barge
systems because they require fewer resources to
construct, less space for optimal operation and do not
require the use of an entire estuarine ecosystem.19
Wave power generally has less stringent requirements
than tidal power. Offshore systems are often anchored in
water that is 40 meters deep or more,20 while shoreline
oscillating water columns need only 10-25 meters of water
depth.21 Site evaluations must include assessments of
average wave power, generally measured as the quantity
of energy per unit width of a progressing wave with units
of kWh/m. A wave-strength of 30 kWh/m is considered
reasonable for wave power generation,22 and areas with
Global Trends | Section 4 173
sustained wind speeds generally have more wave-power
generation potential.
Other Energy Uses
Marine power technologies have few secondary uses, in
large part because of distance from shore. Other
renewable energies, such as wind, can utilize excess
mechanical energy to perform tasks such as pumping
water to higher elevations. Marine energies are often too
far from the coast to take advantage of excess
mechanical energy in this manner. Moreover, there is no
heat transfer in marine power technologies. Other
renewable sources, such as geothermal and solar,
produce immense amounts of heat that can be used for
other functions.
Technological Evolutions
Innovative marine power designs and ideas abound, but
few have proven technically feasible and even fewer have
become commercially viable. One technology that has
shown potential is Ocean Thermal Energy Conversion
(OTEC). Effective almost anywhere on earth, OTEC
utilizes the ocean temperature difference between the
surface and at least a 1,000m depth. The technology
operates like a binary-cycle geothermal plant. Warm,
ocean surface water is passed through a heat exchanger
with a separate working fluid that has a very low boiling
point such as ammonia. The surface water vaporizes the
ammonia, causing it to expand and rotate a turbine-
generator. The discharged ammonia is then circulated
through a second heat exchanger which contains cold
water from the depths of the ocean. This cold interface
causes the ammonia to condense before returning to the
first heat exchanger to begin the process again. It is
believed that this source of energy could produce 1013
Watts of base-load power per year,23 roughly four orders
of magnitude the energy consumed in the U.S. annually.24
Notwithstanding this immense potential, technical hurdles
have slowed development of the technology.
Economics
As discussed, marine energy is still not economically
viable. Technical challenges and competition with
conventional and other renewable sources have proven
daunting. The sector also suffers from limited
communication between industry researchers and
investors. If government and institutional investors could
be shown the potential of marine-based power, there is a
chance the industry could grow significantly. However,
even if the marine power industry experiences a massive
expansion, it is still years, if not decades, behind other
more mature renewable energies.
174 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Costs
As with most renewable energies, the greatest cost outlay
is in development. Site evaluation and equipment
manufacturing and installation are costly. One study
estimates that wave technology construction timelines
could vary in length from 1-10 years while tidal facility
construction could last 3-10 years. Even these estimates
depend on the commercialization of currently unavailable
technology.25 High construction costs and long timelines
are a powerful disincentive for investors26 and constitute
the greatest obstacle to the growth of the sector.
Because marine-power generation is still in its early stages,
exact commercialized cost estimates are difficult to obtain.
Nevertheless, industry experts appear to agree that if
existing technology were commercialized today, costs for
wave energy would be approximately US$100/MWh and
US$80/MWh for tidal energy, assuming optimal sitings.27 In
addition, capital costs are estimated to be US$4-8m/MW-
installed for wave technologies, and $3-4m/MW-installed
for tidal facilities with 30-9000 MW-installed capacity, again
assuming commercialization.28 These costs are high
relative to other renewable sources. Geothermal power
plants, which satisfy comparable base-load requirements,
are approximately $2.8m/MW-installed29 and wind turbines
cost $0.79m/MW-installed.30 Significant cost reductions will
be necessary if marine power is to approach economic
viability and compete with other renewable energy
technologies.
One considerable advantage to marine power is that
operation and maintenance costs are relatively low. For
the dam-type plants in France and Canada mentioned
above, generator components had to modified after initial
installation but have since been highly reliable and
required only modest maintenance.31 Similarly,
maintenance costs for wave-based technologies are lower
than first expected due to the fact that many devices can
be brought to the surface for servicing. Nonetheless,
reductions in development stage costs will be essential
before investors will appreciate lower operation and
maintenance costs.
Outlook
As marine-based energy moves from research and
development towards commercialization, capable sector
leaders will begin to emerge. High-profile pilot programs
could help bring marine power into the mainstream, and
technology transfer from other renewable technologies may
also boost this promising sector. Presently, however, all of this
research and development is taking place in the U.S. and EU,
despite LAC’s considerable marine power potential.
4.7 Biofuels & Bioenergy
Introduction
Biofuels are fuels derived from biological sources, including
virgin crops, agricultural and forestry residues, and animal
and vegetable waste oils. This report will focus on biofuels
for transport — ethanol and biodiesel — and biomass and
biogas for thermal and electric power generation.
While technologies to produce biofuels are as old as
vehicles themselves, higher costs compared to petroleum-
based fuels have limited their use. During the past several
years, high oil prices, increasing concerns about climate
change, and growing debates over energy security and
energy independence have combined to facilitate an
explosion of interest in these long-established, first-
generation processes as well as promising
next-generation technologies yet to reach the commercial
stage. Backed by strong government support in many
countries, global biofuels production has exploded, with
ethanol production more than doubling since 2000 to 13.5
billion gallons and biodiesel production, starting from a
much smaller base, growing threefold to two billion
gallons.1 Though biofuels are a much faster-growing
source for transportation energy than petroleum, they
represent only 2% of total transport fuel use worldwide.2
Ethanol produced in the U.S. and Brazil, which in 2006
accounted for 4.9 billion and 4.5 billion gallons,
respectively, account for approximately 70% of total
global ethanol production.3 Biodiesel production is much
smaller and led by Europe, which produced 1.5 billion
gallons in 2006 and accounted for approximately 77% of
global production. (The U.S. was a distant second with
250 million gallons produced.)4
Bioenergy’s share of the world’s energy supply has been
stable since at least 1973. The IEA estimates that
combustible renewables and waste — which includes
municipal waste, industrial waste, primary biomass, and
biogas — accounted for 10.6% and 10.1% of the world’s
total primary energy supply in 1973 and 2006,
respectively.5 Yet, in 2006, two-thirds of this was
residential consumption of primary biomass:6 woody
biomass combusted for heat and cooking, which this
section will not address.
This report will address the remaining one-third of
combustible renewables and waste that is combusted
directly or transformed for thermal and electric power
generation, referred to herein as “bioenergy.” Primary solid
biomass accounted for 2.9% of the world’s primary energy
supply in 2005, with municipal waste, industrial waste, and
biogas7 accounting for a miniscule 0.02%, 0.01%, and
0.01%, respectively.8
Bioenergy can be produced through various methods,
such as biomass co-firing with hydrocarbons at
industrial facilities; biomass cogeneration at agro-
industrial facilities; bioconversion of municipal solid
waste (MSW) methane; or small-scale biogas production
through anaerobic digestion. Biomass sources include
forestry and agricultural products and residues,
industrial residues such as from sawmills, and waste
streams. Biogas includes methane gas capture from
agricultural, industrial, and municipal solid waste. In
addition to their significance as an actual and potential
source of power in themselves, biomass and biogas are
frequently used in biofuels projects in order to enhance
productivity, lower costs, and improve energy balance
and environmental performance.
Rapid development of the biofuels and bioenergy industry
has produced growing pains, including increasing
commodity and feedstock costs, food security concerns,
and environmental impact in the former, and difficulties
expanding supply chains beyond the highly localized level
in the latter. However, as detailed below, new feedstocks,
practices, and developing technologies are generating
optimism that these issues will be addressed.
Technology
Bioconversion Processes9
The following section briefly describes the steps involved
in bioconversion for biofuels and bioenergy.
Ethanol
Although the initial steps of different ethanol production
methods vary according to feedstock, all processes
involve the extraction of sugars for fermentation and
distillation into the final ethanol product.
Sugarcane Ethanol
• Extraction: The sugarcane is crushed to extract the
juice, which is collected. Additional steps, such as
imbibation or diffusion (adding water to the bagasse),
can maximize juice extraction. The bagasse can be
burned in boilers to help generate power for the distillery
or used to make paper.
• Purification: The juice is filtered through a variety of
methods such as straining, sedimentation, and centrifugal
force. It is then chemically treated, heated, and put
through a process of evaporation to extract excess water.
Global Trends | Section 4 175
• Saccharification: Lime is added to the juice mixture,
and the liquid is then heated and cooled again. After this
phase, the juice is pasteurized and sterilized.
• Fermentation: The sugars are transformed into ethanol
and carbon dioxide through a biochemical process in
which yeast is added to ferment the sugars. This
process includes several stages of fermentation, after
which the yeast is removed from the ethanol by
centrifuge.
• Distillation: The mixture containing 7%–10% alcohol
and unfermented solids is processed in a series of
distillation columns to remove the unfermented matter.
The hydrous ethanol leaves through the top of the final
column with a strength of 96%, and the leftover phlegm
leaves through the bottom of the final column.
• Dehydration: The hydrous ethanol is dehydrated using
benzol, which is later removed, leaving a mixture of
99.7% pure or anhydrous ethanol.
Corn-based Ethanol
Corn can be processed through either dry or wet milling.
Dry milling is more cost-effective than wet milling and
requires less equipment. Wet milling entails higher
equipment costs, and the process uses hazardous sulfur
dioxide. Wet milling yields more valuable co-products
such as corn oil. Dry milling accounts for 79% of ethanol
production in the U.S., and wet milling accounts for the
remaining 21%.10 Both are identical after the first step for
wet milling, called “steeping” or “separation”.
• Steeping/Separation: Corn is steeped in water and
sulfur dioxide for 24 to 36 hours to separate the starch
and protein, after which the corn is ground to break
apart the germ and kernel.
• Milling: The feedstock is ground into a fine powder
called “meal.”
• Liquefaction: The meal is mixed with water and an
enzyme called “alpha-amylase.” It is then passed
through a cooker to liquefy the starch.
• Saccharification: The liquid starch, or “mash,” is cooled
and a second enzyme, called “gluco-amylase,” is added
to convert the liquid starch into dextrose, a fermentable
sugar.
• Fermentation: Yeast is added to the mash to ferment
the dextrose into ethanol and carbon dioxide. This
process entails several stages of fermentation.
176 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
• Distillation: The fermented mash, now called “beer,”
containing roughly 10% alcohol and unfermented solids,
is processed in a series of distillation columns to remove
the unfermented matter. The hydrous ethanol alcohol
leaves through the top of the final column with a strength
of 96%, and the leftover residue, or “stillage,” leaves
through the bottom of the final column and is moved to a
co-product processing area.
• Dehydration: The remaining water is removed from the
alcohol, often using a molecular sieve, leaving 200-proof
anhydrous ethanol.
• Denaturing: Gasoline is added to the anhydrous
ethanol, usually 2%–5%, making it ready for use as fuel
and unfit for human consumption.
The main co-products of dry milling are distiller’s dried
grain with sobules (DDGS), condensed syrup, and carbon
dioxide. DDGS and the condensed syrup can be sold as
a feed additive, while captured carbon dioxide can be
used for a variety of purposes including soft-drink
manufacturing and the enhancement of plant growth in
greenhouses.11 Newer dry-mill plants may separate corn
germ and fiber in a new process, called “dry
fractionation,” producing more potential by-product
streams. Wet milled corn-based ethanol plants co-
produce corn oil, corn gluten meal, corn gluten feed, and
carbon dioxide.12 Some large wet mill plants incorporate
the production of vitamins, food and feed additives,
aquaculture, and hydroponic vegetable production using
the carbon dioxide to enhance growth.
Biodiesel
Biodiesel production is produced through transesterification,
in which one ester is converted into another using an alcohol
and a catalyst. Essentially, the glycerin in vegetable oil is
replaced with an alcohol. Feedstocks include rapeseed,
soybeans, palm oil, jatropha, and other vegetable seeds and
oils, but the process is the same.
• Extraction: The oil is extracted from the seed or nut
through the use of a solvent and/or through mechanical
crushing.
• Pre-treatment: The oil is filtered and pre-processed to
remove water and impurities. Free fatty acids present in
the oil are removed and can be converted into biodiesel.
• Alcohol and Catalyst Mixing: An alcohol, either
methanol or ethanol, and a catalyst, usually sodium or
potassium hydroxide, are mixed together, and the pre-
treated fats and oils are then added to the mixture.
• Reaction: The mixture is charged into a closed-reaction
vessel, where it is kept above the boiling point for
alcohol to accelerate the reaction. Some systems involve
reaction at room temperature. During this phase, the
triglycerides, or oil molecules, are broken down and
reformed into biodiesel and glycerin.
• Separation: The biodiesel and glycerin can be
separated by gravity or centrifuge.
• Alcohol Removal: The excess alcohol is removed
through either flash evaporation or distillation and can be
collected and reused.
• Glycerin Neutralization: Unused catalyst and soaps
remaining in the glycerin are neutralized with an acid,
and the glycerin is stored. On some occasions, salt
forms during this phase, which can be collected and
used as fertilizer.
• Washing: After separation from the glycerin, the biodiesel
can be gently washed to remove impurities such as
catalyst or soap, which are then dried and stored.
Bioenergy
Bioenergy processes entail the thermochemical or
biochemical conversion of organic material to generate
energy. Under first-generation technology, primary solid
biomass can be combusted directly or gasified through
thermochemical conversion to produce heat and
electricity. Feedstocks such as forestry waste and sawmill
residues, sometimes processed into pellets, sugarcane
bagasse, palm nut fibers, woody biomass from dedicated
energy crops and other agricultural waste products such
as peanut shells or sunflower hulls are primary sources of
raw material. Biogas is methane gas released by organic
matter. Its sources for use in power generation include
municipal solid waste, agricultural effluents, manure, and
industrial effluents. Gas must be rid of other components,
such as carbon dioxide, ammonia, and sulphides, and can
then replace natural gas in most applications. Once the
organic material has been processed through the
anaerobic digester, and biogas is captured for power
generation, the effluent can be separated from its solid
(organic) and liquid forms. The organic material is
degraded by enzymes into acetate, carbon dioxide, and
hydrogen. The acetate and hydrogen are converted to
methane and carbon dioxide in either a mesophilic or
thermophilic fermentation process.
Thermochemical Conversion:
Under these processes, heat is applied to achieve bio-
conversion.
• Combustion: Primary biomass is combusted to
produce heat or drive a steam-powered electric
generator. One common application is the co-firing of
biomass with coal and other hydrocarbons, whereby
biomass is fed into boilers or kilns to displace
hydrocarbons. Another is co-generation, whereby
100% biomass is used to heat steam-driven generators,
which produce energy for consumption on site, with
excess power sold to the grid. This method is
commonly applied in sugar and ethanol mills.
• Gasification or Thermophilic Digestion: Biomass is
fed into a digester, which is heated to 55 degrees
Celsius, and the residence time is typically 12–14 days.
The biogas can then be fed into a gas turbine and
compressed or synthesized into liquid fuel and fed into
an engine for heat or electric power generation.
Thermophilic digestion systems offer higher methane
production, faster throughput, better pathogen and virus
“kill” than biochemical or mesophilic anaerobic
digestion (discussed below) but require more expensive
technology, greater energy input, and a higher degree of
operation and monitoring and thus tend to be used on
an industrial scale.13
Biochemical Conversion:
This process, also known as “mesophilic digestion,” does
not require the application of heat for bio-conversion and is
typically used on a small scale in rural settings. The digester
is heated to 30–35 degrees Celsius, and the feedstock
remains in the digester typically for 15–30 days. Mesophilic
digestion tends to be more robust and tolerant than the
thermophilic process. However, total gas production is
reduced, and larger digestion tanks and sanitization are
required.14 In the case of municipal solid waste (MSW),
landfill methane gas is captured from existing capped
landfills, and the gas is fed to power generators.
Sources of Improvements for Biofuels
While the basic technologies for first-generation biofuels
production are well established, a number of incremental
improvements promise to increase efficiency, particularly in
regions where industrialized agriculture is less established.
In terms of improving feedstocks, per-acre yields have
increased dramatically through the use of genetically
modified strains that are resistant to insects and diseases
and more tolerant of herbicides and drought.15 Moreover, in
developed and some developing countries, advanced
technologies in farm management (including the use of
global positioning systems (GPS)), the adoption of reduced
till and no-till farming practices, slow-release fertilizer, and
improved irrigation systems have all been proven to
increase the efficiency of feedstock production.
Global Trends | Section 4 177
A variety of energy-saving technologies may be utilized
at modern biofuels-production facilities. For example,
heat exchangers are widely used in ethanol plants to
capture waste heat from the cooking of starch for use in
the distillation process, reducing overall energy inputs.
New enzymes have also shown promise for
saccharifying starches without the need to cook them
at all. The increasing efficiency of process automation
stemming from the use of distributed control systems
(DCS) in the 1980s and 1990s has allowed for dramatic
increases in productivity, reducing labor requirements
for U.S. ethanol plants by more than 50% over the past
15 years. Similarly, sugarcane-based ethanol producers
throughout Latin America have been able to increase
efficiencies and reduce labor requirements with the
adoption of high-efficiency bagasse-fired cogeneration
systems and increased automation. Under green
harvesting, sugarcane growers forgo burning cane in
the fields and collect the residues for co-generation
(and potentially cellulosic ethanol once the technology
becomes economically viable).
Sources of Improvements for Bioenergy
In addition to traditional biomass and biogas combustion,
advanced gasification technologies are being developed
to convert MSW into energy without negative emissions.
American and Swedish firms have developed gasification
technology that is on its way to being commercialized.
Gasification technology produces syngas and electrical
energy from MSW, and other technologies convert “black
liquor” (concentrated biomass from pulp and sawmills)
into co-production of pulp and renewable electricity and
have reached commercialization. While not yet
widespread, the waste-to-energy gasification technology
has direct application for all urban areas confronted with
waste-management problems and could be utilized
throughout Latin American once the technology becomes
cost-competitive.
Performance Characteristics
Biofuels Performance
Energy Balance
The “net energy balance” of biofuels production refers to
the energy content of fossil energy inputs required to
produce the fuel, versus the energy contained in the final
product. A full life-cycle evaluation for biofuels
production must assess the energy associated with
growing, harvesting, and transporting feedstocks as well
as with transporting, distributing, and combusting the
fuel.16 Calculated energy balances can vary widely,
depending on which steps are included in the process,
which technologies are used, the value of by-products,
and other factors, making the precise energy balance of
a given fuel open to considerable and increasingly
contentious debate.

Chart 4.7a Energy Balance of Biofuels

14
Ratio of energy returned on energy invested

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178 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Though not definitive, Chart 4.7a illustrates how much
these values can vary among feedstocks and includes
widely cited values for each. While some have argued
that the energy balance of corn-based ethanol is
actually negative, the U.S. Department of Energy (DOE)
and most other sources award it a slight positive
balance of 1.3–1.5 units of energy returned for every
unit invested.17 Sugarcane-based ethanol, by contrast,
offers an energy balance estimated at 8.3 units returned
for every unit invested, due to the efficiency of the
crop’s production in Brazil and other tropical regions
and the ability of producers to co-generate power with
bagasse waste. Cellulosic ethanol technologies,
discussed at length below, hold the promise of even
higher energy returns, ranging from roughly five units
using corn stover to more than 12 units from
switchgrass.
The energy balances of biodiesels are generally
considered higher than for ethanol, with rape- and
soybean-based biodiesel at the low end of 2–3 units
returned per unit invested and palm oil ranking the highest
by far, with a return of nine units.18
Vehicle Performance
As liquid fuels that can be blended with gasoline and
diesel, ethanol and biodiesel enjoy greater vehicle-fuel
compatibility than other alternative fuels such as
compressed natural gas (CNG) or hydrogen and can be
used at low levels in conventional engines with no
modification, although higher-level blends require
inexpensive modifications or flex-fuel engines in the case
of ethanol. In general, both ethanol and biodiesel have
positive and negative effects on vehicle performance.
Ethanol: Because alcohols can degrade some types of
plastic, rubber, and other elastomer components, and
because it can accelerate corrosion of certain metals
used in vehicle ignition and fuel system components, the
use of ethanol blends higher than E10 in unmodified
engines can eventually cause component failure.19 There
is debate over whether slightly higher-level blends can be
used without modifications. Brazil blends 20%–25%
ethanol in all its gasoline supplies, with few technical
problems, and Minnesota and other ethanol-producing
U.S. states are lobbying for the study of E20 blends.20
For high-level blends such as E85, however, flex-fuel
technology is necessary. This technology, which costs an
estimated $100–$150 per vehicle, uses alcohol-resistant
materials in the fuel system and includes a system that
can detect the fuel blend and adjust engine controls
accordingly.
As an oxygenate, ethanol allows fuel to be more fully
combusted, reducing carbon monoxide and particulate
matter emissions. It also contains less sulfur than
gasoline, reducing health and acid rain impacts.
Ethanol’s high octane rating reduces engine knock (the
combustion of fuel too early in the cylinder), improving
the efficiency of vehicle operation.21 However, ethanol
has only two-thirds the energy content of gasoline,
meaning that vehicles will drive proportionately shorter
distances on a gallon of ethanol than on a gallon of gas.
While this difference might not be noticeable at low blend
levels, use of E85 can result in a mileage penalty of
approximately 25%.22
Biodiesel: Biodiesel is generally more compatible with
existing vehicles than ethanol, requiring few engine
modifications for use even in pure (B100) form, although
long-term operation on high-level blends can potentially
degrade rubber hoses, seals, and gaskets in fuel
systems.23 Blends of up to B20 can be used in virtually
any diesel engine with no modifications.
Like ethanol, biodiesel can improve engine performance. It
has a higher cetane number and significantly better
lubricity than petroleum diesel, providing superior engine
performance.24 Even a 1% blend can improve lubricity by
up to 30%, reducing engine wear and tear and extending
engine life. These improvements in efficiency from higher
cetane and lubricity effectively reduce the mileage impact
of biodiesel (biodiesel has only 90% of the energy content
of conventional diesel) to just a few percentage points.25
Moreover, biodiesel is non-toxic and has a higher flash
point, making it safer to handle.26 Biodiesel’s mild solvent
properties can also help to keep engines clean by
dissolving diesel sediments that collect at the bottom of
fueling lines, tanks, and delivery systems over time.27 While
this can cause clogging in the fuel filter at first, once these
deposits have been removed, the vehicle will run more
efficiently.
One of biodiesel’s principal technical downsides is its
relatively poor cold flow properties, which cause it to
congeal in cold weather more easily than diesel fuel. The
severity of this problem varies by feedstock and is more
pronounced for palm oil and waste cooking oil.28 This
problem creates performance issues and inhibits
international trade in the fuel, as some biodiesels are not
suitable for use in colder regions. The lack of
standardization generally inhibits its fungibility. However,
from a technical perspective, the problem can be
addressed by using heaters to keep the fuel warm,
keeping the vehicle indoors when not in use, and blending
the fuel with winterizing agents or other additives.29
Global Trends | Section 4 179
Table 4.7a Efficiencies for Different Bio-conversion Options
Conversion Option
Biogas production via anaerobic digestion and landfill gas production
Biomass combustion for heat
Biomass combustion for electrical power generation
Co-firing of biomass with coal for electric power generation
Gasification for heat production
Gasification or combined heat and power (CHP) using gas engines
Gasification using combined cycles for electric power generation
Source: IEA30
Bioenergy Efficiencies
Biomass and biogas bio-conversion yields can vary widely
depending upon the technology used, the scale of the
power plant, and the type of power being generated. Table
4.7a summarizes the lower heat value (LHV) efficiencies of
some bio-conversion processes. Advanced next-
generation bio-conversion processes can improve
efficiencies and are discussed at length below.
Biofuels Resource Requirements
Land: While a variety of feedstocks under development,
such as jatropha, can be grown on marginal or
unproductive land, first generation biofuels production
requires arable land and water supplies for the production
of feedstocks. It has been estimated that 11 to 12 million
acres globally are being used for biofuel crop production,
about 1% of the total area under cultivation,31 though this
ratio is higher in biofuels producing countries.
The global average of ethanol production per hectare is
approximately 3,500 liters per hectare, but land
requirements for a given volume of biofuels can vary
significantly according to feedstocks and climate. For
instance, Brazil, the world’s most efficient producer of
ethanol, has 2.5 million hectares, or about 5% of cropped
land, dedicated to sugarcane for biofuels and produces an
average of 6,200 liters of ethanol per hectare. By contrast,
the U.S. requires 4 million hectares, or about 4% of its
cropped land, with production of about 3,300 liters per
hectare. Europe, the largest biodiesel-producing region,
produces 1,700 liters per hectare of biodiesel from
rapeseed, the most common feedstock.
The productivity per acre of different feedstocks can vary
significantly depending on climatic and agronomic
conditions, farming techniques, and other factors. Yields
for second-generation crops such as sweet sorghum,
cellulosic crops like switchgrass and miscanthus, as well
as biodiesel yields for jatropha have yet to be proven on a
180 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Net Efficiency Lower Heat Value (LHV) Basis
10% – 15% (assuming onsite production of electricity)
70% – 90% for modern industrial furnaces
20% – 40%
30% – 40%
80% – 90%
15% – 30% electrical; 60% – 80% overall
40% – 50%
large scale, although demonstration and commercial
projects are underway. As mentioned above, advances in
farming techniques and the advent of genetically modified
plants have steadily and substantially increased the per
acre yields of many crops during the past 30 years, a trend
likely to continue in the years to come.32
Water: Globally, biofuel crops account for roughly 100 km3
of evapotranspired water and 44 km3 of irrigated water
consumption — just 1% and 2%, respectively of global
water consumption by crops.33 On average, it takes 2,500
liters of crop evapotranspiration and 820 liters of irrigation
water to produce one liter of biofuel, but this varies widely
by region. In Europe, rainfed rapeseed uses negligible
quantities of irrigation water, and Brazil’s mostly rainfed
sugarcane also requires very little irrigation. By contrast,
China and India rely heavily on irrigation for agriculture,
averaging 2,400 liters and 3,500 liters of irrigated water,
respectively, for every liter of biofuel produced.
Infrastructure Integration
The efficiency of biofuels and bioenergy production can be
significantly influenced by access to infrastructure and
logistics, both for the transportation of feedstocks to plant,
and biofuels to market, and biomass resources to bio-
conversion plants, and in the interconnection of biomass
and biogas power-generation facilities to national or
regional grids. Though not common, integrating biogas
production to natural gas grids would preclude the need to
employ dedicated power-generating infrastructure as the
fuel feeds into the grid.
Ethanol plants are generally sited near feedstock
supplies rather than near markets such as with
sugarcane, where processing must occur soon after
harvesting, as feedstock inputs are bulky, high-volume,
and low-density compared to liquid biofuels outputs.34
This concern is less pressing for biodiesel feedstocks,
however, as the vegetable oils used as inputs are energy-
dense and easy to transport, which has facilitated a
growing trade in raw palm oil.35
In general, transportation of biofuels and ethanol to
distant markets is becoming increasingly problematic as
production scales up. Ethanol cannot be transported in
pipelines with oil, and while low-biodiesel blends have
been tested in existing petroleum pipelines, questions
remain about the fuel’s cold-flow properties, fungibility,
and material compatibility.36 Because of these
constraints, biofuels are currently transported by rail,
tanker truck, and barge, resulting in much higher
transportation costs. The constraints posed by this
inefficient logistics chain has resulted in serious
infrastructure bottlenecks in the U.S. as the ethanol
industry has grown. While pipelines offer a much more
efficient means of transportation, they also require
massive capital investments, estimated at roughly $1
million per mile in the U.S.37 and consistently high levels
of long-term demand to secure financing.
There have been reports that U.S. ethanol producers are
studying the potential for ethanol pipelines connecting
the producing states of the Midwest with the major
markets of the coasts, but no concrete proposals have
been made, and the recent downturn in the industry and
uncertainties over future demand have made this type of
project even riskier.38 By contrast, Brazil’s state-owned oil
company, Petrobras, is positioning itself as a major
player in the marketing and logistics of Brazilian ethanol
and plans to build two pipelines connecting the center-
south ethanol producing state of Goias to the São Paulo
port of São Sebastiao and to the southern port of
Paranagua in Parana State.39 These pipelines are being
developed with an eye to ethanol exports, which Brazil
hopes to quadruple to 3.8 billion liters per year by 2011.40
To this end, Brazil is also investing in terminals along
major rivers that pass through ethanol-producing
regions, allowing for the shipment of ethanol on barges
and minimizing road transport.
Biomass and biogas feedstocks’ transportation costs are
substantial, and transportation and logistics chains for
these resources tend to be highly localized. Furthermore,
biomass and biogas feedstocks are not commoditized,
thus bioconversion plants are generally located near
feedstock sources as well. Nevertheless, there are a few
examples of long-distance trade flows of biomass
resources, for example, the exporting of palm kernel
shells from Malaysia to the Netherlands or wood pellets
from Canada to Sweden, which are occurring despite the
bulkiness and low energy content of most primary
biomass.41 This requires dedicated infrastructure in terms
of ports and terminals, in addition to adequate land
transportation infrastructure via road or rail. Bioenergy
can also be exported as electricity through
interconnected grids.

Chart 4.7b Percent Reduction in Life-Cycle Greenhouse Gas Emissions for Selected Biofuels

180%

160% High
Estimate
140% Low Estimate

120%

100%

80%

60%

40%

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Global Trends | Section 4 181

 Environmental Impacts
Despite their mixed environmental record, and despite
concerns about global food security, discussed below,
some international organizations, national governments,
and environmental groups offer at least qualified support
for biofuels on environmental and energy security grounds,
although most also stress the need to ensure that biofuels
development proceeds sustainably. All note the
importance of adopting best practices in agricultural
management to minimize potential negative impacts of
current methods, and all emphasize the vital need to
develop and deploy next-generation technologies and
feedstocks.
Climate Change
Transportation currently accounts for approximately 20% of
the world’s greenhouse emissions. In developed countries,
such as the U.S., it accounts for 30%.42 Biofuels have been
widely touted for their potential to reduce greenhouse
gases, since the carbon dioxide released upon combustion
is equal to the amount sequestered during the growth of the
feedstock used to produce it, making it carbon-neutral.
However, as noted above, carbon-emitting fossil fuels are
widely used to produce feedstocks and the biofuels
themselves, resulting in relative emissions reductions of less
than 100% compared to gasoline or diesel.
Power stations account for 21.3% of global greenhouse
gas emissions.43 Since the fossil energy inputs required for
biofuel production can come from sources that vary widely
themselves in terms of carbon content (for example,
facilities using natural gas produce far fewer emissions
than facilities using coal, and facilities replacing fossil fuels
with biomass sources reduce emissions even further) the
greenhouse emissions of biofuels production varies even
more widely than the energy efficiency of the process.44
Assessing the greenhouse impacts of biofuels use is made
more complex by the emissions resulting from converting
land to biofuel feedstock production, a process that can
dramatically affect the life-cycle greenhouse emissions of
a given project. Emissions from land-use change arise
from direct conversion, which includes land converted
directly from another use to agricultural land for the
production of biofuel feedstocks, as well as indirect
conversion, when forested areas are cleared to make way
for crops displaced by biofuel feedstocks.
For example, biodiesel derived from palm oil grown in
Indonesia on already-utilized or unproductive lands can
reduce lifecycle greenhouse emissions by three tons for
every ton of biodiesel. Yet, the process of draining
wetlands to create new plantations produces an average
182 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
of 33 tons of carbon dioxide emissions per ton of palm oil
produced.45 While Brazil’s sugarcane production occurs
mostly in the São Paulo region, far from rainforests, and
poses no such direct threat, its potential to force other
agricultural and cattle producers to clear land in
vulnerable regions is a considerable indirect risk, but one
that is often difficult to establish and quantify.
The development of an internationally agreed-upon system
for calculating and monitoring life-cycle greenhouse
emissions from biofuels is a critical challenge if biofuels are
to be effectively integrated into carbon markets and other
climate change policies. Biofuels producers and carbon-
project developers, such as EcoSecurities, have tried to
establish the eligibility of biofuels projects for credits under
the Kyoto Protocol’s Clean Development Mechanism, but
the structure of these credit streams and the methods for
calculating actual life-cycle emission reductions are the
subjects of ongoing debate.
The potential to reduce greenhouse gas emissions
through bioenergy production is well accepted and not
controversial. Methane gas has global warming impact
21 times as great as carbon dioxide. Biomass power
generation can significantly reduce emissions, depending
on which hydrocarbon fuel it replaces. For example, co-
firing biomass at power plants worldwide could displace
approximately 14% of the fossil fuel currently used in
power production or roughly 2% of total fossil fuel use
worldwide.46 Coal and peat accounted for 42% of fuel-
based greenhouse gas emissions in 2006, oil 38%, and
natural gas 19%.47 Biomass and biogas methodologies
are well established and widely used under the Clean
Development Mechanism, including MSW methane gas
capture, bagasse-based co-generation, agricultural-
effluent methane gas capture, and co-firing of biomass
with coal.
Land Impacts
In addition to the global climate change impacts of land-
use changes noted above, the conversion of forests to
agricultural land for biofuels production can have negative
local effects. Forests provide a wide range of ecosystem
services, including income from harvesting or tourism,
watershed regulation, protection from extreme weather,
and timber, which can be particularly important to the poor
in developing countries.48 Forests also represent
enormous sources of biodiversity (particularly in tropical
regions), an ecosystem service of global importance.
Moreover, increased use of water and fertilizer to grow
biofuels crops can result in soil contamination and erosion,
a problem that could be exacerbated if biofuels production
were to push crop production into less-productive areas
requiring even greater quantities of these inputs.49
Under some circumstances, the cultivation of biofuels
crops may produce positive local impacts. The cultivation
of certain feedstocks can add nutrients back to the soil
and help curtail soil erosion. For example, alternating corn
with soybeans can help replace nitrogen depleted by corn
crops. Jatropha, a non-edible, oil-producing shrub that is
garnering growing interest as a biodiesel feedstock, can
be grown on marginal lands unsuitable for growing food
crops and is being studied for its potential in
bioremediation strategies to improve degraded soil.50
Next-generation feedstocks may also make positive local
environmental impacts. Recent research by the U.S.
Department of Agriculture’s Agricultural Research Service
indicates that the high-yield switchgrass cultivars being
considered for use as a cellulosic biomass feedstock are
very similar genetically to native grasses in the U.S.
Midwest, making them compatible with conservation and
restoration efforts in the region.51 Algal oil production
technologies currently under development can be placed
anywhere that has sunlight, including the desert, rooftops,
and even power plant smokestacks, where they could be
used to reduce carbon emissions.52
Water Impacts
Water resources, already an issue of growing international
concern, are also impacted by local biofuel feedstock
production. An October 2007 study by the International
Water Management Institute (IWMI) indicates that a
projected quadrupling of global biofuels production to 140
billion liters by 2030 would require 170 km3 of additional
water in the form of evapotranspiration (compared to
7,600 km3 for food) and 180 km3 more withdrawals for
Chart 4.7c Projected Ethanol Yields, Gallon per Acre
1,600
1,400
1,200
1,000
Gallon/Acre
800
600
400
200
0
High-Fiber Sweet
Sugarcane
Source: Anderson, Da Silva, ICRISAT, Sorghum
Hodes, Macedo, Tilman.
irrigation (compared to 2,980 km3 for food).53 Because
these represent increases of just 2%–5% on overall
agricultural land use, major changes in water systems on a
global level are not expected.54
However, as with other aspects of biofuels production,
local impacts can vary widely. A November 2007 report
by the National Research Council of the U.S. National
Academies warned that although increased agricultural
production for biofuels was not expected to alter
national-aggregate water use, “significant regional and
local impacts” were likely, particularly where water
resources are already stressed, such as the Ogalla
aquifier area in the Midwest, the Colorado River, and the
San Joaquin Valley of California.55 Similarly, China and
India both face regional and seasonal water shortages
as they attempt to expand their heavily irrigated
agriculture to feed huge populations, and the
aforementioned IWMI report warns that major
expansions of these countries’ biofuels production could
exacerbate their growing water crises.56
Beyond added stress on water supplies, increased
biofuels cultivation can also result in more pesticide and
herbicide contamination in water supplies, as well as the
creation of low-oxygen dead zones in bodies of water
from fertilizer runoff.57 These impacts are a particular
concern for corn, which is a leaky crop that results in
higher levels of runoff and usually requires more fertilizer
and pesticide inputs than other biofuels crops. While
improved farm-management practices and biotechnology
advances may mitigate these impacts, cellulosic biofuel
feedstock crops, such as switchgrass, which requires
Min Gallons/Acre
Max Gallons/Acre
Switchgrass Miscanthus Sugarcane Poplar Corn Cassava
Global Trends | Section 4 183
fewer inputs and less water, promise much more dramatic
reductions in water usage. Jatropha has also been hailed
for its smaller environmental footprint, especially in water-
constrained India.58
Resource Evaluation
Biofuels feedstock potential is heavily determined by local
climatic and agronomic conditions, which determine the
crops that can be grown effectively in a given area. In
general, tropical countries have the highest concentration
of suitable and available land and have climatic conditions
that ensure the highest yields and the most productive
crops, particularly sugarcane and palm. When water is not
a limiting condition, tropical countries generally have two
to three times the agricultural productivity of temperate
regions.59 For example, Brazil is the world’s largest
producer of sugarcane due to plentiful rains, fertile soil,
and climatic conditions that allow it two growing seasons
per year. Similarly, the tropical climate of Southeast Asia
has allowed Indonesia and Malaysia to dominate the
global production of palm oil. Beyond proximity to
feedstocks, biofuel production facilities can benefit from
being sited close to key transport infrastructure, such as
rail lines and rivers. Access to affordable electricity
supplies can also significantly improve the economics of
biofuel production, and the ability of sugarcane producers
to derive some or all of their power needs from the
combustion of leftover bagasse constitutes an important
potential advantage in this regard.
Chart 4.7d Project Biodiesel Yields, Gallon per Acre
700
600
500
Gallon/Acre
400
300
200
100
0
Palm Oil
Source: Fraiture and Riesing
184 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Biofuels make up a very small portion of overall global
bioenergy use. Biomass sources provide about 45 EJ of
energy worldwide, only 1.5 EJ of which takes the form of
biofuels.60 In fact, only 7 EJ of this bioenergy supply takes
the form of modern bioenergy applications (including
commercial power generation and transport fuels), with
the rest going to the burning of biomass for cooking and
space heating, mostly in developing countries. While
biomass generally represents less than 10% of energy use
in industrialized countries, it can provide 20%–30% in
many developing countries and as much as 50%–90% of
total energy demand in some of the least developed
countries.61 Biomass resource availability frequently
depends on corollary economic activities, such as
residues from Canadian sawmills being correlated with
U.S. housing construction, or Malaysian palm kernel husk
supply being correlated with palm oil production.
Technological Evolutions
First-generation biofuels are almost exclusively produced
from food crops. As discussed below, the growing debate
over food versus fuel is leading many to challenge the
continued expansion of these biofuel sources in some
countries, particularly in the U.S. and EU, where relatively
inefficient feedstocks require subsidies and mandates in
order to be feasible. The limits that food needs impose on
the use of these crops, as well as the promise of greater
yields per acre, are driving a great deal of research into
next-generation technologies that can produce biofuels
Jatropha Rapeseed Sunflower Safflower Soybeans
(Projected)
from a wider range of biomass sources. Biofuels and
bioenergy may compete for feedstocks in the future as
cellulosic ethanol begins to be sourced with common
biomass feedstocks, including agricultural, forestry, and
industrial residues; municipal waste; and fast-growing
trees, grasses, and other dedicated energy crops are
likely to be the focus of near- and medium-term biofuel
production.62 Second-generation bioenergy technology is
focused on obtaining diverse fuel streams form biomass,
including synthetic fuels and bio-oil, which can be used
for transportation in addition to thermal and electric
power generation.
Unlike the relatively simple first-generation fermentation
and transesterification processes used to create biofuels
from food crops, these biomass sources require more
advanced conversion technologies. In general, feedstock
costs for these technologies will be lower than for first-
generation fuels, while capital costs (and enzyme costs for
enzymatic facilities) will be higher. This decomposition of
biomass feedstocks is also expected to pave the way for
the development of advanced biorefineries that can
integrate several processes to yield a number of bio-
sourced products from a given quantity of feedstock, in
the same way that petrochemical refineries produce a
number of products from crude oil.
Enzymatic – Cellulosic Ethanol
While first-generation ethanol production ferments simple
sugars and starches, the majority of carbon in plant
material is found in complex, highly stable cellulose and
hemicellulose chains that are much more resistant to
chemical action.63 One method of unlocking this potential
source of energy is to utilize enzymes to hydrolyze the
cellulosic portion of the biomass (the single largest source
of plant carbon) into its component sugars, making them
available for fermentation to fuel ethanol — commonly
referred to as “cellulosic ethanol.”64
While a number of government-subsidized
demonstration plants are being developed,
commercially viable cellulosic ethanol projects are
estimated to be at least four years away due to high
enzyme and capital costs.65 Production costs today are
roughly $3 per gallon—more than double the cost of
U.S. corn-based ethanol — although DOE believes that
costs will drop to $1.30 per gallon by 2012.66
Hydroprocessing — Renewable or Green Diesel
In addition to Fischer-Tropsch-based synthetic fuels, some
major oil and chemical companies, including UOP, Eni, Galp
Energia, and Neste Oil, are developing proprietary
technologies that upgrade vegetable or animal oil
feedstocks through high-pressure hydrogenation to make
them suitable for the production of quality diesel-compatible
fuels using existing petroleum-refinery technologies.67
Several plants using these technologies are planned or are
under construction, potentially bringing hundreds of millions
of gallons of capacity online in the next few years.68
Thermochemical — Pyrolysis or Bio-Oil
Pyrolysis (or fast pyrolysis) technologies rapidly heat
biomass in the absence of oxygen to produce a liquid
fuel. Often called “pyrolysis oil” or “bio-oil,” this liquid
product is similar to fuel oil and can be stored, pumped,
and transported like petroleum products. It can be
directly substituted for heavy or light fuel oil as well as
natural gas in a number of applications, including
stationary diesel engines, industrial boilers, pulp and
sawmill kilns, power plants, and district heating.69 Bio-oil
requires further processing to be used as a
transportation fuel, through further synthetic fuel
processing technologies (see below). Pyrolysis is already
competitive with fuel oil or natural gas in many markets,
and a number of plants are being developed in Canada
and South America, although refining the oil for transport
fuel use is not currently economical.
Gasification — Biomass-to-Liquids
Gasification is similar to pyrolysis in that it heats biomass
under conditions where available oxygen is much less
than needed for efficient combustion. Where the zero-
oxygen conditions of pyrolysis produce a mostly liquid
product, heating with low, controlled levels of oxygen
produces a synthesis gas of hydrogen and carbon
monoxide.70 This gas, also called “syngas,” burns more
cleanly than the biofuels from which it is derived and can
be used in boilers and gas turbines in this form or
converted to a high-quality liquid transportation fuel
through the Fischer-Tropsch (FT) process or similar
technologies.71
While this technology is not yet widely deployed, players
in several industries, including established gasification
technology firms, the German car manufacturers
Volkswagen and Daimler, and food-processing giant Tyson
Foods, have announced major commercial-scale projects
under development.72, 73
Economics
As with other aspects of biofuels production, the
economic picture for biofuels is strongly affected by
local factors. Costs can vary widely according to
feedstock, climate, conversion process, scale of
production, and regional economic conditions, making
general cost estimates problematic. Moreover, there is
Global Trends | Section 4 185
a paucity of data on smaller producers outside the U.S.,
the EU, and Brazil,74 and comprehensive data are not
yet available on the effects of last year’s increased
commodity prices, including not only feedstocks but
also fossil fuels, steel, copper, and other construction
materials.
On the demand side, fuel markets are heavily fragmented
by protectionist trade policies, a patchwork of regional and
national biofuels incentives, a lack of standardization, and
a lack of international trade logistics and infrastructure.
Thus, output prices vary considerably by location. The
implications of trade policy and logistics will be discussed
at length in a subsequent section.
As mentioned earlier, bioenergy markets are highly
diverse and frequently highly localized, with the exception
of a few emerging supply chains that are driving a trend
toward the commoditization of certain biomass
resources. Given this heterogeneity, it is difficult to
establish an aggregate figure for total investment and
operating costs for bioenergy production. Nevertheless,
investment costs associated with some bioenergy
technologies are detailed in Table 4.7b.
Biofuels Costs
Biofuel production costs include costs for feedstocks,
non-feedstock operating expenses, and capital
expenditures. While these production costs can vary
widely, depending on the factors noted above, feedstock
costs have the largest influence for first-generation
production technologies, which is why overall production
costs are generally differentiated by feedstock, as in the
diagram below. Among current technologies, sugarcane-
based ethanol is by far the cheapest, at $0.30–$0.50 per
liter, roughly half the $0.60–$0.80 per liter for corn-based
ethanol. Biodiesel from waste oil is the only competitive
biodiesel, at $0.40–$0.55 per liter, compared to vegetable
oil costs of $0.70-$1 per liter. Next-generation
technologies utilizing biomass feedstocks will offer a
different cost profile, with lower-cost feedstocks and
greater costs for capital as well as enzymes needed in the
operating process.76 Bioenergy costs vary significantly by
source and technology, making it difficult to posit a
reliable, average referential cost structure.
Table 4.7b Investment Costs for Different Bio-conversion Options
Conversion Option
Biomass combustion for heat
Biomass combustion for electrical power generation
Co-firing of biomass with coal for electric power generation
Gasification or combined heat and power (CHP) using gas engines
* kilowatt thermal output
Source: IEA75
186 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
Feedstock Costs: Feedstocks are the largest cost
component for biofuels production, as they account for
50%–70% and 70%–85% of overall production costs for
ethanol and biodiesel, respectively77 although this cost can
be partially offset in each case through the sale of dried
distiller’s grains (DDG) or excess electricity from ethanol
production and cogeneration and glycerin from biodiesel
production.78 For ethanol, operating costs including labor,
chemicals, and energy comprise a third of production
cost. Capital expenditures (discussed below) account for a
sixth of production costs. For biodiesel plants, these non-
feedstock costs constitute a proportionately lower share of
variable costs.
Note that feedstock production costs can vary significantly
by region due to labor costs and other economic
differences, even when the feedstock crop itself is the
same. For example, Brazilian-grown sugarcane is the most
efficient ethanol source in the world, but corn is a more
cost-effective feedstock in the U.S., due in part to high
sugar prices.79 These relationships can change over time:
A recent study indicates that high world sugar prices kept
ethanol production from being cost-effective even in Brazil
for most of the period between January 1990 and April
2007, and corn was a less costly feedstock for ethanol
production when world sugar prices hit their peak in
2000.80 These changing feedstock prices should be
distinguished from the underlying per-acre efficiency of
these crops, discussed above.
U.S. and EU ethanol and biodiesel production is
significantly more expensive than gasoline or diesel fuel,
and both require significant subsidies to compete.
Conversely, Brazil’s highly efficient and subsidy-free
sugarcane ethanol production is the only major source of
biofuels that can even compete with fossil fuels on a per-
gallon-equivalent basis, as indicated in Chart 4.7a.81 The
vulnerability of U.S. and EU producers was demonstrated
in 2007, when record prices for grains and oilseeds forced
many existing plants to shut down and disrupted plans for
new capacity.
Non-Feedstock Operating Costs: Non-feedstock
operating costs vary by technology and feedstock. With
U.S. maize prices of $3.35 per bushel ($131.89 per metric
Investment Cost Ranges ($/kW)
300–800/Kwth* for automatic furnaces, 300–700/kWh for larger furnaces
1,600–2,500/kWh
100–1,000/kWh plus costs of existing power station, depending on biomass fuel and co-firing configuration
1,000–3,000 kWh, depending on configuration
ton) in 2006/2007, and an ethanol yield of approximately
108 gallons per metric tons of maize, gross production
costs were approximately $491.72 per cubic meter ($1.86
per gallon). With additional co-product sales of $112.88
per metric ton, net production costs are estimated at
$406.52 per cubic meter ($1.54 per gallon). Total operating
costs for dry-milled ethanol production in the U.S. were
$0.64 per gallon in 2006/2007, up from $0.58 a gallon in
2005, including an increase in energy and fuel costs from
$0.27 to $0.32 per gallon.82 Total operating costs for wet
milled ethanol production in the U.S. were $0.77 per gallon
in 2006/2007, up from $0.70 per gallon in 2005, which
includes a more than doubling of energy and fuel costs
from $0.21 per gallon to $0.47 per gallon. In Brazil, the
gross production cost of sugarcane ethanol in 2007 was
$1.16 per gallon and its net production cost was $1.13 per
gallon when accounting for the co-product credit.
Operating costs for Brazilian ethanol have been estimated
at an average of $0.22 per gallon. In Europe, the net cost
for grain-based ethanol is $2.19 per gallon and $1.82 per
gallon for sugar beet–based ethanol.83
The capital costs for biofuels production facilities may vary
widely by location, based on factors including raw material
costs, access to utilities and other infrastructure, and
environmental-compliance costs.84 In general, biofuels-
production facilities benefit from production economies of
scale. For example, a tripling of plant size for both dry-mill
and wet-mill ethanol plants in the U.S. can reduce capital
costs by up to 40% per unit of capacity, saving about
$0.03 per liter for a 150-million-liter dry-mill plant
compared to a 50-million-liter plant.85 Furthermore, capital
costs have fallen over time due to increased
standardization of technology and equipment. However, in
2006 and 2007, capital costs increased due to a
considerable construction boom.86
By contrast, biodiesel plants utilize simpler processes and can
be economically viable even on a small scale.87 They generally
benefit less, if at all, from economies of scale.88 In the U.S.,
construction costs for corn-based ethanol plants averaged
$1.57 per gallon of annual capacity in a 2005 survey, although
these capital costs included a fairly wide range, from $1.05 to
$3.00 per gallon.89 2005 figures place the costs of capacity for
Brazilian sugarcane ethanol producers at $1.32 per gallon.
Biodiesel production capacity can also vary widely in cost, but
it has been estimated at $1.04 per gallon of capacity in the
U.S. in 2004.90 Note that increases in global construction
costs across the board, as well as rapidly growing demand for
construction firms with expertise in this area, have
undoubtedly driven up costs over the past two years. On the
other hand, in recent years biodiesel plants in particular have
developed improved technologies and modular designs that
have reduced costs in some cases.
Fuel Pricing
Global biofuels markets are fragmented, with
international trade currently accounting for only about
10% of the world’s biofuel consumption.91 The immaturity
of the international market is due to a range of factors
including a lack of harmonization in standards, protective
tariffs in major U.S. and EU markets, and the relatively
low level of global demand for biofuels compared to
petroleum products. These factors have impeded
necessary investments in logistics and infrastructure
networks.
In the absence of liquid and deep international markets,
biofuel prices are determined by fossil fuel prices, the
local economics of production, and national and local
subsidies for producers, distributors, and consumers.
These local pricing dynamics will be discussed at length
later in this report.
Socio-Economic Impacts
In addition to the environmental and economic effects of
biofuels use, the industry’s growth has affected food
prices, economic development, and energy security. An in-
depth examination of these socio-economic issues is
beyond the scope of this report, but it is clear that these
issues will influence the development of the industry and
public policy surrounding it.
Food vs. Fuel
The coincidence of booming global biofuels production
from grain and oilseed crops and rising food prices has led
critics, from Fidel Castro92 to global food-processing
conglomerates93 to the UN Special Rapporteur on the
Right to Food,94 to draw a direct correlation between the
two. In reality, rising food prices are attributable to several
factors, including increasing demand for meat and dairy
products in developing countries due to rising incomes
and high energy prices that have driven up costs
throughout the food supply chain.
A PATH TO GREEN GROWTH
Every dollar spent on new biomass
or bioenergy projects generates
approximately two to four dollars of
additional value in the economy,
depending on specific conditions.
Global Trends | Section 4 187
Until late 2008, in Brazil and elsewhere, growing biofuel
production had coincided with falling global sugar prices
over the same period, demonstrating that the influence of
biofuels production on commodity prices is often
outweighed by other factors. In this case, the drop in
prices had been driven largely by massive increases in
production from India95 and Thailand,96 whose
governments have recently encouraged ethanol
production to help alleviate the glut of sugar in the market.
Moreover, sugar plays a smaller role in the global food
chain than grain and oilseed crops, making the expansion
of its use less of a concern for consumers. In the longer
term, as global biofuel production comes increasingly from
non-food biomass crops, jatropha, and various waste
residues, these negative impacts will abate.
Economic Development
The ability of biofuels production to create new markets
for agricultural products and facilitate rural development
has also been hailed in recent years. Biofuels advocates
have stressed these advantages as the food vs. fuel
debate has escalated. In fact, as part of the country’s
Social Fuel Seal program, Brazil’s President Lula has
emphasized that biofuel production improves rural income
and thereby makes food more affordable for these
populations.97
While many justifiably protest that these benefits are not
needed by the heavily subsidized farmers of the U.S. and
EU, they can be a source of great hope for the large, rural
populations of many developing countries. Indeed, the
head of energy policy at the UN Food and Agriculture
Organization (FAO) claims that biofuels are “the best
opportunity there has been since the ‘green revolution’ to
bring really a new wind of development in rural areas.”98
international trade, mutual interdependence, and
diversification of energy supplies.100 Moreover, the import
of biofuels from reliable and sustainable producers can
facilitate energy diversification and improve countries’
overall energy security positions.
Outlook
The IEA Bioenergy Task Force estimates that with
continuing technological progress, global biomass
resource potential could be increased from the current 45
EJ to 100–300 EJ annually by 2050 using only currently
cultivated agricultural lands and without jeopardizing world
food supplies.101 As much as 200 EJ of this potential is
assumed to be from low-cost perennial biomass crops
grown for next-generation biofuels, a critical technological
development for the future expansion of biofuels.
Moreover, an additional 100 EJ could be produced, albeit
with lower productivity and higher costs, on marginal and
degraded lands. Organic wastes and residues could
supply another 40–170 EJ. In all, the Task Force estimates
that global bioenergy potential could surpass 400 EJ this
century — more than the total current fossil energy use of
388 EJ. However, achieving this potential will require a
number of steps in addition to the development of new
technologies, most prominently the crafting and
enforcement of sustainability criteria and the development
of efficient global markets for biofuels.

Moreover, increasingly expensive oil imports can have a

particularly negative effect on poor developing countries,
where energy costs in general comprise a much larger
share of household expenditures. Where governments
subsidize or otherwise regulate fuel prices, fiscal accounts
have been severely impacted. The substitution of oil
imports with locally produced biofuels can help moderate
the effects of high energy costs in these areas and
improve country balances of trade. The fact that many
more countries can produce biofuels than can produce oil
will ensure that the benefits of a global biofuels market will
extend beyond a few producers.99

Energy Security
Advocates often stress that locally grown biofuels can
reduce energy security risks, but oil industry experts
caution that energy independence is different from energy
security, which has generally been ensured by embracing

188 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf

Endnotes Section 4.1
1 International Energy Agency (IEA), World Energy Outlook 2008 (Paris: IEA, 2008);
U.S. Department of Energy, Energy Information Administration (EIA), International
Energy Outlook 20078 (Washington: EIA, 2008); Chevron. “Energy Supply and
Demand: Meeting the World’s Energy Needs.” {Use italics instead of quotes, for
consistency?} <http://www.chevron.com/globalissues/energysupplydemand/>;
ExxonMobil, Tomorrow’s Energy: A Perspective on Energy Trends, Greenhouse Gas
Emissions, and Future Energy Options (Irving, Tex.: ExxonMobil, 2006); Royal Dutch
Shell, Shell Energy Scenarios to 2050. (Netherlands: Shell International BV, 2008).
2 International Energy Agency (IEA), World Energy Outlook 2007 (Paris: IEA, 2007), 73;
U.S. Department of Energy, Energy Information Administration (EIA), International
Energy Outlook 2007 (Washington, D.C.: EIA, May 2007), 5.
3 ExxonMobil. Tomorrow’s Energy: A Perspective on Energy Trends, Greenhouse Gas
Emissions, and Future Energy Options, 16.
4 EIA. International Energy Outlook 2008 , 1.
5 EIA. International Energy Outlook 2008 , 1.
6 ExxonMobil, Tomorrow’s Energy: A Perspective on Energy Trends, Greenhouse Gas
Emissions, and Future Energy Options, 16.
7 EIA International Energy Outlook 2007 6; IEA World Energy Outlook 2007, 3.
8 EIA. International Energy Outlook 2007, 6.
9 IEA. World Energy Outlook 2007, 73.
10 EA. World Energy Outlook 2008.
11 Joint Global Change Research Institute. Global Energy Technology Strategy:
Addressing Climate Change, Phase 2 Findings From An International Public-Private
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12 World Energy Council. Deciding the Future: Energy Policy Scenarios to 2050.
(London: World Energy Council, 2007).
<http://www.worldenergy.org/documents/scenarios_study_online.pdf>
13 See ExxonMobil. Outlook for Energy: A View to 2030. Accessed Nov. 20 2008 <
http://www.exxonmobil.com/Corporate/energy_outlook.aspx>. See also
Organization of Petroleum Exporting Countries (OPEC). World Oil Outlook 2008.
(Vienna: OPEC, 2008).
14 IEA. World Energy Outlook 2008, 78.
15 “EA. WWorld Energy Outlook 2008, 78.
16 OPEC. World Energy Outlook 2008.
17 OPEC. World Energy Outlook 2008.
18 IEA. World Energy Outlook 2008.
19 See ExxonMobil. Outlook for Energy: A View to 2030 and IEA. World Energy Outlook
2008.
20 IEA. World Energy Outlook 2008, 81.
21 EIA. International Energy Outlook 2007.
22 IEA. World Energy Outlook 2008, 124.
23 IEA. World Energy Outlook 2008, 125.
24 See ExxonMobil. Outlook for Energy: A View to 2030 and IEA. World Energy Outlook
2008.
25 IEA. World Energy Outlook 2008.
26 IEA. World Energy Outlook 2008, 125.
27 United Nations (UN). “World.” World Population Prospects: The 2006 Revision
Population Database. (Accessed March 4, 2008), <http://esa.un.org/unpp/>. And
U.S. Census Bureau, World Population Information
<http://www.census.gov/ipc/www/idb/worldpopinfo.html>.
28 UN. “Less Developed Countries.” World Population Prospects: The 2006 Revision
Population Database.
29 UN. “Executive Summary.” World Population Prospects: The 2006 Revision. (New
York: United Nations, 2007), ix.
30 UN. World Population Prospects: The 2006 Revision, 9.
31 UN. World Population Prospects: The 2006 Revision, vii.
32 See U.S Census Bureau and UN. World Population Information.
33 UN. “China” World Population Prospects: The 2006 Revision Population Database.
34 UN. “China” World Population Prospects: The 2006 Revision Population Database.
And UN. World Population Prospects: The 2006 Revision, 49.
35 IEA. World Energy Outlook 2008, 64.
36 EIA. International Energy Outlook 2008, 14.
37 UN. World Economic Situation and Prospects 2008, 3.
< http://www.un.org/esa/policy/wess/wesp2008files/wesp2008.pdf>; and
International Monetary Fund. World Economic Update.
<http://www.imf.org/external/pubs/ft/weo/2008/update/01/index.htm#P16_413.>
38 IEA. World Energy Outlook 2008, 66.
39 EIA. International Energy Outlook 2007, 27.
40 EIA. International Energy Outlook 2007.
41 ExxonMobil, Tomorrow’s Energy: A Perspective on Energy Trends, Greenhouse Gas
Emissions, and Future Energy Options, 17; and EIA, International Energy Outlook
2007, 26–27.
42 ExxonMobil, Tomorrow’s Energy: A Perspective on Energy Trends, Greenhouse Gas
Emissions, and Future Energy Options, 17.
43 EIA. International Energy Outlook 2007, 2.
44 EIA. International Energy Outlook 2007, 2.
45 Eaves, Elizabeth, “Two Billion Slum Dwellers.” Forbes, 11 June 2007.
46 UN. United Nations Population Fund (UNFPA). The State of World Population:
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47 UNFPA. The State of World Population: Unleashing the Potential of Urban Growth, 8
48 UNFPA. The State of World Population: Unleashing the Potential of Urban Growth, 8
49 IEA. World Economic Outlook, 2008.
50 Kahn, Matthew E., Green Cities: Urban Growth and the Environment. 93
51 Kahn,134.
52 Kahn, 134.
53 UNFPA. The State of World Population, 56
54 See Exxon Mobil. Tomorrow’s Energy: A Perspective on Energy Trends, Greenhouse
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and EIA. International Energy Outlook 2008.
55 EIA. International Energy Outlook 2007, 19
56 EIA. International Energy Outlook 2007, 19–20
57 Exxon Mobil, Tomorrow’s Energy: A Perspective on Energy Trends, Greenhouse Gas
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58 See OPEC. World Oil Outlook 2007; and IEA. World Energy Outlook 2007.
59 OPEC. World Oil Outlook 2008.
60 ExxonMobil. Outlook for Energy: A View to 2030 and IEA. World Energy Outlook
2008.
61 IEA World Energy Outlook 2007, 80.
62 Chevron. Energy Supply and Demand: Meeting the World’s Energy Needs.
<http://www.chevron.com/globalissues/energysupplydemand/>.
63 “Satisfying China’s Demand for Energy.” BBC. Feb. 16, 2006.
<http://news.bbc.co.uk/2/hi/asia-pacific/4716528.stm>.
64 EIA. International Energy Outlook 2007, 20, and ExxonMobil, 16.
65 EIA. International Energy Outlook 2007, 20.
66 ExxonMobil, Tomorrow’s Energy: A Perspective on Energy Trends, Greenhouse Gas
Emissions, and Future Energy Options, 1; IEA. World Energy Outlook 2007, 79; and
EIA. International Energy Outlook 2007, 17.
67 ExxonMobil, Tomorrow’s Energy: A Perspective on Energy Trends, Greenhouse Gas
Emissions, and Future Energy Options, 1.
68 EIA. International Energy Outlook 2007, 15; IEA. World Energy Outlook 2007, 79.
69 EIA. International Energy Outlook 2007, 15.
70 EIA. International Energy Outlook 2007, 17.
71 “Chinese gov’t to spend 78% more on energy efficiency, emission reduction.” China
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03/24/content_7851081.htm>.
72 “Energy Efficiency: The EU’s Action Plan.” Euractiv.
<http://www.euractiv.com/en/energy/energy-efficiency-eu-action-plan/article-
143199>.
73 “Energy Efficiency: The EU’s Action Plan.” Euractiv.
74 “Faster progress on energy efficiency needed in Brazil, China, India — World Bank.”
Forbes. Feb. 28, 2008.
<http://www.forbes.com/markets/feeds/afx/2008/02/28/afx4707230.html>.
75 “IEA urges to overcome market barriers to increased energy efficiency.”
NieuwsBank. Mar. 20, 2008. <http://www.nieuwsbank.nl/en/2008/03/20/f046.htm>.
76 “IEA urges to overcome market barriers to increased energy efficiency.”
NieuwsBank. Mar. 20, 2008.
77 IEA. World Energy Outlook 2007, 73.
78 Royal Dutch Shell, 8.
79 IEA. World Energy Outlook 2007, 11. EIA. International Energy Outlook 2007, 31.
80 National Petroleum Council. Hard Truths: Facing Hard Truths about Energy.
(Washington: National Petroleum Council, 2007), 9.
<http://downloads.connectlive.com/events/npc071807/pdf-
downloads/Facing_Hard_Truths-Report.pdf>.
81 EIA. International Energy Outlook 2007, 31.
82 EIA. International Energy Outlook 2007, 39.
83 I EIA. International Energy Outlook 2007,82
84 EIA. International Energy Outlook 2007, 35; IEA, World Energy Outlook 2007, 82.
85 “No Production Boost from OPEC.” ABC News. Accessed Nov. 24 2008.
<http://abcnews.go.com/Business/Economy/WireStory?id=4391266&page=2>.
86 British Petroleum. BP Statistical Review of World Energy 2008.
<www.bp.com/productlanding.do?categoryId=6929&contentId=7044622>
87 Council on Foreign Relations (CFR). Non-OPEC Oil Production.
<http://www.cfr.org/publication/14554/#2>.
88 IEA. World Energy Outlook 2007, 83; and ExxonMobil, 20.
89 EIA. International Energy Outlook 2007, 32.
90 EIA. Top World Oil Producers, 2006. <http://tonto.eia.doe.gov/country/>.
91 British Petroleum. BP Statistical Review of World Energy 2007, 9.
92 Brookings Institution. The Russian Federation. (Washington, D.C.: Brookings
Institution, Oct. 2006), 16.
93 Rosenthal, Elisabeth. “U.N. Chief Seeks More Climate Change Leadership.” New
York Times, Nov. 17 2008. Accessed Nov. 24 2008
<http://www.nytimes.com/2007/11/18/science/earth/18climatenew.html?pagewante
d=1&_r=1>
94 “UN Challenges States on Warming.” BBC. Nov. 17, 2007.
<http://news.bbc.co.uk/1/hi/sci/tech/7098902.stm>.
95 United Nations, Intergovernmental Panel on Climate Change (IPCC). Climate Change
2007 Synthesis Report: Summary for Policymakers. (New York: United Nations, Nov.
Global Trends | Section 4 189
 2007) <http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf>.
96 Stern, Nicholas. The Stern Review on the Economics of Climate Change. HM
Treasury Cabient Office, United Kingdom. (Cambridge: Cambridge University Press,
2007). <http://www.hm-treasury.gov.uk/stern_review_final_report.htm>
97 The CNA Corporation. “Executive Summary.” National Security and the Threat of
Climate Change (Washington, D.C.: CNA Corporation, 2007), 6.
<http://securityandclimate.cna.org/report/National%20Security%20and%20the%20
Threat%20of%20Climate%20Change.pdf>.
98 UN. Framework Convention on Climate Change (UNFCCC) Secretariat. “UNFCCC:
Rising industrialized countries emissions underscore urgent need for political action
on climate change at Poznan meeting.” UNFCCC Press Release, Nov. 17 2008.
Accessed Nov. 24 2008
<http://unfccc.int/files/press/news_room/press_releases_and_advisories/application
/pdf/081117_ghg_press_release.pdf>.
99 UNFCCC.
100 European Commission. "Combating Climate Change: The EU Leads the Way."
European Commission, 2007.
<http://ec.europa.eu/publications/booklets/move/70/en.pdf>
101 “G20 nations discuss shape of post-Kyoto pact.” Reuters. Mar. 16, 2008.
< http://africa.reuters.com/top/news/usnBAN635002.html>.
102 “G20 nations discuss shape of post-Kyoto pact.” Reuters. Mar. 16, 2008.
103 World Resources Institute. Navigating the Numbers: Greenhouse Gas Data and
International Climate Policy. Accessed Nov. 24 2008 <
http://www.wri.org/publication/navigating-the-numbers>, 22.
104 IEA. World Energy Outlook, 2008, 439.
105 IEA. World Energy Outlook, 2008, 441.
Endnotes Section 4.2
1 IEAHydro. “Hydropower FAQ.” 6 Dec. 2007 <http://www.ieahydro.org/faq.htm>.
2 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr 2008 <
http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
3 US Department of Energy Wind and Hydropower Technologies Program.
“Hydropower Research and Development.” 5 December 2007
<http://www1.eere.energy.gov/windandhydro/hydro_rd.html>.
4 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
5 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
6 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
7 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr 2008 <
http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
8 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
9 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr 2008 <
http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
10 World Energy Council. “Survey of Energy Resources 2007.” September 2007. 10
Sept 2008 <http://www.worldenergy.org/publications/
survey_of_energy_resources_2007/default.asp>.
11 New Energy Finance. “New Energy Finance Desktop 3.0.” New Energy Finance. 11
Sept 2008 <http://www.newenergymatters.com>.
12 World Energy Council. “Survey of Energy Resources 2007.” September 2007. 10
Sept 2008 <http://www.worldenergy.org/publications/
survey_of_energy_resources_2007/default.asp>.
13 New Energy Finance. “New Energy Finance Desktop 3.0.” New Energy Finance. 11
Sept 2008 <http://www.newenergymatters.com>.
14 US Department of Energy National Renewable Energy Laboratory. “Small
Hydropower Systems.” July 2001. 7 Dec. 2007
<http://www.osti.gov/bridge/product.biblio.jsp?osti_id=783400>.
15 European Small Hydropower Association. “Hydropower Technology.” 2004. Dec.
2007 <http://www.esha.be/fileadmin/esha_files
/documents/SHERPA/SHERPA_fiche_the_technologyl.pdf>.
16 US Department of Energy National Renewable Energy Laboratory. “Small
Hydropower Systems.” July 2001. 7 Dec. 2007
<http://www.osti.gov/bridge/product.biblio.jsp?osti_id=783400>.
17 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
190 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
18 Ibid.
19 European Small Hydropower Association. “Environmental Integration of Small
Hydropower Plants.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_EN.pdf>.
20 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
21 European Small Hydropower Association. “Environmental Integration of Small
Hydropower Plants.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_EN.pdf>.
22 Ibid.
23 European Small Hydropower Association. “Hydropower Technology.” 2004. Dec.
2007 <http://www.esha.be/fileadmin/esha_files
/documents/SHERPA/SHERPA_fiche_the_technologyl.pdf>.
24 European Small Hydropower Association. “Environmental Integration of Small
Hydropower Plants.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_EN.pdf>.
25 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
26 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
27 European Small Hydropower Association. “Environmental Integration of Small
Hydropower Plants.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_EN.pdf>.
28 Ibid.
29 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
30 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
31 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
32 US Department of Energy National Renewable Energy Laboratory. “Small
Hydropower Systems.” July 2001. 7 Dec. 2007
<http://www.osti.gov/bridge/product.biblio.jsp?osti_id=783400>.
33 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
34 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
35 European Small Hydropower Association. “Hydropower Technology.” 2004. Dec.
2007 <http://www.esha.be/fileadmin/esha_files/
documents/SHERPA/SHERPA_fiche_the_technologyl.pdf>.
36 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
37 Ibid.
38 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.Ibid.
39 Camjahi, Simon. “Small Hydro Projects Using Existing Infrastructure.” Comexhidro.
21 Feb 2008
<http://www.conae.gob.mx/work/sites/CONAE/resources/LocalContent/2820/1/ima
ges/Salomon_Camhaji.pdf>.
40 Comision Nacional de Energia y Comision Nacional de Riego. “Estimacion Potencial
Hidroelectrico Asociado a Obras de Riego Existentes o en Proyecto.” Procivil Chile.
Oct 2007. 18 Mar 2008 <
http://www.chileriego.cl/incjs/download.asp?glb_cod_nodo=20080128143822&hdd
_nom_archivo=resumen%20de%20resultados%202.pdf>.
41 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
42 US Department of Energy National Renewable Energy Laboratory. “Small
Hydropower Systems.” July 2001. 7 Dec. 2007
<http://www.osti.gov/bridge/product.biblio.jsp?osti_id=783400>.
43 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
44 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
45 Hidroeléctrica Candelaria, S.A. “Candelaria Hydroelectric Project – Project Design
Document.” CDM – Executive Board. 9 July 2006. 10 Mar 2008
<http://www.mgminter.com/pdd/co2_PDD%20Candelaria%20Hydroelectric%20Pro
ject.pdf>.
46 Interview with Rodrigo Toromo, Hidrosecacao, by John Atkinson. 30 July 2008.
47 Tecnoguat, S.A. “Matanzas Hydroelectric Plant – Project Design Document.” CDM
– Executive Board. 8 Jul 2005. 10 Mar 2008 <
http://cdm.unfccc.int/UserManagement/FileStorage/BCO5JJX4H2W5A5SJD85IXCB
O57JUO8>.
48 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>..
49 US Department of Energy National Renewable Energy Laboratory. “Small
Hydropower Systems.” July 2001. 7 Dec. 2007
<http://www.osti.gov/bridge/product.biblio.jsp?osti_id=783400>.
50 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
51 European Small Hydropower Association. “Hydropower Technology.” 2004. Dec.
2007 <http://www.esha.be/fileadmin/esha_files
/documents/SHERPA/SHERPA_fiche_the_technologyl.pdf>.
52 RETScreen International. “RETScreen International Small Hydro Project Model.” 7
Dec. 2007 <http://www.retscreen.net/ang/g_small.php>.
53 Thematic Network on Small Hydro Power. “Proposals for a European Strategy of
Research, Development and Demonstration (RD&D) for Renewable Energy from
Small Hydropower – Summary.” May 2005. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Stra
_doc_summary_2005.pdf>.
54 European Small Hydropower Association. “Small Hydropower: Innovation is Our
Business.” 12 Dec. 2007 <
www.esha.be/fileadmin/esha_files/documents/publications/publications/Innovation_i
s_our_business.pdf>.
55 European Small Hydropower Association. “Hydropower Technology.” 2004. Dec.
2007 <http://www.esha.be/fileadmin/esha_files/
documents/SHERPA/SHERPA_fiche_the_technologyl.pdf>.
56 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr 2008 <
http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
57 European Small Hydropower Association. “Environmental Integration of Small
Hydropower Plants.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_EN.pdf>.
58 New Energy Finance. “New Energy Finance Desktop 3.0.” New Energy Finance. 11
Sept 2008 <http://www.newenergymatters.com>.
59 Thematic Network on Small Hydropower. Guide on How to Develop a Small
Hydropower Plant. 2004. Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Part
_1_Guide_on_how_to_develop_a_small_hydropower_plant-_Final.pdf>.
60 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
61 Fundación Solar. “Memoria de Labores – 2006-2007.” Fundación Solar. June
2007. 12 Mar 2008 <http://www.fundacionsolar.org.gt/
Documentos/Memoria%20FS%20ARTE%20FINAL.pdf>.
62 E-mail communications with Marta Riviera, Fundación Solar, June 4, 2008.
63 European Small Hydropower Association. “Small Hydropower for Developing
Countries.” 6 Dec. 2007
<http://www.esha.be/fileadmin/esha_files/documents/publications/publications/Broc
hure_SHP_for_Developing_Countries.pdf>.
Endnotes Section 4.3
1 Hulen, J.B. and P.M. Wright. “Geothermal Resources.” Geothermal Energy May
2001: p 4. Energy and Geoscience Institude of the University of Utah. Dec. 3, 2007
< http://www.geothermal.org/GeoEnergy.pdf>.
2 Geothermal Energy Association (GEA). “All About Geothermal Energy –
Environment.” GEA. n.d. GEA. Dec. 4, 2007 <http://www.geo-
energy.org/aboutGE/environment.asp>.
3 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr 2008 <
http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
4 International Geothermal Association. “Installed Generating Capacity.” 29 July
2008. 1 Sept 2008 <http://iga.igg.cnr.it/geoworld/geoworld.php?sub=elgen>.
5 Geothermal Resources Council. “World Geothermal Generation 2001-2005.” GRC
Bulletin. May/June 2006. 1 Sept 2008
<http://www.geothermal.org/articles/worldpower05.pdf>.
6 Polaris Geothermal. “San Jacinto Tizate.” 1 Sept 2008 <
http://www.polarisgeothermal.com/eng/san_jacinto_tizate.php>.
7 Business News Americas. “Ormat inicia operaciones comerciales de Amatitlán.”
Business News Americas. 7 Nov 2007. 30 Jan 2008 <http://www.factiva.com>.
8 Hulen, J.B. and P.M. Wright. “Geothermal Energy for Electric Power.” Geothermal
Energy May 2001: p 5. Energy and Geoscience Institude of the University of Utah.
Dec. 3, 2007 < http://www.geothermal.org/GeoEnergy.pdf>.
9 Hulen, J.B. and P.M. Wright. “Geothermal Energy for Electric Power.” Geothermal
Energy May 2001: p 5. Energy and Geoscience Institude of the University of Utah.
Dec. 3, 2007 < http://www.geothermal.org/GeoEnergy.pdf>.
10 Geothermal Energy Association (GEA). “All About Geothermal Energy – Basics.”
GEA. n.d. GEA. Dec. 3, 2007 <http://www.geo-energy.org/aboutGE/basics.asp>.
11 Hulen, J.B. and P.M. Wright. “Geothermal Energy for Electric Power.” Geothermal
Energy May 2001: p 5. Energy and Geoscience Institude of the University of Utah.
Dec. 3, 2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
12 Hulen, J.B. and P.M. Wright. “Minimal Environmental Impact.” Geothermal Energy
May 2001: p 7. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
13 Geothermal Energy Association. “All About Geothermal Energy – Environment.”
GEA. n.d. GEA. Dec. 12, 2007 <http://www.geo-energy.org/aboutGE/
environment.asp>.
14 Geothermal Energy Association. “All About Geothermal Energy – Environment.”
GEA. n.d. GEA. Dec. 12, 2007 <http://www.geo-energy.org/aboutGE/
environment.asp>.
15 Hulen, J.B. and P.M. Wright. “Minimal Environmental Impact.” Geothermal Energy
May 2001: p 7. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
16 Hulen, J.B. and P.M. Wright. “Minimal Environmental Impact.” Geothermal Energy
May 2001: p 7. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
17 Hulen, J.B. and P.M. Wright. “Minimal Environmental Impact.” Geothermal Energy
May 2001: p 7. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
18 Business News Americas. “CFE: Solicitud de información por parte de Semarnat no
es inusual.” Business News Americas. 9 July 2008. 15 Aug 2008
<http://www.factiva.com>.
19 Business News Americas. “CFE contempla desarrollar apenas 25 MW en Cerritos
Colorados.” Business News Americas. 14 Feb 2008. 4 Mar 2008
<http://www.factiva.com>.
20 Hulen, J.B. and P.M. Wright. “Geothermal Energy for Electric Power.” Geothermal
Energy May 2001: p 5. Energy and Geoscience Institude of the University of Utah.
Dec. 3, 2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
21 Hulen, J.B. and P.M. Wright. “Geothermal Resources.” Geothermal Energy May
2001: p 3. Energy and Geoscience Institude of the University of Utah. Dec. 3, 2007
<http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
22 Geothermal Energy Association (GEA). “Executive Summar.” Factors Affecting
Costs of Geothermal Power Development Aug. 2005: p 4. Dec. 5, 2007
<http://www.geo-energy.org/publications/reports/Factors%20Affecting%20
Cost%20of%20Geothermal%20Power%20Development%20-
%20August%202005.pdf>.
23 Hulen, J.B. and P.M. Wright. “Geothermal Heat for Direct Use.” Geothermal Energy
May 2001: p 6. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 < http://www.geothermal.org/GeoEnergy.pdf
http:// www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
24 Hulen, J.B. and P.M. Wright. “Minimal Environmental Impact.” Geothermal Energy
May 2001: p 7. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
25 Hulen, J.B. and P.M. Wright. “Minimal Environmental Impact.” Geothermal Energy
May 2001: p 7. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
26 Hulen, J.B. and P.M. Wright. “Geothermal Resources.” Geothermal Energy May
2001: p 3. Energy and Geoscience Institude of the University of Utah. Dec. 3, 2007
<http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
27 Schirber, Michael. “Whatever Happened to Geothermal Energy ?“ LiveScience Dec.
4, 2007. Dec. 4, 2007 <http://www.livescience.com/environment/071204-
geothermal-energy.html>.
28 US Department of Energy Geothermal Technologies Program. “Evaluation of
Enhanced Geothermal Systems Technology.” US Department of Energy Energy
Efficiency and Renewable Energy Program (EERE). 2008. 22 Sept 2008
<http://www1.eere.energy.gov/geothermal/pdfs/evaluation_egs_tech_2008.pdf>.
Global Trends | Section 4 191
29 Schirber, Michael. “Whatever Happened to Geothermal Energy ?“ LiveScience Dec.
4, 2007. Dec. 4, 2007 <http://www.livescience.com/environment/071204-
geothermal-energy.html>.
30 Pribnow, D.F.C. & Hamza, V.M. “Enhanced Geothermal Systems: New Perspectives
for Large Scale Exploitation of Geothermal Resources in South America.”
http://www.bgr.de/veransta/igc2000/pribnow_ext_abst.pdf
31 Hulen, J.B. and P.M. Wright. “Minimal Environmental Impact.” Geothermal Energy
May 2001: p 7. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
32 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr 2008 <
http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>.
33 Hulen, J.B. and P.M. Wright. “Minimal Environmental Impact.” Geothermal Energy
May 2001: p 7. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
34 Hulen, J.B. and P.M. Wright. “Minimal Environmental Impact.” Geothermal Energy
May 2001: p 7. Energy and Geoscience Institude of the University of Utah. Dec. 3,
2007 <http://www.egi.utah.edu/geothermal/GeothermalBrochure.pdf>.
35 Geothermal Energy Association (GEA). “Executive Summar.” Factors Affecting
Costs of Geothermal Power Development Aug. 2005: p 4. Dec. 5, 2007
<http://www.geo-energy.org/publications/reports/Factors%20Affecting%20
Cost%20of%20Geothermal%20Power%20Development%20-
%20August%202005.pdf>.
36 Geothermal Energy Association (GEA). “Executive Summar.” Factors Affecting
Costs of Geothermal Power Development Aug. 2005: p 4. Dec. 5, 2007
<http://www.geo-energy.org/publications/reports/Factors%20Affecting%
20Cost%20of%20Geothermal%20Power%20Development%20-
%20August%202005.pdf>.
37 New Energy Finance. “New Energy Finance Desktop 3.0.” New Energy Finance.
11 Sept 2008 <http://www.newenergymatters.com>.
38 Joynes-Burgess, Kate. “Deputies Back Plan to Exploit Geothermal Energy in Costa
Rica National Parks,” Global Insight Daily Analysis. 15 July 2008.
39 Konrad, Tom. “Geothermal: The Other Base Load Power.” Alternative Energy
Stocks. 21 Oct 2007. 22 Sept 2008 <http://www.altenergystocks.com/
archives/2007/10/geothermal_the_other_base_load_power.html>.
40 US Department of Energy Geothermal Technologies Program. “Evaluation of
Enhanced Geothermal Systems Technology.” US Department of Energy Energy
Efficiency and Renewable Energy Program (EERE). 2008. 22 Sept 2008
<http://www1.eere.energy.gov/geothermal/pdfs/evaluation_egs_tech_2008.pdf>.
41 World Bank Group. “Innovative “Geofund” Program Supports The International
Geothermal Association And Hungarian Oil And Gas Company To Promote
Geothermal Energy Development.” World Bank. 15 Nov 2006. 13 Mar 2008 <
Endnotes Section 4.4
1 Global Wind Energy Council. “Global Wind 2007 Report.” GWEC. May 2008. 1
June 2008 < http://www.gwec.net/fileadmin/documents/test2/gwec-08-
update_FINAL.pdf>.
2 Global Wind Energy Council. “Global Wind 2007 Report – Second Edition.” May
2008. 1 Sept 2008 < http://www.gwec.net/fileadmin/documents/test2/gwec-08-
update_FINAL.pdf>.
3 Global Wind Energy Council. “Global Wind 2007 Report – Second Edition.” May
2008. 1 Sept 2008 < http://www.gwec.net/fileadmin/documents/test2/gwec-08-
update_FINAL.pdf>.
4 OLADE. “Sistema de Información Económica Energética.” OLADE. Nov 2007. 1
Sept 2008 <http://www.olade.org/documentos2/plegablecifras-2006.pdf>.
5 Latin America Wind Energy Association. “Latin America Wind News – Boletin 09.”
11 Jan 2008. 22 Sept 2008
<http://www.lawea.org/newsletter/eng/0111/index.html>.
6 New Energy Finance. “NEF Desktop 3.0.” 10 Sept 2008
<http://www.newenergymatters.com>.
7 Danish Wind Industry Association. “Power Coefficient.” Danish Wind Industry
Association. 12 May 2003. Danish Wind Industry Association. 18 Dec. 2007
<http://www.windpower.org/en/tour/wres/cp.htm>.
8 American Wind Energy Association. “Wind Energy Basics.” American Wind Energy
Association, 27 Nov. 2007, <http://www.awea.org/faq/wwt_basics.html>.
9 American Wind Energy Association. “Wind Energy Basics.” American Wind Energy
Association. 2007. 27 Nov. 2007, <http://www.awea.org/faq/wwt_basics.html>.
10 de Vries, Eize. “Tall is beautiful: Why wind turbine towers are on the up.” Renewable
Energy World Magazine, Nov./Dec. 2006: Vol. 9 Issue 6, 6 Dec. 2007,
<http://www.renewable-energy-
world.com/display_article/279883/121/CRTIS/none/none/Tall-%20is-beautiful:-%20
Why-wind-turbine-towers-are-on-the-up/>.
11 American Wind Energy Association. “Wind Energy and the Environment.” American
Wind Energy Association. 2007, 27 Nov. 2007,
<http://www.awea.org/faq/wwt_environment.html>.
12 British Wind Energy Association. “Offshore Wind – Frequently Asked Questions.”
British Wind Energy Association. 2007, 27 Nov. 2007,
<http://www.bwea.com/offshore/faqs.html>.
192 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
13 American Wind Energy Association. “Wind Energy and the Environment.” American
Wind Energy Association. 2007, 27 Nov. 2007,
<http://www.awea.org/faq/wwt_environment.html>.
14 American Wind Energy Association. “Wind Energy Basics.” American Wind Energy
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15 European Wind Energy Association. “Wind Energy and the Environment.” European
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<http://www.ewea.org/index.php?id=204&no_cache=1&sword_list[]=wind&sword_lis
t[]=environment>.
16 European Wind Energy Association. “Wind Energy and the Environment.” European
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t[]=environment>.
17 European Commission. “Wind and Hydro.” ExternE – The Externalities of Energy.
1995. Vol. 6. ExternE. 28 Nov. 2007
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18 European Commission. “Wind and Hydro.” ExternE – The Externalities of Energy.
1995. Vol. 6. ExternE. 28 Nov. 2007
<http://www.externe.info/oldvolumes/vol6.pdf>.
19 British Wind Energy Association. “Offshore Wind – Frequently Asked Questions.”
British Wind Energy Association. 2007. British Wind Energy Association. 27 Nov.
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20 World Energy Council. “Renewable Energy Projects Handbook.” World Energy
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21 Solar and Wind Energy Resource Assessment (SWERA). “Central America – 50m
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22 World Energy Council. “Renewable Energy Projects Handbook.” World Energy
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23 British Wind Energy Association. “Offshore Wind – Frequently Asked Questions.”
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24 European Wind Energy Association. “Prioritizing Wind Energy Research,” European
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SRA_final.pdf>.
25 European Wind Energy Association. “Technology.” Wind Energy – The Facts 2004:
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acts_Volume_1.pdf>.
26 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr 2008 <
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27 Flowers, Larry. “Wind Energy Update.” National Renewable Energy Laboratory. 8
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28 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr 2008
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29 British Wind Energy Association. “Reference – The Economics of Wind Energy.”
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30 REN21. “Renewables 2007 – Global Status Report.” REN21. 2008. 20 Apr 2008
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31 European Wind Energy Association (EWEA). “Costs and Prices.” Wind Energy – The
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32 Danish Wind Industry Association. “Operation and Maintenance Costs for Wind
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34 Danish Wind Industry Association. “Operation and Maintenance Costs for Wind
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Endnotes Section 4.5
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2 Solarserver, The. “Photovoltaics: Solar Electricity and Solar Cells in Theory and
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September 2008 http://www.technologyreview.com/Biztech/19095/page1/ September 2008. 24 September 2008
5 NREL. “NREL Solar Cell Sets World Efficiency Record at 40.8 Percent.” National http://www.technologyreview.com/Biztech/21365/?a=f
Renewable Energy Laboratory Press Release, 13 August 2008. 25 September 2008 35 Goho, 2008.
http://www.nrel.gov/news/press/2008/625.html 36 Goho, 2008.
6 UD Daily. “UD Team sets solar cell record, joins DuPont on $100 million project.” 37 US DOE. “Solar Energy Industry Forecast: Perspectives on the U.S. Solar Market
University of Delaware Daily, 23 July 2007. 25 September 2008 Trajectory.” U.S. Department of Energy, 24 June 2008. 24 September 2008
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7 NREL. “Photovoltaics.” National Renewable Energy Laboratory, 2008. 25 September 38 Chernova, 2008.
2008 http://www.nrel.gov/learning/re_photovoltaics.html 39 US DOE. “Solar Energy Industry Forecast: Perspectives on the U.S. Solar Market
8 Miller, Claire Cain. “Thin Film Solar Companies Raise Hundreds of Millions in Trajectory.” U.S. Department of Energy, 24 June 2008. 24 September 2008
Financing.” New York Times, 9 September 2008. 24 September 2008 http://www1.eere.energy.gov/solar/solar_america/pdfs/solar_market_evolution.pdf
http://bits.blogs.nytimes.com/2008/09/11/another-thin-film-solar-company-rakes-in- 40 Chernova, Yuliya. “Shedding Light on Solar.” Wall Street Journal, 30 June 2008. 24
venture-capital/ September 2008 http://online.wsj.com/article/SB121432258309100153.html
9 Renewable Energy World. “NREL Sets Thin Film Record.” Renewable Energy World, 41 Chervona, 2008.
26 March 2008. 24 September 2008 42 Solarbuzz. “Solar Module Price Highlights: September 2008.” Solarbuzz, September
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10 NREL. “Thin Film Partnership Program - Cadmium Telluride.” National Renewable 43 Solarbuzz, 2008.
Energy Laboratory, 2008. 24 September 2008 44 Miller, 2008.
http://www.nrel.gov/pv/thin_film/pn_techbased_cadmium_telluride.html 45 Kho, Jennifer. “Thin Film Solar Will Grow Eightfold By 2010.” Seeking Alpha, 9
11 Roedern, B. von and H.S. Ullal. “The Role of Polycrystalline Thin-Film PV September 2008. 24 September 2008 http://seekingalpha.com/article/94608-thin-
Technologies in Competitive PV Module Markets.” National Renewable Energy film-solar-will-grow-eightfold-by-2010
Laboratory, 2008. 24 September 2008 46 Sun*Lab. "Big Solutions for Big Problems." Concentrating Solar Power and Sun Lab,
http://www.nrel.gov/pv/thin_film/docs/IEEE08off.pdf 2007? 25 September 2008 http://www.energylan.sandia.gov/sunlab/documents.htm
12 Volker Quaschning. “Solar Thermal Power Plants.” Volker Quaschning – Renewable
Energy and Climate Protection. n.d. Volker Quaschning. Nov. 30, 2007
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13 Spectrolab. “Frequently Asked Questions.” Spectrolab. n.d. Spectrolab. Nov. 30,
Endnotes Section 4.6
2007 http://www.spectrolab.com/prd/terres/FAQ_terrestrial.htm
1 British Wind Energy Association. “Marine Resource.” British Wind Energy
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15 US DOE – EERE. “Parabolic Trough Solar Thermal Electric Power Plants.” United
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Association. 2007. British Wind Energy Association. 11/27/2007
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16 World Energy Council. “Solar Energy.” Renewable Energy Projects Handbook Apr.
3 International Energy Agency (IEA). “Executive Summary.” Renewable Energy: RD&D
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18 Groenendaal, B.J. “Environmental Constraints.” Solar Thermal Power Technologies.
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July 2002: p 23. Nov. 30, 2007
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19 Bower, Michael. “Environmental Impacts of Renewable Energy Technologies.” Union
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of Concerned Scientists, 1992. 25 September 2008
6 Jah, Alok. “”Wave Snakes” Switch on to Harness Ocean’s Power.” The Guardian, 24
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20 Raugei, Marco, et al. “Life cycle assessment and energy pay-back time of advanced
7 Redding Energy Management Pty Ltd et al. “Marine Energy Resources.” 2%
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21 Raugei, Marco, et al. “Life cycle assessment and energy pay-back time of advanced
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9 Jah, Alok. “First Tidal Power Turbine Gets Plugged In.” The Guardian, 17 Julty 2008.
22 Mullins, Robert. “Cadmium: the Dark Side of Thin-Film.”25 September 2008. 25
29 September 2008 <http://www.guardian.co.uk/environment/2008/
September 2008 http://earth2tech.com/2008/09/25/cadmium-the-dark-side-of-thin-
jul/17/waveandtidalpower.renewableenergy>
film/
10 Gorban, Alexander N. et al. “Limits of the Turbine Efficiency for Free Fluid Flow.”
23 Texas Solar Energy Society. “Solar Photovoltaic End-of-Life.” Texas Solar Energy
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2007 <http://mystic.math.neu.edu/gorban/Gorlov2001.pdf>.
photovoltaic-end-life>
11 Composites Technology. “Tidal Turbines to Mine Marine Megawatts.” Composites
24 Fairley, Peter. “Thin Film’s Time in the Sun.” Technology Review - MIT, 2007. 24
World. June 2007. Composites World. Dec. 12, 2007
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25 Raugei, Marco, et al. “Life cycle assessment and energy pay-back time of advanced
12 Redding Energy Management Pty Ltd et al. “Marine Energy Resources.” 2%
photovoltaic modules: CdTe and CIS compared to poly-Si.” Energy, 32: 1310-1318.
Renewables Target in Power Supplies 06/18/06: p 95. 12/05/07
2006.
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26 World Energy Council. “Solar Energy.” Renewable Energy Projects Handbook Apr.
13 Redding Energy Management Pty Ltd et al. “Marine Energy Resources.” 2%
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27 World Energy Council. “Solar Energy.” Renewable Energy Projects Handbook Apr.
<http://www.greenhouse.gov.au/markets/mret/pubs/10_marine.pdf>.
2004: p 12. Nov. 26, 2007 http://www.worldenergy.org/documents/handbook04.pdf
14 United States Department of Energy (DOE) - Energy Efficiency and Renewable
28 World Energy Council. “Solar Energy.” Renewable Energy Projects Handbook Apr.
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29 World Energy Council. “Solar Energy.” Renewable Energy Projects Handbook Apr.
15 United States Department of Energy (DOE) - Energy Efficiency and Renewable
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30 World Energy Council. “Solar Energy.” Renewable Energy Projects Handbook Apr.
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31 Solar Energy Industries Association (SEIA). “Solar Energy Types.” SEIA. n.d. SEIA.
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17 United States Department of Energy (DOE) - Energy Efficiency and Renewable
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Global Trends | Section 4 193

18 United States Department of Energy (DOE) - Energy Efficiency and Renewable
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19 The Oil Drum. “Tapping the Source: The Power of the Oceans.” 24 February 2008.
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21 Redding Energy Management Pty Ltd et al. “Marine Energy Resources.” 2%
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<http://www.greenhouse.gov.au/markets/mret/pubs/10_marine.pdf>.
22 Redding Energy Management Pty Ltd et al. “Marine Energy Resources.” 2%
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25 Redding Energy Management Pty Ltd et al. “Marine Energy Resources.” 2%
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26 United States Department of Energy (DOE) - Energy Efficiency and Renewable
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27 Redding Energy Management Pty Ltd et al. “Marine Energy Resources.” 2%
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28 Redding Energy Management Pty Ltd et al. “Marine Energy Resources.” 2%
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29 Geothermal Energy Association (GEA). “All About Geothermal Energy – Power Plant
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Endnotes Section 4.7
1 International Energy Agency Bioenergy Task Force Executive Committee. “Potential
Contribution of Bioenergy to the World’s Future Energy Demand.” Sept. 2007. Dec.
2007 <http://www.ieabioenergy.com/LibItem.aspx?id=5584>; Renewable Fuels
Association. “RFA – The Industry – Industry Statistics – Annual World Ethanol
Production by Country.” 30 Nov. 2007
<http://www.ethanolrfa.org/industry/statistics/#E>; and European Biodiesel Board.
“2006-07 production statistics confirm a strong growth in the EU, but legislative and
fair trade improvements are urgently needed to confirm expansion.” 17 July 2007.
Dec. 2007 <http://www.ebb-eu.org/EBBpressreleases/EBB%20press%20release%
202006%20stats%202007%20cap%20Final.pdf>.
2 N.a. “UN agency urges review of biofuel policies to ensure poor can benefit.” UN
News Service. 8 Oct. 2008.
3 Renewable Fuels Association. “RFA – The Industry – Industry Statistics – Annual
World Ethanol Production by Country.” 30 Nov. 2007
<http://www.ethanolrfa.org/industry/statistics/#E>.
4 European Biodiesel Board. “2006-07 production statistics confirm a strong growth
in the EU, but legislative and fair trade improvements are urgently needed to confirm
expansion.” 17 July 2007. Dec. 2007 <http://www.ebb-eu.org/EBBpressreleases/
EBB%20press%20release%202006%20stats%202007%20cap%20Final.pdf>.
5 N.a. International Energy Agency “Key World Energy Statistics 2008.” N.d. 2008.
Paris, France.
6 International Energy Agency. Accessed 10 Sept. 2008.
http://iea.org/Textbase/stats/renewdata.asp?COUNTRY_CODE=29&Submit=Submit
7 Excludes residential biogas use.
8 International Energy Agency. Accessed 10 Sept. 2008.
http://iea.org/Textbase/stats/renewdata.asp?COUNTRY_CODE=29&Submit=Submit
9 Garten Rothkopf. A Blueprint for Green Energy in the Americas. 2006. 12 Dec.
2007 <http://gartenrothkopf.com/content/index.cfm/ContentID/2646/
SectionID/858>.
10 United States Department of Agriculture. The Economic Feasibility of Ethanol
Production from Sugar in the United States. July 2006. Dec. 2007
<www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf>.
194 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf
11 Ibid.
12 Ibid.
13 The European Anaerobic Digestion Network. Accessed on 18 Jan. 2008.
http://www.adnett.org/index.html
14 European Biomass Industry Association. Accessed 18 Jan. 2008.
http://www.eubia.org/108.0.html
15 United States Department of Agriculture. The Economic Feasibility of Ethanol
Production from Sugar in the United States. July 2006. Dec. 2007
<www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf>.
16 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007. Dec. 2007
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
17 Ibid.
18 Ibid.
19 International Energy Agency. “Biofuels For Transport: An International Perspective.”
2004. Dec. 2007 <http://www.iea.org/textbase/nppdf/free/2004/biofuels2004.pdf>.
20 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007. Dec. 2007
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
21 Ibid.
22 National Ethanol Vehicle Coalition. “2007 Federal Legislative Agenda, 1st Session,
110th Congress.” January 19, 2007.
23 International Energy Agency. “Biofuels For Transport: An International Perspective.”
2004. Dec. 2007 <http://www.iea.org/textbase/nppdf/free/2004/biofuels2004.pdf>.
24 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007. Dec. 2007
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
25 International Energy Agency. “Biofuels For Transport: An International Perspective.”
2004. Dec. 2007 <http://www.iea.org/textbase/nppdf/free/2004/biofuels2004.pdf>.
26 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007. Dec. 2007
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
27 International Energy Agency. “Biofuels For Transport: An International Perspective.”
2004. Dec. 2007 <http://www.iea.org/textbase/nppdf/free/2004/biofuels2004.pdf>.
28 Nielsen, Stephan. “Just How Liquid Are Biofuels?” New Energy Finance. Vol. 5,
Issue 6, Oct. 2007.
29 International Energy Agency. “Biofuels For Transport: An International Perspective.”
2004. Dec. 2007 <http://www.iea.org/textbase/nppdf/free/2004/biofuels2004.pdf>.
30 International Energy Agency Bioenergy Task Force Executive Committee. “Potential
Contribution of Bioenergy to the World’s Future Energy Demand.” Sept. 2007. Dec.
2007 <http://www.ieabioenergy.com/LibItem.aspx?id=5584>; Renewable Fuels
Association. “RFA – The Industry – Industry Statistics – Annual World Ethanol
Production by Country.” 30 Nov. 2007
<http://www.ethanolrfa.org/industry/statistics/#E>; and European Biodiesel Board.
“2006-07 production statistics confirm a strong growth in the EU, but legislative and
fair trade improvements are urgently needed to confirm expansion.” 17 July 2007.
Dec. 2007 <http://www.ebb-
eu.org/EBBpressreleases/EBB%20press%20release%202006%20stats%202007%
20cap%20Final.pdf>.
31 Fraiture, Charlotte de, Mark Giordano, Liao Yongsong. “Biofuels and implications for
agricultural water use: blue impacts of green energy.” International Water
Management Institute. Oct. 2007. Dec. 2007
<http://www.iwmi.cgiar.org/EWMA/files/papers/Biofuels%20-%20Charlotte.pdf>.
32 U.S. Department of Energy — Energy Information Administration. “Biofuels in the
U.S. Transportation Sector.” Feb. 2007. Dec. 2007
<http://www.eia.doe.gov/oiaf/analysispaper/biomass.html>.
33 Fraiture, Charlotte de, Mark Giordano, Liao Yongsong. “Biofuels and implications for
agricultural water use: blue impacts of green energy.” International Water
Management Institute. Oct. 2007. Dec. 2007
<http://www.iwmi.cgiar.org/EWMA/files/papers/Biofuels%20-%20Charlotte.pdf>.
34 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007. Dec. 2007
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
35 Ibid.
36 McElroy, Anduin Kirkbride. “Pipeline Potential.” Biodiesel Magazine. Feb. 2007.
Dec. 2007 <http://biodieselmagazine.com/article-print.jsp?article_id=1441>.
37 “Ethanol pipeline a possibility, to link Nebraska to Chicago, California, Southeast,”
Biofuels Digest, September 19, 2007.
http://biofuelsdigest.com/blog2/2007/09/19/ethanol-pipeline-a-possibility-to-link-
nebraska-to-chicago-california-southeast/
38 Biofuels Digest. “Ethanol pipeline a possibility, to link Nebraska to Chicago,
California, Southeast.” 19 Sept. 2007. Dec. 2007
<http://biofuelsdigest.com/blog2/2007/09/19/ethanol-pipeline-a-possibility-to-link-
nebraska-to-chicago-california-southeast/>.
39 Fan, Grace. “Cosan Warns Against Petrobras Ethanol Pipeline.” Dow Jones
Newswires. 24 Sept. 2007. Dec. 2007
<http://www.cattlenetwork.com/content.asp?contentid=162861>.
40 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007.
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
41 Jungingner, Martin et al. “Sustainable International Bioenergy Trade: Securing
Supply and Demand.” IEA Task 40. N.d.
42 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007.
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
43 Rhode, Robert cites Emission Database for Global Atmospheric Research version
3.2, fast track 2000 project. Accessed 15 Oct. 2008.
http://en.wikipedia.org/wiki/Image:Greenhouse_Gas_by_Sector.png
44 Ibid.
45 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007. Dec. 2007
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
46 Tustin, John. “Co-utilization of Biomass with Fossil Fuels,” IEA Bioenergy
Secretariat. Rotorua, New Zealand. 25 May 2005.
47 IEA. Accessed 10 Oct. 2008. http://wds.iea.org/WDS/TableViewer/tableView.aspx
48 Ibid.
49 Eaglesham, Allan, William F. Brown, and Ralph W.F. Hardy. The Biobased Economy
of the Twenty-First Century: Agriculture Expanding into Health, Energy, Chemicals,
and Materials. Report 12, Ithaca: National Agricultural Biotechnology Council, 2000.
50 Green Car Congress. “Bioremediation for Mined Land to Grow Biodiesel
Feedstock.” 6 May 2005. December 2007
<http://www.greencarcongress.com/2005/05/bioremediation_.html>.
51 Biopact. “Geneticist finds switchgrass could bridge bioenergy and conservation.”
15 Oct. 2007. Dec. 2007 <http://biopact.com/2007/10/geneticist-finds-switchgrass-
could.html>.
52 BusinessWeek. “Here Comes Pond Scum Power.” 3 Dec. 2007.
<http://www.businessweek.com/magazine/content/07_49/b4061075.htm>.
53 Fraiture, Charlotte de, Mark Giordano, Liao Yongsong. “Biofuels and implications for
agricultural water use: blue impacts of green energy.” International Water
Management Institute. Oct. 2007. Dec. 2007
<http://www.iwmi.cgiar.org/EWMA/files/papers/Biofuels%20-%20Charlotte.pdf>.
54 Ibid.
55 Green Car Congress. “National Research Council Warns on Water Impact of
Accelerating Biofuels Production.” 10 Oct. 2007. Dec. 2007
<http://www.greencarcongress.com/2007/10/national-resear.html>.
56 Fraiture, Charlotte de, Mark Giordano, Liao Yongsong. “Biofuels and implications for
agricultural water use: blue impacts of green energy.” International Water
Management Institute. Oct. 2007. Dec. 2007
<http://www.iwmi.cgiar.org/EWMA/files/papers/Biofuels%20-%20Charlotte.pdf>.
57 Engelhaupt, Erika, “Biofueling water problems.” Environmental Science and
Technology Online. 10 Oct. 2007. Dec. 2007 <http://pubs.acs.org/subscribe/
journals/esthag-w/2007/oct/policy/ee_biofuels.html>.
58 Barta, Patrick. “Jatropha Plant Gains Steam in Global Race for Biofuels.” Wall Street
Journal. 24 Aug. 2007. Dec. 2007
<http://online.wsj.com/article/SB118788662080906716.html>.
59 Doornbosch, Richard and Ronald Steenblik. “Biofuels: Is the Cure Worse than the
Disease?” OECD Round Table on Sustainable Development. 11 Sept. 2007. Dec.
2007 <http://media.ft.com/cms/fb8b5078-5fdb-11dc-b0fe-0000779fd2ac.pdf>.
60 International Energy Agency Bioenergy Task Force Executive Committee. “Potential
Contribution of Bioenergy to the World’s Future Energy Demand.” Sept. 2007. Dec.
2007 <http://www.ieabioenergy.com/LibItem.aspx?id=5584>.
61 Ibid.
62 U.S. Department of Energy Biomass Program. “Biomass Feedstocks.” 1 Dec. 2007
<http://www1.eere.energy.gov/biomass/biomass_feedstocks.html>.
63 U.S. Department of Energy Biomass Program. “Understanding Biomass as a
Source of Sugars and Energy.” 1 Dec. 2007
<http://www1.eere.energy.gov/biomass/understanding_biomass.html>.
64 U.S. Department of Energy Biomass Program. “Sugar Platform.” 1 Dec. 2007
<http://www1.eere.energy.gov/biomass/sugar_platform.html>.
65 Destexhe, Alain. “Advancing cellulosic ethanol.” Presentation to IEA Bioenergy
Group. 29 Oct. 2007. Dec. 2007
<http://www.ieabioenergy.com/DocSet.aspx?id=5668&ret=lib>.
66 Jackson, Sam. “University of Tennessee Office of Bioenergy Programs.”
Presentation to the West Tennessee Research and Education Center. 21 Aug. 2007.
Dec. 2007 <http://www.utbioenergy.org/NR/rdonlyres/C299150A-4A84-4700-84BD-
A39BD23CF57E/581/JacksonExtinservice2008.pdf>.
67 Green Car Congress. “Neste Oil Aims to Become World’s Leading Producer of
Second-Generation Renewable Diesel.” 27 Sept. 2006. Dec. 2007
<http://www.greencarcongress.com/2006/09/neste_oil_aims_.html>.
68 Green Car Congress. “Eni to Build Renewable Diesel Facilities Using UOPs
Ecofining Biomass Hydrogenation Technology.” 20 June 2007. Dec. 2007
<http://www.greencarcongress.com/2007/06/eni_to_build_re.html>; Honeywell.
“Galp Energia Selects UOP/Eni Ecofining Technology to Produce Green Diesel Fuel
from Biofeedstocks.” 28 Nov. 2007. Dec. 2007
<http://www.honeywell.com/sites/portal?smap=honeywell&page=pressrel_detail&th
eme=T8&id=A59284757-0D4A-A4BF-7D09-00D1F8AF1B01&catID=cat1b754a4-
fb536f3d74-3e3e4447ab3472a0c2a5e5fdc1e6517d&c=n>.; and Green Car
Congress. “Neste Oil to Build 245M Gallon/Year NExBTL Renewable Diesel Plant in
Singapore.” 30 Nov. 2007. Dec. 2007
<http://www.greencarcongress.com/2007/11/neste-oil-to-bu.html>.
69 Bradley, Doug. “European Market Study for BioOil (Pyrolysis Oil).” IEA Bioenergy
Task 40. 15 Dec. 2006. Dec. 2007 <http://www.bioenergytrade.org/downloads/
bradleyeuropeanbiooilmarketstudyfinaldec15.pdf>.
70 U.S. Department of Energy Biomass Program. “Biomass Gasification.” 3 Dec. 2007
<http://www1.eere.energy.gov/biomass/printable_versions/gasification.html>.
71 Ibid.
72 Green Car Congress. “Volkswagen and Daimler Buy Stakes in BTL Company
CHOREN.” 11 Oct. 2007. Dec. 2007
<http://www.greencarcongress.com/2007/10/volkswagen-and-.html>.
73 Green Car Congress. “Tyson and Syntroleum to Develop Renewable Synthetic Fuels
Plants.” 25 June 2007. Dec. 2007
<http://www.greencarcongress.com/2007/06/tyson-and-syntr.html>.
74 UN Food and Agriculture Organization Global Bioenergy Partnership (GBEP). A
Review of the Current State of Bioenergy Development in G8 +5 Countries. 2007.
Dec. 2007 <www.fao.org/docrep/010/a1348e/a1348e00.htm>.
75 International Energy Agency Bioenergy Task Force Executive Committee. “Potential
Contribution of Bioenergy to the World’s Future Energy Demand.” Sept. 2007. Dec.
2007 <http://www.ieabioenergy.com/LibItem.aspx?id=5584>; Renewable Fuels
Association. “RFA – The Industry – Industry Statistics – Annual World Ethanol
Production by Country.” 30 Nov. 2007
<http://www.ethanolrfa.org/industry/statistics/#E>; and European Biodiesel Board.
“2006-07 production statistics confirm a strong growth in the EU, but legislative and
fair trade improvements are urgently needed to confirm expansion.” 17 July 2007.
Dec. 2007 <http://www.ebb-
eu.org/EBBpressreleases/EBB%20press%20release%202006%20stats%202007%
20cap%20Final.pdf>.
76 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007. Dec. 2007
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
77 International Energy Agency. “Biofuels for Transport: An International Perspective”.
Paris, 2004.
78 International Energy Agency. “Biofuels For Transport: An International Perspective.”
2004. Dec. 2007 <http://www.iea.org/textbase/nppdf/free/2004/biofuels2004.pdf>.
79 United States Department of Agriculture. The Economic Feasibility of Ethanol
Production from Sugar in the United States. July 2006. Dec. 2007
<www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf>.
80 Doornbosch, Richard and Ronald Steenblik. “Biofuels: Is the Cure Worse than the
Disease?” OECD Round Table on Sustainable Development. 11 Sept. 2007. Dec.
2007 <http://media.ft.com/cms/fb8b5078-5fdb-11dc-b0fe-0000779fd2ac.pdf>.
81 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007.
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
82 F.O. Lichts. “Ethanol Production Costs – A Worldwide Survey.”. F.O. Lichts, 2007.
83 Ibid.
84 United States Department of Agriculture. The Economic Feasibility of Ethanol
Production from Sugar in the United States. July 2006. Dec. 2007
<www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf>.
85 International Energy Agency. “Biofuels For Transport: An International Perspective.”
2004. Dec. 2007 <http://www.iea.org/textbase/nppdf/free/2004/biofuels2004.pdf>.
86 F.O. Lichts. “Ethanol Production Costs – A Worldwide Survey”. F.O. Lichts, 2007.
87 Childs, Britt and Rob Bradley. Plants at the Pump: Biofuels, Climate Change, and
Sustainability. World Resources Institute. 3 Dec. 2007. Dec. 2007
<http://www.wri.org/publication/plants-pump-biofuels-climate-change-and-
sustainability>.
88 International Energy Agency. “Biofuels For Transport: An International Perspective.”
2004. Dec. 2007 <http://www.iea.org/textbase/nppdf/free/2004/biofuels2004.pdf>.
89 United States Department of Agriculture. The Economic Feasibility of Ethanol
Production from Sugar in the United States. July 2006. Dec. 2007
<www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf>.
90 Radich, Anthony. “Biodiesel Performance, Costs, and Use.” U.S. Department of
Energy Energy Information Administration. Dec. 1 2007
<http://www.eia.doe.gov/oiaf/analysispaper/biodiesel/>.
91 Doornbosch, Richard and Ronald Steenblik. “Biofuels: Is the Cure Worse than the
Disease?” OECD Round Table on Sustainable Development. 11 Sept. 2007. Dec.
2007 <http://media.ft.com/cms/fb8b5078-5fdb-11dc-b0fe-0000779fd2ac.pdf>.
92 BBC News. “Castro hits out at U.S. biofuel use.” 29 Mar. 2007. 12 Dec. 2007
<http://news.bbc.co.uk/2/hi/americas/6505881.stm>.
Global Trends | Section 4 195
93 Associated Press. “Ethanol boom, rising corn prices divide farm lobbyists.” 17
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94 IRIN Africa. “Global: UN food agency regrets “crime against humanity” label on
biofuels.” UN Office for the Coordination of Humanitarian Affairs. 1 Nov. 2007. Dec.
2007 <http://www.irinnews.org/report.aspx?ReportID=75104>.
95 Parija, Pratik, and Bibhudatta Pradhan. “India Makes Sale of Ethanol-Blended Fuel
Compulsory.” Bloomberg. 9 Oct. 2007. Dec. 2007
<http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNXNYwiMWwi4>.
96 Bloomberg. “Thailand to double ethanol content in petrol.” 6 Nov. 2007. Dec. 2007
<http://biz.thestar.com.my/news/story.asp?file=/2007/11/6/business/19388585&sec
=business>.
97 da Silva, President Luiz Inácio Lula. “Speech to the International Conference on
Biofuels.” 5 July 2007. Dec. 2007
<http://www.brazil.org.uk/newsandmedia/speeches_files/20070705.html>.
98 Pomeroy, Robin. “Interview – Biofuel can help poor as well as climate – FAO.”
Reuters. 5 June 2007. Dec. 2007
<http://www.alertnet.org/thenews/newsdesk/L04384353.htm>.
99 da Silva, President Luiz Inácio Lula. “Speech to the International Conference on
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<http://www.brazil.org.uk/newsandmedia/speeches_files/20070705.html>.
100 Yergin, Daniel. “The Fundamentals of Energy Security.” Testimony for the
Committee on Foreign Affairs, U.S. House of Representatives. 22 Mar. 2007. Dec.
2007 <http://foreignaffairs.house.gov/110/yer032207.htm>.
101 International Energy Agency Bioenergy Task Force Executive Committee.
“Potential Contribution of Bioenergy to the World’s Future Energy Demand.” Sept.
2007. Dec. 2007 <http://www.ieabioenergy.com/LibItem.aspx?id=5584

196 A Blueprint for Green Energy in the Americas 2009 | Garten Rothkopf