Energy and Global Climate Change: From Port of Spain to Copenhagen

Speakers:

• Opening Remarks: Luis Alberto Moreno, President, Inter-American Development Bank
• Moderated by: Juan Pablo Bonilla, Chief, Sustainable Energy and Climate Change Unit, Inter-American Development Bank
• Marvin Odum, President, Shell Oil Company
• Mark Lambrides, Energy and Climate Change Mitigation Division Chief, Organization of American States
• Rodney Bent, Acting Chief Executive Officer, Millennium Challenge Corporation

Summary

The Energy Action Group of the Americas Society and Council of the Americas hosted a public discussion on May 12 at the Inter-American Development Bank in Washington, DC on the challenges and opportunities for cooperation on energy and climate change in the Western Hemisphere. Following the Summit of the Americas in Trinidad and Tobago in April, and in advance of the UN Climate Change Conference in Copenhagen in December, panelists focused on priorities for the region.

Obstacles to Hemispheric Energy Security

The Western Hemisphere faces great challenges as it seeks to meet growing energy needs and reduce the impact of climate change. According to Marvin Odum, by 2050 the world will need twice as much energy as it requires today due to population growth and higher standards of living. As Luis Alberto Moreno pointed out, in Latin America alone energy demand is projected to increase 2 percent a year through 2030. Much of the electricity in Latin America is generated by hydropower, which, as Moreno noted, is a resource particularly vulnerable to climate change.

To meet demand, as well as to mitigate the effects of climate change, countries will have to diversify their energy sources, adopt cleaner energy strategies, and develop energy-conserving habits. Odum estimated that in the best-case scenario, alternative forms of energy would be able to supply, at most, 40 percent of the energy mix by 2050. But in any scenario, according to Odum, meeting demand will require an increase in the use of oil and gas, which will necessitate a reduction in carbon emissions through greater efficiency, carbon capture and storage, and others measures.

Rodney Bent noted the challenge climate change poses to development since shifts in temperature by just a few degrees affect crops, water levels, and weather patterns. The Millennium Challenge Corporation must factor the effects of climate change into its development assistance and is developing indicators to do this more effectively, according to Bent.

Opportunities in the Field of Energy

While the challenges may seem daunting, the speakers also pointed to opportunities. The declaration from the recent Summit includes a commitment to greater hemispheric cooperation to develop clean energy, diversify energy sources, and reduce the impact of energy use on the environment. Also at the Summit the United States invited countries to participate in the Energy and Climate Change Partnership of the Americas, a new initiative to promote cooperation on energy security and climate change in the region.

Globally, negotiations through the UN Framework Convention on Climate Change are underway. Countries hope to have an agreement by the end of the Copenhagen conference in December of this year. The financial crisis, which can make funding the development of alternative energy sources and carbon mitigation technologies more difficult, has provided an opportunity in the form of stimulus plans that seek to jump-start a new low-carbon economy. According to Moreno, an HSBC analysis of 20 national stimulus plans found that 15 percent of allocated funds have gone to climate friendly investments. Moreno noted that Brazil is the only country in Latin America and the Caribbean to have included climate concerns in its stimulus package.

Other positive initiatives in the hemisphere include Brazil’s leadership in biofuels and its actions to reduce emissions from deforestation; Mexico’s new renewable and sustainable energy legislation; and Canada’s efforts to introduce a cap and trade system. Odum also noted the cap and trade legislation currently being negotiated in the U.S. Congress. But he cautioned that for a cap and trade system to work, it has to include sufficient transition time and incentives so businesses and consumers can adjust; it should provide funding for environmental projects and to help ease the burden on consumers; and it should be compatible with other national systems.

Setting the Agenda

Mark Lambrides named the mitigation of energy poverty, harmonization of standards and codes, investment in infrastructure, and technology transfer and knowledge sharing as some of the important priorities in the region. But energy and climate change initiatives undergird  the regulatory frameworks which, speakers emphasized, must be updated to promote both public and private sector investment in alternative energy and carbon mitigation strategies as well as to foster public-private partnerships. Policies that support public and private investment in traditional energy sources are also key. Other essential ingredients are increased efficiency and a coordinated strategy for addressing climate change in the hemisphere.

Recognizing that all of these goals cannot be achieved in the short time before Copenhagen, Juan Pablo Bonilla asked the speakers to prioritize items they would like to see addressed in Copenhagen, focusing particularly on what the Western Hemisphere could bring to the table. Lambrides and Odum agreed that the development of a standard tool for pricing carbon would be a critical contribution from the region.

Energy Action Group

The Energy Action Group of the Americas Society and Council of the Americas convenes meetings with high-level energy leaders and experts across the Americas in order to provide input to the countries of the hemisphere as they seek to increase cooperation on energy and climate change.