Transcript Slide 1

SUMMIT IMPLEMENTATION REVIEW GROUP (SIRG)
Sixth Regular Meeting of 2008
December 10-12, 2008
Hotel Royal Decameron Salinitas
El Salvador
OEA/Ser.E
GRIC/O.6/doc.11/08
11 December 2008
Original: English
PRESENTATIONS BY THE PARTNER INSTITUTIONS OF THE
JOINT SUMMIT WORKING GROUP - JSWG
WORLD BANK
(Energy Security)
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Energy Security in Latin America
and the Caribbean and the role
of the World Bank
Summit Implementation Review Group
December 10, 2008
El Salvador
Philippe Benoit
Sector Manager, Energy
Latin America and the Caribbean
The World Bank
Outline
A. Energy Security Defined
B. Energy Security Challenges Facing the
Latin America and Caribbean Region
C. World Bank Strategy to Promote Energy
Security in the LAC Region
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Part A: Energy Security
Defined
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A. Energy Security
“Energy” for the WB means:
Power (P) [Gx, Tx, Dx; Hydro, Thermal, Wind, Coal, etc.]
+ Oil & Gas
+ Biofuels, Biomass, Nuclear
with concerns regarding Climate Change
E=P++C2
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A. Energy Security
Focus is on electricity
-- but other sources also important (oil, gas, biomass, etc)
Energy security for electricity means:
• Sufficient, secure, quality electricity at a
reasonable price
• Different countries face different challenges, but
many common issues
• Approach: respect differences while looking to
leverage off commonalities and synergies
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Part B. Energy Security
Challenges Facing the
LAC Region
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B. Energy Security Challenges Facing the Region
1. Meeting the Increasing Demand for Electricity
 Projected growth in electricity demand of 4.8% p.a.
• 100,000 MW needed in next ten years (current capacity: 250,000 MW)
• Annual investment of about US$20 billion required for related
generation, transmission and distribution
• Investment requirements still large under lower demand scenarios
 Concern over supply gap
• Load shedding in some countries
• Other countries face prospect of future supply deficit
 Concern over increasing cost of power supply
• Capital costs (hydro, wind, etc.)
• Fuel costs (thermal, etc.)
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B. Energy Security Challenges Facing the Region
2. Coping with Impact of High and Volatile Oil Prices
 Impact on region mixed, with certain countries in the Caribbean
and Central America especially vulnerable
 Challenges both for producer and consumer countries
 Despite recent fall in prices, still historically high
 Great uncertainty regarding future prices
Evolution of Oil Prices (US$)
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US$ Per Barrel
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B. Energy Security Challenges Facing the Region
2. Coping with Impact of High and Volatile Oil Prices (cont’d)

Changes in oil prices affect electricity costs
(in some cases over US cents 3/kWh per US$10/bbl increase)
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Variation on Electricity Production Costs per $50/bbl Change
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GDP impact of higher electricity costs varies:
• High impact (per $10/bbl): Jamaica (2.3%), Grenada (1.5%), Nicaragua (1%)
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• Low impact: Paraguay, Trinidad and Tobago (0%)
B. Energy Security Challenges Facing the Region
3. Including Climate Change in the Energy Equation
 Opportunity to increase role of clean energy
sources; renewed interest in hydropower
 Climate change will impact energy resources
(e.g. impact on hydrology)
{Other environmental and social impacts –
e.g., local pollution, impact on indigenous
peoples}
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B. Energy Security Challenges Facing the Region
4. Increasing Access to Electricity
 About 50 million people, mostly in rural and
poor urban areas, still lack electricity service
 About US$14 million in total needed to
increase coverage to above 95% by 2015
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B. Energy Security Challenges Facing the Region
5. A World in Flux
Financial
crisis
Oil prices
Impacts on
the real
economy
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Part C. World Bank Strategy
to Promote Energy Security
in the LAC Region
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C. WB Group Strategy to Promote Energy Security
The Approach:
World Bank
IFC
MIGA
SUPPORT THROUGH
Financing
Analytical work
Policy Reform
Collaboration
IN A CONTEXT OF
Volatile Oil
Prices
Climate
Change
Macroeconomic
Considerations
Regional
Relations
Public/ Private
Mix
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C. WBG Strategy to Promote Energy Security
1. Increase Power Supply
 Increase investments in electricity infrastructure:
• Generation, tranmission and distribution
 Diversify energy matrix:
• Promote development of lower-cost and clean power
sources
• Greater focus on renewables: hydro, wind, biomass,
biofuels, geothermal, solar
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C. WBG Strategy to Promote Energy Security
1. Increase Power Supply (cont’d)
 WBG Energy lending has increased in recent years:
•Total energy lending in FY08: $7.6b
IBRD/IDA : $4.2b FY08 ($1b FY04, $2b FY07)
•
IFC: $2.9 billion
•
MIGA guarantees $ 110 million
• New focus on clean energy:
EE, new renewable energy and large
hydro represented 35%
(US$2.7billion, an 87% increase from
FY07) of WBG energy lending in FY08
World Bank Group Energy Lending
US$ Millions
•
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
FY03
FY04
FY05
FY06
FY07
FY08
Fiscal Year
• World Bank is back in hydropower
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C. WBG Strategy to Promote Energy Security
1. Increase Power Supply (cont’d)
 Support regional integration (synergies, etc.)
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C. WBG Strategy to Promote Energy Security
2. Promote Energy Efficiency
 Demand-side management
• end-users (e.g. lighting, domestic appliances)
• policy advice and investment
 Supply-side interventions
• loss reduction
• efficiency in generation
 Energy conservation
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C. WBG Strategy to Promote Energy Security
3. Strengthen Power Sector Planning
 Better Planning for System Expansion:
• Low-cost options
• Consider all options: thermal, clean sources
• Focus on renewables, with special attention to hydro
 Managing High and Volatile Oil Prices:
• Stronger Analysis of Impacts and Options
• Improve energy efficiency
• Diversify energy matrix, reducing dependency on thermal
generation
 Support a sound public-private mix:
• Support reform of sector utilities
• Recognize differing country-specific views on appropriate public-
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private mix
C. WBG Strategy to Promote Energy Security
4. Integrate Climate Change in Power Sector Management
 Mitigation: Support renewables (large and small hydro, wind,
biomass, biofuels, geothermal) and gas
WBG: Share of renewable and EE in total energy lending is increasing
 Adaptation/Resiliency: Understand impacts and plan accordingly
(e.g. analyze hydrological changes as part of hydro dev. planning)
{Maintain attention on local pollution and other environmental
and social issues -- incl. Impacts on local populations}
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C. WBG Strategy to Promote Energy Security
5. Improve Access to Modern Energy Services for the Poor
 Support rural electrification
 Support electrification in poorer urban areas
 Improve Access to other modern energies (e.g., gas)
 Protect Affordability
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C. WBG Strategy to Promote Energy Security
6. Responding to a World in Flux
Financial
crisis
Oil prices
Impacts on
the real
economy
WBG and other Multilaterals
need to help countries to
adapt to a rapidly changing
world with evolving
development challenges
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THANK YOU
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