Energy Costs Implications

Energy Costs & Implications for Tourism : 

Energy Costs & Implications for Tourism Anton E. Edmunds Executive Director Caribbean Central American Action Building Tourism Resilience in Small Island Developing States June 7-9, 2006 The Bahamas

Slide 2: 

Caribbean Central American Action (CCAA) is a private, independent organization whose mission is Strengthening The Third Border®. It serves its goal by stimulating a constructive dialogue between the private and public sectors to improve the policy and regulatory environments for business on both the international and local level. The organization conducts policy-oriented programs in sectors such as agribusiness, apparel, energy, environment, financial services, intellectual property rights, telecommunications & information technology, tourism and transportation. CCAA is host to the Miami Conference on the Caribbean Basin, the premier annual gathering of its kind that brings together senior public and private sector leaders from the region, including Heads of State, to discuss trade, economic and policy issues in the Caribbean Basin. Host of Energy & the Competitiveness of the Caribbean, June 27th & 28th 2006, Trinidad & Tobago

Energy Worldwide : 

Energy Worldwide Cost of crude over US $70 on the world market Significant growth in world demand – China Natural uncertainties (extreme weather) – e.g. Katrina Political uncertainties (war/conflict) – e.g. Middle East Political/social instability in producer countries – e.g. Nigeria, Russia Unknown effect of new policies – e.g. Venezuela & Bolivia Small Island Developing States have little control of any of these factors. Decisions made by extra regional forces

Energy - Caribbean : 

Energy - Caribbean Increases in pricing has dramatic effect on national accounts Energy costs have substantial impact on both consumers/economic output Electricity costs; low: .16 cents per kilowatt-hour in Trinidad, at a high .37-.51 cents per kilowatt-hour in St.Kitts Compounded by lack of regional energy policy/consensus on balanced approach to the problem Region still dependant on supply chain operated largely by multinationals Country to country agreements (Petrocaribe) may not be the solution Little penetration of technological developments Weak legislative and regulatory frameworks mitigate against development of the sector

Impact on Tourism : 

Impact on Tourism Increasing price of fuel/energy to providers of tourism goods and services Price has/will be passed on to the consumers which allows lower cost-same segment competitors become more attractive Disproportionate impacts on small businesses which dominate the sector Highlights inefficient practices that we may employ in terms of costs Environmental: For economies largely based on tourism, pressure will increase for us to become “greener” and embrace policies that address air and water quality issues as well as to shift away from pollution and aging facilities and technologies

What’s Needed : 

What’s Needed Expanded use of renewable and energy efficient technologies Investment in regional technical capacity and recognition of these opportunities by bankers and financiers Improvements in our investment environment Recognition that price controls and regulatory uncertainty and inconsistencies dampen foreign and domestic interests Note that disparate and small markets of the region present a challenge in attracting significant financing or providing meaningful returns – CSME a opportunity

Opportunity to Review : 

Opportunity to Review Petroleum Policy Harmonization - WHY-Differences in National taxes and subsidy systems on imported fuels. - WHY-Pricing systems differ from country to country Standards and Specifications - WHY-Differences in imported fuel product specifications - WHY-Differences in transportation specs for shipments and tankers Savings through economies of scale, logistical and system efficiencies can be achieved as a region. Power Generation Policy - WHY-Access to national electricity grids and ability to utilize alternative energy product limited by national policies Security of Supply WHAT ARE-Long term implications of the PETROCARIBE negotiations WHAT OF-Sole source dependence and relations with multinationals…..flexibility

Technologies : 

Technologies Hydro How it works: Water currents turn turbines that generate electricity. Where it’s at: 7 percent of America’s electrical power, but few dams are used for hydro. Small, environmentally sound facilities could help boost capacity. What it costs: 5 – 12 cents per kilowatt-hour Wind How it works: Wind currents turn turbines that generate electricity. Where it’s at: Advances have made wind power competitive with fossil-fuel generation – if you have the right site for your farm. Wind generates 15 percent of Denmark’s electricity. What it costs: 3 - 9 cents per kilowatt-hour. Regional efforts: Jamaica, Barbados, Guadeloupe, Curacao Wave How it works: Coastal waves compress air in chambers, powering turbines to generate electricity. Deep currents can also turn the turbines. Where it’s at: Expensive-to-build facilities stand up to rough seas? What it costs: 4 - 9 cents per kilowatt-hour. Courtesy, National Renewable Energy Labs, US Department of Energy

Technologies : 

Technologies Geothermal How it works: Steam from beneath Earth’s surface turns turbines to produce electricity. Where it’s at: Power generation is feasible only in certain areas, and environmental concerns limit its application. What it costs: 4 - 6 cents per kilowatt-hour. Regional efforts: French islands, St. Lucia – OAS projects Fuel Cells How it works: Hydrogen and oxygen are combined to produce water and electricity. Where it’s at: Stationary fuel cells can electricity for homes and businesses, but infrastructure for hydrogen fuel still to be developed. Fuel-cell facilities still use carbon containing fuel such as natural gas. What it costs: 8 - 15 cents per kilowatt-hour. Courtesy, National Renewable Energy Labs, US Department of Energy

Technologies : 

Technologies Solar How it works: Arrays of photovoltaic cells convert solar rays to electricity. Where it’s at: Thin-film technology and economies of scale are reducing the relatively high cost of manufacturing solar arrays. What it costs: 12 to 40 cents per kilowatt-hour. Regional efforts: Barbados water heaters/incentives. Need for more acceptance/incentives. Opportunity for companies like BP Solar Biomass How it works: Organic waste and vegetation, ranging from straw to landfill gas, sugar are burned to power turbines that produce electricity. Ethanol and "biodiesel" are produced for cars. Where it’s at: Co-firing with conventional fuels is a low-risk, low-cost power solution. What it costs: 3 to 9 cents per kilowatt-hour. Regional efforts: Cuba/Brazil with public transportation and flex fuel cars. Jamaica to blend petroleum products with ethanol vs. MTBE. Sugar link-beneficiaries could include Guyana Courtesy, National Renewable Energy Labs, US Department of Energy

Today’s Solutions : 

Today’s Solutions Region must adopt energy efficient and conservation policies Change regulations including building codes Encourage use of eco-efficient building materials and construction technology Advocate for investment friendly policies & demand tax incentives for new technologies Dismantle monopoly framework that exists related to power generation Embrace policies like Barbados

Industry Opportunity : 

Industry Opportunity Re-brand the region as the premier Green Destination in the world Re-position the traditional Caribbean tourism product to more effectively include eco and nature based attractions Our competitive advantage in this market will be derived from authenticity of the eco-product, the entire vacation experience as increasingly knowledgeable tourists will be able to discern “green washing” easily Note - national commitments already in Dominica and others but need for regional approach Advocate/develop a industry wide regional action plan Hotels - demand resources/incentives related to renewable energy Educate political directorate :bully pulpit” Track and press CARICOM on its renewable energy program Embrace the work of CAST

Accountability : 

Accountability Challenge our Ministers “Tourism and Energy”, to: - Implement creative incentives for industry that take into consideration energy issue - Advocate greening of industry and engage in high level energy discussions Hoteliers, business owners: - Embrace new technologies and management practices - Be creative in investment thinking and decision making as it relates to energy costs - Consider not only social, economic impact but also environmental footprint Take a seat at regional energy forums. Weigh in with policy makers. Forge creative alliances with technical and policy research institutions