Project Document An assessment of the economic and social impacts of climate change on the energy sector in the Caribbean Ramón Martín Charmaine Gomes Dillon Alleyne Willard Phillips Economic Commission for Latin America and the Caribbean (ECLAC) The views expressed in this document, which has been reproduced without formal editing, are those of the author and do not necessarily reflect those of the Organization. LC/CAR/L.397 Copyright © United Nations, February 2013. All rights reserved Printed in Santiago, Chile – United Nations ECLAC – Project Documents collection The economic and social impacts of climate change on the energy... Contents Executive summary .................................................................................................................... 7 I. Introduction ......................................................................................................................... 9 II. Climate change and the energy sector in the Caribbean: a literature review ........................13 A. Energy and clilmate change ........................................................................................13 1. Effects of climate change on energy use patterns ................................................13 2. Effects of energy production on climate change ...................................................15 3. Effects of climate change on energy production ...................................................16 B. Overview of concerns and main challenges ................................................................18 1. Energy security ...................................................................................................18 2. Energy efficiency .................................................................................................20 3. Energy and economy ..........................................................................................21 4. Energy management and social impacts .............................................................24 5. Resource assessment .........................................................................................25 6. Barriers ...............................................................................................................26 7. Regulatory processes..........................................................................................27 8. Social impacts .....................................................................................................29 III. Methodology ......................................................................................................................31 A. General description of the methodology ......................................................................31 B. Data collection and analysis........................................................................................32 1. Temperature, relative humidity and wind speed ...................................................32 2. Socio-demographic variables ..............................................................................34 3. Energy variable ...................................................................................................35 C. Methods and models: cost-benefit analysis and financial analysis ...............................36 1. Artifiicial neural networks .....................................................................................37 2. Generalized regression, probabilistic and linear neural networks .........................38 3. Model specifications ............................................................................................40 D. Cost benefit analysis and financial evaluation inputs ...................................................41 IV. Results ..............................................................................................................................43 A. The energy sector in the Caribbean ............................................................................43 1. Energy supplies ..................................................................................................43 2. Energy consumption in the Caribbean .................................................................45 3 ECLAC – Project Documents collection The economic and social impacts of climate change on the energy... B. Energy demand forecast using climate change variables ............................................46 1. Oil price forecast .................................................................................................47 C. Mitigation and adaptation goals, strategies and targets ...............................................49 1. First target...........................................................................................................51 2. Second target: 20 million electric light bulbs are replaced with compact fluorescent light bulbs..........................................................................................56 V. Conclusions and recommendations ....................................................................................57 A. Conclusions ................................................................................................................57 B. Recommendations ......................................................................................................58 Bibliography ..............................................................................................................................61 Annexes ....................................................................................................................................69 Annex 1: Energy sector structure .......................................................................................70 Annex 2: Title of Annex ......................................................................................................73 Annex 3: Title of Annex ......................................................................................................74 Tables Table 1 Caribbean region: CO2 emissions: 2009 ..............................................................15 Table 2 Renewable resources estimates for selected Caribbean Countries ......................20 Table 3 Qualitative level of renewable energy availability in the Caribbean .......................20 Table 4 Losses in electricity transmission and distribution in the Caribbean ......................22 Table 5 Interest of Caribbean countries in renewable energy resources ...........................26 Table 6 Availability of energy balances ............................................................................27 Table 7 National energy policies and regulations in the Caribbean ...................................28 Table 8 Energy and electricity consumption in the Caribbean 2010 ..................................29 Table 9 Caribbean country electrification levels 2009 .......................................................30 Table 10 Projected Caribbean climate variations under SRES A2 and B2: 2010 to 2050 ...................................................................................................................33 Table 11 Gross domestic product and population variations in the Caribbean under SRES A2 and B2: 2010 and 2050 .......................................................................35 Table 12 Growth in Energy consumption for selected Caribbean countries, 1970-2010 ......35 Table 13 Costs per energy source and technology .............................................................42 Table 14 Country corporate tax rates employed .................................................................42 Table 15 Total oil and natural gas primary energy supply in the Caribbean, 2000 and 2009 ...................................................................................................................43 Table 16 Main features of Caribbean petroleum sector, 2009 .............................................44 Table 17 Electricity generation capacity from renewable energy sources in the Caribbean, 2010 .................................................................................................44 Table 18 Forecast energy consumption in the Caribbean under emissions scenarios A2 and B2, 2020-2050 ........................................................................................46 Table 19 Forecast growth in energy consumption in the Caribbean under emissions scenarios A2 and B2, 2010 to 2050 .....................................................................47 Table 20 Forecast present value of economic impacts of climate change on the energy sector in the Caribbean discounted at 1%, 4% and 14% ......................................48 Table 21 Energy policy goals and strategies ......................................................................49 Table 22 Number of renewable energy projects and installed capacity in the Caribbean ...........................................................................................................50 Table 23 Summary of electricity generation and nameplate capacities in the 89 renewable energy projects, 2020-2050 ...........................................................51 Table 24 Investment cost by category for the 89 renewable energy projects, 2013-2050 ....51 Table 25 Change in electricity share of total energy consumption, 2009-2050 ....................52 Table 26 Change in renewable energy share of total electricity consumption in the Caribbean, 2009-2050.........................................................................................53