Abstract
With increasing concerns about rising energy demand and cost, diminishing oil reserves, and climate change, Central American and Caribbean (CAC) nations have the opportunity to become producers of low-carbon sustainable biofuels for domestic consumption and foreign exchange earnings. While the region has a number of comparative advantages for developing a vibrant biofuels sector, including favorable climate and significant agricultural experience, the experience under the favorable Caribbean Basin Initiative (CBI) has exposed significant technical and non-technical barriers that must be overcome. Using information compiled through interviews with industry executives, government policy makers and civil society stakeholders, we provide a critical analysis of this experience focusing on non-technical barriers to investment. Survey results suggest that political uncertainty, poor regulatory frameworks, and lack of institutional commitment and business incentives are the main non-technical barriers. Having laid out the challenges, we propose potential policy positions to stimulate growth of the regional biofuels sector. Results point to the need to prioritize enhancing national legislation, developing risk prevention plans, creating supply and demand side incentives and increasing multilateral collaboration. While these findings are derived from the Caribbean Basin experience, they may also be applicable to small economies in other regions that are considering policies for biofuels industry development.
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Notes
Estimates are based on basic resource potential and assume that it makes economic sense to convert such feedstocks to energy.
Bagasse is the fiber left over after the juice has been squeezed out of sugarcane stalks. As biomass, it is used to manufacturing cellulosic ethanol.
Vinasse is a liquid residue generated during sugarcane ethanol distillation that represents an environmental concern for the ethanol industry. It is acidic with high biological oxygen demand.
Information about Caribbean Central American Action (CCAA) can be obtained at http://www.ccaa.org. Reports on CCAA’s Annual Miami Conference, listing these forums and speakers are also available online.
Quantitative researchers point out social desirability bias (the inclination of the interviewee to say what he believes is the social expectation) is a problem in some studies; but can ultimately be minimized by agreements of anonymity between research and respondent (Shah and Rivera 2007).
The revised Renewable Fuel Standard (RFS2) is a mandate implemented by the U.S. Environmental Protection Agency (EPA) in 2010 under the Clean Air Act (CAA), which aims to boost biofuel production in the U.S.
It is part of the Global Sustainable Energy Islands Initiative (GSEII), which is a consortium of governments and NGOs supported by the Organization of American States, the United States Agency for International Development (USAID) and others.
Although Infinity Bio-Energy and the Jamaican government failed to strike an agreement for the privatization of the country’s sugar factories, the case illustrates a genuine effort to put adequate funds into Caribbean basin programs. Later, Kingston reopened its search for potential buyers (Liskey 2009) and successfully concluded the divestiture.
This term first became prominent in 2007, when energy security was the main focus of U.S. President George W. Bush’s Latin American tour, in which he met with Brazil’s president Luiz Inacio Lula da Silva. They sought a common agenda to promote the production and use of sugar cane-based ethanol throughout Latin America and the Caribbean (Colitt 2007)
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Acknowledgements
The authors thank the management of Caribbean Central American Action (CCAA) of Washington D.C. for its support of this research and the access to reports, documentation and participants of the Energy and Biofuels forums of its Annual Miami Conferences held between 2006 and 2010. We also thank the many energy and biofuels industry executives, government officials, and academic experts who attended these forums and provided interviews and comments to the authors.
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Shah, K.U., Philippidis, G., Dulal, H.B. et al. Developing biofuels industry in small economies: Policy experiences and lessons from the caribbean basin initiative. Mitig Adapt Strateg Glob Change 19, 229–253 (2014). https://doi.org/10.1007/s11027-012-9437-8
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DOI: https://doi.org/10.1007/s11027-012-9437-8