Opening Ceremony of the OAS Forum on Sustainable Energy for Central and North America

December 11, 2008

Thank you all for inviting me to participate in this vital discourse on renewable energy. Today’s meeting is the third in a series of sub-regional discussions on renewable energy, aimed to carry on the important discussions begun at the OAS General Assembly in Panama in 2007. The United States Government is pleased to support these events because energy security, as we know, is fundamental to the region’s development.

In its recently released annual World Energy Outlook, the International Energy Agency predicts that worldwide demand for energy will increase by 45 percent between now and the year 2030, with fossil fuels continuing to provide 80 percent of the world’s energy. The IEA further asserts that the world will need at least 26 trillion dollars of investment in the energy sector, with half of this amount just for electricity, in order to satisfy the projected increase in worldwide energy demand.

As a financial sector veteran, trust me when I tell you that $26 trillion is a lot of money! Further complicating the issue of developing adequate energy supplies are several challenges; the recent financial crisis affecting investment; declining production from current fossil fuel sources; and the long production time needed to produce new fossil fuels sources.

Looking at the situation holistically – increasing demand in the developing world, dwindling supply, uncertain credit markets, and high investment costs – industry observers have unanimously concluded that energy prices, especially for petroleum, will certainly rise in the future, and will remain higher than trend over the long term. In other words, we cannot bank on today’s temporary reduction in oil prices.

So what does this mean for the region?

First, while we have a short respite with the dip in world oil prices, any country that relies exclusively on petroleum to meet its energy needs is likely to continue to see its energy bill rise year after year into the foreseeable future. This region is one of the world’s most oil dependent regions, using oil for both transport and also for power generation. There is also the issue of a growing share of petroleum coming from insecure regions, further affecting the energy security in the region.

Second, subsidized fuel and energy prices do not encourage efficient energy use and strain fiscal accounts, especially when energy costs rise. The volatility of energy prices makes it more difficult to plan for these costs and subsidies divert money from needed social investments such as education and health. Today though, I would like to focus on ways to supplant petroleum imports with homemade, renewable sources of energy that not only bolster energy security, but are also better for the environment.

One such way is through greater use and development of biofuels. This is an area where the United States has played a leading role, with a particular focus on the Western Hemisphere. Last year, the United States and Brazil – the world's two largest producers of biofuels – formed a partnership to catalyze the use of biofuels in this Hemisphere and beyond, to promote sustainable development, and to protect the environment. The initiative seeks to accomplish these objectives in three ways: First, by advancing bilateral U.S.-Brazilian cooperation on biofuels research and development: Second, by working with partner countries, like El Salvador and others in the Hemisphere to stimulate biofuels production for local consumption; and third, by working multilaterally to advance the commoditization of biofuels on a global basis.

Under the second aspect of this initiative, we are already providing technical assistance, and supporting feasibility studies in Haiti, the Dominican Republic, and St. Kitts and Nevis, as well as here in El Salvador. Last month, the U.S. and Brazil announced a second tranche of countries to join this effort, including Guatemala, Honduras, and Jamaica, as well as Guinea-Bissau and Senegal in Africa.

In addition to biofuels production, the countries of North and Central America have vast potential to harness other sources of renewable energy, such as wind, solar, and geothermal. Due to advances in technology, the IEA estimates that renewable energy will become the second largest source of electricity generation by 2010.

Of course, that estimate only holds true in markets that are open and supportive of investment in the renewable sector. For that reason, we encourage all governments in the region swiftly adopt laws that encourage private investment in renewable energy.

We look forward to participating in this important event, and I encourage everyone to take advantage of the opportunity to share best practices and to develop contacts that will assist in transforming our regional energy matrix. By promoting renewable energy and reducing our dependence on petroleum, we will ultimately strengthen our economies, improve our energy security, and protect the environment.

Thank you.