Strategies to improve energy supply security

pillars:

(1) Increased economic competitiveness. This is necessary not only for improving energy security, but also for increasing the sustainability of national socioeconomic development. Cuba’s main obstacle in this respect is the shortage of foreign exchange needed to undertake the technological modernization necessary to increase efficiency and produc-tivity and, therefore, reduce energy demand.

(2) Fuel conservation and rational use of energy. A fundamental limiting factor in the development of programmes aimed at fuel conservation and the rational use of energy is related to the shortage of financial resources.

Much remains to be done to increase the effectiveness of economic–

financial instruments and incentives to enlarge the scope of the rational energy use policy, including unexploited or insufficiently used areas, mainly in the electricity sector, the sugar agro-industry, the residential sector, the production of basic materials and the transport sector, where approximately 80% of the national potential of assessed energy savings is concentrated.

In addition, the capacities necessary to raise international funds for projects supporting the rational use of energy should be developed. This could begin with the creation of a multi-organizational negotiation team to monitor project proposals systematically and submit them as a strategi-cally integrated package in agreement with the demands of the financial entities.

(3) Efficient exploration and use of crude oil and gas. Important steps are being taken with the commencement of drilling in two of the offshore blocks of Cuba’s EEZ in the Gulf of Mexico, with the participation of international oil companies specializing in exploration and extraction of oil and gas. Finding oil deposits of better quality than those obtained in the so-called heavy crude oil strip north of the Havana and Matanzas provinces would increase Cuba’s energy self-sufficiency, since this would increase the possibility of obtaining refined products from the increased share of domestic crude oil in the refining process.

Another important aspect that involves both financial aspects and technological and R&D efforts is the use of domestic heavy crude oil in electricity generation and in the refining process, and the mitigation of the adverse environmental effects (e.g. acid rain) of the technologies that consume or process it.

(4) Development of renewable energy sources. Important efforts are being carried out to assess Cuba’s technically and economically accessible renewable resource potential, including the recent creation of the Renewable Energy Front, with the participation of top level specialists and decision makers from the institutions dealing with this issue. The Renewable Energy Front operates under the supervision of the Ministry of Science, Technology and Environment. As with energy conservation and the exploration and extraction of hydrocarbons, Cuba must strengthen its capacity for obtaining sources of external cooperation and for raising international finance for this field.

(5) Legal and institutional support of the energy sector. High priority must be given to the normative, legal and regulatory aspects of energy activities and to the improvement of State control mechanisms, particularly the strengthening of the State energy inspection. This includes, first, the intro-duction of standards for buildings and for equipment prointro-duction and imports, and the improvement of existing standards, as well as the reinforcement of practices related to energy efficiency and the use of renewable sources.

The adoption of a new electricity law currently under review would provide significant support for institutionalizing the rational use of energy. Another useful step would be the creation of a regulatory agency having the greatest autonomy possible and its own legal status.

Among the actions likely to have the greatest positive impact on improving energy security are the following:

— Improvement of tariff and pricing policies;

— Diversification of financing mechanisms and forms;

— Measures to increase the role of the territories or provinces in energy management and in the use of locally available renewable sources;

— Strengthening of the institutions that promote the rational use of energy, particularly ESCOs;

— Promoting the production of energy saving equipment and the use of renewable sources (mainly relying on foreign investment and without excluding the possibility of exports to third countries);

— Progressive improvement in energy planning, reinforcing a strategic approach.

(6) International involvement. Cuba would benefit from active involvement in the efforts of regional integration and in international forums related to technological, energy and environmental issues, and in strengthening bilateral alliances aimed at creating the necessary environment for trade, technology transfer, R&D and foreign investment for guaranteeing national energy supply.

8.6. MAIN ISSUES

In the case of Cuba, energy security goes beyond the typical security framework of energy supply to encompass the economic blockade which affects Cuba’s access to some markets for its traditional products and obstructs international credit options.

Recent problems concerning security of national energy supply include:

— Shortages of foreign exchange necessary for the purchase of fuel and spare parts, for new investments and for the implementation of programmes supporting the rational use of energy.

— High dependence on imported energy, including oil and petroleum products.

— Use of domestic crude oil, with energy performance slightly below that of the imported fuels it replaces, especially fuel oil. The main negative aspect is the high sulphur content, which has adverse operational and environmental effects.

— Interruptions in energy services resulting from hurricanes and tropical storms, and from breakdowns and accidents related to the transport of fuels, especially coastal transport.

The strategies employed to improve Cuba’s energy security situation are based on:

— Increased economic competitiveness;

— Fuel conservation and rational use of energy;

— Efficient exploration and use of oil and natural gas;

— Development of renewable energy sources;

— Legal and institutional support of activities in the energy sector;

— Active involvement in the international arena focused on regional integration efforts and international forums related to technological, energy and environmental issues, and on strengthening bilateral alliances aimed at creating the necessary environment for trade, technological transfer and foreign investment for guaranteeing national energy supply.

REFERENCES

[8.1] VICTOR, D., BARRY CARIN, B., ABBOTT, C., Energy Security at the L20?

Overview of the Issues, Background discussion paper for L20 Energy Security Workshop (2005),

http://www.l20.org/publications/16_37_Es_background.pdf

[8.2] SOMOZA, J., Tendencias Tecnológicas, Opciones Estratégicas y Proyectos Iden-tificados en el Campo de la Energía, INIE, Havana (2000).

[8.3] ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES, OPEC Annual Statistical Bulletin 2005, OPEC, Vienna (2006).

[8.4] SOMOZA, J., GARCÍA, A., Reformas del sector energía en América Latina y el Caribe, Cuba: Investigación Económica 3–4, INIE, Havana (1998).

[8.5] COMITÉ ESTATAL DE ESTADÍSTICAS, Anuario Estadístico de Cuba — 1989, CEE, Havana (1990).

[8.6] DESPACHO NACIONAL DE CARGA, Memorias 2004: Despacho Nacional de Carga, UNE, Havana (2005).