restricted access 4. Energy Balances and the Potential for Biofuels in Cuba
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80 In 2002 we published a paper on Cuban energy that began with the observation “Cuba is considered a promising growth energy market in the Americas.”1 Eight years later Cuba shows even greater promise in the energy sector, but progress in realizing energy opportunities has been slow. Gaining a better understanding of Cuba’s energy potential is important for policymakers in the United States, Cuba, and the Caribbean region. From the American point of view, the possibility of having an additional supplier of energy to the U.S. market located just a few miles offshore could contribute significantly to the United States’ energy security. The magnitude of Cuba’s energy resources is uncertain, but one estimate, by the U.S. Geological Survey, is that Cuba has mean “undiscovered” reserves of 4.6 billion barrels of conventional oil and 9.8 trillion cubic feet of natural gas in the North Cuba Basin.2 In addition, Cuba has large land areas that once produced sugar but now lie idle. These could be revived to provide a basis for a world-class ethanol industry. We estimate that if Cuba achieves the yield levels attained in Nicaragua and Brazil and the area planted with sugarcane approaches levels seen in the 1970s and 1980s, Cuba could produce up to 2 billion gallons of sugar-based ethanol per year. four Energy Balances and the Potential for Biofuels in Cuba RONALD SOLIGO AND AMY MYERS JAFFE The authors thank Matthew Osher for his help in the preparation of this paper. The authors have also benefited from comments by Jonathan Benjamin-Alvarado and Jorge Piñón.We are especially grateful to our colleague Kenneth Medlock for his assistance in generating the energy forecasts. 12250-04_CH04_rev2.qxd 9/3/10 12:38 PM Page 80 Potential for Biofuels in Cuba 81 Despite this potential, Cuba remains dependent on energy imports on a concessional basis. The collapse of its economy when assistance from the Soviet Union was terminated by that country’s breakup demonstrated in a dramatic way the benefits that could accrue if Cuba became energy selfsufficient . Cuba has been thwarted by U.S. economic sanctions and other internal domestic barriers in aggressively pursuing its own energy independence. For the time being, Havana has adopted a policy of replacing former Soviet energy assistance with current Venezuelan aid. This is a risky strategy, since Venezuelan beneficence is dependent on Caracas’s own economic health, which is currently shaky.3 In this chapter we argue that given its rich potential in both conventional energy and biofuels, Cuba can be both energy-independent and an energy exporter. State of the Cuban Economy The Cuban economy suffered a major economic decline after the 1991 collapse of the Soviet Union, with GDP falling 35 percent between 1990 and 1993.4 The economy began a slow recovery in the mid-1990s, but the extent of the recovery is disputed. International Energy Agency data show that per capita income in purchasing power parity dollars grew on average about 2 percent per annum between 1994 and 2005. CIA data show an increased growth rate for the period 2005 to 2008 ranging between 4.3 percent and 8 percent.5 Most recently, in 2009 Cuban growth fell to 1.4 percent.6 The higher growth rates of Cuban GDP during the period from 2005 to 2008 reflect the increase in Venezuelan aid as well as Cuba’s participation in the worldwide commodity boom and some increase in foreign investment. The extent of Venezuelan aid is not fully transparent. Cuba is importing around 92,000 barrels a day (b/d) from Venezuela under favorable terms. Some of the oil is financed by loans, part is a barter trade involving some 20,000 Cuban medical professionals who work in Venezuela, and some oil is provided as an outright grant.Venezuela has also financed the completion of the Cienfuegos refinery, which was opened at the end of December 2007, with plans to increase the plant’s capacity from around 65,000 b/d to 150,000 b/d.7 Venezuela has also provided $122 million to finance the acquisition of tankers to carry Venezuela crude and products to Cuba. The commodity boom has also helped the Cuban economy. Cuba is among the top six or seven largest producers of nickel in the world. Production and 12250-04_CH04_rev2.qxd 9/3/10 12:38 PM Page 81 export of nickel rose from 26.9 million metric tons (mmt) in 1993 to...


Subject Headings

  • Energy policy -- Cuba.
  • United States -- Foreign economic relations -- Cuba.
  • Cuba -- Foreign economic relations -- United States.
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