San José, Costa Rica, since 1956

A first step toward carbon neutrality

It may have been a politically ambitious pronouncement when ex-President Oscar Arias declared in 2009 – his last year in office – that Costa Rica would become the world’s first carbon-neutral country by 2021.

Other countries also declared their intentions of becoming the first carbon-neutral nation, but have since scaled back those promises or rolled back their target dates. Since 2009, observers have noted that Costa Rica likely will join them, eventually pushing back its goal by five to 10 years.

In June 2011, Arias admonished his successor, President Laura Chinchilla, and her administration for being soft on carbon neutrality (TT, July 8, 2011). Officials responded by saying the date of 2021 – the country’s 200th anniversary – wasn’t important, as long as Costa Rica committed to reaching its goal of zero net carbon emissions.

Still, in spite of setbacks in the past three years, Costa Rica is in a good position to meet those goals, once a plan is set in motion, environmental officials said this week.

On Wednesday, Environment Minister René Castro made public the first phase of the administration’s carbon-neutral strategy, which focuses on reducing emissions in two key sectors: energy and agriculture. Following negotiations with players in both sectors, it appears the government is further along with the former than the latter.

Utopia or Reality?

Last week, environment officials and researchers participated in a forum titled “Carbon Neutrality: Utopia or Reality?” They sought to answer the question on everyone’s mind: Is carbon neutrality possible for Costa Rica?

Following that forum, a sense of optimism has spread through the Environment Ministry (MINAET) and the universities participating in the groundbreaking research required to analyze the country’s current emissions and set realistic goals to achieve zero carbon emissions. The ministry is relying on experts at the University of Costa Rica and the National University (UNA) to help design their strategy.

“The numbers in black and white show [carbon neutrality] really is possible for the country. It’s not easy, but it’s possible,” said Marianella Feoli, executive director of the University of Costa Rica’s Fundecooperación para el Desarrollo Sostenible (Cooperative Fund for Sustainable Development), and a researcher collaborating with MINAET on the carbon-reduction strategy.

Costa Rica currently emits about 14.6 million tons of CO2 annually. By 2021, that number will reach 21.7 million tons, and in order for Costa Rica to reach carbon neutrality, it will have to offset or reduce emissions by 5.8 million tons in the next decade.

Based on data from the World Bank, which calculates the intensity of CO2 released per unit of production in each country, Costa Rica is one of the best countries in terms of CO2 per unit produced. According to Castro, despite economic and population growth, Costa Rica’s CO2 output per unit of production has decreased from 200 kilograms per unit to 170 kg in the past few years.

The country has another tool: its forests. A recent study concluded that 52 percent of Costa Rica is forested, up from 21 percent in 1987 thanks to a series of policies over the decades to invest in forestry conservation. That means the country has a large percentage of new, carbon-capturing forest (31 percent in the past 25 years), Feoli said.

Continuing that trend, the Costa Rican government, in collaboration with the National Forestry Financing Fund, is working with landowners to plant 7 million trees on cattle and coffee farms. The trees eventually will be milled for the national lumber industry and replaced with new forests. Landowners are offered an attractive 6 percent, 25-year credit for the project.

Buses and taxis

The biggest shot Costa Rica has at achieving short- and mid-term goals on reducing carbon emissions is by focusing on the country’s public transport sector. Spearheading research on how to do that is Leiner Vargas, of the National University’s International Center for Economic Policy for Sustainable Development.

Carbon Neutrality 2

Popular taxi stands like this one in San José’s Central Park could be carbon-neutral in two years.

Lindsay Fendt

Plans already are formed to reduce emissions by focusing on Costa Rica’s fleet of public buses and private taxis. According to Vargas, Costa Ricans could begin to see dramatic changes in public transportation within two years, as buses and taxis are converted to zero-emission vehicles through a mixed policy that relies on market incentives and stricter emissions regulations.

“What’s going to happen is we are going to convince 20-25 percent of the [bus and taxi] fleet to move to carbon-neutral alternatives in the next two years,” Vargas told The Tico Times.

Researchers at UNA, in collaboration with the United Nations Development Program and other groups, are calculating the costs involved in converting the public transportation sector to cleaner technologies, mapping areas of heaviest traffic, and building models to convince bus and taxi company owners that converting to new technologies can be profitable within six years.

On the government’s end, officials working with the Public Transportation Council (CPT) will add tougher emissions standards to concessions for bus and taxi operators, starting in January 2013. Renewing concessions will require operators to implement tougher standards on sound and air pollution, Castro said.

“The task is to design the instruments needed for taxis to really reduce or change from a gasoline-based vehicle to one that reduces the carbon footprint,” Vargas said. “If we don’t take steps to change the fleet of buses and taxis, the process [of achieving carbon neutrality] will take 200 years in the public transportation sector.”

According to an extensive cost-benefit analysis of the industry, the most profitable alternative for taxi companies is natural gas. The second-best option is liquefied petroleum gas, or LPG, followed by electric or hybrid vehicles.

For buses, the structure is different: Buses rely more on fuel, especially in urban areas in heavy traffic. Natural gas and hybrid systems that combine natural gas or LPG with diesel provide the best alternatives for bus company owners, according to the cost-benefit analysis, Vargas said.

Public policy also has a vital role to play in convincing transportation company owners to make the change as quickly as possible. MINAET will spearhead that role, but a successful policy will also rely on municipalities, the CPT and the Public Works and Transport Ministry to regulate “hot spots,” where buses and taxis congregate, such as San José’s Central Park, San Juan de Dios Hospital, hotels and other areas. Municipalities can regulate those areas as “carbon-neutral,” meaning taxi stands and bus stops can be designated for use by carbon-neutral vehicles only.

Consumers also will have a major role to play by choosing zero-emission taxis and buses and helping make them profitable for company owners.

“I can imagine a taxi with a big green frog painted on it, and a consumer deciding, ‘I’m going to take this taxi because I’m contributing to carbon neutrality,’” Vargas said.

One barrier that has contributed to transportation company owners’ reluctance to invest in cleaner buses and taxis is their higher purchase cost. According to Castro, officials are negotiating “intensely” with foreign producers of these vehicles to convince them to bring costs down, not only for buses and taxis, but also for private consumers.

Officials also are devising other economic incentives, including negotiating with national banks to offer financing at better rates for clean technology vehicles, particularly in the public transportation sector, Castro said. Private companies – including Toyota – also are laying out plans to offer more competitive prices to taxi companies on cleaner technology vehicles to meet the spike in demand as the initiative advances in coming years.

MINAET also is working with the National Oil Refinery to improve fuel standards by 2013. Officials have already eliminated a damaging and harmful additive – MMT – from national fuel supplies, and other additives such as sulfur will decline dramatically by next year.

Private vehicles

It is no secret that Costa Rica has many barriers to converting its fleet of private consumer vehicles to cleaner technology automobiles. One of the biggest barriers is a high import tax on zero-emission and hybrid vehicles.

Another barrier is culture. But researchers are convinced that once consumers grow accustomed to using cleaner-technology buses and taxis, demand for lower-emission private vehicles will increase.

“We Costa Ricans are very conservative, but if we see a taxi that functions with zero emissions, we’ll realize that our own vehicles can too,” Vargas said. “But it will be very important that older vehicles are eliminated from the market, including rural taxis and cars.”

“Eventually, we’ll have to lower the taxes that consumers pay [on cleaner-technology vehicles],” the environment minister acknowledged.

Agriculture and the future

While Costa Rica’s first step in its journey toward carbon neutrality focuses on the energy and transportation sector, the second crucial element – the agricultural sector – is facing setbacks. Negotiations with major export crop producers have sparked only limited interest, Castro said.

The biggest contributors to carbon emissions in this sector are large export-crop plantations and cattle. Fertilizer application accounts for 54 percent of emissions in the agricultural sector, according to Feoli.

Yet officials have gotten only as far as discussing cost-benefit analyses with pineapple, banana and coffee exporters, Castro said.

“Some are interested, some aren’t,” he added.

Still, what once seemed like political posturing by an outgoing president is starting to show signs of life with scattered advances, “some small, others quite visible,” Castro said.

Companies like Coopedota, a Costa Rican coffee cooperative based in Santa María de Dota, in the coffee-producing Los Santos region south of San José, which became the world’s first carbon-neutral coffee producer, may seem like small drops in the carbon-neutral bucket. But as years advance and policy begins to solidify, these actors could be remembered as pioneers, serving as models for other companies.

Coopedota became carbon neutral by reducing energy use, improving water consumption practices and generating energy from organic material formerly discarded as waste (TT, Dec. 2, 2011).

Another company that has made great strides on reducing emissions is Florida Ice and Farm Co., Costa Rica’s largest food and beverage company. The company recently was recognized as one of the top 16 “green” businesses in developing countries, particularly for its focus on water conservation (TT, Sept. 16, 2011).

The second phase of Costa Rica’s carbon-neutral plan is set for 2014-2018, and includes improvements in water treatment, more investment in renewable energies, and newer technologies for waste disposal (such as converting landfills into energy producers).

From 2018-2021, administration officials hope the country will focus on advanced energy initiatives, such as developing an “intelligent” electricity transmission and distribution grid, as well as sustainable construction and public infrastructure projects.

Said Castro: “The country will continue reducing its emissions until it reaches a point when it can’t reduce any more.”

Clear rules, consumers key to carbon-neutral goals

Leiner Vargas, of the National University’s International Center for Economic Policy for Sustainable Development, is one of the leading researchers for the government’s plan to make Costa Rica the first carbon-neutral country. The Tico Times spoke with Vargas on Wednesday about how to make the goal a reality.

Excerpts follow:

TT: How will this process work step by step?

LV: As a researcher, what I can tell you is that we’re going to convince 20-25 percent of the current [taxi and bus] fleet to move to carbon-neutral alternatives in the next two years. This will have a mirror effect on consumers, who will begin to prefer carbon-neutral taxis and buses, and it will be an incentive for companies to change their fleet over time.

We need banks to offer better financing rates for innovative business owners who are willing to make this change; we need to declare bus stops and taxi stands carbon-neutral only; we need municipalities to contribute with financing strategies; and we need alternative systems, like having only carbon-neutral taxis in Central Park in San José, or in the center of Heredia, for example, which forces taxi drivers and owners to decide on their own to upgrade their technology.

We have to align municipal policy with central government policy, along with the actors who will finance green technology.

Where are we headed? In 2020-2025, I see Costa Rica with an entirely carbon-neutral taxi fleet, and a bus fleet that is 40-50 percent carbon-neutral. How much we achieve by 2014 depends on how much we advance with [public transport] concessions, and we’re working on that.

We need to bring natural gas, which is an enormously more efficient fuel than diesel or other gasoline.

Much of this plan relies on the market. What role will regulation have?

Clear rules. We can’t change the rules of the game. There has to be synergy between environmental policy, or the Environment Ministry, and price regulation at the Public Services Regulatory Authority. And they’re working on that with rates to encourage change. We need regulatory models so that the rules of the game are clear and don’t change for concession owners. That will help them make the changes that are needed, because we don’t want to create bad business for them. Everyone who is working on this issue knows that environmental protection, at the end of the day, is a much more profitable business than a business that pollutes, which is what we have today with taxis and buses that burn gasoline and diesel.

Now, consumers and the government can make the difference in this process. Clear rules, inter-agency coordination, and incentives, small incentives but important ones such as lower interest rates and bus-only lanes in the city, these types of things can have a big impact on reducing carbon dioxide emissions in Costa Rica.

Since this is a long-term project, how do you convince future administrations to stay the course?

In 1990, there was a big change in our forestry policy. We’ve taken nearly 30 years to solidify that and change the course of environmental degradation that was happening in the country. In 2010, a very important political choice was made, and I would hope that in 2025 or 2030, this process will have become visible on a large scale, as it is today with our forestry policy. Why? Because in the ’90s Costa Ricans made a decision, and today, we adore our forests. We refuse to return to what was happening in the ’80s. I would hope that the same thing happens in the public transport sector.

This is a technological change that needs to happen step by step. We can’t do everything at once, but it is important to include these changes in concessions by 2014 in order to achieve our goals.

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