The presidents of China, Xi Jinping, and Costa Rica, Luis Guillermo Solís, both at their microphones during a Jul. 17 meeting in Brasilia. Credit: Presidencia de Costa Rica

By Diego Arguedas Ortiz
SAN JOSE, Jul 30 2014 (IPS)

China’s plan to become Costa Rica’s main energy ally through the joint reconstruction of an oil refinery has been revived after the presidents of the two countries agreed to review the conditions of the project during a meeting in the Brazilian capital.

The two countries initially signed a framework accord in 2008, including Chinese participation in oil projects, especially the upgrade and expansion of the Moín refinery on Costa Rica’s Caribbean coast, with an investment of 1.5 billion dollars.

But criticism from public institutions, political leaders and social organisations brought the initiative to a halt.

The Costa Rican president’s office stated in a communiqué that Beijing had accepted its request to renegotiate the project, with the aim of “resolving inconsistencies in the contract,” in which each country has invested 50 million dollars so far.

Costa Rican Foreign Minister Manuel González said in a Jul. 22 press conference that “we have no deadline” for that review, which all of the involved institutions will take part in.

President Luis Guillermo Solís participated in the news briefing, although he did not specifically refer to the refinery.

Solís held a bilateral working meeting with Chinese leader Xi Jinping on Jul 17 in Brasilia, during a summit of presidents of the Community of Latin American and Caribbean States (CELAC) with Xi, after the sixth summit of the BRICS (Brazil, Russia, India, China and South Africa) grouping.

The upgrade of the Moín refinery, which belongs to the state oil refinery Refinadora Costarricense de Petróleo (Recope), would increase its processing capacity from 18,000 to 60,000 barrels a day of crude. The company controls Costa Rica’s oil imports, and since 2011 it has had to purchase only refined products, because the plant was shut down.

The joint refinery project, or “Chinese refinery” as it is referred to locally, was criticised by politicians and a large part of organised civil society from the start.

“We have always defended the construction of a refinery, whether it was with China, Russia or France,” said Patrick Johnson, a leader of the oil workers’ union, the Sindicato de Trabajadores Petroleros Químicos y Afines.”We want the confusion to be cleared up…and if the project is beneficial, then it should go ahead because the country needs a refinery,” he told IPS.

In June 2013, the office of the comptroller general brought the initiative to a halt arguing that there were serious problems with a key feasibility study. Since then, the project has been on hold.

The renegotiations should overcome the first real hurdle that China has run into in Costa Rica. In 2007, this country became the first in Central America to establish diplomatic relations with China, in a part of the world that continues to have ties with Taiwan – incompatible with relations with China.

“Having an embassy here makes it easier to deal with matters with Central America,” Patricia Rodríguez, an expert on China who was an official in Costa Rica’s embassy in Beijing from 2008 to 2010, told IPS.

China is now Costa Rica’s second-biggest trading partner after the United States. This country’s sales to the Asian giant climbed from 91 million dollars in 2000 to 1.5 billion in 2011, when a free trade treaty signed in 2010 went into effect.

In strategic terms, the joint refinery between Recope and the state-run China National Petroleum Corporation International (CNPCI) is China’s star project in the country, and the joint venture Sociedad Reconstructora Chino Costarricense (Soresco) was set up in 2009 to carry it out.

The investment is to amount to 1.5 billion dollars, of which Soresco would receive 900 million in loans from the China Development Bank. The rest will come from the partners. The construction and remodeling of the plant will absorb 1.2 billion dollars of that total.

The work was to begin early this year and was to last 42 months. The comptroller general’s office’s decision to put it on hold was due, among other things, to the fact that the feasibility study was carried out by a subsidiary of CNPCI, which it said subverted the evaluation.

The resolution had the effect of “completely paralysing the refinery upgrade process by leaving it without the technical studies necessary for it to continue,” explained Recope in a lawsuit brought against the comptroller general’s office in response to the measure.

Despite the ruling by the comptroller general’s office, the administration of conservative President Laura Chinchilla (2010-May 2014) continued to defend the refinery modernisation project. But the centre-left Solís promised during the election campaign to renegotiate the agreement, because he considered several aspects of the contract negative for the country.

The request to renegotiate the contract had the support of political sectors and in particular of lawmaker Ottón Solís, an economist and university professor who was one of the first to speak out against certain facets of the agreement.

“We have enormous bargaining power here because China is desperate to open up negotiations with Costa Rica and this country has prestige,” Deputy Solís, of the governing Citizen Action Party, told IPS.

“If we insinuate that it’s impossible to negotiate with China because they take advantage of you with unfair contracts, the whole world will be put on the alert and other countries won’t want to negotiate with them,” and that gives Costa Rica bargaining power, he said.

One of the promises made was that the upgrade of the refinery will bring down fuel costs for consumers, who currently pay 41 percent extra in taxes and profit margins for service stations and Recope’s operating costs.

Petrol currently costs 1.48 dollars a litre in Costa Rica, which makes it the most expensive gasoline in Central America. Official figures from 2012 indicate that oil consumption in the country stood at 53,000 barrels per day.

“Fuel is a fundamental element for price stability because there are public services that depend on its price, like public transportation and electricity, and the same is true in the case of the productive apparatus,” the president of Costa Rica’s consumers association, Erick Ulate, told IPS.

During the meeting with President Solís, Xi also agreed to expand the timeframe for carrying out studies for the project of widening the road connecting San José with the Caribbean port of Limón, where 90 percent of the country’s exports are shipped out. The expansion of the road will be financed with a 395 million dollar loan from Beijing.

Cloud forest in Costa Rica. Credit: Germán Miranda/IPS

By Diego Arguedas Ortiz
SAN JOSÉ, Feb 5 2014 (IPS)

Meeting Costa Rica’s self-imposed goal of being the first country in the world to achieve carbon neutrality by 2021 will depend on the priority given this aim by the winner of the second round of the presidential elections in April.

To be carbon neutral means removing as much carbon dioxide (CO2) from the atmosphere as is emitted.

But experts are doubtful about the future of the carbon neutrality plan, which was notable by its absence from the election campaign that ended Sunday Feb. 2, when none of the candidates received the 40 percent of votes needed for a first-round win.“According to calculations we performed nine months ago, we will have an excess of 5.2 million tonnes to absorb." -- William Alpízar, head of Climate Change for MINAE

On Apr. 6, over three million voters will choose between Luis Guillermo Solís, of the opposition centre-left Citizen Action Party (PAC), who took 31 percent of the vote, and Johnny Araya of the governing centre-right National Liberation Party (PLN), who received 29 percent, according to provisional official figures.

“Studies show that the 2021 goal is not realistic. We have to take steps towards that target, but realistically we are probably talking about 2025,” Patricia Madrigal, the PAC’s environmental adviser, told IPS.

In her view, carbon neutrality should not be seen as an isolated issue, but as a guiding force for all public policies in future four-year government terms.

In 2007, Costa Rica decided to become the world pioneer in carbon neutrality, and set itself the goal of fixing as much CO2 as it emits by 2021, to commemorate the bicentennial of its independence that year.

Experts and officials consulted by IPS acknowledged that the government that takes office May 8 will face complex challenges in transport, energy, institutional organisation and agriculture in order to meet that deadline.

Besides, they say, links must be developed between the national economy and the struggle to mitigate and adapt to climate change.

“As long as the goal of carbon neutrality remains unrelated to the transport sector, which generates most CO2 emissions, it is just a slogan to raise international funding,” complained Mónica Araya, the head of Clean Costa Rica, an NGO, who was a government negotiator on climate change until mid-2013.

René Castro, the environment and energy (MINAE) minister, told IPS that plans for carbon neutrality have gone forward “75 to 80 percent.” But he also recognised that the transport sector was “notorious” for producing 42 percent of national CO2 emissions.

One priority in the move towards carbon neutrality is reduction of dependence on fossil fuels and modernising the obsolete public transport system, made up of hundreds of bus lines and a recently restored railway, linking the four major cities.

The parties of the two presidential candidates still in the race are proposing an electric railway for the capital city as well as renewing the bus and taxi fleets.

This Central American country with an area of 51,100 sq km and 4.4 million people has its strong points, too, such as a remarkable increase in forest cover, from 21 percent of its territory in 1983 to 52 percent in 2012.

This achievement was due mainly to the state programme of payment for environmental services, a local precursor to the United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (UN-REDD).

However, according to “State of the Nation 2013: Challenges for 2014-2018”, a study commissioned by the National Council of Rectors of public universities, the country’s ecological footprint grew by 43 percent between 2002 and 2012, when CO2 emissions reached 16 million tonnes.

The ecological footprint represents the biologically productive land and sea area necessary to supply the resources a human population consumes, and to absorb its waste products, including CO2.

Both parties with a chance of governing from May onward plan to reform the institutions in charge of environmental management. Currently the environmental authority is the Directorate of Climate Change, part of MINAE.

The PAC wants a supraministerial body to direct climate change action, while the PLN is proposing a national environmental strategy.

Some people within the state apparatus are also urging for renewal of institutional structures, which they say have been eroded by the imbalance between the task they are charged with and their real powers to carry it out.

“The climate change agenda must become a development agenda; it cannot be the exclusive responsibility of MINAE, which is weak and has limited resources,” William Alpízar, head of Climate Change for the ministry, told IPS.

To become carbon neutral, Costa Rica must reduce its CO2 emissions as much as possible and compensate for the remaining emissions by the CO2 absorption capacity of the new forests.

The private sector is participating in the drive through carbon neutrality certification. The Climate Change directorate has already certified eight companies and another four are being processed.

During the Warsaw Climate Change Conference or COP19 in November, Costa Rica presented a proposal for the first CO2 bank, designed to trade carbon credits between CO2-emitting companies and owners of forested lands that act as carbon sinks.

According to official estimates, Costa Rica will emit close to 21 million tonnes of carbon in 2021, and it hopes to compensate for 75 percent of this total by carbon capture in its forests, an amount practically equivalent to its current emissions.

“According to calculations we performed nine months ago, we will have an excess of 5.2 million tonnes to absorb. That is our target for reduction, and it is divided between transport, agriculture and waste,” Alpízar said.

This model has been criticised because the burden of lowering emissions is assigned to local forest cover, without proposing a real change of policy for a form of development that is fully adapted to climate change.

“In the name of carbon neutrality we have set aside everything else we need to do about climate change,” Jorge Polimeni, an environmental auditor with the Ecological Flag Foundation, which advocates a more comprehensive adaptation to the hazards of climate change, told IPS.

The study “Economic Impact of Hydrometeorological Phenomena in Costa Rica”, coordinated by researcher Roberto Flores, reported last year that between 2005 and 2011, climate change effects cost the country 710 million dollars.