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November 2008

Country Profile Costa Rica

Costa Rica Flag Compared with other countries in Central America, Costa Rica is blessed with relative wealth and political and democratic stability. An attractive option for foreign investment, the country has seen a boom in eco-tourism which in turn has opened up new opportunities for climate change mitigation.

By expanding its national parks and awarding eco-labels to agricultural products, Costa Rica plays an increasingly important role as a model country in matters of nature and biodiversity conservation. Growing environmental awareness among tourists and consumers, and the country’s acute lack of fossil fuels, provides a perfect setting in which to use the CDM as additional economic incentive in the switch to green thinking.

The Costa Rican government has set an ambitious goal to become the world’s first carbon-neutral country by 2021 with the aid of the international climate regime. Funding programmes are in place to promote hydropower, wind power, geothermal heat and ethanol projects. Some 92 percent of Costa Rica’s energy needs are met from renewable energy sources, which given the low emissions factor limits the scope for using the CDM in the energy sector. The emissions factor will, however, be boosted by the planned linking of the Central American electricity market under the SIEPAC programme (Sistema de Interconexion Electrica para America Central).

Founded in 1995, the Costa Rican Office on Joint Implementation (Oficina Costarricense de Implementación Conjunta, or OCIC) serves as the national DNA. By outsourcing responsibilities to the Association for Joint Implementation (Asociación Costarricense de Implementación Conjunta, or ASOCIC), the DNA can draw on the expertise of member enterprises. Costa Rica’s institutional framework is rounded off by the Energy and Environment Ministry (MINAE – Ministerio de Ambiente y Energía), the Climate Change Commission (Comisión Consultativa de Cambio Climático) and the Environment Agency (SETENA, which is responsible for environmental impact assessments). Up to now, six CDM projects have been registered, two hydropower and two biomass. Although Costa Rica will only contribute a mere 0.6 percent of CERs generated in Latin America by 2012, thanks to its favourable institutional and political conditions it currently ranks in eighth place in the DEG CDM Investment Climate Index.

Relations between the EU and Costa Rica have gradually intensified since the San José Dialogue and are now entering a new phase with negotiations on a Central American Free Trade Area.

German development cooperation activities in Costa Rica have meanwhile switched focus to concentrate on urban-industrial environment protection. And with GTZ, KfW, CIM, InWent and numerous research foundations all present in the country, Germany is represented by its leading agencies in this sector. This paves the way both for further activities (hydropower, biomass, wind power) and for greater diversification (transport, energy efficiency, PoAs) within the CDM project portfolio.