August 2008

Country Profile Honduras

The country’s vast hydroelectric potential, a motivated DNA office team and favourable economics for hydro projects have ensured moderate success for CDM projects in the hydroelectricity category in Honduras. A changing energy matrix also works in favour of the CDM: Up to 1994, 99 percent of electricity was supplied by hydro plants. Due to droughts, combustion-based energy generation has grown in recent years to reach 20 percent of the market in 2005 and close to 70 percent now.

There are still challenges, however, due to a poor regulatory, efficiency and management situation in the electrical sector and general country risk for investment. As in other countries in the region, Honduras also experiences local resistance to hydroelectric projects and especially those on a large-scale.

New renewable energy incentives launched in 2007 provide an opportunity to further and diversify CDM project development. There is untapped potential in biomass, wind, solar and geothermal energy.

Honduras currently has 27 CDM projects in the pipeline. Almost all CDM projects are from the renewable energy sector. Nine projects are hydro, all of them registered. Biomass (bagasse, palm oil residues and rice husks) and biogas follow, with 6 and 5 projects respectively. There is only one energy efficiency project. 15 projects are registered and 265,000 CERs have already been issued for 8 projects. Honduras is home of the first small-scale CDM project in the world, the 13 MW Río Blanco hydro plant. This and another small hydro project in Honduras (La Esperanza) were also the first projects to be issued CERs in October 2005.

The DNA office for energy-related projects in Honduras is housed in the Natural Resources and Energy section of the Ministry of Natural Resources and Environment (Secretaría de Recursos Naturales y Ambiente, SERNA) and works separately from the Climate Change Office at the national energy agency. Forestry and transport projects are to be supervised by different agencies.

With the change of government, most of the staff of the DNA office was laid off in 2005. The change of administration has stalled the initial fast progress attained by Honduras with regard to the CDM. An office for special projects was created within the presidential office to explore the potential for biofuels by helping palm producers improve cogeneration efficiency in order to generate CDM credits. A governmental grant of $43 million was awarded to help project owners finance such projects. Honduras also has the support of international organisations.

The UN Environment Programme and Fundación Bariloche completed an analysis of the country’s renewable energy and energy efficiency policies and assessed the potential for renewable energy in 2002. There is a local CDM broker, Fundación MDL. The Asociación Hondureña de Pequeños Productores de Energía Renovable (AHPPER) has helped write several of the PDDs for small-scale hydro projects in the country.

Further selected information:

Honduran DNA’s website
German Embassy in Tegucigalpa
German Foreign Office country information on Honduras
German-Honduran Commerce and Industry Chamber
CIA World Fact Book
GTZ in Honduras
Bertelsmann: Country Report Honduras
World Bank country information on Honduras
Asociación Hondureña de Pequeños Productores de Energía Renovable-AHPPER
European Commission: The EU’s Relations with Honduras