Green energy: how it can reduce migration from Central America | Opinion
One in 5 active shipping containers are stuck in China due to pandemic shutdowns, and major US companies are now rethinking these geographically expansive supply chains. They are considering offshoring, moving their manufacturing centers to a closer location, and Central America is a natural choice.
Meanwhile, concerns about climate change have led to mandates for renewable energy sources to support new manufacturing activities. The key then is to enable nearshoring in places like Central America with reliable, cost effective and sustainable energy sources. However, reliable 24/7 power generation with renewable sources such as solar, wind or hydro is only possible with storage systems that provide sufficient backing capacity.
Is Central America ready to take up this challenge? It is possible, with solutions that will also help solve migration problems at US borders.
A number of new green energy projects are underway, such as La Vegona II in Honduras. This innovative development has a potential of 1,200 megawatts to become the region’s most reliable and cost-effective power generation and storage system, according to its sponsors.
With an estimated budget of $2.5 billion, La Vegona II incorporates a scalable hydroelectric plant, a hybrid solar power and pump storage system and a 185 km transmission line. The line will cross the Sula Valley in the industrial zone of northern Honduras, connecting its industrial parks and the main port in Central America on the Atlantic Ocean to the regional power grid.
This addition to the power grid transmission line will link businesses in the United States and Central America in a two-way “electricity highway”, generating and transmitting electricity, as well as receiving and storing it for use when needed to fuel industrial growth. Its location will improve logistics at ports, airports and ground transportation hubs.
As you might expect, the vision of combining nearshoring with sustainable, reliable energy requires massive investment.
Enter the multinational HUGE Business and Investment Council. (HUGE stands for Honduras, United States, Guatemala and El Salvador.) It is a market-based and socially conscious response to a humanitarian crisis: the lack of opportunity for millions of people in the countries of the Triangle North of Central America to support themselves and their needs. Their families.
HUGE includes many of the largest investors and companies based in the region. Almost all have worked with the US government’s Development Finance Corporation or the Inter-American Development Bank at one time or another. Members include some of the largest employers and taxpayers in these countries. These businesses are also in the area for the long haul and see the potential in the area.
When the La Vegona II project was presented to US Under-Secretary of State Jose Fernández during an official visit to Honduras last March, it aroused such interest that he interrupted the presentation, stood up from his chair and walked over to the speaker to ask several of the questions.
La Vegona II is part of a growing portfolio of strategic infrastructure projects in Central America. These projects, many of which include the development of renewable energy, aim to promote, facilitate and link regional investments to the opportunities that arise from the competitive advantages of the Northern Triangle countries’ partnership with the United States.
Although La Vegona II is an entirely private investment, it could benefit from the support of agencies such as the Development Finance Corporation or “IDBInvest” of the Inter-American Development Bank, the private arm of the bank. There is not enough foreign aid to create jobs in the region, but the United States can work with local governments, and foreign aid or development funding can provide support for this purpose.
This brings us to how this and other green energy projects can help with the growing number of Central American migrants coming to the United States to seek work. In recent years their numbers have increased, and a report released last year indicates that a growing share of migrants from Honduras, El Salvador and Guatemala cite unemployment and other economic factors as the reason. .
Central America is blessed with its location, and it is also blessed with many sources of renewable energy. La Vegona is an example of the types of projects that will propel a cleaner energy mix to an area that needs more energy, and it is this type of energy that will fuel the jobs in the area that will encourage young people to make their future in Central America and not elsewhere.
Juan Jose Daboub, former Minister of Finance of El Salvador, is Chairman of the HUGE Business and Investment Council and Senior Advisor at the Center for Strategic and International Studies. Daniel F. Runde is Senior Vice President and William A. Schreyer Chair in Global Analysis at the Center for Strategic and International Studies. He is the author of “The American Imperative: Reclaiming Global Leadership Through Soft Power” which will be published in December by Bombardier Books.