URBAN ENERGY TRANSITION FOR THE GREATER METROPOLITAN AREA OF THE CENTRAL VALLEY OF COSTA RICA

EXECUTIVE SUMMARY
As with other countries in Latin America and the Caribbean, Costa Rica is highly vulnerable to the effects of climate change, even though it contributed less than 0.05% of global greenhouse gas emissions in 2019. The country has developed national vision of transforming its economy to net zero emissions by 2050 and an ambitious decarbonisation plan with sectoral breakdowns including for the transport and buildings sectors. To meet Costa Rica’s decarbonisation target, there is a need for the national government as well as local municipalities to step up their actions. This is because that scaling up the use of clean energy and improving energy efficiency at both the national and local levels are key in realising the shared decarbonisation objective. This would particularly require support from local governments in implementation when it involves urban planning interplaying with energy use at the local levels. Over the past years, municipalities have been undertaking efforts to improve the sustainability of their jurisdictions, to which decarbonisation actions are well in aligned with this endeavor.

INTRODUCTION
To address the global climate challenge, Costa Rica has committed to fully decarbonising its economy by 2050 and has developed a corresponding plan to achieve this target (UNFCCC, 2019; UNFCCC, 2018). As in many countries, implementing such a comprehensive plan would require efforts at all levels. Although Costa Rica’s central government is in charge of developing national energy and transport policies and regulations (Presidencia de La República, 2019), there is large potential for decarbonisation in cities, given that 75% of the country’s population lives in urban areas. This report explores plausible technological options in the Greater Metropolitan Area of the Central Valley of Costa Rica to contribute towards achieving the national decarbonisation goal.

National context
Costa Rica has a population of around 5 million inhabitants within a total area of 51060 square kilometres (km2 ), making it the third densest country in the Central America region (following El Salvador and Guatemala) with 98 inhabitants per km. The territory is structured in 7 provinces, 82 cantons (municipalities) and 482 districts (Figure 1). The rapidly growing Greater Metropolitan Area, which includes the capital, San José, and the provinces of Alajuela, Heredia and Cartago, is home to 2.2 million inhabitants, nearly half of the population, distributed within an area of 2044 km.

Economic growth in Costa Rica has depended heavily on the services and industry sectors (Figure 2), which have largely driven the more than 30% increase in the country’s gross domestic product (GDP) between 2012 and 2019 (Central Bank of Costa Rica, 2020a; IMF, 2020). The economy has been fuelled primarily by clean electricity generated from renewable energy sources such as hydropower, geothermal and wind energy, and by petroleum-based fuels used mainly for transport and industry (Figures 3).

As shown in Figure 3(c), the transport sector is the largest consumer of oil, at 83% in 2018, followed distantly by the industry (12%) and residential (3%) sectors. Consumption of petroleum-based transport fuels has increased over the last 13 years alongside the growth in internal combustion engine vehicles, assuming similar driving behaviours and fuel economy since 2007 (Figure 4) (SEPSE and MINAE, 2018).

Among the nine power suppliers, the state-run ICE (Instituto Costarricense de Electricidad, or Costa Rican Institute of Electricity) accounts for the bulk of the electricity supply. It provides 63.7% of the total installed generation capacity of 3 500 megawatts (MW) and also monopolises the national transmission market (Figure 5). Two municipally owned energy utilities, ESPH and JASEC, operate only 3% of the national total generation capacity, while co-operatives account for around 5.9%.

THE URBAN ENERGY CONTEXT AND REPRESENTATIVE DISTRICTS OF THE GREATER METROPOLITAN AREA

Characterisation of districts in the Greater Metropolitan Area The state-owned power company CNFL supplies electricity in most districts of the Greater Metropolitan Area, as shown in light blue in Figure 9. To characterise these districts in the analysis, multiple sources of information were collected, combined and represented in GIS

format. The resulting database comprises key features including the surface area, population density, economic growth, energy consumption, and number and type of customer (residential, commercial or industrial), among others. For example, high-resolution data were gathered on monthly energy consumption for each building within the districts and were used to produce time-series demand profiles. In addition, the end uses for each technological carrier at a building level were identified based on energy surveys.

Energy demand
Time-series load profiles per customer within each district were computed to estimate their energy demand at an hourly basis for one year, as shown in Figure 12. Because Costa Rica is located in a tropical climate zone with an average year-round temperature of 25 degrees Celsius (°C), domestic space heating or cooling systems are not commonly found. However, districts located near the coast may require assessing cooling demand in the future. In the Greater Metropolitan Area, the use of cooling technologies is limited to commercial, industry and public buildings. The energy required for domestic hot water (or eventually cooling) is produced mostly using electricity-based systems. These end uses are represented in the electricity profiles.

DECARBONISING THE ENERGY SECTORS AT THE MUNICIPAL LEVEL

Given the high urbanisation rate in Costa Rica and that nearly half of the population resides within the boundaries of the Greater Metropolitan Area, it is necessary that municipalities be part of the country’s decarbonisation strategy – the strategy that has been orchestrated and designed at the national level while being implemented with the support and engagement from local authorities and stakeholders. For example, authorities at the local level can put forward initiatives such as planning a “15-minute” city (as proposed by Paris, France) to shift mobility to non-motorised transport. Such initiatives would lead to reduced consumption of fossil fuels, which currently dominate the transport fuel mix in Costa Rica. Other opportunities exist as well. Even though Costa Rica’s electricity demand is well covered under the current Electricity Generation Expansion Plan, strategically it is worth considering diversifying the mix to enhance energy security and hedge against the seasonable variation and climate-induced risks facing hydropower generation. From a technical perspective, local renewable energy sources, particularly solar PV and wind energy, can be tapped into to diversify the power mix, thus enhancing the security of energy supply (IRENA, 2021a).

The use of electricity for transport is expected to grow significantly by 2050 in the urban-level NDP scenario, as evidenced by the fuel shares of energy demand at the national level in the transport sector (Figure 14). This scenario also considers the gradual replacement of diesel and petrol with electricity and hydrogen, and a limited penetration of LPG. The scenario also expects a reduction in energy demand due to the greater efficiency of the technologies that use these new fuels in the transport sector.
Decarbonisation of the transport sector is likely to contribute the greatest level of emission reductions and will potentially drive other socio-economic benefits in cities such as lower congestion, fewer accidents and more jobs (IDB and DDP-LAC, 2019; Saget, Vogt-Schilb and Luu, 2020). However, to enable the benefits of an electric transport sector, the electricity system must also evolve. It must ensure high participation of renewable energy sources with deployment of distributed generation in the overall energy system.

Electrification of the industry sector must also evolve, and enabling conditions should be designed. Figure 15 indicates a growing share of electricity for this sector, which will help reduce overall energy consumption through increased energy efficiency. Petroleum coke, LPG, fuel oil and diesel used in the BAU scenario (without decarbonisation) are gradually decarbonised with low- or zero-emission technologies. However, to maximise the benefits of electrifying the industry sector, challenges remain.
Electrification of this sector may lead to higher energy expenditure for the end users as a result of the lost subsidies granted to the substituted petroleum-derived energy commodities. Therefore, restructuring electricity tariffs to support this technological transition may be required.

Medium-term planning (2035)
It is technically possible to reduce emissions in the medium term (Figure 17). The higher the reduction in emissions, the higher the total cost per capita per year, as more zero-emission technologies are needed. Most operating points in the no-policy (BAU) scenario lead to emissions that are higher than the values projected for 2035 in Costa Rica’s Nationally Determined Contribution (NDC) (about 1.6 tonnes of CO2 per capita assuming a linear extrapolation). In the BAU scenario, the optimised solutions provided on the supply side within the technological scope of the study cannot, in most of the cases, match the NDC’s targets, except for the district of San Rafael, which can provide a high share of renewable energy for a contained demand.

Extrapolation to the CNFL area
With the application of the clustering analysis, the district-level results were extrapolated to the CNFL area. This provides an estimate of the potential for renewable energy deployment within the area. For the optimal decarbonisation pathway, considering the minimum carbon emissions solutions leads to a potential installed renewable energy capacity of 1.7 gigawatts (GW) to 1.9 GW of solar PV and 100 MW to 200 MW of wind power, combined with the deployment of options providing system flexibility in 2050, including 26 MW to 80 MW of electrolyser capacity (13 MW fuel cell) and up to 1 GWh of electricity-based storage capacity. This provides an estimate of the renewable energy potential that can be harvested in and around the city as well as in the region.

The carbon emissions are quantified for the medium-term and long-term scenarios, stacked by sector and scenario in Figure 27, starting with the mobility, industry and buildings sectors, which also include the generation of local energy, such as electricity and hydrogen, based on the scenario. The shaded areas in the figure represent the emissions for the different objective functions, with the lower end representing carbon minimisation. The maximum emission reduction achieved per scenario is highlighted on the figure, with the name of the scenario juxtaposed to the final carbon emissions reached in 2050. The NDP scenario provides a potential reduction in carbon emissions of 50% compared to the BAU scenario. Between 83% and 87% of the emissions savings, for 2035 and 2050 respectively, are achieved through the electrification of transport combined with the development of public transport. The NZC scenario provides a further 15% reduction in carbon emissions in 2035
through efficiency measures for appliances and by switching LPG use in cooking to electricitydriven systems for buildings.

CONCLUSIONS
This report explored the plausible decarbonisation pathways for the Greater Metropolitan Area of the Central Valley in Costa Rica. This represents a potential action that sub-national governments can take to assist the national government in implementing the National Decarbonisation Plan, given that the country’s carbon emissions come mostly from the transport, industry and buildings sectors. Additionally, locally available renewable energy potential, particularly solar PV and wind energy, can in the long run be tapped into to diversify the power mix, thus enhancing the security of energy supply from a technical perspective. The study also found that sector coupling technologies and strategies will play a critical role in keeping the energy system operation reliable and stable while diversifying the energy supply by scaling up variable renewable energy sources. In this regard, through applying the Planning Platform for Urban Renewable Energy – a tool that IRENA has developed – different coupling options for the five districts located within the concession area of the state-owned power utility CNFL were evaluated as part of the overall analytical results, based on which the different scenarios were constructed. The granular temporal and geospatial analyses for those representative districts were conducted and the ensuing extrapolation to the Greater Metropolitan Area was taken to understand the potential impact on the entire area. The results show that the resultant emission reduction would be reached by around 90% by 2050 compared to BAU is technically possible in the NDP scenario.

Source:IRENA

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