Cuba’s energy crisis: interview with Jorge Piñon
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This week, we continue to watch developments surrounding the U.S. Senate Foreign Relations Committee (SFRC) in hopes of returning to a “rational, humane Cuba policy that actually helps the Cuban people and serves US interests instead of Russia and China’s,” as stated by Ben Rhodes, Deputy National Security Advisor and main advisor on Cuba for former President Barack Obama. We’re hopeful for such a return after the new Chair of the SFRC, Senator Ben Cardin (MD), told reporters he supports engagement with Cuba. President Díaz-Canel’s return after an eventful visit to New York was followed by warnings of continued apagones and food shortages, exacerbating already existing concerns over energy, fuel, food, and the overall economy. Cuba’s allies, Mexico and Russia, provided varying support to Cuba’s shortages this week, as Mexico announced it may no longer be able to donate oil to the island while Russia made a large donation of vegetable oil. The U.S. embargo also populated headlines as Mexico’s President Andrés Manuel López Obrador blamed U.S. sanctions for the influx of arrivals at the U.S.-Mexico border and Cuban entrepreneurs told U.S. business owners of the added obstacles created by U.S. sanctions.
In light of Cuba’s ongoing struggle with apagones, we interviewed Jorge Piñon, Senior Research Fellow at the University of Texas at Austin Energy Institute, about the current state of Cuba’s energy crisis, its causes, and possible solutions. Read the interview below or visit our website to read it in English or Spanish.
See you next week!
Fuel shortages lead to increased power outages in Cuba
Cubans should expect power blackouts to increase and food and milk supply to decrease throughout the country in the coming months according to a Mesa Redonda, or Round Table, broadcast featuring Cuba’s Energy and Mining Minister Vicente de la O Levy and Economy Minister Alejandro Gil. Last week, Minister O Levy and Minister Gil addressed Cuba’s crises on the national show and mentioned several causes, including Cuba’s “complex” economic situation, U.S. sanctions, and rising global food and fuel prices. Minister Alejandro Gil attempted to acknowledge the severity of conditions of the island, telling viewers “We know that life is hard” before suggesting “that the only way out is revolution and socialism.”
The anticipated rise in blackouts is attributed to Cuba’s difficulties in obtaining fuel and overall fuel shortages. Despite increased oil imports from Venezuela in the past year, Minister O Levy revealed that it is still not enough to support the fuel consumption in the country and that Cuba will not “have the level of fuel [it] need[s] or had in previous months.” Minister O Levy blamed the fuel shortages on U.S. sanctions as well as suppliers that failed to comply with what had been stipulated in their contracts. In response, restrictions on power usage have been imposed by local governments on state-owned companies and civilian institutions. Cuba’s government will also allocate fuel traditionally used for public transportation to electricity production, meaning the fuel shortages will also severely affect the island’s public transportation. According to El País, blackouts will increase this month and range from eight to ten hours a day. Throughout the summer, numerous municipalities across the island had their electricity cut every three days during peak hours (from 10am-2pm).
Despite continued promises, Cuban officials have repeatedly said that there is no short-term solution to the frequent blackouts and failing power grid. For many, the promises feel empty. One Cuban citizen, Dani González, spoke to El País about the Ministers’ Mesa Redonda appearance, sharing “It’s more of the same. What I do know is that no leader is going through what we, the people, are going through. I feel disappointed in everything they have promised us and have not fulfilled.” As CDA has extensively reported, Cuba has been grappling with an energy crisis in recent years marked by crumbling energy infrastructure, issues with financing, and heavy reliance on fossil fuels, which currently make up 95 percent of its energy production. For previous reporting on Cuba’s blackouts, read here.
Cuba’s situation warrants numerous questions: Why is the energy crisis so bad? What internal changes Cuba has applied to address this cycle? If any? And what are external factors that continue to subject Cuba to this state of crisis? Is there a way out of this energy crisis?
To answer those questions, CDA interviewed Jorge Piñon, Senior Research Fellow at the University of Texas at Austin Energy Institute, about the current state of Cuba’s energy crisis. Read the interview below.
Cuba’s Energy Crisis: Interview with Jorge Piñon
Lea la entrevista en español aquí.
CDA: Cuba is facing a severe and ongoing energy crisis that has significantly impacted the country’s economy, daily life, and overall development. The crisis has been characterized by persistent shortages of fuel, electricity, and other energy resources, leading to widespread disruptions in various sectors. Can you provide an overview of the current energy crisis in Cuba and its main causes? Why is the crisis seemingly so bad? Or is it?
Jorge: Cuba’s electric grid, the Servicio Eléctrico Nacional (SEN), faces far-reaching structural challenges that threaten the economic and social development of the Island. The infrastructure of its high sulfur oil-fired base load thermoelectric and distributed generation is collapsing due to its over forty years of operation and the lack of scheduled and capital maintenance.
Today, according to Cuba’s Unión Eleéctrica (UNE), less than 50 percent of the sector’s total oil thermoelectric based load and distributed generation capacity is operational, which is resulting in blackouts of 8 to 10 hours throughout the country.
To make matters worse, 85 percent of Cuba’s thermoelectric baseload generation is fueled by high sulfur oil, which is highly corrosive with vanadium and sulfur-rich-compounds that produce ash deposits on components such as heat exchangers, boilers, or turbine blades. This situation causes more damage to the already weakened infrastructure.
It is a vicious maintenance cycle with no end in sight. Cuba cannot move forward toward a reliable, clean, and secure SEN with temporary band-aid solutions, such as the recently leased oil-fired floating power stations, to what are structural problems.
Access to efficient and clean energy is needed to ensure a positive impact on people and their environment. Electricity is essential for the well-being of households and commercial activities, as well as the quality of most public services, such as health and education, that depend on it.
There is no short-term solution to Cuba’s structural electric power generation challenges. The only solution is the total recapitalization of its base load, distributed generation, and renewable electric power matrix. Regrettably, it would take time and as much as $8 to 10 billion dollars of investments.
Cuba also needs to meet the challenges of global warming and reduce its carbon footprint by reaching its optimistic 2030 target of 37 percent share of renewables; but also, by lowering the greenhouse gasses and pollutant emissions generated by the burning of highly contaminating high sulfur liquid petroleum fuels.
CDA: Cuban officials have repeatedly said that there is no short-term solution to the frequent blackouts and failing power grid. What measures has the Cuban government implemented to address the energy crisis and mitigate its effects? Have they been successful?
Jorge: NONE. NO. They don’t have any money, nor the economic model that would attract foreign investors and also allow its citizens to afford the true cost of clean and reliable electricity.
Cuba has to learn from Vietnam’s economic model. Stop fighting the “ogre” – the embargo. Face it, it is codified legislation and only Congress can change it.
Going back to my learnings at Shell and BP, project management is key. President Díaz-Canel spoke to this upon his return from China last year, as quoted in CubaDebate: “…our commitment has to be fulfilled well, how we do things well, how we take advantage of opportunities, how we are efficient, how we do not waste resources, and how we ensure that investments have an adequate return, and how we are increasingly more serious and also more effective in the projects that we propose to continue expanding cooperation.”
CDA: Following the devastation caused by Hurricane Ian last fall, you said that Cuba’s power grid was “on life support.” Given your experience in the energy sector and studying Cuba, what steps do you believe Cuba should take to address its energy crisis and ensure energy security in Cuba? Can Cuba overcome the crisis?
Jorge: As I said earlier, Cuba’s SEN’s high sulfur liquid petroleum fuels fired base load electric power infrastructure is old, tired, and highly inefficient. Years and billions of dollars would be needed to reconstruct its thermoelectric baseload and distributed generating capacity and achieve the government’s stated goal of 37 percent of renewables within its electric power sector energy matrix.
Cuba faces two significant obstacles in recapitalizing its power system: time and money. To overcome these obstacles, the government must decentralize its economic model and resolve its political differences with the United States.
Cuba has to abandon its failed Soviet-style centralized command economic model based on state ownership of all means of production and industrial transformation. It should welcome a market economic system in which the decisions regarding investments and production are guided by supply and demand market forces (following Vietnam’s model). This is the real impediment for foreign investors to invest in energy generation: who is going to pay for it? The government is bankrupt, and the Cuban consumer does not have the disposable income to pay for the real cost of electricity; investors would only invest if they receive an acceptable rate of return for their capital investment and to cover political risks.
Also, a political solution has to be found to The Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (Helms–Burton Act), which codified into law several economic, financial, and commercial sanctions against U.S. and foreign companies trading with Cuba.
CDA: What role does renewable energy play in Cuba’s energy mix, and are there efforts to expand its usage or diversify energy sources during this crisis?
Jorge: If we look at the breakdown of Cuba’s 2030 target of 37 percent share of renewables, it’s regrettably a pipe-dream.
Solar 2104 megawatts (MW)
Wind 807 MW
Biomass 612 MW
Hydro 56MW
Total 3579 MW 37%
Fossil fuels 6071 MW 63%
The question is: Who is going to pay for it?
As for efforts to expand, biomass (any living or recently living organic matter, such as sugar cane, used for fuel) is out of the equation. For instance, a recent $186 million investment in a 65MW biomass plant at the Ciro Redondo sugar mill is not operating. Why? There is no sugarcane! La Herradura 1 wind project has been in its developing stage for over 8 years with the support of Chinese financing, Chinese equipment and technologies (GoldWind), and Chinese supervisory personnel.
CDA: Cuba has a history of depending on global partners for subsidized fuel imports, namely with the Soviet Union and Venezuela. How has this dynamic impacted their current situation? Is there a future in which Cuba escapes this dynamic?
Jorge: Cuba has to be very careful not to lock itself into inefficient technologies or outmoded power systems from countries that offer preferential financing terms and conditions or commit the government to politically fuel supply relationships such as with Russia or Venezuela.
Today, Europe is learning the hard way what happens to an economy dependent on fossil fuels supplied and controlled by a single import source. Europe is now paying the price of “putting all their eggs in one basket” with Russia.
Cuba also has to be sure that new electric power plants don’t become “stranded technologies”; where the impact of new and more efficient future technology availability causes fossil fuel power plants to be decommissioned or underused.
For example, one path towards a reduced carbon energy system being discussed today is the use of hydrogen as a gas turbine fuel. Hydrogen-fueled gas turbines could potentially allow both new and existing power plants to continue operating for decades to come while reducing their carbon emissions.
Liquified natural gas (LNG) could play an important role in Cuba’s future energy mix. Cuba needs to decarbonize its electric power generation while still providing reliable and cost-competitive power by investing in technologies that will make this possible while avoiding stranded assets as technologies change.
U.S.-CUBA RELATIONS
- New SFRC Chairman continues speculation of future shift in U.S.-Cuba policy: Last Wednesday, Senator Ben Cardin (MD) took over the chairmanship of the U.S. Senate Foreign Relations Committee (SFRC) from Senator Bob Menendez (NJ), suggesting a shift in U.S.-Cuba policy could be possible (Reuters). Senator Menendez, who was forced to step down last week after being federally indicted in a corruption scheme, has historically opposed increased engagement with the island and been a roadblock to normalization efforts in his position as Chairman of the SFRC. Sen. Cardin told reporters this week that he holds a “pro-engagement” view towards Cuba, but said he needed more time before he could speak on the matter further (The New York Times). Senator Cardin has previously signaled support for improving U.S.-Cuba relations as evidenced by his support of President Barack Obama’s removal of Cuba from the State Sponsors of Terrorism (SSOT) list and for reopening the U.S. Embassy in Havana in 2015. Sen. Cardin previously assumed leadership of the committee from 2015 to 2018, as Sen. Menendez dealt with federal corruption charges.
U.S.-Cuba Relations Recommended Readings and Viewings:
- Takeaways from Cuban entrepreneurs Miami visit: Last week, private Cuban entrepreneurs met with a group of Cuban American business owners to exchange business advice and discuss Cuba’s private sector, revealing the need for access to the international banking system, troubles caused by the U.S. embargo, difficulties converting Cuban pesos, and more (The Miami Herald). The meeting also underscored the diversity of Cuba’s private sector, which includes entrepreneurs from across the island operating businesses ranging from company-management solutions to beauty supply sales, and the large involvement of the Cuban government.
- Cuban migrants face challenges in a changing immigration landscape: Weeks after a U.S. judge ruled that Cuban arrivals given I-220A documentation would be precluded from adjusting their status and receiving permanent residency under the Cuban Adjustment Act (CAA), a new group of Cubans estimated to be in the tens of thousands are forced to navigate uncertain and unfamiliar circumstances while without a parole. (The Miami Herald).
- From Molotov cocktails to Cuba’s private sector; Interview with Vice Minister Carlos Fernández de Cossío: In an interview between WLRN’s Tim Padgett and Cuba’s Vice Minister of Foreign Relations, Carlos Fernández de Cossío, Mr. Fernández de Cossío addressed the recent Molotov cocktail attacks on Cuba’s embassy in Washington, D.C., reiterating the need for a thorough investigation and how the incident reflects on the current U.S.-Cuba relations (WLRN). Regarding the growth of Cuba’s private sector, Mr. Fernández de Cossío emphasized that Cuba is taking steps towards economic development independently of the U.S., while also discussing the importance of clear investment rules for the private sector’s growth.
- Cuban Scientists’ Dual Mission for Environmental Conservation and Economic Sustainability: After completing a two month-long, 5,700-kilometer circumnavigation of Cuba’s coastline, Cuban scientists found significant damage to the health of the island’s coral reef ecosystems and coastal communities caused by climate change and pollution (CNN). Among other suggestions, the scientists are advocating for Cuba to shift away from commercial fishing and expand on maritime tourism to support conservation efforts and the island’s economy.
IN CUBA
In Cuba Recommended Readings and Viewings:
- Cubans get candid about the economic crisis on the island: In an interview with NPR’s International Correspondent, Eyder Peralta, Cubans spoke candidly about how the economic crisis is rearing its head across the island (NPR). Prices for food and other essential items have skyrocketed, making it virtually impossible for people to afford or access basic necessities; one Cuban woman remarked “Food is stable, like a sick person at a hospital stable.”
- Cuban entrepreneurs turn to ‘aquaponics’ amidst food scarcity: In search of creative solutions to the island’s numerous shortages and low food production, two Cuban entrepreneurs have embraced aquaponics as an efficient and environmentally friendly solution to bolster food supply (Reuters). Aquaponics is an aquaculture system that combines fish farming with hydroponics to cultivate plants, like lettuce, thereby eliminating the need for environmentally harmful and costly fertilizers or pesticides, making it well-suited for Cuba’s current challenges.
CUBAN MIGRATION
- Mexico says U.S. sanctions are to blame for influx of arrivals at the U.S.-Mexico border: Mexican President Andrés Manuel López Obrador reported on Monday that approximately 10,000 migrants are arriving at the U.S. border daily and attributed the rise in regional migration in large part to U.S. sanctions on Cuba and Venezuela (AP News). According to Mexico’s President, a root causes approach is required to address the influx, which includes the added strain caused by U.S. sanctions. On Friday, President López Obrador called for the U.S. to lift sanctions on Cuba and Venezuela and proposed a cooperative plan to prevent citizens of Venezuela, Cuba, Nicaragua, Ecuador, Guatemala, and Honduras from feeling forced to emigrate (AP News). The remarks echo criticism from Colombian President Gustavo Petro who also argues that these sanctions have been a major factor in the migration crisis in which there are large numbers of Cuban and Venezuelan nationals (Democracy Now!). President López Obrador’s remarks come just days before he is set to meet with U.S. State Secretary Antony Blinken and Homeland Security Secretary Alejandro Mayorkas to discuss migration and border security.
- Ten Cuban migrants die in an accident in Mexico: Over the weekend, a cargo truck carrying a group of migrants through Chiapas, Mexico overturned on a highway, resulting in the deaths of nine women and one young girl, all of whom were Cuban nationals (BBC News). 15 others were injured in the accident. Mexico’s National Migration Institute (INM) reported that the driver lost control of the truck while speeding, causing it to overturn, and then fled the scene of the accident. Amidst rising numbers at the U.S.-Mexico border, this is the second fatal vehicle accident involving migrants in the past week.
Click here for data on Cuban migration to the United States, including total Cuban migration to the U.S. and the number of Cubans interdicted by the U.S. Coast Guard.
CUBA’S FOREIGN RELATIONS
- Mexico considers charging Cuba for oil as donations become too expensive: As the cost of crude oil surges, Mexico’s state-owned oil company, Petroleos Mexicanos (Pemex), is looking to charge Cuba for previously donated oil supplies, according to Mexico’s Secretary of Foreign Affairs, Alicia Barcena (Bloomberg). Since June, Mexico’s Agency of International Cooperation for Development has facilitated oil donations from Pemex to the island, amounting to over 150,000 barrels of oil worth approximately $77 million. However, over the span of three months, the cost of oil globally has increased, and Mexico’s government now faces its “largest fiscal deficit in over three decades.” This comes at a bad time for Cuba as the island struggles through an economic crisis and an increasing number of blackouts due to insufficient fuel supply.
- Russia donates 650 tons of vegetable oil and reports its “in contact” with Cuba regarding the alleged human trafficking ring: Last Wednesday, Cuban officials gathered at Russia’s Embassy in Cuba to receive a donation of 650 tons of vegetable oil worth approximately $3 million USD (Reuters). During the ceremony, Russia’s ambassador to Cuba, Victor Koronelli, confirmed that Cuba and Russia were “in contact” regarding the alleged human trafficking ring that surfaced last month that recruited Cuban nationals to fight for the Russian army in the invasion against Ukraine (Reuters). Mr. Koronelli did not provide any further information on the subject and reported he didn’t know how many Cubans had been recruited.
- In the aftermath of the attack on Cuba’s embassy, North Korea joins in criticizing the U.S.: In a statement from a spokesperson for North Korea’s foreign ministry, North Korea accused the U.S. of neglecting the safety of the Cuban diplomatic mission in Washington, D.C. (Reuters). The unnamed spokesperson argued that the attack last week and the 2020 attack were the product of “despicable anti-Cuban” intentions, alleging that the U.S. was complicit in allowing the alleged terrorist attacks to occur. The statement called on the U.S. to take responsibility for the incident rather than focusing on labeling countries as state sponsors of terrorism, referring to the U.S. State Sponsors of Terrorism (SSOT) List which includes both North Korea and Cuba.
- Cuba and PAHO sign Cooperation Strategy: Last week, the Pan-American Health Organization (PAHO) hosted its sixtieth Directing Council session in Washington, D.C., which resulted in PAHO and Cuba’s Ministry of Public Health (MSP) signing the 2023-2027 Cooperation Strategy (Prensa Latina). On Wednesday, Cuba’s Minister of Public Health, José Angel Portal, and PAHO’s director, Jarbas Barbosa da Silva, signed the PAHO and MSP cooperation agreement which aims to advance Cuba’s national health under the current socioeconomic and demographic situation on the island (MINREX). As of now, Cuba hosts eight active PAHO/World Health Organization (WHO) Collaborating Centers at various educational institutions throughout Havana that intend to support the mission of the organizations (WHO).
Cuba’s Foreign Relations Recommended Readings and Viewings:
- A year in rewind: Cuba and Russia strengthen bilateral relations: Cuba and Russia continue to strengthen their geopolitical and economic ties as Cuba’s government seeks assistance from Russia to revive its struggling industries (Harvard International Review). Russia’s increasing involvement in Cuba poses a potential obstacle to U.S.-Cuba relations while the U.S. government “wavers on whether to slowly warm to Cuba.”
- Inside why Cuban nations have gone to fight in Russia: As the economic crisis in Cuba continues, Reuters details how many Cuban nationals, enticed by the financial prosperity promised, have been recruited through social media and WhatsApp to join the Russian army in its invasion of Ukraine (Reuters). While some Cubans were unaware of the end result, Reuters found that others were aware of the terms of the contracts they signed.
EVENTS
New Directions in Cuban Studies, October 18-22 | Miami, FL
On October 18, the Cuban Heritage Collection of the System of Libraries in the University of Miami will host its fifth edition of the multidisciplinary symposium, New Directions in Cuban Studies. This year’s theme is “The great challenges for Cuba yesterday, today and tomorrow.” The symposium will promote works of postgraduate academics on Cuba, with the purpose of spreading the achievements of the global Cuban diaspora.
Book Presentation: Transnational Cuban Networks of Exchange, October 20 | Coral Gables, FL
Books and Books will host an in-person book discussion of “Circulating Culture: Transnational Cuban Networks of Exchange,” by postdoctoral Research Fellow Jennifer Cearns. Her study delves into the meaning of Cuban culture and identity in a transnational context.
Panel Discussion: Revisiting the War of 1898 and its Long-Term Repercussions for Cuba & the U.S., October 25 | Miami, FL
FIU will hold a panel discussion focused on the impact of the War of 1898 on Cuba and the United States. Leading scholars Javior Figueroe, Marial Iglesias Utset, Kate Clarke Lemay and Taína Caragol will delve into how the aftermath of the Spanish-Cuban-American War transformed the United States and its newly acquired territories, how Cuba emerged as a 1902 nascent republic, and the growing ubiquitous presence of the United States.
The views and opinions expressed by authors are their own and articles do not necessarily reflect the views or positions of CDA.
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