The Caribbean must develop a more efficient regional regulatory framework if it is to overcome the current barriers to investment in its growing energy sector, according to a leading CARICOM official.
CARICOM Secretary General Ambassador Irwin LaRocque stressed the importance of finding the right mix of public and private sector investment in increasing energy capability throughout the region, during a panel at the Caribbean Energy Security Summit (CESS) in Washington, D.C., stating that CARICOM members require stronger local and regional coordination efforts.
"Coordination is a key part in seeking to allow for the region to derive the skills that it requires in moving towards its renewable energy targets. Coordination on a local level is important, but equally important is coordination on a regional level. Although LaRocque felt that CARICOM member states had done a sufficient job in setting national targets for renewable energy, he said that a "common vision" is required to attract the necessary funding to make the Caribbean's dreams of energy security a reality.
"For us energy is an economic cost. Our competitiveness to a large extend is affected by the high cost of energy and our very survival in terms of being able to provide our goods and services is threatened. There's no pushback, where we're going to have to do more work is in how we seek to arrive at a regional regulatory framework," said LaRocque.
While he anticipated a fair amount of difficulty in developing an appropriate regulatory environment for Caribbean investment, he believed that the region could look to Central America for a similar model. The energy summit gathered delegates from across the Caribbean to explore methods of reducing the cost of energy in the region. The Bahamian government has committed to having a renewable energy input of 30 percent by 2030, while CARICOM currently seeks 20 percent alternate energy penetration by 2017.
LaRocque was joined by President of the Inter-American Development Bank (IDB) Luis Alberto Moreno, who said that energy costs continue to be one of the most challenging economic hurdles for Caribbean countries, noting that the region's energy prices are roughly triple that of U.S. households.
"The reality is that we are in a very unique moment. There is no question that the changes in the prices of energy allow the Caribbean to do things that otherwise would have been difficult in the past. At the same time, we're in a world economy that is almost now running on just one engine and that is the U.S. economy," said Moreno.
President of Caribbean Development Bank (CDB) Dr. William Smith and David Anderson, parliamentary secretary in Canada's Ministry of Foreign Affairs, rounded out the panel as they identified the barriers to financing renewable and alternate energy projects in the Caribbean, with Anderson touching on the critical role of donors in future projects.
"We find that investment into many of these emerging economies is restrained across critical sectors, including energy, often because of perceived risks in the markets. Donors can play a critical role in reducing the barriers to investment and creating sustainable growth and we believe that we can be a part of that," said Anderson.
Smith stated that even though the recent plummet in crude oil prices represents a welcome relief, it did not address the regional problem. CDB research had projected that Caribbean energy prices still remain at least double or triple the respective costs in the U.S. with the reduction of oil to $45 dollars a barrel.
"There is no question that even with the prices as they are today, the Caribbean still has a competitiveness problem," he said.
Smith agreed with LaRocque that the Caribbean needs a broad-based, multi-country regulatory framework to make investment in the energy sector feasible, adding that the old age and small scale of local power plants had significantly impacted the region's competitiveness.
"There is the challenge of investing and replacing those plants, even if you were to even go with the previous fuels or go with renewables. You have that inherent problem of small scale and lack of investment over time. The private sector, the main producing sector in the Caribbean, then faces the challenge of competing with a real impediment," said Smith.
The U.S. announced that it would use its Overseas Private Investment Corporation (OPIC) to finance projects in middle-income Caribbean countries, while Trinidad and Tobago Prime Minister Kamla Persad-Bissessar proposed a $1 billion Caribbean Energy Thematic Fund for CARICOM member states to address regional energy security, which will be housed at the IDB.
Coinciding with the energy summit was the announcement of a nearly $43 million loan from OPIC to finance a 36 megawatt capacity wind farm in Jamaica. Future success could arguably lead to the deployment of similar projects in The Bahamas' Family Islands, including Eleuthera and the Exumas, where wind generation pilot projects have already launched.
Click here to read more at The Nassau Guardian
