Page 18 - CARILEC CE Industry Journal_Oct_2019

Climate Change Financing:

The Breakthrough for the Caribbean’s

Sustainable Energy Transition?

- Judith Ephraim-Schmidt, Programme Coodinator for the Sustainable Energy Unit
of the Organisation of Eastern Caribbean States (OECS) Commission

INTRODUCTION key outcome sought from sustainable energy is the
reduction in energy costs which will have positive ripple
There is a well-recognized, inextricable link between effects on other sectors, helping to stimulate economic
climate change and energy. Climate change has growth and increasing the competitiveness of the region.
emerged as a global problem which requires innovative The Caribbean has a particularly diverse and large
and collective effort to address it. Energy drives almost supply of renewable energy resources relative to the
all aspects of life as we know it. The impacts of climate region’s energy needs but this has not been developed to
change are many, and in some cases irreversible any significant level. Amongst the barriers to realizing
damage has already been done. For the Small Islands the full potential of the Caribbean’s renewable energy is
Developing States, SIDS, including Caribbean SIDS, financing. This is not unusual for developing countries
climate change action is both a priority and a dilemma. who often struggle to access the large quantities of
SIDS are amongst the most vulnerable countries to the upfront financing needed for renewable energy
negative impacts of climate change, yet their investments. Even when available, the cost of financing
contributions of global greenhouse gas emissions is is often substantially higher than in developed countries.
negligible. SIDS contribute less than 1 per cent to the Given their upfront capital intensity, renewable energy
world’s greenhouse gas emissions, these countries are projects are particularly sensitive to high costs of debt
among the first to experience the worst and most and equity. Innovative solutions are therefore needed to
devastating impacts of climate change (UNDP 2017). help de-risk and realise the renewable energy projects.
Reducing the level of greenhouse gases in the This will ultimately improve the competitiveness of
atmosphere, the main culprits responsible for global renewable energy projects in the region and help boost
warming, requires a shift in our energy sources and economic growth and resilience.
consumption patterns. Sustainable energy clearly
contributes to Climate Change Mitigation, the term used Caribbean SIDS have recognized the potential benefits of a
to describe actions that reduce the greenhouse gas shift towards sustainable energy. To this end,
emissions. Although the impetus for sustainable energy Governments, utilities, businesses and even home owners
on SIDS is not primarily climate change, opportunities are embracing measures to adopt renewable energy. The
exist to build on synergies between the two areas and to transition away from fossil fuels to renewable energy and
propose measures to achieve shared goals. Financing is increased energy efficiency will require significant levels of
one area that needs to be further explored to capitalize investments particularly for Caribbean SIDS. Whilst these
on joint strategies for a sustainable energy future. investments are expected to pay off within reasonable
timeframes, neither the governments or the private sector
in these countries have a ready source of funding for these
ADVANCING THE SUSTAINABLE energy initiatives. In most cases, government are too
indebted to take on additional loans and even when
ENERGY TRANSITION financing may be available, access can be challenging due

to reasons of technical capacity and availability of
Most Caribbean SIDS are largely dependent on imported information to mention a couple. A key to solving the
fossil fuels for their energy needs. Sustainable energy financing challenges for renewable energy projects in the
and more explicitly, renewable energy, is expected to Caribbean could lie in the financing opportunities linked to
provide significant benefits to the region including climate change. Global actions to address Climate Change
increased energy security, reduction in expenditure on is formalized under the United Nations Framework
imported fossil fuels and technological advancement. A Convention on Climate Change, the UNFCCC.

16 CE INDUSTRY Journal