Turks and Caicos Islands

As outlined, managers will usually be interested in any investment that has pay-back times as short as 5-7
years, while longer times are not favourable. While this would support investments into any technology
with payback times of up to seven years, it means that alternative forms of financing are needed for some
of the more expensive renewable energy technologies with longer payback periods. Most developing
countries can look to use the Clean Development Mechanism (CDM) as an instrument to finance emission
reductions. The CDM is one of the flexible instruments of the Kyoto Protocol with two objectives:
1. to assist parties not included in Annex I in achieving sustainable development and in contributing to
the ultimate objective of the convention of cost-efficient emission reductions;
2. to assist parties included in Annex I in achieving compliance with their quantified emission
limitation and reduction commitments.
The CDM is the most important framework for the supply of carbon credits from emission reduction
projects, such as electricity generation from biomass, renewable energy projects, or capture of CH4, which
can be sold in the regulatory or the voluntary carbon markets. As such, it is a novel instrument to
restructure islands towards low-carbon economies. As an Overseas Territory of the United Kingdom, Turks
and Caicos would be classified as an Annex I country and therefore ineligible to act as a host country for
CDM. However, as indicated in Castalia (2011), there are other sources of international funding available. In
particular the UK Government has carbon abatement targets, and pays money to comply with them; the
Government of TCI should work with the UK Government to identify measures through which TCI can
reduce carbon emissions and obtain funding. This would be in accordance with the commitments made in
the 2001 Environment Charter (OTEP, n.d.).
Further funds can be derived through voluntary payments by tourists. For instance, Dalton et al. (2008)
found that 49% of Australian tourists were willing to pay extra for renewable energy systems, out of which
92% were willing to pay a premium corresponding to 1–5% above their usual costs. In another study,
Gössling and Schumacher (2010) found that 38.5% of a sample of international tourists in the Seychelles
expressed willingness to pay for carbon-neutrality of their accommodation, out of which 48% stated they
would be willing to pay a premium of at least €5 per night. While these values are not representative, they
nevertheless indicate that there is considerable potential to involve tourists emotionally and financially in
strategies to implement renewable energy schemes. The Turks and Caicos Islands already have an
Accommodation Tax with 1% earmarked for environmental projects (Kairi Consultants Limited, 2000a). This
could potentially be expanded to include investments in renewable and energy efficiency technologies.
5.2.4. Summary
The Turks and Caicos Islands are vulnerable to rising oil prices and global climate policy, particularly with a
view to their rapidly growing tourism system. However, there are various tools that can be employed to
reduce energy use in the country, possibly in the order of an estimated 20% within two years, though
attention has to be paid to increasing tourist arrival numbers, which can outweigh achievements in
efficiency gains. Adaptation should focus on policy, management and technology.
Policy, including regulation, taxation and incentives, is important to increase pressure on
stakeholders to engage with energy management – this is an area that is generally seen as less
relevant and efforts to engage significant stakeholder numbers will demand strong policy
environments, as outlined in the Energy Conservation Policy and Implementation Strategy for the
Turks and Caicos Islands.
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