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ENERGY Caribbean Yearbook (2013-14)

caricom energy policy 1

caricom energy policy 1 Energy issues The Caribbean’s nightmare import bill Except for Trinidad and Tobago, the countries of Caricom have long faced the acute problem of having to import the energy they need for their economies to function. This dependence has been worsening. “The total cost of the annual fuel import bill for the region today is around (US) $8-9 billion,” says Desiree Field-Ridley, officer in charge of trade and economic integration at the Caricom secretariat in Guyana, “with the tendency to be rising.” Compare that with $2.5 billion in 2006, when the Caricom task force, appointed three years earlier with a mandate to “develop mechanisms for a regional energy policy,” was finalising its draft report. The magnitude of the dependence is staggering. With so much foreign exchange going to pay for one product, however essential, there is a “deleterious effect”, as Field-Ridley puts it, “on the economic and social development of the net Traffic in St. John’s, Antigua (courtesy Hugh Fiske/Flickr) energy-importing countries of Caricom.” The effort made by Venezuela in 2005 to ease that “deleterious effect” through the PetroCaribe oil supply programme only plunged the 13 Caricom states who signed up for it further into debt and did little to ease their foreign exchange liability, according to Field- Ridley’s figures. After a down-payment of part of the commercial price would be made, buyers would pay the balance over several years. Companie Countries Caricom’s energy-importing countries Despite PetroCaribe, when the price of oil soared to $147 a barrel in 2008, “were almost at a panic stage”, to quote Joseph Williams, manager of the secretariat’s energy unit. The secretariat responded with a programme named C-SERMS (Caricom Sustainable Energy Road Map and Strategy), to help accelerate the move towards renewable energy and more efficient usage in member states. C-SERMS has now been subsumed into the Caricom Energy Policy, which updates and completes the 2007 task force report. It was adopted by regional energy ministers at a special Council for Trade and Economic Development meeting in Port of Spain on March 1, 2013, and was due to go forward to the Caricom heads of government in July for formal ratification. The major petroleum products on which Caricom depends are residual fuel oil for power generation (57% of the total in 2008) and motor gasolene for transportation (16%). “Other petroleum products” accounted for 13%. The larger Caricom states like Jamaica and Guyana have to divert 40- 60% of their total export earnings to pay for this lifeline, leaving relatively little for other imports, including food and medicines. As the Caricom Energy Policy points out, “for the tourism/services-oriented countries, such as Belize, Grenada, St Vincent and the Grenadines and Barbados, petroleum imports range from 13% to 30% of export earnings.” When export income falls, as it did in Grenada in the year under review (2008), “a higher oil import/foreign exchange earnings ratio” has to be faced. In Caricom, Jamaica is most heavily dependent on imported energy. It requires crude oil to feed its 36,000 b/d Petrojam refinery and refined products to run the various parts of its economy. In 2008, it imported 16.3 million barrels of fuel oil for power generation, and 4.3 million barrels of gasolene and 3.6 million barrels of diesel for transportation. 6

Energy caricom energy policy 2 issues Is the Caribbean serious about renewable energy? The principal purpose of the Caricom Energy Policy is to reduce substantially the Community’s historic dependence on imported petroleum products. Once approved by the regional heads of government, it will provide a measure of energy security that has not been possible when the cost of oil can fluctuate widely overnight and import needs are decided by the state of the economy from year to year. A major source of Caricom’s petroleum Compani imports is actually one of its own – Trinidad and Tobago. But that is small comfort, since Trinidad and Tobago sells its refined products at prices related to international crude benchmarks. Caricom states do get some relief from the part-payment they make on Venezuelan oil, but that too is little comfort when deliveries fall short, as they have often tended to do. Hence the problem: how to adjust the energy mix so that oil plays a less burdensome part? The Caricom Energy Policy settles unsurprisingly for a multi-pronged approach, focusing on enhanced renewable energy alongside efficiency measures to reduce the amount of energy needed to create each dollar of GDP. It lists renewable inputs as solar, wind, biomass, landfill gas, bio-ethanol, hydro, geothermal, waste-to-energy, marine energy (including tidal and wave), and even hydrogen. Countries Even geothermal-fired electricity Most of those resources are available domestically and do not involve the use of precious foreign exchange once plant and equipment are installed. Their very presence enhances energy security. exchanged between two members could be regarded as a national source. The Caricom policy document points out that, though some progress has been made with renewable energy in the region, “the overall proportion of [its] contribution in primary energy still remains quite low”. The creation of a “sustainable energy path” will require “commitments to increasing the contribution of both RE and EE.” EE (energy efficiency) may prove more difficult to adopt than RE (renewable energy) because it requires a conscious change in human behaviour. Governments are urged to make EE a more attractive exercise through “fiscal and other incentives”, especially “solarthermal systems for hot water production in all sectors” and setting “minimum efficiency standards that require electric utilities to decommission inefficient generation plant and conduct demand side management programmes.” The electricity sector is seen as the main channel for increasing RE, since renewable sources can “provide direct replacement for fossil fuels as the principal source (base-load type) for generating electricity at the national level.” The 2009 C-SERMS initiative (the Caribbean Sustainable Energy Road Map and Strategy) will take responsibility for promoting both RE and EE. It is expected to set “quantitative targets for sustainable energy and “provide an implementation framework, engaging all member states and actors in the energy sector.” The Caricom Energy Policy focuses on increasing renewable energy while simultaneously pursuing efficiency Wigton wind farm, Jamaica (courtesy pcj.com) energycaribbean YEARBOOK 2013/14 7

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