Caribbean Energy Security Summit - event coverage

2 February 2015


Joe Biden, U.S. Vice President, speaking at the Caribbean Energy Security Summit on January 26th 2015 ©Business Intelligence Unit 

 
On January 26th 2015, Joe Biden, Vice President of the Unites States of America, invited official delegations and members of the private sector and think tanks to attend the first Caribbean Energy Security Summit held at the State Department in Washington DC.
 
The aim was to bolster Caribbean energy security by fostering dialogue between the 700 participants and to identify frameworks for the creation a strong investment climate for clean and sustainable energy in the region. The event was preceded by two days of consultations between government members coming from the Caribbean states and government officials in Washington.
 
Key talking points: the cost of the renewables has been reduced by 50 percent in the past 4 years so time has come to seize the moment; it is important to listen to and follow the leadership of the Caribbean states rather than impose outside rules that might not necessarily apply on the ground; it is crucial for every single stakeholder to coordinate in order to maximize the probability of success of this very ambition agenda; climate change is a frightening prospect: 80 percent of the Caribbean landmass will be lost if the sea level rises 1.5 meters and with a global warming of 3.7-4.8 degrees Celsius, many islands will no longer be there by 2100.

The conference began with a strong message: the summit comes at a critical moment for the Americas in terms of energy security. Frederick Kempe, President and CEO of the Atlantic Council, noted in his opening statement: “the heads of states gathered here today are our allies, friends, neighbors, in this reexamination of the energy policy and paradigm in the Caribbean. Energy is on everybody’s mind these days. We have a special duty to do more than just talk when it comes to energy in the Caribbean. There’s a sense of urgency now because of the economic situation, environmental challenges, Venezuelan challenges, and changes overall in the energy links.”
 
He continued by emphasizing the need to have a bold vision, to take action at all levels, whether government, business community or international financial institutions, and to find joint solutions. “The vision comes from Joe Biden”, he said, “from Brazil to Mexico, the Vice President has been instrumental in breaking down barriers and building bridges in the Americas.”
 
Frederick Kempe: “This Caribbean Energy Security initiative launched last summer signals a new era by focusing on multilateral participation to transform the Caribbean regional energy matrix, using all the cooperative means at our disposal. It outlines specific, comprehensive actions to diversity energy and to reduce dependency on a single fuel source.”
 
When Joe Biden took the floor, he made sure to pass along a strong message on behalf of the Presidency, in his signature way: “my dad used to say that if all is equally important to you, then nothing is important to you.” President Obama made it “absolutely clear that both the Caribbean and Central America energy security are primarily issues for us. It’s overwhelming in the interest of the US that we get it right and that this relationship changes for the better across the board.”
 
Factors such as the 3.4 percent rise of the United States (US) economy, the International Monetary Fund estimates for a GDP growth around the world, the combination between low oil prices and the plummeting cost of renewable energy, indicate a propitious moment to get “significant support from the American public for overseas investment just across the water in the Caribbean.”
 
And then there was a surprising, albeit expected, change in tone. “Citizens in your countries are demanding more affordable supply; they are expressing their discontent when they hear about investments with no clear results. Governments shouldn’t depend on single increasingly unreliable energy supplies. Whether it’s the Ukraine or the Caribbean, no country should be able to use natural resource as a tool of coercion against any other country.”
 
Joe Biden: “Energy developers come to your door with exciting ideas but somehow deals fall apart when it comes to finding financing. This is an opportunity. When it comes to energy we are living in a new moment. It’s up to us to seize it. It’s a measure of how governments keep up with fundamental changes across the world. The low oil prices give governments a little space to breath. The best time to fix the roof is when the sun is shining.”
 
He moved on to express just how important the Americas have become in the global energy equation, having a combined production between the US, Canada, Mexico, that exceeds the one in the Arabian peninsula, explaining just how easy it can be to purchase gas on the open market, with or without a Free Trade Agreement, from the US or other markets in the region, such as Trinidad and Tobago.
 
Joe Biden: “An integrated North America working together to promote energy security beyond our borders can be a major asset for the entire hemisphere and it’s profoundly in the self-interest of the US to see the Caribbean countries as prosperous, secure, energy-independent neighbors. It’s the first time that this vision is achievable if we make the right decisions,” the Vice President noted.
 
Joe Biden: “Some people think that it can’t be done in the Caribbean. Not only can it be done, it is being done right now with some of your neighbors. In the US Virgin Islands, they’re combining renewable energy with propane to lower costs and secure their supplies, saving 30 percent of the energy bill and reducing green-house gas emission from the fossil fuel by 12 percent. The photovoltaic facility at the Port Authority is saving nearly 1,000 dollars at day. Aruba uses renewables for 30 percent of their energy demand, due to an action plan uniting the government, the utilities company and the businesses. Saint Lucia is developing investments and new legislation for geothermal energy, to stabilize the rules of the game and make investments more attractive for those of you who are suppliers. Barbados has long been the leader of solar technologies and is poised to make major new investments in renewables. “
 
He then urged once again governments in the region to seize political power, because the private sector is where the money is, not aid or government money, so the primary goal is to create conditions to attract private energy companies and hedge funds.
 
The Vice President explained which are the “core ingredients for energy independence: deal with corruption, choose those who are competitive, modernize not only basic infrastructure, but institutions and regulations, with rules that are clear, transparent, and fair. Enforcement needs to be predicated under the rule of law; utilities need to be financially viable – you cannot bankrupt yourselves with subsidies. Harmonize regulatory framework so that businesses can look to invest in the entire region, rather than trying to navigate the regulation of each country. Talk to the stakeholders, utilities companies, businesses selling generators, and consumers to articulate a common vision and create a system that works to realize that vision. We need to have political will to take on entrenched interests, to better serve our people. Some of you have been promised easy solutions, but if they were easy, they would have been found by now. Countries that do best take a holistic approach with an eye on the long term and make it a paramount priority to attract private investment.”
 
Joe Biden: “This is not an either or, it’s all the above. We are prepared to work to support it, we guarantee we will do our part and we can afford it, but we are not going to waste money; we will insist on an considerably more transparency, better coordination, a change in regulations. We’re not here to replace one flawed financing scheme with another.”
 
Joe Biden:  “The donors need to change the way we do business, we want to invest, we are well intentioned, it’s easier to do a series of warm-up projects, but we have to talk to one another, to be successful in the long run, we need one central forum to achieve maximum impact, we have not done that. I promised last summer that we will work to do a better job at coordination. The goal of today is to walk away with an agreement to create a coordinating mechanism that will maximize energy programs in the region. We support the World Bank’s proposal in creating this. Your presence is an encouraging sign. We need to back it up with true, genuine action, what we talk about here. You have a chance at a supply of energy that’s more resilient, sustainable, cleaner, more affordable, a change to reduce the number of oil spills, protect your waters, put the money you’re saving in schools, hospital, jobs, infrastructure, manufacturing, save your people money, free up your budgets.”

Advertising:
 
When Prime Minister Christie of the Bahamas took the stage, his discourse struck many of the attendees as surprisingly different in tone and approach for a Summit that focuses on cohesion and a better coordination.
 
He started by recognizing the need for energy efficiency, diversification, and cost reduction as key factors to building competitiveness, such as the Caribbean Community (CARICOM) 5-year adopted strategic plan for 2015-2019, which puts forth the goal of having renewable energy accounting for 20 percent of the energy mix by 2017. With a dependency of over 90 percent on petroleum products for their energy needs, the Caribbean countries are very vulnerable.
 
He then moved on to criticize the way the aid is allocated as well as the conditions imposed by international institutions.

Perry Christie: “The qualification as medium income nations based solely on the GDP per capita, which determined the access to concessional developmental financing, needs to be reconsidered. One member of the Organization for Economic Cooperation and Development (OECD), Jeff Han, has recognized this peculiar situation and has developed the appropriate financing policy with respect to the CARICOM. For future energy security initiative, we kindly ask the Vice President to remove the GDP as sole indicator, and consider broader shifts in conceptual change towards development aid and accessing finance from international financial institutions where the US holds considerable influence.”
 
Perry Christie: “In many instances the conditions imposed restrict the states in which the governments can play. The fundamental question is how we can de-risk the financial environment to substantially increase investments in clean energy sector. Agreements with international financial institutions should contain default provisions to allow for public sector risk reduction to stimulate economic growth. Energy has direct implications on economic development. Most of the Caribbean is not industrialized but heavily dependent on tourism; the energy cost has a direct effect on pricing and this can affect competitiveness. As living standards rise across the regions, so does the energy demand. Without massive investments achievement of our sustainable development is out of reach. Public resources and development assistance need to be used in a catalytic way to attract sufficient investment to exploit our considerable renewable energy potential.”
 
He goes on to mention the pre-feasibility studies suggest that the average internal rate of return of low carbon investments in CARICOM is estimated at 17 percent, compared to 1 percent in Europe, 11 percent in India and 20 percent in the US. The majority of investors in energy efficient projects is believed to have achieved an average of 16.7 percent return, without fiscal incentives.
A major challenge is also the level of information sharing which is highly inadequate. Coordination needs to be improved and a more optimal utilization of resources applied. Caribbean Sustainable Energy roadmap is a strategic planning management and implementation framework, aimed at rationalizing and expediting the development of sustainable energy in CARICOM. “This platform is being developed to facilitate regular engagement between various stakeholder groups and has already been approved by CARICOM energy ministers”, Prime Minister Christie explains.
 
For the Prime Minister, the two ways in which the US can help were very clear: funding and provision of natural gas. However, even if the vision of the US officials is to provide natural gas to the Caribbean, organizations such as the Carbon War Room, clearly stated that there shouldn’t be a major push for gas, because very few Caribbean nations have gas, and at Davos this year there has been significant chatter with regard to a possible raise in the price of gas to around USD 200, so betting on it shouldn’t be a deal to be pushed so heavily on the Caribbean.
 
The message of the event was clear: charter a new course for energy in the Caribbean. However, although there was a common understanding of the urgency to act, there seemed to be little consensus on how to implement the ideas that were being circulated. The challenges to a sustainable, integrated action were put on the table far more often than actual solutions and suggestions on how to move forward.
 
 
 
OER: Business Intelligence Unit (BIU) supports free sharing and open educational resources. All the materials published on our website may be reproduced in any form for educational or non-profit purposes without special permission from BIU, provided acknowledgement of the source is made. For reproductions having a commercial purpose we welcome applications for permission consisting of a statement of purpose and the extent of the reproduction at info@businessintelunit.com