Energy Aid in Caribbean and Pacific Small Island Developing States (SIDS)

Abstract

Small Island Developing States have narrow resource bases and are extremely reliant on fossil fuel based energy for electricity generation. These island economies are also particularly vulnerable to the impacts of peak oil and climate change. The objective of this research was to ascertain the impact of international aid (if any) on a sustainable energy transition in the power sector, particularly as it relates to the acquisition and deployment of renewable and energy conserving technologies.\n\nRequests for data on energy projects in both regions that occurred between 1970 and 2010 were sent to donor entities (including development banks) active in the Caribbean and Pacific. From this, project data pertaining to approximately 550 energy initiatives which donor entities had approved was collected. A total of 76 interviews with key power sector stakeholders from 19 countries were also conducted. \n\nThis research has found that 71 percent of the approximately USD$4.7 billion awarded by donorsbetween 1970 and 2010 was allocated to energy projects in the Caribbean, region while 29 percent (approximately USD$1.3 billion) was allocated to energy projects in the Pacific. The Caribbean also received a greater amount of energy aid on a per capita basis, of USD$202,182 in comparison to USD$150,928 in the Pacific. Moreover, substantially more funds were allocated to fossil fuel based projects than renewable energy initiatives in the Caribbean. This trend did not hold true in the Pacific where funds allocated to renewable energy projects outpaced those spent on fossil fuel based initiatives. Further, energy aid to both regions was disbursed primarily in the form of loan funding. In fact, of the approximately USD $4.7 billion disbursed, at least USD$3.8 billion (around 80 percent) was supplied via debt financing. \n\nThis thesis also asserts that Caribbean and Pacific SIDS have not substantially transitioned to sustainable energy sources in the electrical power sector, though some progress toward greater deployment of renewable energy has been made, largely through the use of hydroelectricity. This research also found that donor entities had significant impacts on Caribbean and Pacific SIDS by facilitating investment in energy technologies (conventional and renewable) and through providing support for the development of energy policies. Additionally, donors placed a deliberate emphasis on enhancing the involvement of private companies in the power sector. Donors also provided vital support to SIDS to help them respond to and cope with oil price shocks.\n\nNonetheless, disbursements to the energy sector have not been altruistic, but rather represented the geopolitical and economic interests of donor entities. This thesis postulates that energy aid to Caribbean and Pacific SIDS at times served to promote the technologies and political interests of donor nations. Moreover, political rivalry and donor competition have contributed to project duplication. Finally, this research has shown that insufficient attention has been placed on energy efficiency initiatives as well as public education programs aimed at encouraging behavioural change with regards to energy consumption and conservation.\n\nHence, this thesis asserts that Caribbean and Pacific SIDS need to ensure that the provision of aid does not serve to facilitate the acquisition and deployment of inappropriate or unproven technologies. A greater degree of emphasis on skill transfer and capacity building, particularly of professional and commercial skills, is necessary. Further, communication amongst donor entities needs to be improved, especially in the Caribbean. Climate change and peak oil mitigation and adaptation should also be mainstreamed into the planning of energy policies and projects towards a sustainable energy transition.

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