CAC report: Structural gaps could slow Caribbean energy transition

Ryan Ba­choo

Caribbean coun­tries, in­clud­ing Trinidad and To­ba­go, face sig­nif­i­cant con­straints in fi­nanc­ing, in­fra­struc­ture and pol­i­cy co­or­di­na­tion as they pur­sue a just en­er­gy tran­si­tion, ac­cord­ing to a new re­port by Cli­mate An­a­lyt­ics Caribbean (CAC), which warns that cur­rent gaps could un­der­mine im­ple­men­ta­tion across key sec­tors.

A new re­port re­leased on April 16 by Cli­mate An­a­lyt­ics Caribbean has iden­ti­fied pri­or­i­ty sec­tors cen­tral to the Caribbean’s en­er­gy tran­si­tion. These in­clude en­er­gy, tourism, agri­cul­ture and fish­eries, and fi­nance and tech­nol­o­gy.

“While the just tran­si­tion con­cept has large­ly de­vel­oped around high-emit­ting economies, this re­port con­sid­ers it in the Caribbean con­text, where the chal­lenge is less fo­cused on tran­si­tion­ing large fos­sil fu­el in­dus­tries and more in­te­grat­ed with fos­ter­ing re­silient, in­clu­sive and sus­tain­able de­vel­op­ment,” its open­ing sum­ma­ry stat­ed.

The re­port, ti­tled Nav­i­gat­ing the Just Tran­si­tion: Trends and Knowl­edge for the Caribbean, was au­thored by Kristin Qui, Mar­li Klass, Va­su Beepath and Car­lon Men­doza.

CAC Di­rec­tor Ruean­na Haynes and Cli­mate An­a­lyt­ics Head of Im­ple­men­ta­tion Strate­gies Dr Jan Sindt al­so con­tributed to and re­viewed the re­port.

Haynes said in an in­ter­view with the Busi­ness Guardian this week that any dis­cus­sion on en­er­gy tran­si­tion must be ac­com­pa­nied by ur­gent ac­tion to lim­it glob­al warm­ing.

“If the world con­tin­ues at this cur­rent tra­jec­to­ry, the Caribbean’s ef­forts to tran­si­tion will be un­der­mined by es­ca­lat­ing cli­mate im­pacts. We are on course for at least 2.7°C of ad­di­tion­al glob­al warm­ing by the end of the cen­tu­ry. This would be a cat­a­stroph­ic lev­el of warm­ing for the health and well-be­ing of Caribbean peo­ple as well as for the vi­a­bil­i­ty of our economies. Al­ready cli­mate shocks are un­der­min­ing crit­i­cal ecosys­tems, re­sult­ing in neg­a­tive health out­comes and dri­ving pub­lic debt.”

The re­port aims to guide pol­i­cy­mak­ers in nav­i­gat­ing the en­er­gy tran­si­tion amid geopo­lit­i­cal con­straints.

The CAC stat­ed that tran­si­tion­ing these four sec­tors, which are crit­i­cal for eco­nom­ic sta­bil­i­ty, food se­cu­ri­ty, cul­tur­al her­itage and liveli­hoods, of­fers an op­por­tu­ni­ty to build re­silience while cre­at­ing new op­por­tu­ni­ties for green growth.

With­in the en­er­gy sec­tor, the re­port en­cour­ages Caribbean coun­tries to ex­pand so­lar and wind pow­er sup­port­ed by bat­tery stor­age and mi­cro­grids. It notes that re­duc­ing de­pen­dence on im­port­ed fos­sil fu­els is nec­es­sary to im­prove en­er­gy se­cu­ri­ty and lim­it ex­po­sure to glob­al price volatil­i­ty.

“This is cen­tral to re­duc­ing the re­gion’s de­pen­dence on im­port­ed fos­sil fu­els. This is both a cli­mate im­per­a­tive and an eco­nom­ic ne­ces­si­ty, as high en­er­gy costs and fu­el price volatil­i­ty un­der­mine fis­cal sta­bil­i­ty across SIDS,” the re­port stat­ed.

Tourism, iden­ti­fied as one of the re­gion’s largest in­dus­tries, presents a key sec­tor for “green­ing” through sus­tain­able trans­for­ma­tion.

The CAC said this in­volves re­new­able en­er­gy-pow­ered ac­com­mo­da­tion, con­ser­va­tion-based tourism mod­els and low-emis­sion trans­port op­tions that min­imise en­vi­ron­men­tal im­pact, while shift­ing away from brown jobs and gen­er­at­ing green em­ploy­ment.

In a joint state­ment to the Busi­ness Guardian, the au­thors added:

“Tran­si­tion­ing to sus­tain­able tourism would re­quire up­skilling ini­tia­tives to en­hance sus­tain­able tourism and in­te­grate eco­tourism and con­ser­va­tion-based tourism mod­els. Ad­di­tion­al­ly, gov­ern­ments can in­cor­po­rate re­new­able-en­er­gy-pow­ered re­sorts and low-emis­sion trans­port op­tions that min­imise en­vi­ron­men­tal im­pact while si­mul­ta­ne­ous­ly shift­ing away from brown jobs - gen­er­at­ing green jobs and strength­en­ing the liveli­hoods of those with­in the tourism sec­tor.”

With­in agri­cul­ture, the re­port states that Caribbean na­tions could ben­e­fit from cli­mate-smart in­no­va­tions such as drought-re­sis­tant crops, re­gen­er­a­tive farm­ing tech­niques and pre­ci­sion ir­ri­ga­tion sys­tems to adapt to chang­ing weath­er pat­terns.

It warns, how­ev­er, that these mea­sures re­quire lim­it­ing tem­per­a­ture over­shoot be­yond 1.5°C and en­sur­ing a swift re­turn to a 1.5°C-aligned path­way to re­main sus­tain­able.

On fi­nance and tech­nol­o­gy, the CAC stat­ed:

“Caribbean na­tions re­quire eq­ui­table ac­cess to con­ces­sion­al fi­nance, blend­ed fi­nance mod­els, and di­rect com­mu­ni­ty in­vest­ment.”

It al­so calls for strength­ened col­lab­o­ra­tion with bi­lat­er­al part­ners, mul­ti­lat­er­al de­vel­op­ment banks, re­gion­al in­sti­tu­tions and the pri­vate sec­tor to en­sure sus­tained fi­nan­cial sup­port.

How­ev­er, the re­port al­so high­lights bar­ri­ers slow­ing or pre­vent­ing a just tran­si­tion, with fi­nanc­ing iden­ti­fied as the most im­me­di­ate con­straint.

It states:

“Cari­com coun­tries will need to in­vest an es­ti­mat­ed US$11 bil­lion over the next 10 years for sus­tain­able en­er­gy trans­for­ma­tion. How­ev­er, cur­rent pol­i­cy frame­works of­ten fall short in fa­cil­i­tat­ing re­new­able en­er­gy de­ploy­ment at scale. In many cas­es, these poli­cies are mis­aligned with im­ple­men­ta­tion ca­pac­i­ty, heav­i­ly re­liant on in­ter­na­tion­al fi­nanc­ing and lack tar­get­ed mea­sures to in­cen­tivise pri­vate sec­tor par­tic­i­pa­tion.”

Haynes said ac­cess to fi­nance con­tin­ues to sig­nif­i­cant­ly ham­per just tran­si­tion ef­forts in Small Is­land De­vel­op­ing States, in­clud­ing the Caribbean.

“This is an is­sue that needs to be tack­led at mul­ti­ple lev­els. Long term in­clu­sive poli­cies and plans must be de­signed in a way that gives cred­i­bil­i­ty to gov­ern­ment ef­forts and con­fi­dence to the pri­vate sec­tor. Sec­ond­ly, there must be a push for joint ef­forts and re­gion­al ap­proach­es to dis­trib­ute risk and at­tract more fi­nanc­ing - this al­so sup­ports the case for more con­ces­sion­al forms of fi­nance. Fi­nal­ly, there must be high-lev­el po­lit­i­cal ad­vo­ca­cy for the cre­ation of fi­nanc­ing in­stru­ments to sup­port the Caribbean’s ef­forts in chart­ing a course for a just eq­ui­table tran­si­tion. This must be tak­en up as a whole-of-gov­ern­ment ap­proach and par­tic­u­lar­ly dri­ven by Min­istries of Fi­nance in the con­text of meet­ings of the mul­ti­lat­er­al de­vel­op­ment banks, bi­lat­er­al dis­cus­sions with part­ners and cli­mate and en­er­gy ne­go­ti­a­tions.”

In­fra­struc­ture was iden­ti­fied as an­oth­er ma­jor con­straint. The re­port notes that most elec­tric­i­ty sys­tems in the re­gion were de­signed for fos­sil fu­el gen­er­a­tion, mak­ing it dif­fi­cult to in­te­grate re­new­able en­er­gy at scale.

It es­ti­mates that around 35 per cent of to­tal en­er­gy in­vest­ment will be re­quired for grid up­grades and trans­mis­sion sys­tems.

The re­port al­so high­lights frag­ment­ed pol­i­cy frame­works, lim­it­ed cross-sec­tor co­or­di­na­tion and weak reg­u­la­to­ry sys­tems, which re­duce in­vestor con­fi­dence and slow im­ple­men­ta­tion. Work­force de­vel­op­ment is al­so iden­ti­fied as a gap, with in­suf­fi­cient train­ing pro­grammes to pre­pare work­ers for re­new­able en­er­gy and emerg­ing in­dus­tries.

When asked about the most ur­gent ac­tion Caribbean gov­ern­ments should take in the next two years, the au­thors stat­ed:

“Align­ing poli­cies is es­sen­tial to avoid frag­ment­ed or du­plica­tive ef­forts in de­vel­op­ing sec­tor-spe­cif­ic tran­si­tion plans and the Caribbean con­text re­quires a just tran­si­tion that is adap­tive, re­silient, and de­vel­op­ment-fo­cused. This will re­quire the in­ter­sec­tion of poli­cies and fi­nan­cial mech­a­nisms that bal­ance eco­nom­ic, so­cial, and en­vi­ron­men­tal pri­or­i­ties through par­tic­i­pa­to­ry gov­er­nance and so­cial di­a­logue to en­hance lo­calised com­mu­ni­ty-led ap­proach­es and en­sure that work­ers, com­mu­ni­ties, and mar­gin­alised groups have a voice in shap­ing tran­si­tion poli­cies.”

As Caribbean gov­ern­ments pre­pare for im­ple­men­ta­tion, the re­port un­der­scores that the pace and suc­cess of a just tran­si­tion will de­pend on co­or­di­nat­ed re­gion­al ac­tion and sus­tained in­ter­na­tion­al sup­port.

It points to the need for stronger pol­i­cy align­ment, im­proved ac­cess to fi­nance, and in­vest­ment in in­fra­struc­ture and hu­man cap­i­tal to en­sure no sec­tor or com­mu­ni­ty is left be­hind.

The au­thors main­tain that while the chal­lenges are sig­nif­i­cant, the tran­si­tion presents an op­por­tu­ni­ty to re­shape de­vel­op­ment path­ways, re­duce eco­nom­ic vul­ner­a­bil­i­ties and strength­en long-term re­silience.

They stress that de­ci­sions tak­en in the near term will de­ter­mine whether the re­gion can meet its cli­mate goals while safe­guard­ing liveli­hoods.

For small is­land states, it notes, the tran­si­tion is not on­ly an en­vi­ron­men­tal re­quire­ment but a defin­ing eco­nom­ic and so­cial pri­or­i­ty.