Worldwatch Institute highlights next steps for CARICOM region to
CARICOM
ENERGY POLICY
In A Nutshell
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This is a Summary of the CARICOM Energy Policy which was approved by the Forty-First
Special Meeting of the COTED on ENERGY held 1 March 2013, in Trinidad and Tobago
The Goal/ Vision of the CARICOM Energy Policy
Fundamental transformation of the energy sectors of the Member States of the Community through the provision of secure and sustainable supplies of energy in a manner which minimizes energy waste in all sectors, to ensure that all CARICOM citizens have access to modern, clean and reliable energy supplies at affordable and stable prices, and to facilitate the growth of internationally competitive Regional industries towards achieving sustainable development of the Community
OBJECTIVES OF CARICOM ENERGY POLICY
In fulfillment of the Goal /Vision of the CARICOM Energy Policy and to assure access to
affordable, adequate, safe and clean energy products necessary for the development of Member States and for the consolidation of the CSME (established by the Revised Treaty of
Chaguaramas), the Community will develop a programme of regional actions in a coherent and comprehensive way in pursuit of the following objectives:
(a) sustainable and secure energy supplies through diversification of energy sources;
(b) accelerated deployment of renewable and clean sources of energy supplies
towards increased energy supply diversification and affordability;
(c) sustained growth of intra-Community trade in energy;
(d) increased energy efficiency and conservation in all sectors, including the
transportation sub-sector;
(e) establishment and enforcement of labeling and standards for the importation of
electrical appliances as well as standards for vehicles importation;
(f) increased investment in production, transformation and distribution of viable
energy resources;
(g) strengthening and enhancement of the human and institutional capacities in the
Community energy sector;
(h) programmed expansion of electricity generation, transmission, distribution and
trade;
(i) improved access to affordable energy by the poor and vulnerable;
(j) greater use of renewable energy for electricity generation as well as in the
transportation, industrial and agricultural sectors;
(k) coordinated approach to exploring and establishing an institutional framework
for leveraging financing mechanisms for the development of viable energy
resources;
(l) increased technology transfer and information sharing;
(m) established regional and national targets for emissions reduction with
corresponding mitigation actions;
(n) strategies for maintenance of adequate energy reserves in the event of disasters;
and
(o) Strengthened research, development and innovation efforts in energy sector
especially in areas of clean and renewable energy sources and technologies.
Quantitative Regional level targets for sustainable energy will be established in the context of the Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS), based on rationalization of the potential energy resources and human and institutional capacity which will accompany the CEP and provide a implementation framework engaging all Member State and actors in the energy sector.
SUMMARY OF BROAD CARICOM ENERGY POLICY ACTIONS
In order to realize the Goal/Vision for the energy sector of the Community, it is the Policy of CARICOM to:
SECURITY OF SUPPLY AND FUEL DIVERSIFICATION (Chapter 1)
1. Ensure increased energy security through timely access to adequate, reliable and
affordable supplies of energy by all Member States of CARICOM.
EXPLOITATION OF HYDROCARBON SOURCES AND DEVELOPMENT OF FOSSIL FUEL MARKETS
(Chapter 2)
2. Secure least cost hydrocarbon resources for each Member State and ensure that
appropriate standards for petroleum and petroleum related products are introduced
and enforced.
RENEWABLE ENERGY (Chapter 3)
3. Diversify the energy sources through increased use of renewable energy in a manner
that assures optimization with other sectors.
ELECTRICITY SECTOR (Chapter 4)
4. Ensure the sustainability of the electricity sector through increased use of renewable
energy, improved legislative and regulatory framework and cross border trade of
electricity generated from indigenous renewable energy sources.
ENERGY CONSERVATION AND EFFICIENCY (Chapter 5)
5. Promote energy savings efforts in all sectors
ENERGY USE FOR TRANSPORTATION (Chapter 6)
6. Promote fuel switching in the transportation sector to cleaner energy sources and
encourage greater efficiency of energy use in the transportation sector.
ENERGY INVESTMENT (Chapter 7)
7. Undertake the necessary reforms in a timely manner to encourage greater investment
in the energy sector.
INTRA-COMMUNITY TRADE IN HYDROCARBON ENERGY SOURCES (Chapter 8)
8. Ensure fair pricing and access to hydrocarbon resources by all Member States to
improve the competitiveness of regional industries.
ENERGY AND THE ENVIRONMENT (Chapter 9)
9. Ensure that energy is supplied and consumed in a manner that creates minimal
adverse impact on the environment.
ENHANCEMENT OF HUMAN AND INSTITUTIONAL CAPACITY (Chapter 10)
10. Build and strengthen the human capacity and skills as well as institutional capacity
within the Region, encourage research and development and increase public education
and awareness to ensure energy sector development.
ENERGY ACCESS AND POVERTY ALLEVIATION (Chapter 11)
11. Eliminate energy poverty and ensure access to clean, affordable and reliable energy
supplies by all citizens of the Region poverty.
CROSS-CUTTING ISSUES (Chapter 12)
12. Encourage sustainable energy practices within all other sectors and areas where there
is linkage to energy use such as agriculture, youth and culture, etc.
ENERGY AND CLIMATE CHANGE (Chapter 13)
13. Establish regional and national targets for the reduction of greenhouse gas emissions
in the energy sector and implement appropriate mitigation actions relevant to the
energy sector.
ENERGY AND DISASTER PREPAREDNESS (Chapter 14)
14. Develop strategies to ensure the availability of energy supplies and products and a
strategic response to any oil spill and sustainability of energy services during any
crisis.
TRADE IN ENERGY SERVICES (Chapter 15)
15. Develop strategies to take advantage of opportunities for trade in energy services
regional and internationally.
PRINCIPLES GUIDING ACTIONS OUTLINED IN
THE CARICOM ENERGY POLICY
The CARICOM Energy Policy is guided by the following:
1. Community Mandates on Energy and Revised Treaty of Chaguaramas;
2. Focus on the Regional Level Energy Sector Challenges and Opportunities;
3. Recognition that Member States
CARIBBEAN Community (Caricom) energy ministers have approved an initial target of 47 per cent renewable energy contribution to total electricity generation in the region by 2027.
The ministers approved the target last week in Port of Spain, Trinidad & Tobago, at the special meeting of the Council for Trade and Economic Development (COTED) on Energy. They also set 20 per cent and 28 per cent renewable energy targets for 2017 and 2022 respectively, breaking new ground in the push towards alternative energy sources such as solar, wind, hydro, geothermal, and bio-energy, according to the Caricom Secretariat.
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Jamaica is highly dependent on imported petroleum to meet energy needs, with a little more than 90 per cent derived from imported oil and the rest from renewable sources. The country, through its national energy policy, has set a target of 20 per cent renewable energy by 2030, but Energy Minister Phillip Paulwell has repeatedly expressed a desire to move the goal to 30 per cent by 2030.
Paulwell, who was travelling to Venezuela to attend the funeral of Venezuelan President Hugo Ch
Densil Williams, Guest Columnist
It is no secret that Jamaica has a growth problem. For four decades, our average growth rate has hovered around 1%, while similar countries such as Singapore and Barbados grew in the rage of 6-8%. Their citizens now enjoy a higher standard of living as measured by their per-capita income than Jamaicans do.
Singapore has a per-capita income of more than US$43,000; Barbados’ per-capita income is around US$23,000, while Jamaica stands at around US$5,000. The disparity is even more alarming if one looks at the fact that these countries are all coming from roughly the same per-capita income of around US$390 in 1960. Indeed, for Jamaica to catch up, it has to grow its economy, full stop. Meandering along with 1% growth is not going to cut it.
However, it must be appreciated that economic growth is not an effortless task, especially for a small, open economy with so many structural problems and vulnerabilities. It is in this context that the discourse on growth in Jamaica has to take place. This article, and some of the others to come, will focus on various impediments to Jamaica’s growth over the last 50 years and also provide some insights into dealing with these challenges. The first issue that will be tackled is energy.
ENERGY AND GROWTH
The high cost of energy in Jamaica is clearly an inhibitor to economic growth. To grow the economy, Jamaica will have to increase the production of goods and services each year and sell these into the marketplace.
If people are buying Jamaican goods, the producers will be obliged to produce more. So, the greater the demand for a country’s goods and services, the greater the likelihood that the producers of those goods and services will increase their production. All other things being equal, the overall output of the country will be increased as well.
However, because of the high cost of energy, it is difficult for Jamaican goods to compete in the marketplace. Price competition, therefore, is not an option for Jamaican producers in the local and international marketplace. As such, Jamaican producers are at a disadvantage, as the majority of consumers are price sensitive. When they go to the stores, they will choose a product with a lower price, assuming all other factors remain constant.
While in the main it is accepted that Jamaican firms can be more efficient and cut wastage in order to reduce their cost structure and eventually compete at better prices, it is not always true that the high price of Jamaican products results from inefficiency at the firm level. The onerous burden that energy places on the cost structure of Jamaican firms cannot be overlooked when analysing price competitiveness in the marketplace.
Cement production is a good example of how high energy prices impact cost structure of an enterprise although the firm performs efficiently in other areas. To produce one ton of cement, Caribbean Cement Company Limited, a subsidiary of the Trinidad Cement Limited, uses roughly 102kWh of electricity, while in Trinidad, cement producers use 110kWh of electricity to produce the same ton of cement.
Carib Cement, however, pays US$0.30 per kilowatt-hour for electricity from the Jamaica Public Service Company (JPS) – note, this is a preferential rate arrived at through negotiations – while cement producers in Trinidad pay US$0.03 per kilowatt-hour. As such, although the Jamaican plant is roughly 8% more efficient with the usage of electricity, it still faces a US$27 higher cost to produce the ton of cement.
The high price of energy in Jamaica is clearly a deterrent to increased production and, by extension, the future growth of the economy.
THE SOLUTION MIX
There will be no single solution to deal with the high cost of energy in Jamaica. What we all agree on is that we must reduce the exorbitant cost that consumers have to pay for this vital resource. For sure, there has to be greater efficiency on the part of the JPS in providing energy to its consumers. Its heat rate must be improved, similar to those of the private power producers; its system loss has to be improved; and most important, it has to use the most efficient technology to produce electricity for its consumers.
Indeed, the Energy Think Tank at the University of the West Indies, Mona, in its latest publication in the
A perfect example of the shortage of vision affecting Caricom governments is their dropping of the ball on the Leucaena project in the early 1980s.
Ambassador Byron Blake, former Caricom assistant secretary general, reminded us of that last month during a sitting of the Jamaica Observer Monday Exchange.
For those who missed it, the Leucaena project was established in response to the energy crisis of the late 1970s. Essentially a group of scientists and energy experts from Jamaica, Barbados, Haiti, Trinidad & Tobago, and St Lucia started producing energy as well as animal feed from the Leucaena plant, which is referred to in some parts of the world as the ‘miracle tree’ and in Jamaica as the ‘wild tamarind’.
The initiative received support from colleague scientists in the region as well as from Caribbean governments and several international donor organisations.
At the height of the project, companies such as Enerplan Limited
In the words of the prime minister of Barbados, Freundel Stuart, the annual bill for the importation of fuel in his small Caribbean island of 250,000 people is “wholly untenable”. In 2010, the national oil import bill for Barbados was US$393 million. That figure is indicative of the annual oil bill that damages the viability of every Caribbean Community (Caricom) country except Trinidad and Tobago, which is a substantial oil and gas producer.
Prime Minister Stuart has declared that “if not corrected”, the oil import bill would become “wholly unaffordable” in his country. The same is true for all other Caricom countries except Trinidad and Tobago and now, to a certain extent, Suriname. The cost of energy is adversely affecting both the manufacturing and service industries and contributing to making the exports of Caribbean companies uncompetitive in the world market.
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STUART
In the words of the prime minister of Barbados, Freundel Stuart, the annual bill for the importation of fuel in his small Caribbean island of 250,000 people is “wholly untenable”. In 2010, the national oil import bill for Barbados was US$393 million. That figure is indicative of the annual oil bill that damages the viability of every Caribbean Community (Caricom) country except Trinidad and Tobago, which is a substantial oil and gas producer. Prime Minister Stuart has declared that “if not corrected”, the oil import bill would become “wholly unaffordable” in his country. The same is true for all other Caricom countries except Trinidad and Tobago and now, to a certain extent, Suriname. The cost of energy is adversely affecting both the manufacturing and service industries and contributing to making the exports of Caribbean companies uncompetitive in the world market.
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