Address: Official Launch and Operational Planning Meeting for Sustainable Energy Initiatives

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Address by Senator the Hon. Darcy Boyce, Minister, Prime Minister’s Office at the Official Launch and Operational Planning Meeting for Sustainable Energy Initiatives, Grand Barbados Beach Resort, January 24, 2011 at 9.00 a.m.

Hon. Carlisle Powell, Minister, Ministry of Communications, Works, Public Utilities, Posts, Physical Planning, Natural Resources and Environment, Government of Nevis; Ambassador Irwin LaRocque, Assistant-Secretary General, Trade and Economic Integration, CARICOM Secretariat; Representatives of other regional and international organizations, delegates, Permanent Secretary in the Energy and Telecommunications Division in the Prime Minister’s Office, Government of Barbados, Mr. Ronald Bascombe; Specially Invited Guests; Members of the Press; Ladies and Gentlemen.

It is my pleasure to address you on the Launch and Operational Planning Meeting for Sustainable Energy Initiatives.

This meeting is to facilitate the implementation of the Caribbean Renewable Energy Capacity Support (CRECS) Project, the Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS) Project and the Sustainable Energy Technical Assistance (SETA – OECS/CDB) Project.?? These projects all seek to facilitate the increased use of sustainable energy and energy efficiency in the CARIFORUM region as we seek to reduce our dependence on fossil fuels while enhancing national and regional energy security.

Sustainable Energy Development in the Caribbean

It is of interest to note that we appear to be going the full circle in terms of the use of sustainable energy.?? Two hundred years ago we were largely dependent on the use of alternative energy.?? With the advent of the use of fossil fuels however, we in the Caribbean region came to on petroleum-based energy to drive the development of our countries.

It was not until the oil crisis of the 1970s, and which have continued in one form or other on a number of occasions since then, that we in the Caribbean region realized the extent of our dependence on imported oil and saw the need to diversify our energy sources.

Regrettably, the approach to bring about this diversification through sustainable energy development has not had the level of sustainability that we would have liked, as the efforts have largely depended on the volatility of the price of oil on the world market.

The draft on the ??Caribbean Energy Policy has been prepared and I look forward to the finalization of this document based on inputs from this meeting and the development of the projects which is the subject of the discussion over the next two days.

Ladies and Gentlemen, we all recognize that we face common problems in the form of high dependency on imported oil products for power generation which are subject to increasing price volatility.??

We all recognize that the competitiveness of the region is severely impacted by the volatility of the international pricing of oil.

We all face common problems of high electricity tariffs which are some of the highest in the world.?? We also note the energy intensive inputs and dependency for the development and sustainability of our societies.

Many of our societies, as you know are very heavily dependent on tourism and that is a highly energy intensive business and highly dependent on office services are also a fairly intensive energy sector.

And we are aware of the considerable fiscal and macro-economic impact on the fragile economies of the Caribbean when the price of oil on the international market is high, not only do we ??use scarce foreign reserves, of course the level of our imports goes up and with the increase in imports we also reduce the growth in the economy.

We further recognize that the price of oil is again trending upwards and has now reached the US$90 per barrel mark and market analysts are projecting that it could reach a hundred dollars before the end of this year.

What do these realities mean for us??? What type of response should we make?

These developments mean that sustainable energy development is one of the central features critical to the future economic growth of the region and that if we are to reposition ourselves as important players in the global economy, we must seriously address the use of indigenous sustainable energy resources with a view to diversifying the region’s energy mix and with a view to reducing the volatility of energy costs in the region.

There must be a commitment to a focused objective for the greater utilization of renewable energy.?? Governments will have to offer bold packages of fiscal incentives, promote a local and regional entrepreneurial spirit, and encourage an investment climate that makes appropriate levels of resources available for renewable energy projects. Of course all of this has to be done in the context of the continued fiscal difficulties that most of our governments face, therefore, while we wish to have these things done quickly, we have to be?? realistic,?? recognising that it will probably be the gradual approaches in these various areas?? because of the fiscal situations that we face.

The Barbados Case

I wish to focus on the island’s experience in this area and give you an idea of the road map which we have set ourselves for the expanded use of sustainable energy in this island.

The Government of Barbados is committed to promoting sustainable energy practices both on the supply side, mainly using renewable energy sources, and on the demand side by encouraging energy efficiency and energy conservation, as a means to reducing the country’s dependency on fossil fuels, enhance security and stability in energy supply, improve the country’s competitiveness, and achieve greater environmental sustainability.

In essence what we are seeking to do is to replicate the country’s success in the solar water heater industry in other areas of renewable energy and energy efficiency and conservation.

Our approach has been to first carry out an assessment of the country’s energy matrix.??

In this regard, the Government of Barbados, with the help of the Inter-American Development Bank, has recently completed a study for the preparation of a National Sustainable Energy Framework.??

This report recommends that the objectives of the National Sustainable Energy Framework should unlock economically viable investments in renewable energy and energy efficiency that will reduce Barbados’ dependency on fossil fuels and thus reduce energy costs, improve energy security and enhance environmental sustainability.

It suggests that by promoting and implementing renewable energy and energy efficiency technologies that are economically viable, Barbados can substantially improve its energy mix in the next twenty years.?? This energy mix would be one where renewable energy generation would account for 29 percent of electricity consumption and the remaining 71 percent would come from conventional fossil fuel-based resources.??

This energy mix could also by 2029:

  • – Cut total electricity costs by US$283.5 million – the net effect of higher capital costs (by US$386.5 million) but lower fuel costs (by US$670 million).

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  • – Cut CO2 emissions by 4.5 million tons and reduce our reliance on fossil fuels to about 71 percent.

It would also result in an overall 22 percent reduction in electricity consumption based on the use of energy efficiency measures.

The report highlights the perceived barriers to the greater utilization of renewable energy and energy efficiency technologies which are primarily, but not entirely limited access to capital, incomplete information and limited and uncompetitive renewable energy and energy efficiency equipment supply.

One glaring problem in the Caribbean with respect to sustainable energy development is the limited use of energy efficiency technologies and energy conservation measures.?? It is clear that while the use of renewable energy entails high capital costs, energy efficiency technologies and the implementation of an effective conservation approach can be done at limited cost and effort.??

In fact these measures may be considered as the "low hanging fruits" of an effective sustainable energy approach that can be quickly implemented.?? Coupled with this we must bring new and creative measures that as a whole will jump start the greater utilization and implementation of renewable energy and energy efficiency technologies.

The fact of the matter, Ladies and Gentlemen, is that we in the Caribbean may have become complacent with respect to the use of energy.?? Any effective energy efficiency programme may therefore have to be one in which the Government takes the lead by retrofitting its buildings and the implementation of effective public education programmes.

Indeed, when one considers that in the public sector alone in Barbados the Government spends $60 million annually on energy use, through conservation and energy efficiency efforts a reduction of only five per cent ??will lead to an annual saving of $3 million, think what will happen if we can get 20 per cent reduction and get to $12 million savings a year in government’s electricity bill.?? I have no doubt that this five per cent, indeed, I have no doubt that the 10 per cent target is well within our reach.

Our approach will therefore be a realistic one which will be focused on the implementation of the following measures:

  • – The establishment of consumer finance instruments based on low interest loans and subsidized hire purchase schemes for viable commercially distributed renewable generation technologies as well as viable energy efficiency technologies. With respect to energy efficiency, there will be the establishment of technical standards for key technologies which will be used to establish eligibility for various incentives.

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  • – The promotion of renewable energy technologies that are commercially viable. The provision of information on their costs, how to purchase them and an indication of the environmental benefits.
  • – The sale of excess capacity to the grid by consumers.
  • – The disaggregation of the electricity tariff structure to make it more cost reflective and thus promote efficient energy efficiency and distributed generation investments, while discouraging economically energy inefficient investments. In this regard, we now have a pilot project by the Barbados Light and Power Company Limited with the approval of the Fair Trading Commission for the sale of renewable energy into the grid and that project will continue for the next 2 or 3 years and then will be reassessed with the view to commence an overall national programme for the absorption of renewable energy into the grid. Of course this also involves making the grid smarter and balancing the grid and so on.
  • – At the last rate hearing, there was approval by the Fair Trading Commission of a rate to be paid by the power company for renewable energy that is sold to the grid. Once again the pilot is starting that effort to make sure that we have some kind of structure in place for the sale of excess capacity generated by renewable energy into the public grid.
  • – We are going to focus on the retrofitting of public buildings under performance contracting schemes by energy service companies – ESCOs – and the mandating of energy efficiency in the building code for new construction.

??Within the next year, the Government of Barbados will be seeking to implement the following measures:

  • – the preparation of a renewable energy and energy efficiency policy and the subsequent drafting of legislation for the implementation of this policy. The renewable energy legislation will seek to allow 5 to 10 megawatts of renewable energy installed capacity and any distribution assets necessary for connection to the network.
  • – The establishment of a Smart Energy Fund to promote the use of renewable energy and energy efficiency technologies and equipment. This Fund will essentially fund campaigns to develop a critical mass of users of some of the most promising technologies and develop a new market equilibrium in which these technologies become the norm. The first set of funding has been approved by the Inter American Development Bank and we are starting that fund with US$10 million and we expect that the loan agreement will be signed fairly soon this year.
  • – The development of a phase out plan for incandescent lamps.
  • – The distribution of over 15,000 compact florescent lamps (CFLs) and 3000 power monitors at minimal cost to consumers to jump start the market for these items.
  • – The installation of several megawatts of solar derived electricity from Government-owned buildings including schools which will also function as an educational tool;
  • – The preparation of a policy for improving the efficiency and sustainability of fossil fuel consumption.
  • – The preparation of a policy and the commencement of a pilot project for the replacement of MTBE with dehydrated ethanol blended with MTBE free gasoline.

As you would note, the plan, while ambitious, is based on a phased approach and entails a broad spectrum of regulatory and policy actions.

These measures are not to be seen in isolation as simply constituting initiatives for the energy sector but within the context of the Government’s desire to create a green economy.?? The Government of Barbados therefore views renewable energy and energy efficiency not from simply an energy perspective but from the standpoint of its contribution to the national economy and the preservation of the environment.

The transition to greater use of renewables must therefore transcend the energy sector.?? There is much potential for the move to renewable energy and energy efficiency to substantially contribute to national economic development.?? With the appropriate mechanisms in place, I can envisage the creation of a new industry for the design, manufacture and supply of the new technologies, creating new long-term jobs (particularly for young persons) and encouraging the development of technology by fostering new creativity in our people.

Ladies and Gentlemen, we are cognizant of the realities and the pitfalls which will be encountered in the execution of this programme which are not exclusive to Barbados but exist elsewhere in the Caribbean.??

One major hurdle which must be overcome is the need to build capacity within the Government itself and the private sector as well to ensure that the skills are available to ensure a sustainable future.

With the best will in the world, sustainable energy development will proceed slowly if there is the absence of institutional capacity to drive the process.??

This area must therefore be treated with the same level of importance and attention as we would have addressed the sugar industry in earlier times and as we now do with the tourism and international business sectors.

I thank you.

Author: Senator the Hon. Darcy Boyce
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