Officials say they are not convinced that the right investment climate exists to ensure rapid transformation from fossil fuel to alternative energy.
Vice president of the European Investment Bank (EIB) Pim van Ballekom said while public sector funding was now “too limited”, the sector was still not attracting the necessary private sector investment.
“You have to make sure that the regulatory environment and the investment climate is welcoming,” Ballekom told the opening of the inaugural EU-Caribbean Sustainable Energy conference at the Lloyd Erskine Sandiford Centre this morning.
“Private investors hate uncertainties and if that is not put into a legal system, the predictability in policies and priorities, then I think it will be quite hard to encourage the private sector to come on board . . . . These are key to attracting investments and for the delivery of a successful project,” he added.
Ballekom also expressed disappointment that more investors were not coming forward with “bankable projects”.
The two-day conference, aimed at supporting the region’s transition to clean, affordable and efficient energy services towards a sustainable development, attracted over 300 people from 50 countries, including the Caribbean Community (CARICOM), the EU and Latin America.
Deputy Director General for Energy at the EU Commission Christopher Jones told the gathering, which included a number of high-level regional public and private sector officials, it was time the Caribbean stops “giving our money away” to oil-rich nations through the purchase of fossil fuel.
Pointing out that Barbados spends about seven per cent of its GDP on fuel imports each year, the Bahamas 11 per cent and Jamaica nine per cent, Jones added that producing energy from more renewable energy sources would result in job creation and cheaper energy in the region.
“For the energy efficiency transformation to happen, it is clear that significant investments will have to be made both by the public and private sectors, and investment need is estimated between 3.5 and 12 per cent of GDP in the Caribbean countries,” said Jones.
“The key is to get the regulatory sphere right and to let the markets work . . . . The energy transformation needs forward planning, consistency, and predictability. No one will invest, no one will buy new technologies, if every few years the regulatory [framework] changes. And this is the challenge of both the CARIFORUM [CARICOM and the Dominican Republic] and the European Union,” added Jones.
CARICOM Secretary General Ambassador Irwin LaRocque agreed governments must play an active role in the promotion and guidance of the energy transformation.
However, he said investment in the regional sector was limited due to economic challenges, as well as the classification of many countries as middle-income “due to international countries using [Gross National Income] per capita as primary criteria”.
“A significant number of our countries are plagued by the burden of high debt. Private investors sometimes require excessive collateral and high interest rate for loan capital and high rates of returns. This typically weakens the business case for many potentially beneficial projects,” said Ambassador LaRocque.
In his contribution to the discussion, Minister in the Office of the Prime Minister with responsibility for Energy Senator Darcy Boyce said while some progress had been made in Barbados in encouraging private investment in the sector, there was need for more timely approvals of applications and improvement in regulation.