Biden asks Caribbean islands to use drop in oil price to invest in renewables 

Source: Lisa Friedman, E&E reporter • Posted: Wednesday, January 28, 2015

Vice President Joe Biden declared the Caribbean “the new epicenter of energy” yesterday, urging island leaders to use the plunge in oil prices as an opportunity to diversify with natural gas and renewables.

Speaking at the first-ever Caribbean Energy Security Summit in Washington, D.C., Biden and other leaders announced a series of initiatives including a World Bank-based investment network to coordinate energy development in the region now more than 90 percent dependent on imported oil.

Noting that the price of solar has dropped by half and options for natural gas delivery are expanding, Biden said the United States wants to see the Caribbean free itself from oil dependency. Without directly mentioning Venezuela, the region’s main supplier, Biden said, “No country should be able to use natural resources as a tool of coercion against any other country.

“The single biggest burden that can be lifted from you right now is the cost of energy and the dependence that you still have on single suppliers,” he said.

The summit, attended by heads of government from nearly two dozen countries, comes as oil prices hover between $45 and $48 per barrel. Caribbean leaders noted yesterday the price plunge has allowed many oil-importing countries to save hundreds of millions of dollars that can be put toward schools, infrastructure or social services. But they also said the budget breathing room has underscored the need to free their economies from being tied to only one energy source.

“This makes us extremely vulnerable to the vagaries of the international oil markets,” said Bahamas Prime Minister Perry Christie. The decline in oil prices, he said, “should be recognized as an indication of increasing oil price volatility and the unpredictability of the forecasting environment in which oil-dependent economies operate.”

“The falling price of oil is exactly why we should be investing in renewables. This is not a game we want to be playing. … We have to control our own destiny,” said James Fletcher, energy minister of St. Lucia.

Indeed, several countries in the region already are powering ahead with clean energy plans. St. Lucia is aiming for 35 percent renewable energy by 2020 and, Biden noted, creating a new regulatory regime to attract private investment. Aruba is trying to transition to 100 percent renewable energy and so far has enough online to satisfy more than 30 percent of the country’s demand.

Meanwhile, countries from Barbados to Jamaica are making major new investments in clean energy options.

Difficulties with financing

“There is incredible potential in the region for renewable energy, and that is going to be expanding,” said Amos Hochstein, special envoy for international energy affairs at the Department of State.

Yet there are challenges, and it’s not clear whether Caribbean and U.S. officials see eye to eye on them. Fletcher and other island leaders yesterday described their biggest concerns as weak institutional capacity, difficulty in getting financing for small-scale projects and the inability to access concessional loans because many islands are considered to be middle income.

Biden focused on the need to root out corruption in the Caribbean and impose serious new transparency and accountability measures.

“It can’t just be about money. It has to be about doing business the right way,” Biden said, saying the private sector is where countries will find the investment dollars they need.

“That’s why the primary goal isn’t to put up another solar panel or sign another gas contract. It’s to help create the conditions where your countries can attract private-sector investment,” he said. But, Biden added, “we’re not going to waste money. We’re going to insist on considerably more transparency.”

Meanwhile, Hochstein said climate change was also a priority topic at a closed-door session among leaders in the morning.

“Caribbean islands are on the front lines of the impacts of climate change,” he said. “The old generation keeps discussing where beach used to be that is now water. The total sum of the effects of climate change has been devastating.”

Hochstein argued that moving ahead with renewable energy efforts in the region both provides for energy security and “is good as part of the global effort on climate change.”