Energy Aid in Caribbean and Pacific Small Island Developing States (SIDS)

Keron Niles

A thesis submitted for the degree of Doctor of Philosophy

December 2012

Table of Contents

Table of Contents...... 3 Table of Figures ...... 8 Chapter 1. Introduction ...... 16 1.1 Preamble to this research ...... 16 1.1.1 The Global Dominance of fossil fuels ...... 16 1.1.2 The importance of international aid in a sustainable energy transition .... 17 1.1.3 Why a transition to sustainable energy in SIDS is required ...... 17 1.2 Defining the research problem: the role of international aid in a sustainable energy transition in the power sector in Caribbean and Pacific SIDS...... 19 1.3 Research Goal and Objectives ...... 21 1.4 Thesis Outline ...... 21 Chapter 2. Research Methods...... 23 2.1 Introduction ...... 23 2.2 Definition of Key Terms & concepts ...... 23 2.3 Project & Interview Data Collection: An Introduction ...... 31 2.4 Project Data Collection Method ...... 32 2.4.1 Limitations of Project Data Collection Method ...... 37 2.5 Interview Data Collection Method ...... 38 2.5.1.1 Limitations of Interview Data Collection Method ...... 40 Chapter 3. Background and Context ...... 41 3.1 Chapter Introduction ...... 41 3.2 Energy Use during the Colonial Era in the Caribbean & Pacific ...... 41 3.3 The Evolution of Energy Production: Globally and in Caribbean and Pacific SIDS ...... 42 3.4 Energy Consumption in SIDS between 1970 and 2010 ...... 43 3.4.1 Newly independent SIDS respond to Oil Price Shocks ...... 43 3.4.1.1 The vulnerability of the Pacific Region to high oil prices ...... 44 3.4.1.2 The Unique case of the Caribbean: the role played by energy exporters in the region ...... 44 3.4.2 Dependence on fossil fuels ...... 45 3.4.3 Why fossil fuel dependence is concerning – climate change & peak oil . 50 3.4.4 Mitigating impacts of climate change & peak oil - the role of renewable energy ...... 51 3.5 Development Constraints in SIDS ...... 51

3.5.1 Geographical Isolation ...... 52 3.5.2 Dependence on Foreign Sources of Finance ...... 53 3.5.3 Population Growth ...... 56 3.5.4 Vulnerability to Natural Disasters ...... 58 3.6 Mutually reinforcing impacts of climate change & peak oil on Tourism & Agriculture ...... 59 3.6.1.1 Tourism ...... 59 3.6.1.2 Agriculture ...... 62 3.7 International Aid – context ...... 65 3.8 Summary ...... 65 Chapter 4. Results (Project Data) ...... 67 4.1 Introduction ...... 67 4.2 Quantity of Aid Awarded ...... 67 4.3 Energy Aid Disbursements between 1970 - 2010 & World Oil Prices ...... 68 4.4 Nature of Energy Aid ...... 71 4.5 Energy Aid Disbursements by Type ...... 77 4.6 Case Studies: Donor Entities and Energy Aid (1970 – 2010) ...... 82 4.6.1 World Bank Group (WBG) ...... 83 4.6.1.1 World Bank Group (WBG) Energy Aid to the Caribbean and Pacific (1970 - 2010) ...... 83 4.6.1.2 Nature of WBG Energy Aid to the Caribbean & Pacific ...... 99 4.6.1.3 WBG Energy Aid Disbursements by Type ...... 103 4.6.1.4 Summary: WBG Energy Aid to the Caribbean & Pacific (1970 – 2010) ...... 105 4.6.2 Asian Development Bank ...... 107 4.6.2.1 Asian Development Bank Energy Aid to the Pacific (1970 - 2010) 107 4.6.2.2 Nature of ADB Energy Aid to the Pacific (1970 – 2010) ...... 130 4.6.2.3 ADB Energy Aid Disbursements by Type ...... 131 4.6.2.4 Summary ...... 133 4.6.3 The Inter-American Development Bank ...... 134 4.6.3.1 Inter-American Development Bank Energy Aid to the Caribbean (1970 - 2010) ...... 134 4.6.3.2 Nature of IDB Energy Aid to the Caribbean (1970 – 2010) ...... 153 4.6.3.3 IDB Energy Aid Disbursements by Type ...... 154 4.6.3.4 Summary ...... 156 Chapter 5. Results (Interviews) ...... 157 5.1 Introduction ...... 157 5.2 Barriers & Challenges to transitioning to Renewable Electricity ...... 165

5.2.1 Funding difficulties...... 167 5.2.2 Small Size ...... 168 5.2.3 Human Resources ...... 169 5.2.4 Political will ...... 170 5.2.5 Lack of clear policy and legislation ...... 171 5.2.6 Dependence upon donors ...... 172 5.2.7 Lack of Project Management Skills...... 172 5.2.8 Land Access ...... 173 5.2.9 Supply of coconuts for Biofuels ...... 174 5.2.10 Lack of Data ...... 175 5.2.11 Other Barriers ...... 175 5.2.11.1 Environmental Risks ...... 176 5.2.12 Summary ...... 176 5.3 Oil Price Volatility: Impacts ...... 177 5.3.1 Impacts on the State ...... 177 5.3.2 Impacts on Power Utilities ...... 178 5.3.3 Impacts on End Users ...... 179 5.3.4 Summary ...... 180 5.4 Perceived role & impact of aid ...... 180 5.4.1 Summary ...... 181 5.5 Regulation and the role of Independent Power Producers ...... 182 5.5.1 Health, Safety & Standards ...... 182 5.5.2 Impact upon Tariffs ...... 183 5.5.3 Compensation to Utilities ...... 183 5.5.4 Appropriate policy mechanisms ...... 184 5.5.5 Summary ...... 185 5.6 Emerging Concerns ...... 185 5.6.1 Donor Engagement and Project Execution ...... 186 5.6.2 Differing priorities between state and aid agencies ...... 187 5.6.3 Donor Co-ordination...... 188 5.6.4 Urgency in Deployment of renewable energy technologies ...... 190 5.6.5 Energy efficiency ...... 191 5.6.6 Summary ...... 193 5.7 The Way Forward: Proposed Regional Solutions ...... 193 5.7.1 The Caribbean: Energy Trade ...... 193 5.7.1.1 Transitioning to Gas – the Eastern Caribbean Gas Pipeline ...... 194 5.7.1.2 Electricity Interconnection ...... 195

5.7.2 The Pacific: Investments in fuel storage facilities ...... 197 Chapter 6. Discussion of Research Findings ...... 200 6.1 Introduction ...... 200 6.2 Background & Context ...... 200 6.3 Structure of Discussion for Research Findings ...... 201 6.4 Research Finding Number 1: Caribbean and Pacific SIDS have not substantially transitioned to sustainable energy sources in the power sector...... 202 6.4.1 The current path: a sustainable transition in the Caribbean and Pacific power sector ...... 212 6.4.1.1 The Future of Conventional Power Generation in the Caribbean and Pacific ...... 212 6.4.1.2 Renewable energy and energy efficiency in the power sector in the Caribbean and Pacific ...... 214 6.4.2 Summary ...... 221 6.5 Research Finding Number 2: Donor Entities active in the Caribbean and Pacific have had significant impacts on the Power Sector through: ...... 221 6.5.1 To facilitate investment in energy technologies ...... 222 6.5.2 To support the development and formulation of energy policies ...... 222 6.5.3 Summary ...... 225 6.6 Research Finding Number 3: Donor entities placed a deliberate emphasis on enhancing the involvement of private companies in the power sector ...... 226 6.6.1 Donor entities sought to stimulate Private Investment in the power sector ...... 226 6.6.2 Donor entities encouraged enhanced private sector participation through regulatory reform to facilitate the introduction of Independent Power Producers 227 6.6.3 Summary ...... 235 6.7 Research Finding Number 4: Aid has been vital in helping SIDS to cope with high oil prices ...... 236 6.7.1 Aid in response to oil price shocks ...... 236 6.7.2 Summary ...... 238 6.8 Other Research Findings (not covered above): including problems or emerging concerns pertaining to the delivery of aid to the power sector in the Caribbean and Pacific ...... 238 6.8.1 Technology Transfer and Promotion ...... 238 6.8.1.1 A lack of technical expertise ...... 238 6.8.1.2 Inappropriate/Unproven technology ...... 239 6.8.1.3 Summary: Technology Transfer & Promotion ...... 240 6.8.2 Political Rivalry and Donor Competition ...... 241 6.8.2.1 Summary: Political Rivalry & Donor Competition...... 242 6.8.3 Loan Dominated Aid & Debt Accumulation ...... 242

6.8.3.1 Summary: Loan Dominated Aid & Debt Accumulation ...... 244 6.8.4 Summary of Other Research Findings (not covered in Numbers 1-4) ... 244 6.9 Summary of Discussion ...... 245 Chapter 7. Conclusions & Recommendations ...... 247 7.1 Conclusions ...... 247 7.2 Recommendations: ...... 249 7.2.1 Promote project implementation through joint ventures ...... 250 7.2.2 Greater emphasis should be placed on skill transfer and capacity building – especially as it relates to professional and commercial skills...... 250 7.2.3 Greater emphasis should be placed on Public Education & Engagement – toward energy conservation, by government agencies and utilities ...... 250 7.2.4 Efforts should be made to streamline, standardise and strengthen the collection of energy-related statistics ...... 251 7.2.5 Enhanced communication should be established amongst donor entities, especially in the Caribbean ...... 251 7.2.6 Climate change and peak oil mitigation and adaptation should be mainstreamed into the planning of energy policies and projects ...... 251 7.3 Scope for Further Research ...... 252 Chapter 8. Bibliography ...... 253 Appendices ...... 284

Table of Figures

Figure 2-1: Map of the Caribbean region ...... 25 Figure 2-2: Map of the Pacific region ...... 26 Figure 3-1: Diagram showing Transition from traditional to more modern forms of energy use ...... 42 Figure 3-3: Energy Mix in the Caribbean (2009) ...... 47 Figure 3-2: Energy Mix in the Pacific (2006) ...... 47 Figure 3-4: Total per capita consumption of Petroleum Products: 2005 -2008 ...... 48 Figure 3-5: Official Development Assistance to SIDS as a percentage of GNI (2010) . 53 Figure 3-6: Chart comparing Official Development Assistance among SIDS, Sub- Saharan Africa, World & Least Developed Countries ...... 54 Figure 3-7: Averaged annual percentage change in Total External Debt per capita (1990 - 2006)...... 55 Figure 3-8: Comparative averaged annual percentage Change in Total External Debt per capita (1994 - 2006) ...... 56 Figure 3-9: Averaged annual percentage changes in population in selected SIDS (2004- 2008) ...... 57 Figure 3-10: Averaged annual percentage population changes (2000 – 2009) ...... 57 Figure 3-11: Percentage of GDP from Tourism in 2005 ...... 60 Figure 3-12: Diagram showing some of the impacts of Peak Oil and Climate Change on the Tourism sector in SIDS ...... 61 Figure 3-13: Percentage of GDP from Agriculture in 2007 ...... 62 Figure 3-14: Diagram showing some of the impacts of Peak Oil and Climate Change on the Agricultural Sector in SIDS ...... 63 Figure 3-15: Averaged annual percentage change in Total Forest Area in Selected SIDS (2000-2005) ...... 64 Figure 4-1: Energy Aid to the Caribbean & Pacific between 1970 and 2010 ...... 68 Figure 4-2: Energy Aid to the Caribbean & Pacific and Oil Prices between 1970 - 2010 ...... 69 Figure 4-3: Energy Aid to the Pacific Region & World Oil Prices between 1970 and 2010 ...... 70 Figure 4-4: Energy Aid to the Caribbean Region & World Oil Prices between 1970 - 2010 ...... 71 Figure 4-5: Fossil Fuel and Renewable Energy Aid to the Caribbean & Pacific between 1970 - 2010 ...... 72 Figure 4-6: Energy Aid to Caribbean and Pacific by sector (1970 - 2010) ...... 73 Figure 4-7: Energy Aid to the Pacific by sector (1970 - 2010) ...... 74 Figure 4-8: Energy Consumption per capita (2008) ...... 75 Figure 4-9: Energy Aid to the Caribbean by sector (1970 - 2010) ...... 76 Figure 4-10: Energy Aid Awarded by Type of Disbursement ...... 78 Figure 4-11: Energy Aid by Type of Disbursement in the Pacific ...... 79 Figure 4-12: Energy Aid by Type of Disbursement in the Caribbean ...... 79 Figure 4-13: Energy Aid to the Caribbean & Pacific between 1970 - 2010, by donor entity (by volume of disbursements - $USD 2010) ...... 80 Figure 4-14: Energy Aid to the Pacific between 1970 - 2010, by donor entity (by volume of disbursements - $USD 2010) ...... 81

Figure 4-15: Energy Aid to the Caribbean between 1970 - 2010, by donor entity (by volume of disbursements - $USD 2010) ...... 81 Figure 4-16: World Bank Group Energy Aid to the Pacific (1970-2010) ...... 86 Figure 4-17: Chart showing relationship between the price of oil average WBG Energy Aid Disbursements using a 5 year moving average, to the Pacific (for 0 year delay) ... 87 Figure 4-18: Chart showing relationship between the price of oil average WBG Energy Aid Disbursements using a 7 year moving average, to the Pacific (for 0 year delay) ... 87 Figure 4-19: World Bank Group Energy Aid to the Caribbean (1970-2010) ...... 92 Figure 4-20:Chart showing relationship between the price of oil average WBG Energy Aid Disbursements using a 5 year moving average, to the Caribbean (for 1 year delay) ...... 93 Figure 4-21: Chart showing relationship between the price of oil average WBG Energy Aid Disbursements using a 7 year moving average, to the Caribbean (for 2 year delay) ...... 94 Figure 4-22: World Bank Group Energy Aid to the Caribbean & Pacific by sector .... 100 Figure 4-23: World Bank Group Energy Aid to the Caribbean and Pacific (by sector & number of projects) ...... 100 Figure 4-24: World Bank Energy Aid to the Pacific (by sector) ...... 102 Figure 4-25: World Bank Energy Aid to the Caribbean (by sector) ...... 102 Figure 4-26: World Bank Group Energy Aid to the Caribbean & Pacific by Type of Disbursement ...... 103 Figure 4-28: WBG Pacific Energy Aid (by disbursement type) ...... 104 Figure 4-27: WBG Caribbean Energy Aid (by disbursement type) ...... 104 Figure 4-29: World Bank Group Energy Aid in the Caribbean and Pacific - by amount approved ...... 105 Figure 4-30: ADB Energy Aid to the Pacific (1970 -2010) ...... 107 Figure 4-31: Chart showing relationship between the price of oil and average ADB energy aid disbursements to the Pacific using a 5 year average (with 0 year delay) ... 108 Figure 4-32: Chart showing relationship between the price of oil average ADB Energy Aid Disbursements to the Pacific using a 7 year moving average (for 0 years delay) . 109 Figure 4-33: ADB Energy Aid in the Pacific (1970 - 2010) by sector ...... 130 Figure 4-34: ADB Energy Aid to the Pacific (by sector & number of projects) ...... 131 Figure 4-35: ADB Energy Aid to the Pacific (1970 - 2010) ...... 132 Figure 4-36: ADB Energy Aid in the Caribbean - by amount approved ...... 132 Figure 4-37: IDB Energy Aid to the Caribbean (1970 -2010) ...... 135 Figure 4-38: Chart showing relationship between the price of oil average IDB Energy Aid Disbursements to the Caribbean using a 5 year moving average (for a 0 year delay) ...... 136 Figure 4-39: Chart showing relationship between the price of oil average IDB Energy Aid Disbursements to the Caribbean using a 7 year moving average (for a 0 year delay) ...... 136 Figure 4-40: IDB Energy Aid in the Caribbean (1970 & 2010) by sector ...... 154 Figure 4-41: IDB Energy Aid to the Caribbean (by sector & number of projects) ...... 154 Figure 4-42: IDB Energy Aid to the Caribbean (1970 - 2010) by type of disbursement ...... 155 Figure 4-43:IDB Energy Aid in the Caribbean - by amount approved ...... 156 Figure 5-1: Most prevalent barriers to transition to Renewable Energy in the Caribbean & Pacific ...... 166 Figure 5-2: Map showing Volcanic Islands of the Eastern Caribbean ...... 196 Figure 6-1: Power Generation Mix in Caribbean and Pacific SIDS (1970) ...... 206

Figure 6-2: Power Generation Mix in Caribbean and Pacific SIDS (2008) ...... 206 Figure 6-3: Power Generation Mix in the Pacific (1970) ...... 208 Figure 6-4: Power Generation Mix in the Pacific (2008) ...... 208 Figure 6-5: Power Generation Mix in the Caribbean (1970) ...... 209 Figure 6-6: Power Generation Mix in the Caribbean (2008) ...... 209 Figure 6-7: Change in Renewable Electricity Generation in selected SIDS in Percentage Points ...... 211 Figure 6-8: Electricity Access in Caribbean and Pacific SIDS...... 218 Figure 6-9: Net ODA per capita received by SIDS compared to World Oil Prices ..... 237 Figure 8-1: US Consumer Price Index (1970 to 2010) ...... 285

List of Research & Conference Papers Associated with this Research

Research Paper (peer-reviewed):

Niles, Keron. ―Resilience Amidst Rising Tides: An Issue Paper on Trade, Climate Change and Competitiveness in the Tourism Sector in the Caribbean, ICTSD Program on Competitiveness and Sustainable Development, Issue Paper No. 9, International Centre for Trade and Sustainable Development, Geneva, Switzerland. Available at: http://ictsd.org/i/publications/71051/. February 2010.

Conference Papers and Presentations: Niles, Keron. ―Institutional, policy and governance issues related to the provision of energy aid to Small Island Developing States (SIDS) in the Caribbean and Pacific.‖ The Energy Conference 2013.Energy at the Crossroads: Energy Innovation for a Sustainable Society. National Energy Research Institute and Victoria University of Wellington, Wellington, New Zealand.12-14 February, 2013 (forthcoming).

Niles, Keron. ―International Aid & the power sector in the Caribbean and Pacific: transitioning to sustainable energy‖ Otago Energy Research Centre Symposium. University of Otago, Dunedin, New Zealand. 22 November 2012.

Niles, Keron and Bob Lloyd ―Renewable Energy Policy in the power sector in Small Island Developing States (SIDS).Responding to Peak Oil and Climate Change in the Caribbean & Pacific: Emerging Key Considerations‖.Otago Energy Research Centre Symposium.University of Otago, Dunedin, New Zealand. 24 November 2011.

Niles, Keron and David Barrett.―The Future Role Of Renewable Energy Sources And Their Potential Impact On The Regional Energy Market‖IBC Energy Efficiency Summit.Energy Caribbean 2011. Port of Spain, Trinidad and Tobago. 3 October 2011.

Niles, Keron. What role for renewable energy policy in the Caribbean power sector?Responding to Peak Oil and Climate Change.‖Responding to Climate Change in the Caribbean. University of London, United Kingdom. 14 June 2011

Niles, Keron. ―Renewable Energy Policy in the power sector in Small Island Developing States (SIDS)‖. Commonwealth Secretariat, London, United Kingdom.23 June 2011

Niles, Keron.―Responding to Climate Change and Peak Oil: The role of renewable energy policy in the power sector.Key Political & Legal Considerations (the Caribbean and Pacific)‖.School of Law, University of Aberdeen, United Kingdom.20 June 2011.

Abstract

Small Island Developing States have narrow resource bases and are extremely reliant on fossil fuel based energy for electricity generation. These island economies are also particularly vulnerable to the impacts of peak oil and climate change. The objective of this research was to ascertain the impact of international aid (if any) on a sustainable energy transition in the power sector, particularly as it relates to the acquisition and deployment of renewable and energy conserving technologies.

Requests for data on energy projects in both regions that occurred between 1970 and 2010 were sent to donor entities (including development banks) active in the Caribbean and Pacific. From this, project data pertaining to approximately 550 energy initiatives which donor entities had approved was collected. A total of 76 interviews with key power sector stakeholders from 19 countries were also conducted.

This research has found that 71 percent of the approximately USD$4.7 billion awarded by donorsbetween 1970 and 2010 was allocated to energy projects in the Caribbean, region while 29 percent (approximately USD$1.3 billion) was allocated to energy projects in the Pacific. The Caribbean also received a greater amount of energy aid on a per capita basis, of USD$202,182 in comparison to USD$150,928 in the Pacific. Moreover, substantially more funds were allocated to fossil fuel based projects than renewable energy initiatives in the Caribbean. This trend did not hold true in the Pacific where funds allocated to renewable energy projects outpaced those spent on fossil fuel based initiatives. Further, energy aid to both regions was disbursed primarily in the form of loan funding. In fact, of the approximately USD $4.7 billion disbursed, at least USD$3.8 billion (around 80 percent) was supplied via debt financing.

This thesis also asserts that Caribbean and Pacific SIDS have not substantially transitioned to sustainable energy sources in the electrical power sector, though some progress toward greater deployment of renewable energy has been made, largely through the use of hydroelectricity. This research also found that donor entities had significant impacts on Caribbean and Pacific SIDS by facilitating investment in energy technologies (conventional and renewable) and through providing support for the development of energy policies. Additionally, donors placed a deliberate emphasis on enhancing the involvement of private companies in the power sector. Donors also provided vital support to SIDS to help them respond to and cope with oil price shocks.

Nonetheless, disbursements to the energy sector have not been altruistic, but rather represented the geopolitical and economic interests of donor entities. This thesis postulates that energy aid to Caribbean and Pacific SIDS at times served to promote the technologies and political interests of donor nations. Moreover, political rivalry and donor competition have contributed to project duplication. Finally, this research has shown that insufficient attention has been placed on energy efficiency initiatives as well as public education programs aimed at encouraging behavioural change with regards to energy consumption and conservation.

Hence, this thesis asserts that Caribbean and Pacific SIDS need to ensure that the provision of aid does not serve to facilitate the acquisition and deployment of inappropriate or unproven technologies. A greater degree of emphasis on skill transfer

12 and capacity building, particularly of professional and commercial skills, is necessary. Further, communication amongst donor entities needs to be improved, especially in the Caribbean. Climate change and peak oil mitigation and adaptation should also be mainstreamed into the planning of energy policies and projects towards a sustainable energy transition.

Acknowledgements

I must express uninhibited gratitude to God, for giving me the strength to pursue a PhD and to keep at it.

To my father and mother, Kenneth and Kerlina Niles, you never doubted, not even for a moment, that I could do this. For that I am truly grateful. To all my siblings and wider biological family, thanks for all of your support for the past 3 years. It has indeed been a journey.

To all of my friends, thank you so much providing the moral and social fuel that I needed to keep my engine going.

To my supervisors Dr. Bob Lloyd and Ms.Ceri Warnock, thanks for your patience and pragmatic advice. Your input truly has been invaluable. Special thanks must be extended to Dr. Lloyd for helping to facilitate the trips necessary for me to conduct the field work required for this research.

To Sandy, Bev and Shae, thank you so much for extending a helping hand and for your persistent smiles.

Dedication

To a father who always encouraged me to dream beyond what I could see

To a mother who demonstrated the value of education and never gave up

To the country that inspired this work, Trinidad and Tobago: may your shores prosper forever.

To a God who is just

A generation misunderstood

And a future uncertain

This, is for you.

Chapter 1. Introduction

Research Thesis: International aid (from donor agencies and entities) has contributed significantly to a sustainable transition in the power sector in Small Island Developing States (SIDS) in the Caribbean and Pacific.

1.1 Preamble to this research

1.1.1 The Global Dominance of fossil fuels

Our existing complex civilisation, has to a large degree, been made possible by the availability of relatively accessible and affordable sources of energy. Higher energy use (i.e. compared to prior to the industrial revolution) has facilitated countless innovations in transport and other sectors, along with higher standards of living (Smil, 2004). This shift to greater energy use has been made possible through a transition from human to mechanical energy - from the domestication of animals and harnessing of fire to the use of water and wind mills and eventually the use of machines, such as steam turbines, (Smil, 2004)- that were driven, in most cases, by fossil fuels. Modern energy consumption, particularly for commercial purposes, has therefore centred on the use of fossil fuels, especially oil. According to Campbell (2000), ―the economic prosperity of the 20th Century was driven by cheap, oil-based energy‖. Moreover, according to the Intergovernmental Panel on Climate Change, in 2008, only 12.9 percent of the world‘s primary energy supply came from renewable sources, and of this figure, 10.2 percent represented biomass use – the majority of which (62 percent) referred to traditional biomass energy (Edenhofer et al., 2011). In stark contrast, 85.1 percent of the primary energy supply across the globe in 2008 was derived from fossil fuels (Edenhofer et al., 2011).

This thesis will illustrate the manner in which energy consumption in Caribbean and Pacific Small Island Developing States (SIDS) conform to the aforementioned global tendency toward a dependence on fossil fuels, especially in the power sector. It will also show how SIDS are expected to be significantly impacted by climate change and peak oil and explain why these nations are worthy of specific investigation. After highlighting the reliance of SIDS on petroleum, the deleterious effects of fossil fuel consumption will be outlined. The expected impacts of climate change and peak oil on SIDS will then be reviewed. It is within this context that the role of renewable energy will be advanced. In this regard, this thesis will examine the importance of international aid in acquiring and deploying renewable energy technologies in the Caribbean and Pacific.

1.1.2 The importance of international aid in a sustainable energy transition

The infrastructure necessary for the provision of energy services is often among the largest investments made in the public sector (assuming electricity utilities are publicly owned) (Weisser, 2004a). Not only do SIDS in the Caribbean and Pacific lack the required financial resources to undertake investments of this nature, but they also often do not possess the technical capacity or professional skills required to negotiate, plan or implement large infrastructural projects of the magnitude required (Briguglio, 1995). Hence, as a result of the scale of investment required, projects of this nature are encouraged via incentives to the private sector or sought from the international donor agencies, with the latter option being much more frequently utilised (Bertram, 1993; Yu and Taplin, 1997; Yu and Taplin, 1998). Thus, the role played by international development agencies in the acquisition, development and deployment of energy– related technology in SIDS can hardly be overstated. Consequently, this thesis will assess the extent to which SIDS are dependent upon aid for the execution of domestic energy projects. The question of whether or not external financial assistance is accompanied by preconditions, required reforms or other forms of influence will also be examined.

1.1.3 Why a transition to sustainable energy in SIDS is required

The vulnerability of Small Island Developing States (SIDS) is acknowledged in the Preamble to the United Nations Framework Convention on Climate Change which recognises that ―low-lying and other small island countries, countries with low-lying coastal, arid and semi-arid areas or areas liable to floods, drought and desertification, and developing countries with fragile mountainous ecosystems are particularly vulnerable to the adverse effects of climate change [emphasis added]‖(United Nations Framework Convention on Climate Change, 1992). Moreover, according to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), small islands, akin to those found in the Caribbean and Pacific, have specific geographic ―characteristics which make them especially vulnerable to the effects of climate change.‖ (Mimura et al., 2007) The report indicates that small islands are likely to face, inter alia, sea-level rise (which can bring about greater floods and coastal erosion) and more extreme and intense natural disasters, such as hurricanes, that can damage vital infrastructure. The small size of the island economies in the Caribbean and Pacific also means that they possess less financial resources to respond to climate change impacts. To add to this, climate change is likely to have significant adverse consequences upon key revenue-generating economic sectors in SIDS (discussed in Chapter 3.6).

However, it should be noted that (largely due to their limited absolute energy demand) SIDS are not large contributors to the problem of climate change but are among the group of countries estimated to be impacted the most (Nurse and Dookie, 2009). Anthropogenic climate change therefore constitutes a significant concern for SIDS not due to their contribution to the problem but rather due to climate change impacts which not only make power sector investments more risky but more importantly, they threaten the very existence of some islands. In fact, in 2010, the President of Kiribati noted that low lying countries were already ―witnessing major damage to infrastructure and

17 property as a consequence of higher than normal tides and storm surges‖, which he associated with the growing impacts of climate change(Anote Tong, 2010; Kaiea, 2012). The risks that would therefore need to be considered by potential investors in the power sector, which include physical damage to infrastructure and equipment, are therefore significant.

The vulnerability of SIDS to the physical and economic risks brought about by climate change impacts is exacerbated when one considers anticipated ‗peak oil‘ impacts; which will become an eminent concern when world demand for oil exceeds the available supply, causing the price of oil to increase (Mobbs, 2005). Recent historical supply of oil over the last decade or so suggests that all liquid fuel consumption for the world may have reached a plateau of around 88 million barrels of oil per day. (BP Global, 2012). Indeed the decline in oil consumption of the OECD nations, which has occurred particularly over the last 6 years, is the first such decline since the oil crisis of the 1970s (BP Global, 2012).

Most SIDS in the Caribbean and Pacific are largely, if not entirely, dependent upon fossil fuels for electricity generation (see Table 3-1). Unless the power sector in these island nations find some means to ‗wean themselves off‘ addiction to petroleum1 within the relatively near future, they will become completely vulnerable to global oil price increases which, in turn, is likely to result in a belated scramble to transition to renewable energy sources (in the longer term).

The impact of peak oil in SIDS is heightened when one considers that within the international trade arena SIDS are largely ‗price-takers‘(Briguglio, 1995); that is, their ability to negotiate special discount prices with exporters is significantly hindered and limited by the relatively minute volume they demand. Hence, under ‗normal‘ circumstances, SIDS (barring special arrangements, including regional trade agreements) are often made to pay the highest prices for the commodities they import. A scenario therefore in which peak oil induces a surge in unmet global demand for petroleum, due to a shortage of supply worldwide, could quite possibly result in a ‗state of play‘ in which SIDS had little or no geopolitical or economic sway to secure special arrangements with exporting countries to service local energy requirements. Citizens of SIDS could therefore be forced to pay exceptionally high rates for electricity.

The susceptibility and relative helplessness of the electricity sector in SIDS to peak oil is indeed unique and worthy of examination due to the fact that diseconomies of scale will probably result in even higher fuel prices for SIDS.

1Adapted from a Quote from President George W. Bush, featured in Richard Heinberg, The Oil Depletion Protocol. 2006 Boston World Oil Conference, Time For Action: A Midnight Ride for Peak Oil, Boston: (2006), Association for the Study of Peak Oil and Gas - USA.

1.2 Defining the research problem: the role of international aid in a sustainable energy transition in the power sector in Caribbean and Pacific SIDS.

In characterising the nature of SIDS, the Barbados Plan of Action states that such nations are ―limited in size, have vulnerable economies [and are] dependent upon narrow bases and on international trade, without having the means to influence that trade‖ (United Nations General Assembly, 1994). Moreover, SIDS face challenges related to developing vibrant internal markets, particularly for power generation, largely due to diseconomies of scale, very high transportation costs (which is exacerbated in the case of the Pacific region, due to its relative isolation), and vulnerability to natural disasters (The University of the West Indies Centre for Environment and Development, 2003; Witter et al., 2002). Climate change impacts (such as hurricanes, flood water inundation, biodiversity loss and sea level rise) are expected to become more intense and more frequent in the future (Intergovernmental Panel on Climate Change, 2007) thus exacerbating many of the existing development constraints faced by island economies in the Caribbean and Pacific. The impacts of peak oil, specifically as it pertains to fuel shortages (resulting from constrained international supply) and the resulting increased oil prices that are likely to come about as a result may understandably serve to exacerbate the difficulty SIDS face in self-financing the cost of imported energy, which by extension, may worsen their reliance on foreign aid to finance energy investments.

The ability of SIDS to attract and accumulate funds from the private sector (i.e. prospective investors) is undermined, not merely by the aforementioned risks related to climate change impacts but also by the small size of islands economies, which contributes to diseconomies of scale. Weisser (2004a) adds that the narrow resource base of SIDS restricts their ability to attract private investment and even to utilise their own funds to invest in renewable energy technologies. In tandem therefore, the limited circulation of human, financial and institutional resources in SIDS, have the combined effect of making power production not only very expensive but also financially risky in the long term (Weisser, 2004a). The inability of SIDS to attract private sector investment or to self-finance the acquisition of renewable energy technologies typically contributes not only to a high degree of dependency on fossil fuels for electricity generation but also to a reliance on donors to fund investments in alternative energy technologies.

Thus, in light of the above challenges SIDS face in terms of attracting private investment to the electricity sector, one could assert that these difficulties naturally provide a platform for international development agencies to intervene. Donor organisations (including development banks) can help facilitate the acquisition of renewable energy technologies (which are capital intensive) through soft loans and can also serve to build local technical capacity. However, the level of dependence on external sources of finance that currently obtains may be a cause for concern, especially when one accounts for the implications of long term debt accumulation. Poirine(1999) notes that ―small island countries with a population of less than 1 million receive on average nine times more aid per capita than do other less-developed countries, even

19 though their average per capita GNP (often) is much higher‖. The overall reliance of SIDS on external financial assistance is therefore significant and worthy of further investigation.

More specifically, due to the existing reliance of SIDS on overseas development assistance (ODA) (including grants, loans and technical assistance) to facilitate the acquisition and deployment of renewable energy technologies within their borders, it is necessary to examine the role of international aid in helping these nations to transition from fossil fuel dependence to greater utilisation of renewable energy. Given the magnitude of aid that has been spent in SIDS, this research therefore seeks to ascertain the nature of the allocations made and their impact on the power sector in these nations. Hence, this thesis will identify the degree and purpose of energy aid that has been accessed by SIDS in the form of direct loans (as opposed to grant funding) for the projects included and surveyed in this thesis, as this distinction could help to provide useful insight into the degree of indebtedness faced in the Caribbean and Pacific. In addition, for the projects investigated, this research will also provide information on the extent of aid allocations received by each sub-sector of the electricity sector (i.e. generation or transmission and distribution). Perhaps even more importantly, this research will juxtapose the magnitude of resources that have been allocated to conventional (i.e. thermal) energy projects with spending on renewable energy and energy efficiency projects, along with projects that involve training and local capacity building in the energy sector in order to provide some indication of the focus of donor agencies active in SIDS.

In tandem to comparing allocations to thermal and renewable energy projects, this thesis will also give specific details of the volume of disbursements made to different forms of renewable energy (namely solar, wind, hydro, biomass and geothermal energy) for the projects assessed. Additionally, this research will also give examples of aid interventions which have contributed in some way to the formation of policy mechanisms in the energy sector. This thesis juxtaposes two groups or regions of SIDS: namely the Caribbean and Pacific, both of which are expected to be significantly impacted by climate change and peak oil (Mimura et al., 2007; Sem, 2007; Simpson et al., 2008) and explores the link between international aid and a transition to sustainable energy sources in the power sector.

There have been few attempts to survey energy projects in the Caribbean and Pacific so as to ascertain the impact of such initiatives in the past (Caribbean Energy Information System et al., 2009; Kozloff, 1995a; Yu, 1998; Yu and Taplin, 1997). However, this research represents the first attempt to make a specific comprehensive comparison of energy projects in which international donors have been involved over a forty year period (from 1970 to 2010) and across two regions. A comparative survey of this nature, assessing energy projects in the Caribbean and Pacific can serve to highlight key lessons learned from project execution by donors in both regions. It will also highlight key barriers, challenges and development constraints encountered by development agencies seeking to successfully implement energy projects. It is hoped that this research might indeed help to provide some insight into the nature of the influence of donor agencies on energy policy formulation and implementation. Additionally, the projects examined in this thesis should help to give some indication of the role of international aid in helping SIDS transition to more sustainable forms of energy in order to achieve energy independence. It should be noted that the period 1970 to 2010 was chosen primarily due

20 to the fact that a large number of island nations, from both the Caribbean and the Pacific featured in this study gained their independence in the 1960s. As such, the required energy and aid data in most cases was only available from around 1970 onward (after the nations in question became independent). The study goes until 2010 simply due to the fact that data was collected between October 2009 and October 2011 (in order to cater for data analysis and thesis submission in 2012). Thus, at that time, comprehensive data for 2011 and 2012 was often not yet available.

1.3 Research Goal and Objectives

The research goal for this thesis is to investigate whether international aid has facilitated the acquisition and deployment of renewable energy technologies in Small Island Developing States in the Caribbean and Pacific, and to assess the implications (if any) of such assistance.

To achieve this goal, this thesis will:

Explain why a transition to sustainable energy is important. In so doing, this research will analyse the impacts of climate change and peak oil on key sectors in Caribbean and Pacific SIDS.

Assess the energy projects funded by international donors in the Caribbean and Pacific over a 40 year period (1970 to 2010) so as to give some indication of the focus of these agencies between, specifically with reference to types of projects that received funding (i.e. projects focused on renewable energy, energy efficiency or fossil fuels).

Elucidate the key barriers, challenges and development constraints encountered by government and development agencies.

Give some indication of the degree of dependence that recipient nations have on external financial assistance - with specific reference to the development of the power sector.

1.4 Thesis Outline

Chapter 1 has sought to introduce and outline the research question. As a preamble to this thesis, it highlighted the dependence of Small Island Developing States (SIDS) on fossil fuels and in that regard, discussed the impacts peak oil and climate change. Within that context, the importance of renewable energy and the role of international aid were introduced and the goals for this research outlined.

In Chapter 2, the methods used to conduct this research are explained. Thus, the methodology used to collect, collate and analyse the project and interview data will be clarified along with the limitations of the methods chosen for this research.

Chapter 3 will explain how Caribbean and Pacific SIDS were transformed during the colonial era from being subsistence-based nations to export-oriented economies and will

21 show how this shaped their current demand for energy and their dependence on fossil fuels. The development constraints faced by SIDS will also be illustrated along with the mutually-reinforcing impacts of climate-change and peak oil on key economic sectors in Caribbean and Pacific island nations, namely tourism and agriculture. Within this context, Chapter 3 will also show how international aid is central and important to the deployment of renewable energy technologies in SIDS.

Chapter 4 will detail the results of this research in terms of the project data collected. The purpose of the funds awarded from donors in terms of allocation to fossil fuelled as opposed to renewable energy projects will be highlighted and the type of assistance, in terms of loans, grants or in-kind assistance will be outlined. Project data from the World Bank Group (WBG), the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB) will also be analysed as case studies in Chapter 4.

The feedback received via the interviews conducted as a part of this research will be detailed in Chapter 5. The major themes that emanated from the interviews will therefore be reviewed and discussed.

Chapter 6will discuss the major findings of this research within the context of relevant and related academic literature. The findings from the project data and interviews will therefore be discussed in relation to the role of international aid in moving toward a sustainable energy transition.

Chapter 7 presents the conclusions of this research. In addition, a few recommendations will be made and potential areas for future research will be highlighted.

Chapter 2. Research Methods

2.1 Introduction

This chapter seeks to outline the methodology used to conduct this research. As such, it will begin by defining key terms and concepts used throughout this thesis. Following this, the methods used to collect information about donor funded projects focused on energy sector in the Caribbean and Pacific between 1970 and 2010 will be outlined and elucidated. The framework and system used to conduct the interviews with relevant stakeholders will also be elaborated upon. Finally, the limitations of the methods used to collect the project and interview data used in this research will be explained.

2.2 Definition of Key Terms & concepts

The term ‗Caribbean‘, for the purposes of this paper, is used to refer to self-governing states in the primarily English-speaking archipelago nestled in the Caribbean Sea – see Figure 2-1 (approximately 2.7 million square kilometres) that forms the regional grouping known as the Caribbean Community (CARICOM)2. The term ‗Pacific Island States‘, for the purposes of this paper, refers to those self-governing nations enveloped by the Pacific Ocean that are members, as well as beneficiaries of the programmes of the Secretariat of the Pacific Community (SPC)3 – see Figure 2-2. The countries featured in this study are listed below inTable 2-1.

2 According to Article 3 of the Revised Treaty of Chaguaramas, 2001 (establishing the Caribbean Community including the CARICOM Single Market and Economy), the Caribbean Community (CARICOM) comprises Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago. Haiti later gained membership in 2002. 3 The South Pacific Commission, as the SPC was formerly called, was founded in Australia in 1947 under the Canberra Agreement by six ‗participating governments‘ that then administered territories in the Pacific: Australia, France, New Zealand, the Netherlands, the United Kingdom and the United States of America. At present, SPC‘s membership includes the 22 Pacific Island countries and territories along with four of the original founders (the Netherlands and United Kingdom withdrew in 1962 and 2004 respectively when they relinquished their Pacific interests – see http://www.spc.int/en/about- spc/introduction.html). From among these nations, - from which this study will only focus on those SIDS that are self-governing, namely; are Cook Islands, Federated States of Micronesia, Fiji Islands, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. 23

Table 2-1: Caribbean and Pacific Small Island Developing States (SIDS) featured in this thesis

Self governing members of the Self-governing members of the Caribbean Community (CARICOM)4 Secretariat of the Pacific Community (SPC)5

Antigua and Barbuda Cook Islands The Bahamas Federated States of Micronesia Barbados Fiji Islands Belize Kiribati Dominica Republic of Marshall Islands Grenada Nauru Guyana Niue Haiti Palau Jamaica Papua New Guinea St. Kitts and Nevis Samoa St. Lucia Solomon Islands St. Vincent and the Grenadines Tonga Suriname Tuvalu Trinidad and Tobago Vanuatu

The two regions are located in relative close proximity to the equator and as a result, both are tropical in nature and experience two climatic seasons per year; wet and dry. While the island states of the Pacific are far more scattered (and as such more isolated) than those of the Caribbean, the topography and geographical character of the two groups of islands are largely homogenous. As such, similar flora and fauna can be found in both locations. That said, the Caribbean is region more populous, and is home to approximately 17 million (see Table 2-2), compared to the 9 million persons (approximately) that reside in the Pacific (see Table 2-3). Average GDP per capita is also higher in the Caribbean. In 2010, the average GDP per capita in the Caribbean region was USD$9131 (see Table 2-2), while in the Pacific it was USD$3151 for the same year (see Table 2-3).

4 Montserrat is a member of CARICOM but it is a British Overseas Territory not self-governing. 5 American Samoa, French Polynesia, Guam, New Caledonia, Northern Mariana Islands, Pitcairn Islands, Tokelau and Wallis and Futuna are members of the SPC but are not self-governing. 24

Figure 2-1: Map of the Caribbean region Source: Open Street Map. © OpenStreetMap contributors (creative commons).

Figure 2-2: Map of the Pacific region Source: Open Street Map. © OpenStreetMap contributors (creative commons).

Table 2-2: Population and GDP per capita data for Caribbean Small Island Developing States

Caribbean Small Island Developing States Country Population in thousands GDP per capita (2010) (2010) Antigua and Barbuda 89 13006.30 Bahamas 343 22664.86 Barbados 273 15034.88 Dominica 68 6963.87 Grenada 104 7499.52 Haiti 9 993 663.91 Jamaica 2 741 5133.44 Montserrat 6 - Saint Kitts and Nevis 52 12846.84 Saint Lucia 174 6890.28 Saint Vincent and the 109 Grenadines 6171.70 Trinidad and Tobago 1341 15613.73 Belize 312 4064.40 Guyana 754 2994.45 Suriname 525 8292.46 Caribbean Total 16 886 127840.64 Caribbean Average 1126 9131.47

Source of Population Data: United Nations, Department of Economic and Social Affairs, Population Division (2011).

Source of GDP per capita Data: World Bank, 2012

Table 2-3: Population and GDP per capita data for Pacific Small Island Developing States

Pacific Small Island Developing States Country Population in thousands GDP per capita (2010) (2010) Fiji 861 3686.99 Papua New Guinea 6 858 1382.28 Solomon Islands 538 1261.04 Vanuatu 240 2874.62 Kiribati 100 1518.65 Marshall Islands 54 3015.21 Micronesia (Fed. States of) 111 2678.20 Nauru 10 - Palau 20 8369.75 Cook Islands 20 - Niue 1 -

Samoa 183 3249.37 Tonga 104 3435.42 Tuvalu 10 3190.39 Pacific Total 9 111 34661.92 Pacific Average 651 3151.08

Source of Population Data: United Nations, Department of Economic and Social Affairs, Population Division (2011).

Source of GDP per capita data: World Bank, 2012

The designation ‗Small Island Developing States‘ (SIDS), while useful in illustrating the unique challenges encountered by these nations, has no binding definition in international law. The group of countries, however, that subscribe to the term ‗SIDS‘are very diverse in nature. SIDS can ―range in size from about 12 km2 of land (Tokelau) to nearly 463,000 km2 (Papua New Guinea), most having between several hundred and several thousand km2‖ (Wade et al., 2005). To add to this dynamic, the populations of island nations can range from approximately 1000 (Niue – see Table 2-3) to more than 10 million people (Haiti – see Table 2-2) (United Nations, 2009; Wade et al., 2005). Interestingly, and illustrative of the different characterisations related to SIDS, even the qualification of needing to be an island is not necessarily a criterion that needs to be met (United Nations Department of Economic and Social Affairs, 2009)6. It is for this reason that Belize, Guyana and Suriname are featured in this study (even though they are continental nations). These definitional issues have been featured in the literature to date (Hein, 2004; Kerr, 2005). Nonetheless, the Barbados Plan of Action states such nations have some important similarities in that they are ―limited in size, have vulnerable economies [and are] dependent upon narrow bases and on international trade, without having the means to influence that trade‖ (United Nations General Assembly, 1994).

The term ‗aid‘ in this thesis is not used as a ―term of art‖ but rather, is meant to refer to international development aid or cooperation, which, broadly defined, refers to any form of official or institutional assistance (financial, in-kind or otherwise) rendered to a state that is ―expended in a manner that is anticipated to promote development, whether achieved through economic growth or other means‖(Minoiu and Reddy, 2010). In this way, the conceptualisation of aid in this thesis is perhaps somewhat broader than ‗Official Development Assistance‘, which refers to ―flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective, and which are concessional in character with a grant element of at least 25 percent (using a fixed 10 percent rate of discount)‖ (Organisation for Economic Co-operation and Development, 2003). Notwithstanding this, in examining resource transfers from development agencies to SIDS between 1970 and 2010, this thesis looks solely at the amount of funds that were allocated at the time

6 The ―World Statistics Pocketbook 2008: Small Island Developing States‖, published by the United Nations Department of Economic and Social Affairs, Statistics Division in 2009, included Guinea-Bissau, Suriname, and Belize. While these nations may have been included for reasons related to fostering greater political cooperation (particularly through the Alliance of Small Island States (AOSIS) which also includes small low-lying coastal States), they are in fact not islands, but rather, are continental territories nations on the coasts of Africa and South America respectively. 28 of project approval. No differentiation is therefore made between ‗gross aid‘ (disbursements) and ‗net aid‘ (disbursements net of repayments) (Bulíř and Hamann, 2008) largely due to the unavailability of data pertaining to repayments and undisbursed funds.

Additionally, with regards to types of aid, this thesis includes all forms featured in the literature and those utilised by donors, such as loans, grants and in-kind assistance (including expert advice). The term loan will refer to any funds disbursed with the expectation or obligation of repayment, regardless of the rate of interest being applied. Thus, under this definition, allotments of funds by donor entities that are awarded under relatively concessionary terms, (including no or very low interest repayments) which are typically referred to as ―credits‖, will be referred to in this thesis as loans. It should be noted that the term loan will also include disbursements which contain both debt and equity investment components as well as those made from private investors through multilateral institutions (like the International Finance Corporation or European Investment Bank)7. The term ‗grants‘, on the other hand, will be used to refer to the allotment of funds by donor entities for which no repayment is required. In measuring various forms of aid, the term ‗Unique Aid‘ is used to refer to in-kind assistance or to describe those forms of assistance for which information pertaining to the type of disbursement made was not available. In this way, ‗unique aid‘ also refers to projects that are not associated with any specific type of assistance (or for which information is unknown or was not accessible).

It may be useful to note that as far as financial assistance is concerned, there have been assertions that loans have had deleterious effects on poor developing countries (Kahn, 2002), particularly with regards to debt accumulation – and so should perhaps not even be considered as aid. In tandem, there has been a considerable amount of literature surrounding whether or not a greater proportion of (or all) international aid should be delivered as grants in lieu of loans (Cohen et al., 2007; Cordella and Ulku, 2007; Nunnenkamp et al., 2010; Odedokun, 2004)8. Some argue that loans contribute to debt accumulation, which the poorest nations seldom repay (Bulow and Rogoff, 2005; Lerrick and Meltzer, 2002) and hinders countries from achieving their development objectives (Clements et al., 2004). Others assert that there are already more grants than loans being disbursed globally (Nunnenkamp et al., 2010) and that phasing out all loans would exacerbate reliance on aid, cause grants to be viewed as a substitute to domestic revenue collection, weaken budgetary and fiscal discipline and threaten the future financial viability and existence of development banks (Clements et al., 2004; Cohen et al., 2007).

7 As an example, in the case of the World Bank, loan financing directly from the Bank‘s funds is referred to as an ‗A-loan‘, while a loan arranged by the Bank using a private or other investor (but with the Bank listed as ‗lender of record‘) is known as a ‗B‘ loan, which also differs from a ‗C-loan‘, which occurs when lending conditions contains both debt and equity characteristics or stipulations. For more, see: World Bank. 2012b. Private Participation in Infrastructure Projects - Glossary [Online]. Washington, DC: The World Bank Group. Available: http://ppi.worldbank.org/resources/ppi_glossary.aspx [Accessed 18 June 2012 2012]. 8 This debate was sparked by remarks by President Bush of the USA, in July 2001, who endorsed a recommendation made by the Meltzer (2000) Commission, which proposed that the World Bank and other development agencies replace up to 50 percent of their future lending with grants. For more, see Cordella, T. & Ulku, H. 2007. Grants Versus Loans. IMF Staff Papers, 54, 139-162. 29

Overall, however, there does seem to be widespread consensus that loans from donor entities should be considered aid due to the often highly concessionary terms through which financing is usually accessed, particularly for poor countries (Clements et al., 2004; Cohen et al., 2007; Cordella and Ulku, 2007; Lerrick and Meltzer, 2002; Nunnenkamp et al., 2010; Odedokun, 2004). Indeed, a number of countries featured in this study have been able to access loan finance from donor entities under concessionary terms specifically because they are small island states. For example, with respect to the Caribbean and Pacific, the International Development Association (an arm of the World Bank) allows the Republic of Marshall Islands (RMI), the Federated States of Micronesia (FSM), the Solomon Islands, Tuvalu and Haiti to access loans on concessionary terms as poor countries and extends similar terms to Kiribati, Samoa, Tonga and Vanuatu as small island economies. Grenada, Dominica, St. Vincent and the Grenadines and St. Lucia are also able to access the ―small island economy exception‖ (International Development Association, 2012) but receive funds under ‗blended terms‘ (a mix of concessionary & near market conditions) – as does Papua New Guinea and Guyana (that do not qualify for the small island economy exception) (International Development Association, 2012)9. Nonetheless, it should be noted that this thesis has not adopted any stance on matters pertaining to whether loans should be considered as development assistance or should be phased out, insofar as it pertains to the development assistance offered to the Caribbean and Pacific regions. However, after the data relating to the magnitude and type of disbursements (particularly as it relates loans as compared to grants) has been presented and examined, statements relating to the impact of international development assistance on debt accumulation in SIDS will be made.

Also, this thesis adopts the International Energy Agency‘s (IEA) definition of ‗renewable energy‘ (RE) as ―energy that is derived from natural processes (e.g. sunlight and wind) that are replenished at a higher rate than they are consumed‖ (International Energy Agency, 2012). Renewable energy sources therefore describes ―energy flows which are replenished at the same rate as they are ‗used‘‖ (Sorensen, 2000). The prime source of renewable energy is solar radiation, from which solar, wind,ocean-thermal energy conversion, hydropower, biomass (combustion/gasification) and wave energy are captured (Sorensen, 2000). However, it should be noted that geothermal and tidal, are other widely acknowledged sources of renewable energy. Various forms of renewable energy utilisation will therefore be discussed, not in terms of the physics or engineering behind their application, but rather in relation to disbursements made by donors to facilitate their deployment.

Fossil fuels, on the other hand, are non-renewable and refer to ―an energy source formed in the Earth's crust from decayed organic material‖ (Energy Information Administration, 2012). The term fossil fuels will therefore be used to refer collectively to petroleum, coal, natural gas and associated non-conventional fossil fuels such as tar sand and oil shale (commonly acknowledged as fossil fuels). Fossil fuel utilisation will also be explored in this thesis but primarily within the context of projects executed by donor agencies.

9 Under donor entities have similar provisions, but each uses its own unique nomenclature and regulations. 30

Moreover, the term ‗energy project(s)‘ in this thesis refers to an initiative or programme undertaken by a donor entity, of which energy-related matters are a major component. Thus, the project activities featured will range from energy efficiency to power generation, and transmission, to petroleum exploration and development, and to energy finance and investment ventures. In this regard, for the purposes of this thesis, project activities have been grouped and measured according to the following categories:

Fossil fuel based Renewable energy based Institutional strengthening & Policy Reform Energy efficiency Transmission and Distribution

That said, this thesis addresses projects related to the electrical power sector in Caribbean and Pacific SIDS. Projects focused on the power sector, but not implemented within these two regions will therefore not be featured. However, projects that were executed across wider country groupings (such as Latin America and the Caribbean or East Asia and the Pacific), will appear in this thesis only if a considerable portion of the project was implemented in one or several of the island states included in this study. General projects which are tangentially linked to the energy sector, such as overall macro-economic technical support and advice (which, for example, might also provide advice on the importation of oil) will not be included. A major component of the project (as determined by the donor and/state entity responsible) must be devoted to the energy sector in order for it to be included in this research thesis.

For the purposes of this thesis, the term ‗donor entity or agency‘ will be used to describe international or regional organisations (usually based in a developed country) that award or allocate funds to other entities or organisations (like power utilities or government ministries) in less developed economies. The term ‗donor nation or country‘ therefore refers to the state where the funds being transferred to the developing economy originate.

Further, according Parris and Kates (2003) the term ‗sustainable transition,‘ when related to the concept of sustainable development, refers to ―meeting the needs of a stabilizing future world population while reducing hunger and poverty and maintaining the planet‘s life- support systems‖. With regards to the power sector, which is the focus of this research, the term ‗sustainable transition‘ will be used to refer to meeting the growing demand for electricity while increasing the uptake of power production from non-finite, renewable sources of energy in a manner that preserves the Earth‘s life- support systems.

2.3 Project & Interview Data Collection: An Introduction

In seeking to achieve the research goals stated in Chapter 1.3, information on the project activities approved by donor entities active in the Caribbean and Pacific between 1970 and 2010 was sourced. The information retrieved related to: 1. The projected cost of the activity: the amount of funds that were released by the donor agency 2. The type of assistance rendered: i.e. in kind assistance, loan or grant funding

3. Nature of the project: the electricity sub-sector on which the activity was focused (such as Renewable energy, energy efficiency, transmission and distribution) 4. The year that the project activity was approved 5. The current status of the project: whether it was completed, in progress or cancelled 6. The official name or title of the project activity 7. The effectiveness of the project activity: donor entities were given the opportunity to rate the overall effectiveness of their initiatives on a scale of 1 to 5 (with 1 representing a failure and 5 representing a success).

Collecting this data facilitated a qualitative analysis of the project activities funded by the donor agencies featured in this thesis, specifically with reference to debt accumulation. It should be noted that an analysis of the effectiveness of project activities was not possible due to insufficient responses to that question. That said, an analysis of the information received from donors allowed for a quantitative analysis of the funds spent by donors, as it pertained to the distribution of funds among different electricity sub-sectors. Data on the annual energy aid disbursement of donor agencies also made it possible to provide insight into whether there was any relationship between energy aid disbursements and global oil prices between 1970 and 2010, though the specific methodology used to do this will be discussed in the case studies of this thesis (Chapter 4.6).

In order to cross check the information conveyed by the project case study data, field research was conducted in Samoa (May/June 2010), Fiji (September 2010), Trinidad & Tobago (September 2011), Barbados (October 2011) and St. Vincent and the Grenadines (October 2011). On a regional level, of the interviews conducted, 44 were completed in the Caribbean, while the remaining 32 interviewees were from the Pacific. As this research seeks to build upon past related research projects (Caribbean Energy Information System et al., 2009; Yu and Taplin, 1997), the conduct and evaluation of the interviews were guided by the qualitative research framework known as ‗directed content analysis‘ (Hsieh and Shannon, 2005). This methodology is geared toward building on prior research and allows the researcher to guide and structure questions to capture the information required to further knowledge in a specific area. Thus, 76 interviews with key power sector stakeholders from 19 countries were undertaken. Basic questions were asked in a flexible framework, allowing for a semi-formal discussion of key topics related to this research. From these discussions, the major (i.e. common) themes arising from the responses of those interviewed were then extracted and examined.

More details pertaining to the methodologies used in collecting the project and interview data are given in the section that follows. In addition, information pertaining to the limitations of the methods used in this research is also outlined in the following section.

2.4 Project Data Collection Method

In order to ascertain the impact of international development assistance in Small Island Developing States in the Caribbean and Pacific, a survey of energy projects funded by

32 donor agencies or entities between 1970 and 2010 was conducted. Requests for data (see Appendix III) related to project activities in the energy sector between the aforementioned dates were therefore sent to the persons and agencies outlined in Table 2-4. While several of these officials did not respond, many others (including other representatives from the same organisation) sent the information requested or directed the author to where the information could be found. This was particularly the case for the development banks that were contacted (such as the Inter-American Development Bank, Asian Development Bank & World Bank), as much of the data related to their projects could be found be online.

Table 2-4: Table showing persons and organisations from which data was requested

Name Organisation & Title Date Response from 1st official contac ted Frederique Inter-American 26- No response Abreu Institute for Feb-11 Cooperation Cori Research Officer, 23- Directed enquiry Alejandrino Pacific Infrastructure Feb-11 to Veronica -Yap Advisory Center Piatkov (PIAC), Asian Development Bank Monica European Investment 18- Provided list of Arevalo Bank (EIB) Oct-11 EIB energy projects Simon Project Officer - 4- Stated that Barns Pacific Regional Nov- information could Infrastructure 11 not be provided Facility/Pacific Infrastructure Advisory Centre, AusAid Philippe Energy Sector 26- No response Benoit Manager, World Bank Feb-11 Juan Coordinator, 8-Apr- No response Bonilla Sustainable Energy & 11 Climate Change Unit (SECCI), IDB Gordon Deputy Executive 24- Referred to Chang Director, Pacific Feb-11 Feedback of Peter Power Association Johnston Allison Caribbean 26- Provided Davis Development Bank Feb-11 information via interview Mark United Nations 4-Mar- Expressed Draeck Industrial 11 interested in Development study Organisation (UNIDO) Anton Executive Director & 26- No response Edmunds CEO, Caribbean- Feb-11 Central American Action Jamie Investment Officer, 8-Apr- Redirected to Fergusson International Finance 11 Catherine Corporation (IFC) Gourdin Yves European Investment 26- No response Ferreira Bank Feb-11 Natalie World Bank, Program 13- Referred to Forrester Assistant Jun-12 World Bank Library Catherine Senior Investment 26- Provided

Gourdin Officer, International Feb-11 information via Finance Corporation interview Christiaan Senior Energy 26- Provided Gischler Specialist, Inter- Feb-11 information via American interview and link Development Bank to information (IDB) online Jennifer Australian Agency for 4- Stated that Greggory International Nov- information could Development 11 not be provided (AusAID) Wendy World Bank, Sydney Februa Provided Hughes Office ry 21, information via 2011 interview (same e- mail) Thomas Environmental and 1-Sep- Expressed Jensen Energy Specialist, 10 willingness to United Nations meet in person & Development provided Programme, Pacific information Centre. Peter Energy Consultant 21- Provided Johnston Feb-11 information & list of persons to contact Robert Energy Specialist, 13- Provided Kesterton ADB Apr- information & 11 link to ADB website database Mark Organisation of 24- Re-directed to Lambrides American States Feb-11 Carolina Pena (OAS) Marco United Nations 26- Sent 5 documents Matteini Industrial Feb-11 Development Organisation (UNIDO) Rupeni Energy Advisor, 15- Expressed Mario Secretariat of the Sep-10 willingness to Pacific Community meet in person & (SPC) provided information Natacha Senior Energy 26- No response Marzolf Specialist, Inter- Feb-11 American Development Bank (IDB) Joseph Development 4- List of NZAid Mayhew Manager, Energy, Nov- Energy Projects Ministry of Foreign 11 provided Affairs and Trade (Aid Programme), New Zealand

Sean Osner USAID Jamaica – 5-Apr- No response Programme Manager 11 Carolina Organisation of 25- Provided Pena American States Feb-11 information & list (OAS) of International Development Agency Contacts Veronica World Bank 25- Provided 2 PRIF Piatkov Feb-11 documents Pablo Senior Advisor, 8-Apr- No response Rosenthal Sustainable Energy & 11 Climate Change Unit (SECCI), IDB Thomas Caribbean Renewable 24- Re-directed to Scheutzlich Energy Development Feb-11 Joseph Williams Programme (CREDP/GTZ) Andrew Caribbean Electric 23- Re-directed to Thorington Utility Services Feb-11 Interntional& Corporation Regional (CARILEC) Organisations Mona White Scientific Research 6-Apr- No response Centre – Jamaica 11 Joseph Head, Energy Unit, 23- Provided Williams Caribbean Community Feb-11 information and Caribbean Energy Information System (CEIS) Study and other contacts Stefan Inter-American 26- No response Wright Development Bank Feb-11 (IDB)

A detailed list of 550 energy projects in the Caribbean and Pacific (in which donor entities have been involved) was therefore compiled based on the responses to the requests for data. While the degree of detail provided on each project varies (according to availability), the data has been formatted in a very simple manner. To this end, the data from the donors, when not supplied in US Dollars (USD) was made available in the currency of the country of origin (of the donor). Thus, all donor contributions have been converted to USD 2010 dollars using the International Monetary Fund (IMF) International Financial Statistics (IFS) exchange rates (this information was accessed from the IMF database on March 8, 2012 and is given in Appendix X). This was thought to be the best source for this information given the concerns of several commentators on the accuracy of exchange rates and the conventional methods used to track and monitor inflation (Williams, 2012). Project activities were then organised according to: the respective donor, the recipient country the amount approved the year the project was approved the project name project status (i.e. on-going, being implemented or closed), the form of assistance being rendered (Loan, Grant or in-kind support).

This basic format was adopted in order to make the process of providing data as easy as possible for the agencies from which the data was requested. That said, as this research seeks to build on existing knowledge, data on energy projects in the Caribbean and Pacific between 1970 and 2010 was also retrieved from within academic literature as well as from annual and project evaluation reports of donor agencies.

Once collected, the project data was sorted according to fuel choice or sub-sectors (i.e. fossil fuel based, renewable energy based, transmission & distribution or institutional strengthening and policy reform) in order to highlight the general focus of aid disbursements in either region. Projects were then sorted in relation to the type of disbursement made, namely loans, grants or other unique forms of assistance such as expert advice. It is hoped that this would allow for comparisons and analysis to be made regarding the volume of support offered through each type of assistance by and among different donor entities.

In addition, it should be noted that throughout this thesis, all quotations of and references to the price of oil, have been given as an average for the respective year in USD 2010 dollars. In terms of the data gathered for this thesis, a complete list of all energy projects in the Caribbean and Pacific in which donors were involved can be found in Appendix VIII and IX.

2.4.1 Limitations of Project Data Collection Method

As given above the data collected indicates the amount of funding allocated to project activities as well as the year in which it was approved. Data pertaining to the amount actually disbursed for the project activity was much less accessible and as such is not

37 provided in this thesis. In tandem therefore, data regarding the timing of disbursements over the life of project activities also could not be obtained10. Also, as data surrounding the timing and application of the discrete sub-disbursements within an overall disbursement was not available, this research has been unable to confirm how much of the allocated funds were spent on different components of projects (such as consultant fees, equipment or relevant taxes). In much the same way, the proportion of funds spent as aid disbursements that remained in the recipient country (as opposed to being used to acquire overseas technologies or services) could not be confirmed as this information was also not accessible. Additionally, for the research showcased in this thesis, project activities have been sub-divided into different categories depending on the nature of the project, such as renewable energy, transmission and distribution or training. This was done in order to show the focus of donor entities at different periods of time. Nonetheless, as a number of projects had multiple components, some double-counting was inevitable, though all attempts were made to minimise any duplication by categorising the projects based on the stated objective for the activity. In this regard, the fact that the power sector is often considered to be a sub-sector of the energy sector meant that it was not always possible to categorise projects as being focused on or entirely geared toward the electricity sector.

Further, using recently recorded interviews to cross-check project activities meant that there was much more available knowledge on projects that occurred between 1990 and 2010. Conversely, there were only a handful of interviewees that possessed relevant knowledge about energy policy and projects in the Caribbean and Pacific between 1970 and 1990. Hence, for the earlier period, there was a much greater reliance on academic literature and reports from relevant organisations. Finally, it should be noted that the data provided by each donor entity was unique and formatted according to each organisation‘s procedures and terminology. As such, the information provided by donor entities was not uniform or identical. Furthermore, one donor indicated that they could not supply information related to project budgets or the amount allocated per project (i.e. the Caribbean Renewable Energy Development Programme (CREDP-GiZ)). Thus, the total amount spent on Caribbean energy projects between 1970 and 2010 as indicated in this research does not include the total amount of funds allocated by this organisation. Hence, due to the fact that the data collected was subject to and dependent upon the provision of information from donors, the project data presented in this thesis cannot be guaranteed to be entirely comprehensive, as information relating to some projects may not have been supplied or accessible.

2.5 Interview Data Collection Method

During field visits to Samoa, Fiji, Trinidad and Tobago, Barbados and St. Vincent and the Grenadines, a total of 76 interviews with key power sector stakeholders from 19 countries were carried out. On a regional level, of the interviews conducted, 44 were undertaken in the Caribbean, while the remaining 32 interviewees were from the Pacific. Trips were planned around energy and/or climate change conferences in each location in order to facilitate interviews with stakeholders from many countries in one location. That said, individual interviews ranged in length from 1 hour and 56 minutes to 10 minutes, usually depending on the length and depth of responses offered by

10 Funding allotments are usually not paid in a single large lump sum payment. Instead, donor entities often make a series of payments throughout the life of the project, for products and services. 38 respondents. In this regard, a complete listing of the persons interviewed along with the lengths of each interview is given in Chapter 5. In tandem, it should be noted that if a stakeholder attending the conference provided valuable information through their speech or presentation at the conference, this data was also captured and presented in Chapter 5 of this thesis.

Notwithstanding the above, the purpose of the field research and interviews was to be able to verify or cross-check the key issues extracted from the project data with the perspectives and input of those ‗on the ground‘ in the countries featured in this study. In light of this, and due to the fact that most of the project data collected came from donor entities, the interviews focused on capturing the viewpoints of energy planners and professionals, particularly those working for state agencies as well as those representing relevant international, regional and national (non/supra – government) organisations. Thus, in terms of the types of organisations, stakeholder interviews were conducted as follows:

Table 2-5: Breakdown of Interviews by Type of Organisation Type of Organisation Number of interviews State Agencies 31 Donor Entities 4 Utility Representatives 16 International/National 19 Organisations Private Sector 6

The interviews were organised around a flexible framework and format, so as to allow for a semi-formal discussion. However, questions were centred on the formulation and implementation of energy policy, as well as the acquisition and deployment of renewable energy technology. In addition, this research did receive ethical approval from the University of Otago Research Ethics Committee to conduct the interviews required for this thesis (see Appendix VII).

It should be noted that references to the interviews within this thesis are demarcated by the words “Thesis Interview” within in-text citations. This was done so as to make it easier to differentiate references to academic literature from those referring to interviews.

As this research juxtaposes energy projects in two regions and is essentially expanding the sample area of past research (which featured projects in either the Caribbean or Pacific, but not both) the method used (directed content analysis) can also be considered to be inductive in nature (Elo and Kyngäs, 2008). In this regard it should be noted that content analysis is a form of assessment used primarily in social and health sciences that seeks to unearth depth and meaning (particularly hidden elements) of a statement, message or text (Babbie, 2007; Mayring, 2000; Potter and Levine-Donnerstein, 1999). Indeed, content analysis is used to evaluate all forms of recorded communication (Kolbe and Burnett, 1991) and is therefore applicable to the interviews conducted in this research. In seeking to analyse the interviews conducted, this research adopted directed

39 content analysis so as to disclose and discuss the key concerns, challenges and opportunities voiced by the interviewees and to be able to reveal hidden meaning where necessary. Thus, most persons interviewed were asked basic and broad structural questions about the following topics: the nature of the energy and power sector in their country or region relevant energy policies past and current initiatives by donor agencies in the energy and/or power sector major barriers and challenges encountered

From these topics, the major themes arising from the responses of those interviewed were then outlined and analysed. This approach allowed the author to trace and show common views held among interviewees and to highlight where differences of opinion existed. It should be noted that the specific questions asked were dependent upon the person being interviewed. Notwithstanding this, based on their responses to the above topics, more open-ended questions pertaining to energy projects, policies and international aid were asked so as to stimulate a discussion.

2.5.1.1 Limitations of Interview Data Collection Method

While directed content analysis can be very useful in highlighting the latent meaning of text or statements, as it usually builds upon already existing knowledge, according to Hsieh and Shannon (2005) ―researchers approach the data with an informed but, nonetheless, strong bias‖. As a result, the researcher may inherently be more likely to uncover data and meaning that supports their pre-conceived notions or conclusions. The special and unique interests of each interviewee also contributes to bias and, to some extent, limits the trustworthiness of their contributions. This is due to the fact each subject (somewhat naturally) usually seeks to portray the institutions they represent as well as themselves, in a positive light. This form of bias, for example, may make taking credit for a successful project or initiative far more likely than accepting culpability for failure or poor performance. In spite of this, Potter and Levine-Donnerstein (1999) note that recognising and accounting for such forms of bias can help to contain and limit its effect or impacts on research findings. Further, it is hoped that using two forms of data (i.e. project data and interviews) will help to enhance the overall reliability of the findings of this paper – by using one form of data to help cross-check or verify the other.

Chapter 3. Background and Context

3.1 Chapter Introduction

This chapter seeks to give an overview of the background and historical context of this research. As a result, this chapter provides insight into the nature of energy consumption in the Caribbean and Pacific from the colonial period up until the present time. In so doing, observations were made pertaining to how the economic orientation of these island nations helped to shape not only their energy consumption but also their current reliance on external financial assistance. In this regard, key reasons for the current reliance of Small Island Developing States (SIDS) on international aid have been highlighted. It is hoped that this will serve as a suitable backdrop for an analysis of the development constraints faced at present by SIDS within the context of the impacts of peak oil and climate change. In this chapter, the impacts of peak oil and climate change on the energy sector are therefore outlined, and are placed within the context of development constraints faced by SIDS. Further, the impacts of climate change and peak oil on two key sectors in SIDS - tourism and agriculture – will be elaborated upon. It is hoped that this approach will help to holistically illustrate the development challenges that SIDS face and serve as fitting backdrop to elucidate the role that international aid currently plays (and perhaps should play in the future) in order to help the power sector in SIDS transition to sustainable energy.

3.2 Energy Use during the Colonial Era in the Caribbean & Pacific

Prehistoric inhabitants of the Caribbean and Pacific were self-sufficient and lived communally within subsistence economies that centred on the production of a few staple foods. European colonisation in both regions led to a transformation of these islands from subsistence agriculture to export-oriented economies, primarily to serve the interests of more developed metropolitan countries. Natural resources and food were no longer extracted or cultivated to satisfy single families or tribes but rather to meet external demand in foreign markets serviced by merchants.

During the colonial era, prior to the independence movements in the Caribbean and Pacific that characterised the 1960s, island nations from both regions were increasingly focused on the cultivation of a variety of products for export. The modes and mechanisms of production in both regions had been transformed from being substantially subsistence-focused to being export oriented. In order to meet the level of demand in export markets, imported labour and eventually (in many cases) machinery and fossil fuelled energy was required. Human labour and the energy obtained from biomass were sufficient and all that was available during the time of subsistence farming. However, the dawn of foreign control and ownership of plantations during colonialism meant that production was now geared toward mass consumption in export markets. In order to cater for this, slave labour (in the Caribbean) and intra-regional labour migration (forced and unforced) in the Pacific was utilised.

In this regard, it is important to note that before the widespread importation of fossil fuels, renewable energy was utilised along with animal and slave labour to operate sugar mills in the Caribbean. According to Williams (1970), ―in 1768, Jamaica had 648 plantations, of which 369 were equipped with cattle mills, 235 with water mills, and 44 with windmills.‖ Use of renewable energy in other islands was even more widespread, ―Grenada, in 1772, had 95 water mills, twelve windmills, and only eighteen mills operated by cattle.‖ In addition, biomass in the form of bagasse (a renewable by-product of sugar production) was used for process heat in the mills. The use of renewable energy during this period however, was not transferred to the indigenous inhabitants or imported labourers for use outside of the sugar industry. Similarly in Fiji indentured labourers were brought from India to produce raw material in foreign-owned sugar mills, which were in turn powered by bagasse and human labour(Campbell, 2003).

3.3 The Evolution of Energy Production: Globally and in Caribbean and Pacific SIDS

The transition from human to mechanical energy in the Caribbean and Pacific occurred within the context of a wider, more global shift from the domestication of animals and harnessing of fire to the use of water and wind mills and eventually to the use of steam turbines (see Figure 3-1). Vaclav Smil (2004) explains that the ability to harness and utilise greater magnitudes of energy contributed significantly to improved standards of living, as it brought with it ―increased food harvests, greater accumulation of personal possessions...and vastly enhanced personal mobility.‖ In SIDS, even though these benefits were being enjoyed primarily by the owners of plantations and capital (as they also transitioned from a reliance on human labour and windmills to steam engines), this usage facilitated an overall greater demand of consumer goods which could not met via local production, largely due to the very narrow resource bases, thus intensifying the reliance on imports.

Figure 3-1: Diagram showing Transition from traditional to more modern forms of energy use

*Max single country installed capacity in Caribbean – 1170MW (in Trinidad and Tobago) ^ Max single country installed capacity in the Pacific – 327 MW (in Papua New Guinea)

Source: Diagram adapted from (Smil, 2004), Data for Caribbean and Pacific from Energy Information Administration (2006) and specific Trinidad and Tobago data from (Regulated Industries Commission, 2004)

Thus, even as commercial energy usage in the Caribbean and Pacific mainly powered by fossil fuels expanded during the mid twieneth century (within and without the agricultural sector) and populations as well as energy consumption grew, it was not accompanied by a commensurate growth in the use of renewable energy technologies. Placed within historical context, however, it is important to note that the technologies necessary to utilise some forms of renewable energy (e.g. solar and wind) to the scale required for export/mass consumption were not as commercially viable or economically competitive at the time as internal combustion engines and associated technologies usually powered by imported oil11. The expansion of energy demand was not limited to SIDS but was part of a worldwide sustained demand for fossil fuelled power that drove homes, industries and economic growth well into the twentieth century (Campbell, 2006; Heinberg, 2007).

3.4 Energy Consumption in SIDS between 1970 and 2010

3.4.1 Newly independent SIDS respond to Oil Price Shocks

Thus by the 1970‘s, in the case of the newly-independent (at that time) SIDS in the Caribbean and Pacific, the widespread adoption of fossil fuelled energy technologies expanded unabated, much like in the rest of the world and without any real cause or need for concern until the first significant oil crisis in 1973-7412. SIDS were among the nations most adversely affected by this event due to the fact the large majority of their energy demand for power generation and transport was liquid fossil fuel based and these islands could not negotiate discount prices, due to their limited total demand compared to other nations. The inability to import electric power or petroleum from contiguous states also proved to be an important factor that significantly inflated the price of oil for the island economies in question. In fact, the geographic isolation of many SIDS meant that they were not on major transportation routes and as such also faced considerable transportation premiums (Weisser, 2004a). The second oil crisis in 1979 had similar adverse effects on islands in the Caribbean and Pacific.

It was due to the spikes in the price of petroleum brought about by the oil crises in 1973 and 1979 that attempts were made by SIDS in the Caribbean and Pacific to transition to

11 Additionally, the relatively small energy requirements in both the Caribbean and Pacific meant that large scale coal fired technologies were generally not appropriate or economically attractive. 12 The first oil crisis was brought about by a decision by the Organisation of Petroleum Exporting Countries to raise the price of oil, largely for geo-political reasons, i.e., the Egypt-Israel war of 1973. 43 renewable energy. However, these efforts were only sustained when energy prices were high (Johnston, 2010, Thesis Interview; Lloyd, 1994). During the mid 1980s the price of oil plummeted and interest in a transition to renewable energy was essentially lost. The overall result of this change of interest was an ongoing reliance on petroleum for transport and electric power which has persisted until recent times. Indeed, global interest in alternative energy technologies has surged in more recent times, partially due to concerns regarding climate change, resource depletion and the price of oil (Campbell and Laherrère, 1998).

3.4.1.1 The vulnerability of the Pacific Region to high oil prices

High oil prices have been a significant concern in the Pacific region where internal transportation premiums are added in order to deliver petroleum products to the outer islands in multi-island states. Weisser notes that ―in Fiji and Papua New Guinea...transport costs add 5-10 percent to the costs of fossil fuels to main distribution centres and another 27-40 percent to smaller secondary distribution points‖ (Weisser, 2004a). The impact of increased oil prices is therefore significant and can be truly detrimental if sustained. In fact, according to a 2008 International Monetary Fund report quoted by the Secretariat of the Pacific Community (2010); ―several Pacific Island countries could deplete their foreign exchange reserves in a matter of weeks if [oil] prices remained high‖. In a study of the vulnerability of nations throughout Asia and the Pacific to oil price volatility, Pacific nations were found to rank among the most vulnerable of the group (Balachandra and Mongia, 2007)13. Even though there was widespread adoption of fossil fuelled technologies (for transport and power), the oil price shocks of 1973 and 1979 brought about an immediate awareness and thrust to transition to alternative (and indigenous) energy sources, though this was not sustained when prices later receded (Lloyd, 1994).

3.4.1.2 The Unique case of the Caribbean: the role played by energy exporters in the region

The Caribbean region faced similar constraints to the Pacific, and has been likewise, vulnerable to increasing energy prices. The overall response of island states within the region to oil price shocks has therefore almost been identical to that of Pacific nations, in terms of seeking to transition to alternative energy sources. Notwithstanding the energy supply difficulties for SIDS in general, one notable difference lies in the important role that oil and gas producers in and around the Caribbean (in the past and at present) played in terms of stabilising energy supply and coping with oil price volatility in this region. This is particularly the case with regards to Trinidad & Tobago, the only island nation in the region that has been a long standing exporter of hydrocarbons14. With regards to original ownership in the sector, Witter (2002) et al, assert that ―the traditional export sectors of SIDS were originally established by foreign investors‖. The oil and gas sector in Trinidad and Tobago was no different.

13 Though the supply of fuel to its outer islands is made more costly due to transportation, oil price volatility in Papua New Guinea is offset to some degree by its indigenous petroleum resources. 14 It may be useful to note however that there are other oil producers in the Caribbean; though primarily for domestic use and on smaller scale. In 2010, Barbados produced 850 barrels of oil per day (b/d) while Suriname and Belize both produced 16,000 b/d and 4,300 b/d respectively. By comparison, Trinidad and Tobago‘s oil production stood at 102,718 for the same year. For more see: Caribbean Community (CARICOM) Secretariat 2010. Petroleum and Gas Briefs. CC Energy: CARICOM Energy Programme Quarterly Newsletter. Turkeyen, Guyana: CARICOM Energy Programme. 44

National ownership and participation only occurred after independence in 1962 via the acquisition of local producing assets in the oil industry. Undoubtedly however, the energy sector in Trinidad & Tobago has not only afforded the island nation the opportunity to exercise a measure of geopolitical and economic prominence in the region, but also to assist other island states in the Caribbean that have been adversely affected by oil price volatility and supply shortages. Being able to source petroleum from within the region has the practical benefit of helping to reduce overall transportation costs to other Caribbean nations. Further, island economies in the region have at times also benefited from concessionary mechanisms offered by relatively nearby oil producing nations, namely Venezuela & Mexico. As an example, following the first oil shock in 1973 the governments of Mexico and Venezuela came together to make funds available with relatively generous and differed payment conditions (i.e. ‗soft financing‘) under the Ven/Mex Oil Facility to Caribbean nations. That said, in 1980, as explained by Bryan (2011), Trinidad and Tobago ―offered its own CARICOM Oil Facility which provided for the incremental purchases of oil, fertiliser, and asphalt from [Trinidad and Tobago] at 1979 prices‖. Indeed, these forms of functional cooperation have continued to feature in the region.

In 2004, the Trinidad and Tobago Petroleum Fund was launched as a grant facility to be made available to CARICOM member states that were experiencing economic hardship because of persistently high oil prices. The stated aims of the fund include economic development and poverty alleviation (Bryan, 2011; Caribbean Community (CARICOM) Secretariat, 2006). A year later, PetroCaribe was established by the government of Venezuela, allowing Caribbean nations to purchase oil at set prices under a deferred payment scheme. One significant difference between the earlier Ven/Mex Oil Facility and PetroCaribe is that the latter also included direct assistance with transportation and storage of petroleum products, thus helping to stabilise the cost of transport by removing the need for private sector participation in this sector. Though Bryan (2011) suspects that these initiatives were and possibly still are manifestations of geo-political rivalry, measures of this nature perhaps do assist the island economies of the Caribbean to respond to supply shortages and oil price volatility (Williams, 2011, Thesis Interview; Broderick, 2011). That said, concessionary mechanisms like the Trinidad and Tobago Petroleum Fund and Petro-Caribe may also have had the added effect of making fossil fuels more accessible or affordable for Caribbean nations, thus making the need to transition to sustainable energy sources appear less urgent.

3.4.2 Dependence on fossil fuels

Energy consumption for commercial purposes in the Caribbean and Pacific is now largely dominated by imported fossil fuels15. In the Caribbean, according to a Benchmark Study of Caribbean Utilities conducted in 2009; 98 percent of primary energy consumption in the region is thought to be fossil fuel based (KEMA, 2010) (see Figure 3-3). Similarly, a Pacific Regional Energy Assessment noted that Pacific Island Countries are ―overwhelmingly dependent on imported petroleum fuels for commercial energy for transport, electricity, business and households though

15 Trinidad and Tobago, which is a longstanding producer and exporter of Oil and Gas, is an exception in this regard. 45 hydropower has been a significant contributor in the larger countries‖ (Wade et al., 2005). In this regard, fossil fuels have been estimated to comprise around 85percent of total energy consumption in the Pacific, with oil accounting for 76 percent of that fraction (Asia-Pacific Economic Cooperation and Asian Development Bank, 2009; Secretariat of the Pacific Community, 2010) (see Figure 3-2). Energy consumption in either region can therefore be described as being ―petroleum intensive‖. One notable difference between the two regions, however, is that biomass is still commonly used for domestic cooking and some agricultural drying (particularly for copra) in the Pacific – though the degree of utilisation varies by country (Wade et al., 2005).

Figure 3-3: Energy Mix in the Caribbean (2009) Figure 3-2: Energy Mix in the Pacific (2006) Source: KEMA, 2010 Source: (Asia-Pacific Economic Cooperation and Asian

Development Bank, 2009; Secretariat of the Pacific

Community, 2010)1

In fact, the per capita consumption of petroleum products in SIDS as a group is over double that of many larger developing economies, such as members of the BRICS grouping (Brazil, Russia, India, China and South Africa, see Figure 3-4). The emphasis on liquid fuels has been partly due to the inability of SIDS to access the economies of scale enjoyed via the use of a large coal steam generation plant for electricity production which has resulted in a reliance on small-scale diesel electricity generation devices. Similarly, the inability of SIDS to pursue nuclear energy use16 also contributes to dependence upon liquid fuels for power generation (especially in the absence of a reasonable magnitude of hydroelectric resources).

Figure 3-4: Total per capita consumption of Petroleum Products: 2005 -2008 Source: Energy Information Administration, 2010

This dependence on conventional (mainly liquid) fuels is indeed reflected in the modes of electricity generation in SIDS (see Table 3-1). As illustrated in Table 3-1, while the magnitude and means of electricity generation in SIDS is rather heterogeneous (and ranges from approximately 3GWh (Niue) per annum to in excess of 6,986 GWh per annum (Jamaica)) – the proclivity toward conventional thermal generation is obvious.

16 Electricity generation using nuclear energy is not only capital intensive, but it requires a considerable degree of technical expertise to operate and maintain. As a dearth of financial and human resources is a major contributing factor to the current lack of indigenous investment in RETs by SIDS, similar undertakings in nuclear energy are highly unlikely. 48

Table 3-1: Net Electricity Generation by Type in selected SIDS - 2008

Percent Distribution (2008) Country Thermal17 Hydro Non-hydro renewable18

Antigua and Barbuda 100.0 0.0 0.0 Bahamas, The 100.0 0.0 0.0 Barbados 100.0 0.0 0.0 Belize 5.1 94.9 0.0 Cook Islands 100.0 0.0 0.0 Dominica 63.2 36.8 0.0 Fiji 29.0 71.0 0.0 Grenada 100.0 0.0 0.0 Guyana 100.0 0.0 0.0 Haiti 61.6 38.4 0.0 Jamaica 95.9 2.1 2.0 Kiribati 100.0 0.0 0.0 Nauru 100.0 0.0 0.0 Niue 100.0 0.0 0.0 Papua New Guinea 69.6 30.4 0.0 St. Kitts and Nevis 100.0 0.0 0.0 St. Lucia 100.0 0.0 0.0 St. Vincent/Grenadines 82.2 17.8 0.0 Samoa 54.7 45.3 0.0 Solomon Islands 100.0 0.0 0.0 Suriname 44.6 55.4 0.0 Tonga 100.0 0.0 0.0 Trinidad and Tobago 99.9 0.0 0.1 Vanuatu 100.0 0.0 0.0

Source: Energy Information Administration, 2011

It is therefore clear that increased electricity demand in SIDS, unless satisfied via renewable or nuclear energy19, will not only exacerbate their reliance on fossil fuels and add to their greenhouse gas emissions but will also augment global demand for fossil fuels, which are finite. Thus, the current proclivity to conventional thermal electricity generation (using oil, gas or coal) is certain to make the power sector in these island nations more vulnerable to volatile fossil fuel prices and to possible greenhouse gas emission penalties in the future, should these economies continue to grow. This problem is also very important in light of the finite nature of fossil fuels themselves. As the

17 Electricity generated from coal, oil, and gas. 18 Includes electricity generated from geothermal, solar, wind, and biomass and waste. 19 Electricity generation using nuclear energy is not only capital intensive, but it requires a considerable degree of technical expertise to operate and maintain. As a dearth of financial and human resources is a major contributing factor to the current lack of indigenous investment in RETs by SIDS, similar undertakings in nuclear energy are highly unlikely. 49 available supply of conventional fuels in the world begins to tighten, fuels may become accessible only to those with access to large secure stocks within their borders or those with sufficient financial resources to purchase them on the open market.

3.4.3 Why fossil fuel dependence is concerning – climate change & peak oil

The term ‗climate change‘ as defined in the United Nations Framework Convention on Climate Change (1992) ―means a change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods.” It is now increasingly clear that the Earth’s changing climate is being driven primarily due to human activities, especially those related to the burning of fossil fuels (Anderegg et al., 2010; Catton, 2009; Doran and Zimmerman, 2009; Intergovernmental Panel on Climate Change, 2007; Venema and Rehman, 2007). Global dependence on petroleum is therefore not only economically expensive, but ecologically costly as increasing exploitation of fossil fuel resources will continue to empty tonnes of carbon dioxide (CO2) into the atmosphere, contributing to a warmer planet. The impacts of these changes will include, but not be limited to, the creation of drought-prone regions in different parts of the world as a result of shifting climatic zones and the erosion of the West Antarctic ice sheet, with a consequent worldwide rise in sea level (Hansen, 2009; Hansen et al., 1981; Intergovernmental Panel on Climate Change, 2001; Intergovernmental Panel on Climate Change, 2007). The implications and costs of the subsequent natural disasters, biodiversity loss and inundation have been estimated to be staggeringly high. In fact, it is argued that the costs of climate change on economic and social activities will be on a “scale similar to those associated with the great wars and the economic depression of the first half of the 20th century” (Stern, 2006).

Equally linked to an incessant dependence on fossil fuels is the issue of peak oil. Peak oil refers to the transition from a period of easily attainable and affordable oil, to a period characterised by a declining global annual supply of petroleum (Heinberg, 2006b). It refers to that ―moment in time when the world will achieve its maximum rate of extraction; from then on...the amount of petroleum available to society on a daily or yearly basis will begin to dwindle‖ (Heinberg, 2007). This scenario reflects the reality that fossil fuels, like all other natural resources, are finite, and will eventually become scarce. In the case of oil and gas, it is not merely the absence of fossil fuels in situ that brings about a shortage of supply, but rather, it is the depletion of easily attainable petroleum. The inevitable dearth of fossil fuels that will face the global economy will as such be brought about by the vast amount of capital, technical, physical and human resources necessary to extract and produce less and less oil. In addition, two other considerations are important. The first is that the energy returned on energy invested (EROEI) for oil is also declining. The EROEI is the ratio of the energy obtained from oil to the energy needed to afford its discovery, extraction and conversion to a useable liquid fuel. The second is that many of the oil producing nations with cheap local fuel costs are still increasing consumption and typically also have high population growth rates. These considerations suggest that the availability of oil on the open market will be increasingly constrained. Put simply therefore, peak oil is meant to point to the

50 realisation of a global maximum of oil production, (Aleklett et al., 2009) before the extraction of petroleum declines due to uneconomical or prohibitive costs.

3.4.4 Mitigating impacts of climate change & peak oil - the role of renewable energy

Enhancing the development and deployment of renewable energy technologies (RETs) is essential to mitigating the socio-economic impacts of climate change and peak oil. Renewable energy use has the potential to simultaneously reduce carbon dioxide emissions and dependence on fossil fuels. Further, renewable energy options make use of indigenous energy sources, which can serve to reduce the (ever-fluctuating) cost of fuel imports and help to stabilise local balance of payments and expenditure on foreign exchange. Perhaps even more importantly, RETs have the overall effect of enhancing what Weisser (2004b)refers to as the ―three pillars of national energy policy: (i) economic efficiency, (ii) environmental performance and (iii) security and diversity of supply‖. This is largely due to the fact (as mentioned earlier) that avoided emissions and fuel costs make RETs economically and environmentally attractive in the medium to long term. In sum therefore, if the dependence of SIDS on fossil fuels is to be arrested, greater deployment of RETs is required.

Notwithstanding the above, very significant reductions in greenhouse gas emissions and overall energy consumption can be achieved through measures aimed at enhancing energy efficiency (Intergovernmental Panel on Climate Change, 2001; Carpio et al., 2010). Policy mechanisms that facilitate the installation of energy saving devices as well as the retrofitting or replacement of inefficient technologies should therefore be encouraged as a means of reducing total energy demand. However, making energy conserving technologies more accessible will not guarantee decreases in emissions or total energy demand if unaccompanied by substantial public education aimed at bringing about behavioural changes with respect to energy use (Niles, 2010). This is largely due to the fact that energy efficient technology in and of itself will not decrease energy demand, if such technologies are utilised inefficiently (Herring and Sorrell, 2008). Thus, in addition to clear and robust policy mechanisms, public engagement on the importance of decreasing energy consumption and carbon emissions is essential.

3.5 Development Constraints in SIDS

It has been well documented that even if we were to ignore the impacts of climate change and peak oil on SIDS, the development constraints faced by these island nations would still be considerable. SIDS face unique challenges that are largely related to their size, limited resource base and (in many instances) remote location. As suggested earlier, one of the key barriers that SIDS face is their typically narrow resource base. Limited human, natural, financial and technical resources often result in existing endowments being stretched and over exploited. In fact, according to Briguglio(1995), economic development in SIDS has already brought some of these nations to the point of depletion or near depletion of their fixed natural resources, as has occurred ―in the case of Fiji (gold), Vanuatu (manganese), Haiti (bauxite), Nauru (phosphate) and Trinidad and Tobago (oil)‖ (Briguglio, 1995).

3.5.1 Geographical Isolation

The relative isolation and geographically scattered nature of island nations in the Caribbean and Pacific regions (but particularly in the latter) constitutes a significant barrier to development as many SIDS often lie far from major international shipping and transportation routes (Briguglio, 1995). Having to divert from these routes usually adds large transportation costs, not merely from external suppliers (oil companies, in the case of the energy sector) to the respective country but also from internal distributors to the different islands that comprise the state (in the case of multi-island countries) (The University of the West Indies Centre for Environment and Development, 2003). The remoteness of some island economies is considerable given that SIDS rely entirely upon air and/or sea transportation to import and export goods and services. Thus, relative geographical isolation often increases the per-unit cost of imports and can bring about significant time delays and lapses in the delivery of products (Briguglio, 1995; World Bank, 2009d). The Republic of Kiribati perhaps provides an appropriate case in point in this regard. This island economy is comprised of 33 low-lying atolls divided into three island groups (the Gilbert Islands, the Line Islands and the Phoenix Islands) spread across an Exclusive Economic Zone of approximately 3,550,000 square kilometres (The Paciﬁc Islands Trade and Investment Commission, 2008). It can therefore take several weeks to travel by sea, from one atoll or island to another. Additional transportation costs may as such be significant. In addition, due to low population densities in the outlying islands, the range and frequency of transport services are often low.

Hence, within the context of a sustainable energy transition in the power sector, acquiring renewable energy technologies may be considerably more costly in SIDS after transportation costs are added. Aside from the cost incurred in transporting energy devices to SIDS, the additional expenditure incurred through having to import necessary foreign expertise to install, operate and/or maintain the technology (even initially) as well engage in training activities to build local capacity often adds yet another dimension of expenses.

Even more importantly, geographical isolation also has an adverse impact on the ability of SIDS to respond to sudden (or even gradual) shortfalls in international oil supply. Weisser (2004a) notes that the ―remoteness and size of SIDS‘s petroleum market makes service and transport expensive and reduces the number of potential suppliers, thereby minimising competition‖ (Weisser, 2004a). Any circumstance which leads to higher oil prices, such as instability in major oil producing countries – like those in the Middle East for example - may create a situation where the supply of oil to more remote islands becomes even more sporadic than it is at present (which would by extension adversely affect the reliability of their electricity supply). The ability of SIDS to respond effectively to high oil prices is weakened further by a lack of petroleum storage facilities in many SIDS, especially in the Pacific region, which reduces the capacity of such nations to make bulk purchases in an attempt to benefit from economies of scale.

3.5.2 Dependence on Foreign Sources of Finance

Briguglio (1995), in noting the great degree of dependence of some islands on foreign sources of funding, asserts that ―[financial] inflows from abroad have permitted many SIDS to attain high standards of living and to offset trade deficits.‖ Development assistance has indeed become an essential source of finance in SIDS, as it provides funds for capital intensive activities and investments, and serves as a valuable source of foreign exchange inflows (though not in the long term – in the case of loans awarded in foreign currencies). The contribution of Official Development Assistance (ODA) to Gross National Income in a number of SIDS is therefore illustrated in Figure 3-5. As it pertains to the energy sector, Yu and Taplin (1998) note that without the considerable cash inflow from foreign aid, tourism, and remittances from citizens working abroad, many SIDS would be incapable of financing their commercial energy imports.

Figure 3-5: Official Development Assistance to SIDS as a percentage of GNI (2010) Source: World Bank, 2012

The dependence of SIDS on Official Development Assistance (ODA) was aptly explored by Poirine (1999) who found that ―small island countries with a population of less than 1 million receive on average nine times more aid per capita than do other less- developed countries, even though their average per capita GNP (often) is much higher‖ (as illustrated in Figure 3-6). If peak oil does indeed bring about increases in fuel prices or economic hardship in donor countries, as suggested by many peak oil analysts (Campbell, 2006; Hall and Klitgaard, 2011; Heinberg, 2006b; Heinberg, 2006a), sustaining existing overseas development assistance budgets will become an increasingly challenging task. If such financial transfers decrease, recipient nations like SIDS will have less revenue to purchase more expensive oil.

Figure 3-6: Chart comparing Official Development Assistance among SIDS, Sub-Saharan Africa, World & Least Developed Countries Source: World Bank, 2012

In addition to formal aid transmission, informal remittances20 (usually from relatives living in traditional donor nations, such as the USA, UK, New Zealand and Australia) may also be adversely affected as donor nations are likely to face higher energy costs and economic hardship making it more difficult for persons there to be able to send funds back home. Such an eventuality is important to consider, as remittances tend to be highly valued in SIDS, where they are said to contribute to increased incomes and higher living standards (Brown and Ahlburg, 1999; Connell and Brown, 2005; Connell and Conway, 2000; Jayaraman et al., 2010). In this regard, the particular reliance of some SIDS on remittances is worth mentioning. Amuedo-Dorantes (2010) notes that in 2007 remittances accounted for a significant portion of GDP for a number of SIDS (Dominica 8 percent, Jamaica 19.4 percent and Haiti 20 percent for example). In the Pacific region, remittances represent around 60 percent (Tonga), 50 percent (Samoa), and 15 percent (Kiribati) of foreign exchange earnings (World Bank, 2010b). As a case in point, and indicative of the vulnerability associated with dependence on remittances, the global economic recession of 2008 – 2009 brought about a 15 percent decrease in receipts of remittances to Tonga, contributing to a significant economic slowdown in the island economy (World Bank, 2010b).

20Remittances (sometimes called migrant remittances) is broadly defined by the International Organisation for Migration as “monetary transfers that a migrant makes to the country of origin.‖ International Organisation for Migration. Iom and Remittances: Definition, Scale and Importance of Remittances. Available: http://www.iom.int/jahia/webdav/site/myjahiasite/shared/shared/mainsite/published_docs/brochures_and_ info_sheets/IOM_Remittance_eng_pdf.pdf [Accessed 1 October 2012]. For more on the definition of remittances see: Alfieri, A. & Havinga, I. 2006. Issue Paper: Definition of Remittances. Available: http://unstats.un.org/unsd/tradeserv/tsg3-feb06/tsg0602-14.pdf [Accessed 1 October 2012]. 54

In this regard, it should be observed that some commentators do not view the overall reliance of island economies on aid and other forms of external income inflows (like remittances) as negative (Bertram and Watters, 1985)21, as they argue that this form of wealth transfer can be sustained through sound socio-economic policies (Bertram, 1993; Bertram, 2006; Poirine, 1998). This school of thought views remittances and international development assistance as ‗entitlements‘ that greatly serve to supplement domestic incomes and are foundational to stimulating the local economy (particularly in the Pacific) (Bertram and Watters, 1985).

Regardless of the above, it should be noted that if SIDS are faced with decreasing receipts of development aid and remittances accompanied by higher oil prices, then borrowing from commercial banks or international lending institutions may be one of the few means of financing their energy import bill (Weisser, 2004a). Unfortunately, though such a strategy may help to alleviate short term pressures to meet energy demands, borrowing would more than likely lead to long-term debt accumulation. Such a scenario would be particularly undesirable as external debt levels among SIDS have already increased within the recent past (see Figure 3-7and Figure 3-8).

Figure 3-7: Averaged annual percentage change in Total External Debt per capita (1990 - 2006) Source: World Resources Institute, 2010

21 Proposed as a model explaining small island economies in the South Pacific; Migration, Remittances, Aid and Bureaucracy (MIRAB) was advanced to highlight the major sources of income in these nations; see ―Bertram, G. & Watters, R. F. 1985. The Mirab Economy in South Pacific Microstates. Pacific viewpoint, 26, 497-519.‖ 55

Figure 3-8: Comparative averaged annual percentage Change in Total External Debt per capita (1994 - 2006) Source: World Resources Institute, 2010

3.5.3 Population Growth

The task of resource allocation has been critical in nations like SIDS that face very severe physical and human resource limitations due to their small size. This concern becomes even more pronounced when one considers the modest but steady population growth in these nations in the recent past, particularly during the last decade (see Figure 3-9 and Figure 3-10). The average rates of population growth of all SIDS worldwide are comparatively greater than other regions of the world except for less developed countries (see Figure 3-10). However, it can also be observed that the population growth in most of the SIDS considered in this study (Figure 3-9) is on average not as high as the overall average population growth in all SIDS across the globe (Figure 3-10). That said, even modest population growth still creates a scenario where there are ‗more mouths to feed‘ and as such will result in increased demand for goods and services, along with an associated increased demand for energy services (including electricity) (Holmgren, 2009).The key problem here is that the already narrow resource base in most SIDS is not expanding at a rate necessary to facilitate increased growth per capita (Seidl and Tisdell, 1999; Malthus, 1798). As a result, increased consumption (due to in part to larger population sizes, but also to increasing income levels) is likely to lead to demand beyond existing carrying capacity, which, by extension, is likely to result in ecological degradation and resource depletion (Daly, 1992; Lloyd and Subbarao, 2009). Conversely, it would be remiss not to mention that in a few cases, significant outward migration in a number of SIDS, can have the effect of alleviating concerns related to overpopulation in small island nations to a degree (McKee and Tisdell, 1988).

Figure 3-9: Averaged annual percentage changes in population in selected SIDS (2004-2008) *N.B: Population decrease in the Cook Islands likely to be due to the historically significant emigration to New Zealand (Spoonley, 2004; Walrond, 2009)

Source: Energy Information Administration, 2010

Figure 3-10: Averaged annual percentage population changes (2000 – 2009) Source: Energy Information Administration, 2010

3.5.4 Vulnerability to Natural Disasters

SIDS are extremely vulnerable to natural disasters such as hurricanes, earthquakes and volcanic eruptions (due in part to their geography, narrow resource base and relative remoteness) (Briguglio, 1995). According to the Intergovernmental Panel on Climate Change(2007), weather driven events such as hurricanes are likely to become more frequent and more intense, which, if accompanied by sea level rise (as is expected) (Hansen and Sato, 2011; McCarthy, 2001), will exacerbate flood water inundation, coastal erosion and other coastal hazards while threatening vital infrastructure, settlements and facilities that support the livelihood of island communities (Mimura et al., 2007). Indeed, inundation due to rising sea levels has already displaced and prompted the relocation of communities in Vanuatu and Cuba (Sem, 2007; United Nations Framework Convention on Climate Change, 2007b) and of entire islands in the Pacific, such as the Carteret Islands of Papua New Guinea (The Office of the United Nations High Commissioner for Refugees, 2009).

Moreover, it is the exposure of small islands to these impacts that makes the possibility of decreased access to energy resources an even greater concern, as liquid fossil fuels are often required, inter alia, to operate emergency earth moving and food distribution vehicles and rescue equipment. Electricity is also often needed for emergency communications and to power hospitals, for example. In this case, peak oil itself may also reduce the adaptive capacity of SIDS to respond to climate change. Additionally, more frequent and intense natural hazards may further complicate the transportation of fuels to small islands (Organization of American States, 2000) and could potentially increase the cost of insurance to shipping companies. This could by extension decrease their willingness to deliver to remote locations, especially during a period where oil is relatively scarce and there are many potential buyers with greater purchasing power in easily accessed locations. In such cases, climate change impacts may well weaken the resilience of SIDS faced with the reality of peak oil. One could therefore posit that SIDS may soon find themselves in the midst of interlocking and mutually reinforcing forces of climate change and peak oil, with both these anthropogenically-driven factors weakening the ability of island economies to respond to either.

3.6 Mutually reinforcing impacts of climate change & peak oil on Tourism & Agriculture

Given that the effects of climate change and peak oil are likely to be mutually reinforcing, the section that follows explores the anticipated impacts of these phenomena on two key sectors in the Caribbean and Pacific, namely tourism and agriculture. Having already described a number of macro-level economic and physical repercussions of climate change and peak oil, the section which follows seeks to give specific insight into two sectors which have traditionally been primary revenue-earning contributors to GDP. The potential adverse effects of both climate change and peak oil on tourism and agriculture are therefore highlighted and illustrated.

3.6.1.1 Tourism

The economic importance of tourism in the Caribbean and Pacific regions is well established. The islands of both regions (especially in the Caribbean) are known for their dependence on the sector (Apostolopoulos and Gayle, 2002; Clayton, 2009; Gayle and Goodrich, 1993; Hall, 2007) not only for its contribution to gross domestic product but also to foreign exchange earnings. In the Caribbean, according to Apostolopoulos and Gayle (2002) tourism accounted for over 25 percent of the region‘s earnings and often represents around 90 percent of all exports (foreign exchange earnings). In fact, Niles (2010) notes that, in 2007, in the nations that comprise the Organization of Eastern Caribbean States (OECS)22 ―the tourism sector accounted for an estimated 45 percent of GDP, and around 60 percent of foreign exchange earnings‖. In the Pacific, although the development of the industry has been slower than in the Caribbean, its importance should not be underestimated. In Fiji, for example, where agriculture (the sugar industry) has traditionally been the mainstay of the economy, Becken (2005) notes that in 1998 ―tourism earned F$568 million in foreign exchange, while sugar only earned F$244 million‖. Similarly, in Samoa tourism was described as the single largest economic activity in the service sector and the fastest growing sector in Vanuatu ―having comprised 40 percent of GDP in 2000‖ (Shareef et al., 2008).

22 The Organization of Eastern Caribbean States (OECS) comprises Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. 59

Figure 3-11: Percentage of GDP from Tourism in 2005 Source: (United Nations World Tourism Organisation, 2007)

As can be observed in Figure 3-11, the tourism sector accounted for more than 15 percent of GDP in most of the SIDS examined23. As these nations already grapple with the limitations of having a narrow resource base, being able to utilise the abundance of ‗sun, sea and sand‘ within their borders to attract visitors often represents a vital source of national income and government revenue. In this regard, the impacts of both climate change and peak oil on the tourism sector are worthy of note. The diagram below (Figure 3-12) attempts to illustrate these impacts - which can occur simultaneously, and at times be mutually reinforcing. As mentioned earlier, peak oil is likely to cause oil supply disruptions which will increase the demand for petroleum and with it, energy prices. Having to pay higher prices for energy often causes consumers to reduce their demand for other goods and services which often results in major economic contraction or, even worse, recession (Campbell, 2000; Campbell, 2006; Heinberg, 2006b).

In the case of tourism, higher energy prices globally are likely to impact negatively on the demand for non-essential items, such as holidays – particularly in small islands in the Caribbean and Pacific which are often regarded as ‗exotic‘ or ‗luxury‘ vacation destinations. Furthermore, higher oil prices will make the cost of travel more expensive, which is likely to make long-haul flights to more remote island nations very costly. As explained by Rubin (2009), when faced with higher fuel prices, ―people will travel less frequently, and when they do travel, they will travel closer to home‖ (Rubin, 2009). In addition, efforts by SIDS to increase their use of biomass as fuel substitute (in order to reduce energy costs) could place pressure on the existing stock of flora, which could

23 Data was not available for the Bahamas, Kiribati, Federated States of Micronesia, Niue, Palau and Solomon Islands. 60 contribute to biodiversity loss and have adverse impacts on ecotourism activities (Figure 3-12).

Simultaneously, climate change is expected to bring about more intense and frequent hurricanes in the Caribbean and Pacific (Mimura et al., 2007). Not only are storm- ravaged islands unattractive to tourists but vital infrastructure and buildings (which are often located near to the sea) are likely to be damaged and inundated. For example, in Barbados 70 per cent of hotels are said to be located within 250 metres of the high water mark which suggests that many are within the inundation zone and at risk of significant structural damage (United Nations Framework Convention on Climate Change, 2007a). Moreover, even if physical damage is contained, more frequent cyclones may make shipping more dangerous and complicated, resulting in greater delays and increased insurance premiums. To add to this, mitigation policies such as carbon taxes on international travel (like the British Air Passenger Duty24, for example) will also increase the cost of visits to long-haul destinations (such as those in the Caribbean and Pacific) making them less competitive than other locations that are closer to source markets (Niles, 2010). Further, sea level rise threatens the existence of coral reefs and beaches, which are not only vital to the tourism sector but to biodiversity as well. Droughts are also expected to become more frequent which will reduce the amount of energy available from hydropower.

Figure 3-12: Diagram showing some of the impacts of Peak Oil and Climate Change on the Tourism sector in SIDS

24 The British Air Passenger Duty (quite apart from the EU – Emissions Trading Scheme), is essentially a carbon tax levied on all international air travel from the United Kingdom. For more on the Air Passenger Duty, and its impact on Caribbean small island states, see: Niles, K. 2010. Resilience Amidst Rising Tides: Climate Change and Competitiveness in the Tourism Sector in the Caribbean. Geneva, Switzerland: International Centre for Trade and Sustainable Development. 61

In spite of the above, it would be remiss not to highlight that a warmer planet (resulting in an increased demand for space cooling) coupled with increased electricity tariffs that could result from higher oil prices is likely to bring about pressure to increase energy efficiency, at the level of the consumer and electricity utilities. Efforts to enhance efficiency can encourage greater utilisation of energy-conserving appliances and can also help to dampen or even reduce overall demand for electricity.

3.6.1.2 Agriculture

The economic prominence of the agricultural sector in SIDS decreased considerably in the twentieth century (Conway, 2002) following the relative decline in the occurrence of large scale plantation monoculture (dominated by sugar or banana cultivation) in the Caribbean and Pacific, accompanied by preferential treatment in metropolitan markets. Yet still, the agricultural sector is vital not only for its economic contribution to Gross Domestic Product (GDP), but more importantly, for its implications for food security. It should be noted that agricultural activity, for subsistence purposes and as a commercial enterprise, is more prominent in the Pacific region. As can be observed in Figure 3-13, the sector‘s contribution to GDP is above 20 percent in Vanuatu, Guyana, Kiribati, Papua New Guinea and the Solomon Islands and above 10 percent in Samoa, Dominica and Fiji. The competitiveness of the agricultural sector in SIDS is, to a large degree, curtailed by their small size, limited resource base, competition for land use and their inability to benefit from economies of scale. To add to this, the remoteness of many SIDS often makes food imports costly (Witter et al., 2002), which makes the viability of the local food production even more important.

Figure 3-13: Percentage of GDP from Agriculture in 2007 *Data represents value-added agriculture, i.e. the net output of a sector after adding up all outputs and subtracting intermediate inputs

Source: World Bank, 2012

Regrettably, climate change and peak oil are likely to exacerbate the already vulnerable agricultural sector in SIDS. To begin, (as illustrated in Figure 3-14) peak oil is expected to increase the price of inputs frequently used in the agricultural sector, such as pesticides, fertiliser and for transport and agricultural machinery (since these require oil or gas to be produced). Hence, if the prices of pesticides and fertiliser do increase, so will food prices – as occurred globally during the spike in oil prices in 2008 (Heinberg, 2011b). Increased international food prices will be particularly deleterious for remote islands that already face high food import bills. Moreover, if sustained high energy prices bring about global economic contraction, the demand for agricultural exports from SIDS may be adversely affected. This is likely to be exacerbated by the fact that high oil prices will also increase the cost of international transport which will make agricultural (and other) products from island nations more expensive and as result, less competitive. Likewise, as oil prices rise, pressure to find fuel substitutes using biomass could result in a greater emphasis on the cultivation of energy crops – which could displace, or be integrated with, food production (via intercropping of food and energy crops, such as vanilla and jatropha, for example). Regardless, greater use of biomass will almost certainly place further stresses on the already declining stock of flora (agricultural and forest) in SIDS (see Figure 3-15).

Figure 3-14: Diagram showing some of the impacts of Peak Oil and Climate Change on the Agricultural Sector in SIDS

Figure 3-15: Averaged annual percentage change in Total Forest Area in Selected SIDS (2000-2005)

Simultaneously, more frequent and intense hurricanes brought about by anthropogenic climate change are likely to lead to crop destruction and inundation. More frequent periods of drought will also pose a significant challenge to the agricultural sector in SIDS, not only due to the direct impact upon crop welfare, but also due to the wider strain that it places on water resources. This is significant, as a decline in precipitation could lead to a fall in the production of rain-fed crops (United Nations Framework Convention on Climate Change, 2007a). Climate change is also expected to result in higher sea levels which might result in crop inundation and increased levels of soil salinity which by extension, would contribute to reduced agricultural yields (Mimura et al., 2007). In addition, a warmer climate does contribute to a considerable degree of pragmatic uncertainty with regards to which crops should be cultivated and when. Decisions pertaining to crop choices have wider implications for domestic food security, and also tends to raise concerns related to securing new export markets. Since the Caribbean and Pacific regions have both benefited from preferential treatment in key markets for specific items (such as bananas and sugar) in the past25, finding new crops

25 For example, under the Lome Conventions and Cotonou Agreement, the EU extended preferential treatment on specific agricultural goods on a Duty-Free, Quota-Free basis to the African, Caribbean and Pacific nations. For more on these conventions see: European Commission 2006. Partnership Agreement Acp-Ec. Signed in Cotonou on 23 June 2000, Revised in Luxembourg on 25 June 2005. Luxembourg: Office for Official Publications of the European Communities, European Community and the African, C., Pacific (ACP) States, 1975. Lomé I Convention. Lomé, Togo: European Community, European Community and the African, C., Pacific (ACP) States, 1979. Lomé Ii Convention. Lomé, Togo: European Community, European Community and the African, C., Pacific (ACP) States, 1984. Lomé Iii Convention. Lomé, Togo: European Community, European Community and the African, C., Pacific (ACP) States, 64 that can be viably exported may constitute a significant challenge. Mitigating the adverse effects of altered crop selections on biodiversity also represents an important consideration. Further, climatic changes may also result in the introduction of new or different pests (and diseases) which may affect crop yields (United Nations Framework Convention on Climate Change, 2007a).

3.7 International Aid – context

It is within this context of vulnerability and exposure (of key sectors) to external shocks that the role of international aid will be situated. As mentioned earlier, SIDS are significantly dependent upon international aid, not simply for the execution of energy projects but also to provide foreign exchange and to fulfil human and technical resource needs (Gounder, 2001). SIDS also receive considerably more international aid than less developed nations (if economic development is measured by average GNP per capita) as illustrated in Figure 3-6 (Poirine, 1999).When coupled with the tradition of dependence developed over time (as detailed in Chapter 3), a clearer picture of the high degree of reliance that SIDS have upon aid emerges. Most SIDS can therefore be safely described as being ‗aid dependent‘. Bräutigam (2000) defines aid dependence as ―a situation in which a country cannot perform many of the core functions of government, such as operations and maintenance, or the delivery of basic public services, without foreign aid funding and expertise‖. While the severity of this description may not be true of every island economy in the Caribbean or Pacific, or even of every sector, what is certain is that capital intensive acquisitions often cannot be pursued without the intervention of a donor agency. Thus, this research will show that in some cases, energy-related infrastructure is rarely ever acquired in either region without the insertion of funds from donor entities.

In light of the above, in order for a transition to renewable energy technologies to occur, the insertion of specialist knowledge along with significant quantities of investment capital is usually required. It is therefore important to account for the impacts that climate change and peak oil are likely to have not just on the economy or the energy sector but also on the provision of aid itself (as mentioned earlier). Having placed the aid reliance of SIDS within the context of their development challenges and vulnerabilities to external shocks (namely climate change and peak oil), what follows therefore is a detailed description of aid disbursements to the energy sector in Caribbean and Pacific SIDS between 1970 and 2010.

3.8 Summary

It should be recalled that one impact of the era of colonialism, was that it essentially transformed self sufficient islands into imperial outposts which produced raw materials for export to more developed nations where they would be consumed or processed to manufacture goods that were of greater value. This emphasis converted the historically self sufficient islands into net energy importers. When placed within the context of the limited terrestrial natural resource endowments of island economies attempting to develop domestic manufacturing industries, the export-orientation of SIDS helps to

1990. Lomé Iv Convention. Lomé, Togo: European Community, European Community and the African, C., Pacific (ACP) States, 1995. Lomé Iv Convention (Revised). Lomé, Togo: European Community. 65 explain their reliance on more developed nations for more sophisticated, and quite often, more expensive goods and technology, including renewable energy devices. The initial and on-going export-orientation of SIDS also helps to explain the dependence of Caribbean and Pacific nations on foreign sources of finance (including international aid and private investment).

Small island economies, by their very nature, face significant human, natural, institutional and financial resource constraints. These constraints to their development include geographical isolation, vulnerability to natural disasters and a high degree of dependence upon external sources of finance. These development challenges, along with the small size of these markets make it more expensive and risky to conduct business within SIDS, which makes it difficult to attract private investment to the power sector. The inability of many SIDS to attract private sector funding or participation in the power sector, as well as the limited financial resources of SIDS makes acquiring renewable energy technologies very challenging, and in effect, increases their reliance on donor entities to make capital investments. Moreover, climate change and peak oil represent two anthropogenically-driven interlocking and mutually reinforcing forces, which both weaken the ability of island economies to respond to either.

Further, key sectors within SIDS, namely tourism and agriculture, are likely to be adversely affected by the impacts of climate change and peak oil. If these sectors are indeed weakened, the ability of SIDS to generate revenue will also be curtailed. Since SIDS are already characterised by limited domestic financial resources and a dependence on external sources of finance, reduced receipts from tourism and agriculture will almost certainly exacerbate the dependence of Caribbean and Pacific SIDS on funding from donor entities. It is from within this framework, that the role of international aid to the energy sector in the Caribbean (between 1970 and 2010) is explored in Chapter 4, Chapter 5 and Chapter 6 (the Results and Discussion chapters).

Chapter 4. Results (Project Data)

4.1 Introduction

This chapter serves to showcase the major findings of the survey of energy projects in the Caribbean and Pacific undertaken as a part of this research, in which donor entities were involved between 1970 and 2010. It therefore seeks to provide insight into the types of projects that received funding as well as the nature of the disbursements made (i.e. loans, grants or in-kind assistance). In so doing, this thesis seeks to ascertain if more funds were allocated to fossil fuel – based or renewable energy projects. Moreover, it is hoped that an analysis of the project data collected will help to illustrate whether, and if so, how, international aid from donor agencies and entities has contributed significantly to a sustainable energy transition in the power sector in Small Island Developing States. It should be noted that aid, when applied judiciously, can serve to alleviate balance of payments difficulties, boost the inflow of foreign exchange and stimulate local and foreign private sector investment (Bräutigam, 2000) in the energy sector.

This chapter will therefore begin with a review of all energy aid in the Caribbean and Pacific by mapping the volume of disbursements between 1970 and 2010, followed by an account of these aid allocations by region. The energy projects featured in the survey will then be divided into various sub-sectors to highlight the general focus of aid disbursements in either region with a special emphasis placed on sub-sectors within the electricity sector. Further, the aid awarded will then be displayed in relation to the type of disbursement made, such as loan or grant payments for example. The disbursements made by the World Bank Group, the Asian Development Bank and the Inter-American Development Bank will then be profiled as short case studies, so as to highlight and juxtapose potential similarities and differences between the different areas of emphases and approaches adopted by the donor. For the three aforementioned donor entities this thesis will also explore the link or correlation (if any exist) between their disbursements of aid to the energy sector and oil prices between 1970 and 2010. Chapter 5 will then explore the results of the interviews that were conducted as a part of this research.

As a reminder, all project data has been quoted in USD 2010 dollars. In addition, all quotations of and references to the price of oil, have been given as an average for the respective year in USD 2010 dollars, converted using the International Monetary Fund (IMF), International Financial Statistics, as outlined in section 2.4.

4.2 Quantity of Aid Awarded

A total of 550 individual projects were examined, 252 in the Pacific (total population of approximately 9 million) and 298 in the Caribbean region (total population of approximately 17 million). For these projects, a total of USD$4,789,055,920 (in USD

2010) was disbursed over the 40 year period to plan and/or execute energy projects in SIDS in those regions. Of this figure, approximately 71 percent of these funds ($3,413,977,920 to be exact) was allocated to energy projects in the Caribbean region while 29 percent ($1,375,078,000) was allocated to energy projects in the Pacific (see Figure 4-1). The Caribbean also received a greater amount of energy aid on a per capita basis, of USD$202,182 in comparison to USD$150,928 in the Pacific. This differential may be due to the fact that the demand for energy has been greater in the Caribbean partly due to its larger population (but still insufficient to benefit from economies of scale). As a case in point, according to the US Department of Energy‘s Energy Information Administration, in 2006 the greatest demand for electricity in the Pacific came from Papua New Guinea which had an installed capacity of approximately 327MW. This was less than half the installed capacity of either Trinidad & Tobago or Jamaica, the Caribbean‘s largest power producers whose installed stood at 757MW and 797MW respectively in 2006. Hence, capital expenditure, particularly on power generating equipment, in the Caribbean has been around twice that of the Pacific in order to meet domestic energy requirements.

Figure 4-1: Energy Aid to the Caribbean & Pacific between 1970 and 2010

4.3 Energy Aid Disbursements between 1970 - 2010 & World Oil Prices

Evidence from persons interviewed in the course of this research suggested that energy aid might be tied to oil prices (Samuel, 2011, Thesis Interview; Weir, 2010, Thesis Interview). Certainly in times of high oil prices the increased cost of energy supply to SIDS would suggest recipient country pressure to gain aid to alleviate imports of this fuel. Figure 5.2 shows the total aid flow to the combined Caribbean and Pacific regions as a function of time together with the price of oil in USD 2010 dollars as obtained from the International Monetary Fund (IMF) International Financial Statistics database. As can be seen, it is difficult to see any pattern from the combined data set. The aid disbursements in the chart appear to be quite ‗lumpy‘, and so, to smooth this data a running average of aid disbursements was utilised. Again, as can be observed, there does not seem to be any correlation between oil prices and the disbursements made to the energy sector in the combined Caribbean and Pacific between 1970 and 2000.

Figure 4-2: Energy Aid to the Caribbean & Pacific and Oil Prices between 1970 - 2010

However, upon disaggregation of the data into separate Caribbean and Pacific regions, a clear difference in the nature of the trends of energy aid becomes evident. Figure 5-3 shows the data for the Pacific region and as can be seen, there emerges a suggestion that during times of high oil prices aid disbursements increase, although there was one large disbursement in 1971 (for a hydroelectric project in PNG26) which occurred before the first oil crisis led to high oil prices in 1974. The period between 1989 and 2002 shows relatively low level of aid disbursements and a low oil price but with the increase in oil prices starting from 2004 aid disbursements again increase. On the other hand, in the Caribbean average disbursements from donor entities on the energy sector appears out of phase with oil prices as seen in figure 5-4.

It should also be noted that there is usually a delay or lag between the occurrence of oil price spikes and the release of aid disbursements for project activities by donors. This delay might be explained by the period required to package (that is plan and design) projects before their initial proposal and approval. Taking this into account, the relationship between energy aid disbursements and oil prices is investigated in more detail as a function of individual donors in section 4.6.

26 This project was entitled the ―Upper Ramu Hydroelectric Development Project‖ and was approved and funded by the World Bank to the tune of approximately USD$125 million. 69

Figure 4-3: Energy Aid to the Pacific Region & World Oil Prices between 1970 and 2010

As mentioned earlier, the Caribbean region overall has received substantially more aid than the Pacific, and as such, the overall scale of expenditure has been much greater over the entire period studied. Notwithstanding this, the trend of disbursements of energy aid to the Caribbean between 1970 and 2010 (see Figure 4-4), though certainly not identical to that of the Pacific, does bring to light some noteworthy observations. Firstly, according to the data collected, no aid allocations were awarded in 1974 (the year following the 1973 oil crisis) in the Caribbean. This may be due to a paucity of available data27. However, aid disbursements to the energy sector did rise to approximately USD $37 million in 1975 (from around USD $11.5 million in 1973) and then to around USD $60 million in 1976. In 1980, after the oil crisis of 1979, aid disbursements to the energy sector rose to approximately USD $100 million (just over USD $20 million more than was allocated to the Pacific at the same time). Even further, in the period of increasing oil prices between 2003 and 2008, aid was largely on the decline in the Caribbean, apart from 2007 to 2008, when aid increased from around USD$14 million to approximately USD $33 million. While this might also be explained to some extent by a lack of available data, it could also be due to the roles that energy suppliers in the Caribbean play in buffering, to some extent, the effect of oil price shocks. As mentioned earlier, regional oil exporters, namely, Trinidad and Tobago, Venezuela and Mexico have in the past introduced unique pricing and fiscal mechanisms as well as funding facilities geared toward assisting Caribbean nations to cope with increased oil prices.

27 It is also possible that political and economic pressures brought about by oil price shocks in 1973 could have made the mobilisation of funds on the part of donor entities more difficult. 70

Figure 4-4: Energy Aid to the Caribbean Region & World Oil Prices between 1970 - 2010

4.4 Nature of Energy Aid

With regards to the nature of the energy projects examined, it should be noted that substantially more funds were allocated to fossil fuel based projects than renewable energy (hereafter RE) initiatives in the Caribbean. Between 1970 and 2010, fossil fuel based projects received more than twice that which was awarded to renewable energy projects (see Figure 4-5). This trend does not hold true in the Pacific where funds allocated to renewable energy projects outpaced those spent on fossil fuel – based initiatives. Interestingly, the amount spent on RE projects in either region are very close, with approximately USD $619 million being allocated in the Caribbean and USD $613 million in the Pacific over the period of interest.

Figure 4-5: Fossil Fuel and Renewable Energy Aid to the Caribbean & Pacific between 1970 - 2010

Overall however, if one were to classify the aid disbursed to Caribbean and Pacific SIDS collectively between 1970 and 2010 by sector, a proclivity toward fossil fuel based projects becomes evident (see Figure 4-6). The collective assistance that focused on RE projects accounted for approximately 23 percent of overall aid expenditure (of this percentage, 21 percent focused on Hydro and one percent each on Wind and Solar energy projects). It may also be useful to note that 21 percent of the total was also devoted to the transmission and distribution (T&D) electricity sub-sector, which was mainly comprised of infrastructure projects – such as making repairs to or extending the power grid. In addition to this, 14 percent of the total aid expended was devoted to institutional strengthening and/or measures aimed at facilitating policy reform. These types of activities ranged from projects meant to assist the process of privatisation and deregulation in the power sector, to the acquisition of specialist (especially managerial) consultancy services for utilities, to financing the cost of domestic energy policy consultations. Nine percent of the aid dispensed between 1970 and 2010 was directed to training programmes and workshops – including those necessary to update and educate local energy officials on how to operate and maintain recently acquired technologies. However, only around one percent of total aid during the aforementioned period was focused on energy efficiency projects and less than one percent was directed toward geothermal and bio-energy programmes.

Figure 4-6: Energy Aid to Caribbean and Pacific by sector (1970 - 2010)

Upon closer examination of each region, clear differences pertaining to the focus of aid expenditure becomes evident. In the Pacific, the largest individual segment of aid (34 percent) was devoted to the implementation of hydro-electric projects – primarily those involving the installation, upgrading or repair of power generating facilities, particularly dams (see Figure 4-7). Following this, 23 percent of the aid expended in the Pacific was directed toward electricity transmission and distribution (T&D) facilities. This disbursement could, in part be explained by the fact that hydro-electric dams and other generating facilities are often some distance away from where the power is required (i.e. load centres) in order to be distributed or sold to customers – making the laying of electrical power lines necessary to transport the electrical load. Notwithstanding the emphasis on renewable energy aid projects in the Pacific (which accounted for approximately 39 percent of the aid expended, if wind and solar energy are added to the percentage spent on hydroelectricity), 19 percent of energy aid was channelled to fossil fuel based projects. Ten percent of the overall assistance was devoted to training (primarily technology based) while seven percent was geared toward institutional strengthening and policy reform. Only two percent, however, of the aid to the energy sector in the Pacific was focused on energy efficiency based projects. Even further, less than one percent was geared towards the development of bio-energy and geothermal energy, perhaps due to the relatively unproven nature of the former (in the case of biomass gasification) and the capital intensive nature of the latter.

Figure 4-7: Energy Aid to the Pacific by sector (1970 - 2010)

In the Caribbean region, 37 percent of the aid dispensed to the energy sector was fossil fuel based (see Figure 4-9), which is almost twice as much as the Pacific for the same period. This larger allocation to fossil fuel based aid may, in some ways, be due to an overall larger energy demand in the Caribbean. A greater energy requirement may make petroleum-based power generation (especially diesel gensets) more economically viable when compared to renewable alternatives, such as wind and solar energy28. Whereas in the Pacific, due to the geographic dispersion of many of its multi-island states, using wind or solar energy (as a form of distributed generation) may indeed be more economically viable, particularly for rural villages where average energy consumption is typically much less than would usually exist in the Caribbean (see Figure 4-8). In this vein, while electricity generation via hydropower and geothermal energy may be comparable to fossil fuelled alternatives in terms of the scale of energy provided, these technologies are both location-specific and dependent upon the local geography and size of the resource.

28 In order for wind and solar energy devices to produce relatively a significant magnitude of power (for example, more than 5MW), more and/or larger devices and parcels of land are required – making the process of expanding generating capacity even more capital intensive. Conversely therefore, when smaller electrical loads need to be met, particularly in rural areas (that are difficult to connect to the grid), decentralized generation using solar and wind energy devices are often thought to be appropriate. See: Venema, H. D. & Cisse, M. (eds.) 2004. Seeing the Light: Adaptating to Climate Change with Decentralized Renewable Energy in Developing Countries, Winnipeg: International Institute for Sustainable Development. 74

Figure 4-8: Energy Consumption per capita (2008) Source: Energy Information Administration, 2011

Legend containing country codes29 for Figure 4-8:

Country Codes Country 1 Country 2 SLB HTI Solomon Islands Haiti KIR GUY Kiribati Guyana VUT DMA Vanuatu Dominica PNG VCT Papua New Guinea St. Vincent & the Grenadines WSM LCA Samoa St. Lucia TON GRD Tonga Grenada NIU BLZ Niue Belize FJI JAM Fiji Jamaica COK BRB Cook Islands Barbados NRU SUR Nauru Suriname KNA St. Kitts & Nevis ATG Antigua & Barbuda BHS Bahamas TTO Trinidad and Tobago

Aside from choices related to power generation however, twenty percent of the disbursements made in the Caribbean were allocated to the transmission and distribution

29 Country codes were produced and published International Organisation for Standardization (ISO) and are the official codes utilised by the United Nations Statistics Division. For more see: United Nations Statistics Division. 2012. Standard Country or Area Codes for Statistical Use [Online]. New York, USA: United Nations. Available: http://unstats.un.org/unsd/methods/m49/m49.htm [Accessed November 28 2012]. 75 of electricity (which is only 3 percent less than the Pacific). To add to this, 17 percent of the aid disbursed to the Caribbean was focused on Institutional Strengthening and Policy Reform, which is ten percent more than was allocated for this purpose in the Pacific. This difference is quite likely to be due to the fact that a much greater push toward privatisation of the power sector was made by international financial institutions (like the International Monetary Fund) as a part of structural adjustment programmes implemented in the Caribbean, though these policies spanned the globe (Bayliss, 2002; Williams and Ghanadan, 2006). With regard to renewable energy, a total of 17 percent (if one were to add the amounts spent on Hydropower, Bioenergy and Wind energy) was devoted to this sector, which is less than half than the 39 percent (of energy aid expenditure) allocated to the same in the Pacific. The percentage allocated to training in the Caribbean (eight percent) is also a little less than the ten percent that exists in the Pacific. Finally, the segment of aid devoted to energy efficiency in the Caribbean (one percent) is also less than exists in the Pacific (two percent).

Figure 4-9: Energy Aid to the Caribbean by sector (1970 - 2010)

4.5 Energy Aid Disbursements by Type

As discussed in Chapter 2, aid disbursements have been classified as either:

Loans Grants In kind assistance Unique aid

It should be recalled from section 2.2 that the conditions and interest rates (where applicable) of different forms of assistance vary widely depending in part on the respective donor entity and/orthe nation receiving the aid. In terms of the types of disbursements made, it is quite clear that the amount of funds approved as loans far surpassed the quantity of aid dispensed as grants. Loans accounted for 89 percent of the aid awarded to the energy sector in the Caribbean and Pacific between 1970 and 2010 (see Figure 4-10). Grants (which included technical assistance projects) accounted for only six percent of the disbursements to both regions, while other more unique forms of aid such as special joint ventures, contingent technical cooperation30, technology demonstrations and even differentiated lines of credit, represented around five percent. The term ‗Unique Aid‘ (as indicated in section 2.2) is also used to describe those forms of assistance for which information pertaining to the type of disbursement made was not available. In this way, ‗unique aid‘ also refers to projects that are not associated with any specific type of assistance (or that information is unknown or was not accessible). Notwithstanding this differentiation, of the USD $4,789,055,920 disbursed overall, at least31 USD$3,848,984,000 (around 80 percent) was supplied via loan funding. The implications of such a large proportion of disbursements being sourced through loans may be significant, particularly as it relates to long term debt accumulation. It should be noted however, that in the survey conducted the number of projects that were listed as grants (a total of 372) was substantially more than those listed as loans (a total of 119). Thus, while there was a greater number of grant projects in either region, these initiatives represented a very small portion of the funding disbursed between 1970 and 2010 in the Caribbean and Pacific. Rather, the majority of funds were distributed via large loan projects, which overall, were fewer in number than grant projects during the aforementioned period. Indeed, it should be noted that a significant number of the grant projects that were approved were feasibility and technical studies, which were often precursors to potentially larger (usually loan-funded) infrastructure projects32.

30 Contingent Technical Cooperation (a form of assistance offered by the Inter-American Development Bank), cannot be considered a grant under strict terms – funds awarded via this mechanism are repayable if the initiative results in a viable project (usually financed through loan funding) 31 The term ‗at least‘ is used because the number given has been approximated and also to account for the fact that, as stated in the methodology, some project information may not have been supplied by the donor entities. 32 For example, in 1990, the Inter-American Development Bank (IDB) approved a grant worth approximately USD$250,000 (in USD 2010 dollars) to prepare a power generation project in the Family Island in the Bahamas, which took place via a USD$48 million loan from the IDB, which was approved in 1993. 77

Figure 4-10: Energy Aid Awarded by Type of Disbursement

The prevalence of loan finance from donor agencies across the Caribbean and the Pacific is obvious (see Figure 4-11 and Figure 4-12). A noteworthy difference between both regions however, is the existence of a larger proportion of ―other‖ or unique forms of aid in the Pacific, where thiscategory accounts for approximately 6 percent of total disbursements made. On the other hand, in the Caribbean, unique forms of aid do not appear to make a significant contribution to total aid whatsoever. Insofar as grant aid is concerned, this accounts for five percent of total aid in the Pacific (see Figure 4-11) and even less (three percent) in the Caribbean (Figure 4-12). Overall therefore, the dominance of loan financing for energy projects was particularly evident in the Caribbean where it accounted for around 97 percent of total aid. Conversely, the aid profile of the Pacific region between 1970 and 2010 can perhaps be described as being slightly more diverse. Notwithstanding this, the proclivity toward loan financing in both regions could be problematic for the future and will be discussed later in this thesis. It should be noted, however, that this may be due to the capital intensive nature of acquiring equipment related to power generation, transmission and distribution and the limited resource base of these island economies.

Figure 4-11: Energy Aid by Type of Disbursement in the Figure 4-12: Energy Aid by Type of Disbursement in the Pacific Caribbean

Given that the disbursements made have been broken down by sector and type, this thesis will now provide several short case studies, illustrating the aid provided by specific donor agencies between 1970 and 2010 in the Caribbean and Pacific. The donor agencies on which the case studies were written, namely, the World Bank Group (WBG), the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB) were chosen because they were among the largest donors to the energy sector in the Caribbean and Pacific (see Figure 4-13). It should be noted that the European Investment Bank (EIB) was not chosen as requests by the author for detailed information pertaining to their disbursements were not met.

Figure 4-13: Energy Aid to the Caribbean & Pacific between 1970 - 2010, by donor entity (by volume of disbursements - $USD 2010) The WBG, ADB and IDB were therefore chosen because they afforded a great degree of access to information about their operations and also due to the fact that they were the largest donors in both Caribbean and Pacific respectively (see Figure 4-14 and Figure 4-15).

Figure 4-14: Energy Aid to the Pacific between 1970 - Figure 4-15: Energy Aid to the Caribbean between 1970 - 2010, by donor entity (by volume of disbursements - $USD 2010, by donor entity (by volume of disbursements - 2010) $USD 2010)

4.6 Case Studies: Donor Entities and Energy Aid (1970 – 2010)

This section will illustrate the flow of energy disbursements between 1970 and 2010 for individual donor entities and will explore in more detail the relationship between specific donor disbursements and global oil prices (if any). The aid awarded to the energy sector will be displayed according to the proportions awarded to fossil fuel based and renewable energy projects during the aforementioned period. Further, the financial assistance offered will be categorised in order to showcase the type of aid that has been awarded by the respective donor entities (in terms of grant funded projects as opposed to loan financing). In illustrating the flow of energy aid disbursements between 1970 and 2010, as discussed earlier, the flow of funding was found to be disbursed in integral amounts which meant that the data could be described as ‗lumpy‘ with several large rises and falls in funding occurring throughout the period. These can perhaps be explained in part by the fact that allocations are made per project, which individually take a number of years to be executed, from approval to completion.

It should be recalled from section 4.1 that all project data and references to oil prices have been quoted in USD 2010 dollars. With regards to the method used to ascertain whether or not a correlation existed between oil prices and energy aid disbursements, it should firstly be noted that aid disbursements are generally negotiated in discrete amounts for specific activities; that is they are not distributed continuously in equal proportions over time. To make any comparison with oil prices, which can vary continuously over time, it was thought best to smooth the aid disbursements. Hence, five and seven year running averages of aid disbursements were applied for this purpose. Secondly it was expected that there would inevitably be a time delay between the independent variable, the price of oil, and the dependant variable, the aid disbursement. Such a delay could be attributed to reaction times on the part of both the recipient, in formulating and packaging a proposed project to receive funding from an aid agency and delays on behalf of the donor, in getting the proposal approved and in finalising an implementation plan acceptable to both parties. Thus, lag values were calculated for five years as it was expected that such a timeframe would be consistent with a causal relationship between the two variables and also because it was thought unlikely that disbursements related to an oil price shock would be delayed for more than five years.

To examine whether energy aid disbursements between 1970 and 2010 from the World Bank Group (WBG), the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB) to Caribbean and Pacific SIDS were related to oil prices, a regression analysis was performed to find the cross correlation coefficient between the price of oil, (X) at time t and the average value of the aid disbursement (Y) at time t- ∆T.

The cross correlation coefficient, Pearson‘s r (see for instance Rodgers and Nicewander(1988)) for data taken at discrete intervals, ―i‖ (in this case years) is given by :

Using this formula, the square of the cross correlation coefficient (r2) was determined for various values of ∆T, using the standard linear regression on Microsoft EXCEL. The values of r2 at different time lagswere tabled and the point of maximum correlation was illustrated on a scatter plot chart. Further, the r2 value at the point of maximum correlation was then used to determine the probability of a correlation between oil price and aid disbursements using the specific data on the probability of correlations from tabulations inTaylor (1997). This method was utilised in the case studies on the World Bank Group (WBG), the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB) to determine whether any correlation existed between energy aid disbursements and the price of oil between 1970 and 2010.

4.6.1 World Bank Group (WBG)

The World Bank Group (WBG) refers to a conglomeration of closely related organisations whose origin stemmed from the formation of the International Bank for Reconstruction and Development (IBRD) which was formed toward the end of the Second World War. To date, the group focuses on developing countries and also comprises the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). As the World Bank Group has a global remit, this research was able to survey projects from both regions between 1970 and 2010.

4.6.1.1 World Bank Group (WBG) Energy Aid to the Caribbean and Pacific (1970 - 2010)

4.6.1.1.1 WBG Energy Aid to the Caribbean and Pacific (1970 - 2010)

As it pertains to the projects approved by the World Bank Group, energy-related aid disbursements, after declining in 1972, increased dramatically in 1973 and 1974 during and immediately following the first oil crisis (of 1973). Aid allocations to both regions increased even further by 1976 (in spite of an initial decline in 1975). The Bank noted that increased prices for food, capital equipment (including power generating equipment) and fuel was having a grave impact upon the economies of its developing member countries (World Bank, 1975). Notwithstanding this, the Bank added that though global oil prices were not the sole variable or factor adversely affecting developing economies at the time, it was perhaps, ―directly or in-directly - more important than any other factor‖ (World Bank, 1975)33. In tandem therefore, in light of the heightened prices for capital equipment, the Bank chose to place its focus on power sector projects, as this usually represents a significant portion of public expenditure.

33 The Bank did however note that it was ―encouraged‖ by the initiatives implemented by Trinidad & Tobago and Venezuela meant to provide relief to neighbouring countries in the Caribbean, using the additional revenue earned from petroleum exports (during the period of higher prices). See: World Bank 1975. Annual Report 1974. Washington D.C. p 42. 83

Thus, unsurprisingly, all of the Bank‘s energy related disbursements to the Caribbean and Pacific (between 1973 and 1978) focused on strengthening the power sector and expanding access to electricity (specifically in Papua New Guinea, Guyana and Haiti).

Several years later, aid disbursements increased slightly between 1979 and 1980 (following the 1979 oil crisis) from approximately USD $50 million to $62 million, before increasing sharply in 1982 to approximately USD $139 million. The fiscal year 1978 was, however, significant in terms of the Bank‘s aid to the energy sector. Not only did the development of energy sources become a greater priority, but the formal decision to extend financial support to the production of petroleum was made (World Bank, 1979a). The Bank noted that attempting to finance oil production prior to 1973 (in its developing member countries) was largely uneconomical simply due to the fact that, member countries of the Organisation of the Petroleum Exporting Countries (OPEC), particularly those in the Middle East could extract and export the resource at a cheaper rate (World Bank, 1979a). Notwithstanding this, the Bank also stated that ―new initiatives and expenditures in petroleum development must not be undertaken to the detriment of coal, hydro, geothermal, etc. development where feasible‖ (World Bank, 1979a). That said, while the World Bank did express its willingness to support the production of oil and gas, and also to provide technical and legal assistance, it added that its role in petroleum exploration activities would be minimal, due to the risk involved (World Bank, 1979a). The Bank however propounded that emphasis would also be placed on the growth and production of firewood, especially for use in rural areas (World Bank, 1979a).

In 1979, energy not only remained a World Bank priority but, followingthe second oil crisis, the Bank also decided to extend financial support for petroleum exploration, including ―survey work, exploratory drilling, and project preparation.‖(World Bank, 1980a). The overarching aim of the Bank‘s involvement in exploration activities however, was to attract private sector involvement, particularly through public-private partnerships (World Bank, 1980a). In tandem, the decision was also made to accelerate the Bank‘s efforts in facilitating exploration activities for coal (World Bank, 1980a). Lending to the energy sector for petroleum and coal exploration and production was therefore forecasted to increase (World Bank, 1982a). Perhaps unsurprisingly therefore, three of the six projects approved in 1981 and 1982 by the WBG, were geared toward exploration for petroleum in Jamaica, Papua New Guinea (PNG) and Guyana34 Indeed, these disbursements were related to the sudden increase in oil prices: these projects were initiated in the hope that finding indigenous sources of oil and/or gas, would ease the impact of rising energy costs (World Bank, 1989; World Bank, 1993).

In fact, it was pressures related to the price of oil that led to ―a further broadening of the Bank's activities in the energy sector to emphasize management of demand for energy in all sectors‖ (World Bank, 1982a). This occurred in 1981, as the World Bank sought ―to give greater attention to energy needs in rural areas, to support the development of renewable sources of energy, and to increase the use of gas to meet the energy needs of developing countries‖ (World Bank, 1982a).

34 These three projects were all approved by the World Bank, the first for a project in Jamaica in 1981 entitled the ―Petroleum Exploration Project‖. The other two were approved in 1982 in Papua New Guinea and Guyana and were named the ―Petroleum Exploration Technical Assistance Project‖ and the ―Petroleum Exploration Promotion Project‖ respectively. 84

This increased thrust was characterised by increased funding being allocated toward the development of fossil fuelled indigenous energy sources (i.e. oil, gas and coal) as well as renewable energy (primarily hydroelectricity, fuel wood and biomass for fuel) (World Bank, 1982a). Two years later, in 1983 as oil prices began their downward trend(though still sitting at USD$64.52) the Bank re-affirmed its commitment to ―serve as a catalyst in encouraging the flow of capital and technology‖ in the energy sector to its developing member countries (World Bank, 1984). Overall, the Bank registered a sustained interest and focus on energy between 1974 and 1983, as a sector in need of urgent strengthening and assistance.

Interestingly, the next period when such a focus became evident in the Caribbean and Pacific was in 2008 (and this was sustained until 2010), as the price of oil peaked at USD$98.28. This occurred in tandem with the publication of the Bank‘s Clean Energy Investment Framework (World Bank, 2008a) and the formation of the Pacific Regional Infrastructure Facility35. Energy related disbursements from the World Bank Group to the Caribbean and Pacific therefore rose substantially to around USD $123 million in 2008 (compared to approximately USD$49 million, which was approved cumulatively between 2005 and 2007). A marked difference however, between more recent and earlier efforts to facilitate investments in the energy sector, was the emphasis placed on climate change. Indeed, the Bank‘s latterly approach to energy-related concerns in developing countries (especially pertaining to high oil prices) has often been from within the context of climate change (World Bank, 2008a; World Bank, 2009a; World Bank, 2011a; World Bank, 2010a). As a result, the World Bank‘s energy strategy, in 2009, was being developed with the twin objectives of improving energy access and reliability as well as ―facilitating the shift to a more environmentally sustainable energy development path‖ (World Bank, 2009b). Thus, unlike the Bank‘s earlier programmes in the energy sector (particularly during the 1970s), projects involving coal are only said to receive financial support if there are no other available alternatives especially in cases where power is being provided to the poor (World Bank, 2011b). Hence, the primary focus of energy aid projects around the year 2008 in the Caribbean and Pacific was upon the diversification of energy supply (particularly as it pertained to boosting the utilisation of renewable energy) (Johnston, 2010, Thesis Interview; Weir, 2010, Thesis Interview). In fact, in 2007 and 2008, out of the fourteen energy projects in which the World Bank was involved, seven were geared toward enhancing the use of renewable energy, while two were focused on the oil and gas sector. Thus, while both increases in aid disbursements (in 1981-2 and 2007-8) were driven by a desire to reduce energy costs, the first focused on enhancing indigenous supplies of thermal energy, while the latter period was geared toward the proliferation of more sustainable energy sources.

4.6.1.1.2 World Bank Group Energy Aid to the Pacific (1970 - 2010)

When examined on its own, the average flow of aid to the Pacific (using 5 and 7 year moving averages), though decreasing for the majority of the period being examined, does at times seem to be responsive to oil prices. In attempting to showcase the relationship between oil prices and energy disbursements the same methodology that was adopted above (for the World Bank Group in the Caribbean and Pacific) was

35 The Pacific Regional Infrastructure Facility is a multi-donor coordination and financing mechanism that supports initiatives in energy, water and sanitation, waste management, transport and telecommunications. For more information see: Pacific Region Infrastructure Facility (PRIF). 2012a. Home [Online]. Available: http://www.theprif.org/ [Accessed 1 August 2012]. 85 utilised. Thus, aid disbursements were compared with oil prices (using 5 and 7 year moving averages for aid disbursements) in constant US 2010 dollars. Figure 4-16, shows aid disbursements from the World Bank Group (WBG) to the energy sector in the Pacific, against world oil prices, along with a 5 and 7 year moving average trendline.

Figure 4-16: World Bank Group Energy Aid to the Pacific (1970-2010)

A regression analysis was performed to find the cross correlation coefficient between the price of oil, (X) at time t and the average value of the aid disbursement (Y) at time t- ∆T (using 5 and 7 year running averages for the aid disbursements). Using the same formula as above to find the cross correlation coefficient, r2 was then determined for various values of ∆T, using the standard linear regression on Microsoft EXCEL; as shown in Table 4-1.

Table 4-1: Regression values showing the relationship (i.e. time delay) between oil prices and WBG energy aid disbursements in the Pacific

Using 5 Year Moving Average Using 7 Year Moving Average Lag Years Regression (r2) Value Lag Years Regression (r2) Value 0 0.093 0 0.253 1 0.057 1 0.111 2 0.017 2 0.032 3 0.009 3 0.004 4 0.025 4 0.005 5 0.013 5 0.008

Here it can be seen that a maximum correlation using both five and seven year moving averages was obtained for a lag of 0 years; that is, the lag was less than one year in this instance. The plot of oil price and the aid disbursement for a time lag ∆T of 0 years is shown in Figure 4-17 and Figure 4-18.

Figure 4-17: Chart showing relationship between the price of oil average WBG Energy Aid Disbursements using a 5 year moving average, to the Pacific (for 0 year delay)

Figure 4-18: Chart showing relationship between the price of oil average WBG Energy Aid Disbursements using a 7 year moving average, to the Pacific (for 0 year delay)

Using a 5 year moving average, for an r2 value of 0.093, r equals 0.304 and with 37 data points this means that the probability of a correlation between oil price and aid disbursements is greater than 92 percent (see Taylor (1997)). In the case of the 7 year moving average, for an r2 value of 0.253, r equals 0.502 and with 35data points this

87 means that the probability of a correlation between oil price and aid disbursements is greater than 99.8 percent.

As illustrated in Table 4-2, in 1971, aid disbursements (rounded to three significant figures) were particularly high in spite of relatively low oil prices (see Figure 4-16). This was due to a large loan for the Upper Ramu Hydroelectric Development Project in PNG which cost approximately USD $125 million. However, aid allotments did not increase in 1973, but instead spiked in the following year with a project aimed at extending electricity distribution network and staff training at the utility in PNG (World Bank, 1974). In the same fashion, aid did not increase with oil prices in 1979, but rather rose in 1980 and 1982 with projects aimed at enhancing the supply of hydroelectric power in Fiji and exploring for petroleum in PNG respectively (World Bank, 1980b; World Bank, 1982b). Both projects however, sought to reduce the vulnerability of these islands to high oil prices.

Table 4-2: World Bank Group Energy Aid to the Pacific (1970 – 2010)

Donor Recipient Year 2010 Project Name Aid Approved $USD form (000's)) World Bank PNG 1971 125,000 Upper Ramu Hydroelectric Development Loan Project World Bank PNG 1974 48,000 Second Power Project Loan World Bank Fiji 1978 50,000 Monasavu - Wailoa Hydroelectric Project Loan World Bank Fiji 1980 41,000 Second Power Project Loan World Bank PNG 1982 6,800 Petroleum Exploration Technical Assistance Credit Project World Bank PNG 1986 57,000 Third Power Project - Yonki Hydroelectric Loan Project World Bank Samoa 1987 7,000 Afulilo hydro power project Loan World Bank PNG 1993 16,600 The Petroleum Exploration TA Project & the Loan Petroleum Exploration and Development TA Project World Bank Samoa 1993 2,000 Afulilo Hydro power World Bank PNG 2000 8,860 Gas Development and Utilization Technical Loan Assistance Project World Bank PNG 2000 12,700 Mining Sector Institutional Strengthening Loan Technical Assistance Project World Bank PNG 2005 1,110 Rural Energy Fund: Teacher's Solar Lighting Grant Project World Bank Regional 2007 9,970 Sustainable Energy Finance Project Loan World Bank Palau 2007 252 Palau Oil & Gas Grant World Bank Multi- 2008 2,800 Preparation of Framework for 'Energizing the Pacific' Group country &AusAid

World Bank Multi- 2008 700 Energy Supply for Micronesia Group country World Bank Kiribati 2008 5,140 Kiribati Grid-Connected Solar PV Project Group World Bank Solomon 2008 3,900 Tina River Hydro Development Project: Project Group Islands Development Support and Hydrological Study &AusAid World Bank Solomon 2008 61,000 Tina River Hydro Development Project: Project Group Islands Implementation &AusAid IFC Solomon 2008 2,670 IFC Advisory Services for Tina River IPP &AusAid& Islands Project World Bank World Bank Tonga 2008 233 Energy Supply for Tonga Group &AusAid World Bank Tonga 2008 9,690 Tonga Energy Roadmap Implementation &AusAid& NZMFAT World Bank Vanuatu 2008 368 Vanuatu oil and gas supply chain study Group World Bank Vanuatu 2008 1,470 Vanuatu Utilities Regulatory Agency Grant Group &AusAid World Bank PNG 2008 17,200 Second Mining Sector Institutional Loan Strengthening TA Project for PNG development World Bank Solomon 2008 4,100 Solomon Islands Sustainable Energy Grant Islands World Bank Solomon 2010 900 Solomon Islands: Mining Sector Technical Grant Islands Assistance - Phase I World Bank Tonga 2010 5,000 Tonga Energy Development Policy Project Grant

Aid disbursements continued to be driven by PNG in the form of a loan for the Yonki Hydroelectric Project approved in 1986 and valued at approximately USD $57 million. In 1993, even though oil prices were declining, aid allocations increased through a loan for approximately USD $16 million for a petroleum exploration project in PNG and also through a disbursement of about USD $2 million toward the Afulilo hydroelectric power project. Moreover, when oil prices did rise again in the year 2000, so did aid allocations via two loan projects in PNG entitled ―the Gas Development and Utilization Technical Assistance Project‖ (USD $7 million) and the ―Mining Sector Institutional Strengthening Technical Assistance Project‖ (USD $10 million), geared toward boosting local management of the gas and mining sectors (World Bank, 2007a; World Bank, 2007c). The period from 1970 to 2000 was therefore marked not only by fluctuating aid disbursements and oil prices, but also quite notably, by the accumulation of approximately USD $268 million of loans on the part of PNG.

Interestingly, as oil prices began to increase in 2004 and continued doing so until 2008, assistance to the energy sector from the World Bank Group (WBG) increased sharply from 2006 and peaked in 2008. In 2005, a project entitled ―Rural Energy Fund: Teacher's Solar Lighting Project‖ (worth approximately USD$ 1 million) was approved, aimed at making solar PV devices more affordable, particularly to rural teachers and health workers in Papua New Guinea (Global Environment Facility, 2005). Two years later (in 2007), the Bank also approved USD$252,000 of grant funding for institutional support towards Palau‘s efforts to explore for oil and gas resources within their shores (World Bank, 2007d). A region-wide project was also approved, at a cost of approximately USD$10 million and was entitled the ―Sustainable Energy Finance Project‖. This regional initiative sought to ―significantly increase the adoption and use of renewable energy technologies in participating Pacific Island states through a package of incentives to encourage local financial institutions to participate in sustainable energy finance in support of equipment purchase‖ (World Bank, 2007b).

The energy aid peak in the Pacific in 2008 was primarily due to the number of projects approved (and amounting to a total of approximately USD$88 million) under the Pacific Regional Infrastructure Facility (PRIF), of which the WBG is a member. This Facility is a multi-development agency infrastructure coordination and financing mechanism that was ―initiated in 2008 by the Asian Development Bank (ADB), the Australian Agency for International Development (AusAID), the New Zealand Government via the New Zealand Aid Programme (NZMFAT36), and the World Bank Group (WBG).... [the] European Commission (EC) and the European Investment Bank (EIB) became members of the joint initiative in 2010‖ (Pacific Region Infrastructure Facility (PRIF), 2012b). Figure 4-16 therefore shows the increased disbursements for initiatives approved in 2008 (under the 2008/9 – 2013/14 PRIF project tranche) for which the WBG was listed as the lead agency (even if the activity was planned or undertaken in partnership with other agencies). The projects undertaken by the WBG via this facility in 2008 focused primarily on resource studies and on the development of renewable energy. Significant emphasis was also placed on the formulation of enabling policy frameworks (largely to facilitate the proliferation of alternative energy sources) in Tonga, Vanuatu and regionally. In the same year, the International Development Association (IDA) also

36 The New Zealand Ministry of Foreign Affairs and Trade. 91 approved an institutional strengthening project geared toward the mining sector in PNG (World Bank, 2009c)37 as well as a project entitled ―Solomon Islands Sustainable Energy‖ which was geared toward improving the performance of the local utility (World Bank, 2008b). Interestingly, the number of approved aid projects (there were none) plummeted in 2009 alongside falling oil prices. As oil prices began to rise in 2010, however, grant projects were approved in the Solomon Islands that focused on strengthening the mining sector (for USD $900,000), and in Tonga, focused on supporting energy sector reform through the implementation of the ―Tonga Energy Roadmap‖ at a cost of USD $5 million (World Bank, 2010c; World Bank, 2010e)38.

4.6.1.1.3 World Bank Group Energy Aid to the Caribbean (1970 - 2010)

In the Caribbean, average energy aid (using five and seven year moving averages) trended upwards between 1975 and 1980 as well as between 1991 and 1996, and then proceeded downwards between 1997 and 2003 (see Figure 4-19). Using the same methodology as above to show the relationship between oil prices and energy disbursements, the two variables were compared in constant US 2010 dollars. Figure 4-19, therefore shows aid disbursements from the World Bank Group (WBG) to the energy sector in the Caribbean, against world oil prices, with 5 and 7 year moving average trendlines.

Figure 4-19: World Bank Group Energy Aid to the Caribbean (1970-2010)

37 The project was entitled the ―Second Mining Sector Institutional Strengthening TA Project‖ as it followed on a similar initiative approved in 2000. 38 The projects were entitled: the ―Solomon Islands Mining Sector Technical Assistance - Phase I‖ and the ―Tonga Energy Development Policy Project‖. 92

A regression analysis was therefore performed to find the cross correlation coefficient between the price of oil, (X) at time t and the average value of the aid disbursement (Y) at time t- ∆T (using 5 and 7 year running averages for the aid disbursements). Using the same formula as above to find the cross correlation coefficient, r2 was then determined for various values of ∆T, using the standard linear regression on Microsoft EXCEL; as shown below in Table 4-3.

Table 4-3: Regression values showing the relationship (i.e. time delay) between oil prices and WBG energy aid disbursements in the Caribbean

Using 5 Year Moving Average Using 7 Year Moving Average Lag Years Regression (r2) Value Lag Years Regression (r2) Value 0 0.110 0 0.208 1 0.208 1 0.241 2 0.195 2 0.258 3 0.170 3 0.166 4 0.083 4 0.108 5 0.015 5 0.082

Here it can be seen that a maximum correlation using a five year moving average was obtained for a lag of 1 year and a lag of 2 years when a seven year moving average was used, that is, the lag was less than one year. The plots of oil price and the aid disbursement for the respective time lags ∆T of 1 and 2 years (from the different moving averages) are shown below.

Figure 4-20:Chart showing relationship between the price of oil average WBG Energy Aid Disbursements using a 5 year moving average, to the Caribbean (for 1 year delay)

Figure 4-21: Chart showing relationship between the price of oil average WBG Energy Aid Disbursements using a 7 year moving average, to the Caribbean (for 2 year delay) Using a 5 year moving average, for an r2 value of 0.208, r equals 0.456 and with 37 data points this means that the probability of a correlation between oil price and aid disbursements is greater than 99.8 percent (see Taylor (1997)). In the case of the 7 year moving average, for an r2 value of 0.258, r equals 0.508 and with 35 data points this means that the probability of a correlation between oil price and aid disbursements is greater than 99.8 percent.

Notwithstanding the above, according to the data available (illustrated in Table 4-4), the first spike in funding between 1970 and 2010 occurred in the same year of the first oil crisis.A power project in Guyana was funded which consisted of installing approximately 36 MW of diesel generation along with a new 69 kV transmission system (World Bank, 1972) at a cost of approximately USD $29 million. That said, even as oil prices rose considerably in 1974 (though falling slightly until 1978), WBG disbursements to the Caribbean between 1973 and 1979 were all for power projects. In addition to the 1973 project in Guyana, the first and second power project in Haiti (in 1976 and 1979 respectively) were both aimed at expanding thermal electricity and improving transmission and distribution on the island (World Bank, 1976; World Bank, 1979b). Similarly in 1978, the Second Power Project was approved in Jamaica (the first initiative, entitled the ―Power Expansion Project‖, was approved in 1966) and was geared toward the strengthening and extension of electricity transmission and distribution (World Bank, 1987b).

Table 4-4: World Bank Group Energy Aid to the Caribbean (1970 – 2010)

Donor Recipient Year 2010 Project Name Aid Approved $USD form (000's)) World Guyana 1973 29,300 Power Project Loan Bank

World Haiti 1976 61,300 Power Project Loan Bank

World Jamaica 1978 66,800 Second Power Project Loan Bank

World Haiti 1979 49,600 Second Power Project Loan Bank

World Guyana 1980 21,200 Technical Assistance for Power Loan Bank Development - Loan 1906-GUA

World Barbados 1981 14,400 Power Project Loan Bank

World Jamaica 1981 9,120 Petroleum Exploration Project Loan Bank

World Jamaica 1982 68,900 Third Power Project Loan Bank

World Guyana 1982 4,520 Petroleum Exploration Loan Bank Promotion Project

World Haiti 1982 58,800 Third Power Project Loan Bank

World Haiti 1984 46,400 Fourth Power Project Loan Bank

World St. Vincent 1984 10,500 Power Project Loan Bank & the Grenadines World Jamaica 1987 35,500 Power Project (04) Loan Bank

World Dominica 1987 5,750 Power Project Loan Bank

World Haiti 1989 42,000 Fifth Power Project Loan Bank

World Jamaica 1992 93,000 Energy Sector Deregulation and Loan Bank Privatization Project

World Jamaica 1993 113,000 Private Sector Development Loan Bank Adjustment Loan Project

World Belize 1994 16,900 Second Power Development Loan Bank Project

IFC Jamaica 1995 30,600 Jamaica Energy Partners Old Loan Harbour Diesel Project

World Jamaica 1995 30,100 Generation Recovery and Loan Bank Improvement Project

IFC Jamaica 2003 53,300 Heavy Fuel Oil - Thermal Power Loan Generation

IFC Jamaica 2005 31,300 Jamaica Energy Partners Loan Expansion

World Haiti 2006 6,490 Electricity Project Loan Bank

World Guyana 2008 2,610 Bagasse Cogeneration Project Loan Bank

World Haiti 2009 5,080 Electricity Loss Reduction Grant Bank Project (Additional Financing)

IFC Haiti 2010 50,000 E. Power S.A. Loan

IFC Jamaica 2010 30,000 JPS Co. II Loan

IFC Jamaica 2010 30,000 Jamaica Energy Partners 3: West Loan Kingston Power Partners (WKPP) 66MW World Haiti 2010 500 Grant for the Emergency Grant Bank Program for Solar Power Generation and Lighting for Haiti as a Consequence of the Earthquake in Port-au-Prince GEF MSP

In 1980 (as oil prices rose), Guyana accessed a USD $21 million loan in order to access technical assistance for the power sector. The project catered for ―managerial and technical rehabilitation of the national power company, the Guyana Electricity Corporation (GEC)‖ (World Bank, 1987c). In the following year, aid allocations rose slightly as both Barbados and Jamaica accessed loans totalling around USD $23.5 million for a power sector development project and a petroleum exploration project respectively. Disbursements of energy aid, however, skyrocketed in 1982 as Jamaica

96 and Haiti39 received loans for power sector projects, which were both entitled ―Third Power Project‖. Both initiatives were geared toward plant rehabilitation, the reduction of system losses and improving the performance of the national electricity utility companies, though the project in Haiti also had a significant focus on increasing the use of indigenous energy resources (hydro) (World Bank, 1990; World Bank, 1992). In the same year Guyana also received a loan valued at USD $4.5 million for the ―Petroleum Exploration Promotion Project‖.

As oil prices began to subside after 1980 and until 1986, so did international assistance to the energy sector in the Caribbean although there were two disbursements in 1984 for power projects in Haiti (entitled ‗Fourth Power Project) and St. Vincent & the Grenadines (entitled ‗Power Project‘) at a sum of approximately USD $57 million. Both projects were focused on expanding local generating capacity but placed particular emphasis on boosting the production of electricity from hydroelectric sources so as to reduce vulnerability to high oil prices (World Bank, 1996a; World Bank, 1994). There were two further power projects in 1987 in Jamaica and Dominica (projects were entitled ‗Fourth Power Project‘ and ‗Power Project‘ respectively) that were both geared toward improving the transmission and distribution of power (World Bank, 1996b; World Bank, 1987a). The project in Dominica, however, which represented the national utility‘s ―entire investment programme from 1988 to 1993‖, also sought to reduce the island‘s dependence on imported fossil fuels through the provision of hydroelectricity (World Bank, 1987a). World Bank Group (WBG) disbursements to Caribbean nations in the 1980‘s therefore exhibited a much greater focus on reducing vulnerability to oil price volatility, particularly through the development of indigenous and renewable energy sources (especially hydro).

Furthermore, as world oil prices increased slightly in 1989, a loan valued at approximately USD $42 million was approved for Haiti‘s ‗Fifth Power Project‘; it was aimed at enlarging the existing generating capacity (World Bank, 1999a). The next major disbursement of funds took place in 1992 and 1993 while oil prices were on the decline and via two projects in Jamaica entitled the ―Energy Sector Deregulation and Privatization Project‖ and the ―Private Sector Development Adjustment Loan Project‖ which received loan funding of US$93 million and USD$113 million respectively. While the former project was also focused on expanding generating capacity, both initiatives were geared toward increasing private sector participation in the energy sector, though the latter project placed a specific emphasis on the deregulation of the petroleum sector (World Bank, 2000; World Bank, 1996c). The year 1994 was marked by the approval of the ‗Second Power Development Project‘ in Belize. This initiative, approved amidst falling oil prices, sought to increase reliability of the utility and reduce pollution and power generation costs by importing electricity from Mexico (World Bank, 1999b).

In 1995, two loans were approved for power sector projects in Jamaica. The first initiative entitled the ‗Jamaica Energy Partners Old Harbour Diesel Project‘ was a loan from the International Finance Corporation (IFC) to an Independent Power Producer (IPP) to build, own and operate (BOO) a 74MW heavy oil power plant (International

39 It should be noted that the Third Power Project in 1982 in Haiti was the only one of the World Bank Group power projects (which occurred between 1976 and 1989) that was rated by the International Development Association as ‗unsatisfactory‘. The other projects were said to have been satisfactorily implemented. 97

Finance Corporation, 1995). The second loan, valued at USD$30 million, was entitled the ‗Generation Recovery and Improvement Project‘ and was geared toward restoring the service of the national utility as well as reducing the cost of power production (World Bank, 1995). Both projects were related to an incident in 1994 which destroyed 25 percent of the existing generating capacity on the island.

Interestingly, disbursements from the WBG plummeted from 1996 until 2003 (while oil prices remained relatively low) at which time the IFC granted a loan of approximately USD $53 million to the Jamaica Public Service Company (the national electricity utility company) in order to expand their generating capacity by constructing a 120MW combined cycle power plant (International Finance Corporation, 2002). In 2006, as oil prices rose, the World Bank approved the ‗HT Electricity Project‘, a loan, via the IDA for USD$6.5 million, which was aimed at modernising and improving the operations of the national power utility company. Two years later, as oil prices peaked, the ‗Bagasse Co-generation Project was initiated in Guyana as a loan programme valued at USD$2.6 million. The programme sought to utilise bagasse (a by-product of sugar production) in order to generate electricity to power sugar production facilities and for sale to the national grid (World Bank, 2005)40. In 2009, the World Bank approved a USD$ 5 million grant in order to provide additional financing for the ‗Electricity Loss Reduction Project‘. This initiative was an extension of the aforementioned ‗HT Electricity Project‘ which was therefore also geared toward the improvement of the quality of service provided by the national utility by focussing on strengthening its operational performance (in areas such as customer service and bill collection) (World Bank, 2006a).

In 2010, though oil prices were already relatively high in 2009 (at USD$62.89), the ascent in price continued to USD$79.03 per barrel (as a yearly average, in USD 2010). In 2010, four projects were approved by the WBG. Projects ―JPS Co. II‖ and ―Jamaica Energy Partners 3: West Kingston Power Partners (WKPP)‖ were both initiated by the IFC, as loans valued at approximately USD $30 million each. ―JPS Co II‖ was aimed specifically at aiding the efforts of the national utility in reducing system losses (in order to comply with newly set efficiency levels), along with making ―new investments in renewable energy (small wind and hydro) sources‖ in order to reduce vulnerability to oil price fluctuations and lower greenhouse gas emissions (International Finance Corporation, 2010c). Simultaneously, however, the Jamaica Energy Partners 3: West Kingston Power Partners (WKPP) project sought to provide financial assistance to an IPP to expand their power generating capacity using ―medium-speed diesel engines burning heavy fuel oil on a build-own-operate (―BOO‖) basis‖ (International Finance Corporation, 2010b).Meanwhile, in Haiti, project ―E-Power S.A‖ was initiated by the IFC as a loan valued at USD $50 million toward the to construction of a 30MW Heavy Fuel Oil (HFO) diesel power plant on a build-own-and-operate basis, as an Independent Power Producer (IPP) (International Finance Corporation, 2010a). In the same year the World Bank also approved financing for a project entitled ―Grant for the Emergency Program for Solar Power Generation and Lighting for Haiti as a Consequence of the Earthquake in Port-au-Prince‖, which was worth approximately USD $500,000.‖ The project, implemented by the Global Environment Facility, was directed toward the ―acquisition of solar power and/or hand-crank portable lanterns and lighting systems” to

40 This project also seeks to facilitate the sale of carbon credits under the Clean Development Mechanism (a mechanism of the Kyoto Protocol. 98 be used in areas affected by the earthquake in Haiti that occurred in January 2010 (World Bank, 2010d).

In sum therefore, between 1970 and 2010, WBG disbursements fluctuated considerably and were not always directly related to oil price increases. What is notable, is that in some instances, following periods of high oil prices (such as in the 1980‘s, in 2008 and to some extent in 2010), projects tended to include components that sought to increase the utilisation of renewable energy sources. In addition, it would be somewhat remiss not to highlight the considerable debt accumulation on the part of Jamaica and Haiti. During the aforementioned period, Jamaica amassed a total debt of approximately USD$529 million, of which USD$113 million was lending to Independent Power Producers (IPPs) (to encourage private sector participation) by the IFC. Similarly, Haiti accrued a debt of around USD$315 million, of which USD$50 million was loan finance from the IFC directed toward an IPP.

4.6.1.2 Nature of WBG Energy Aid to the Caribbean & Pacific

With regard to the sectoral distribution of energy aid from the World Bank Group (WBG) between 1970 and 2010, 39 percent of total aid expenditure was allocated to fossil fuel based projects while 27 percent focused on renewable energy initiatives (see Figure 4-22). The majority of spending on fossil fuel based projects was devoted to power sector projects, as 13 out of a total 22 projects (see Figure 4-23) were geared towards increasing thermal generating capacity, most using diesel or heavy fuel oil (HFO). Simultaneously, renewable energy projects which received funding from the World Bank were dominated by the installation and/or repair of hydroelectric facilities, as 10 out of a total of 17 renewable energy initiatives were focused on this source of power. It would be remiss however, not to highlight that there were no initiatives between 1970 and 2010 in the Caribbean or Pacific that were solely geared toward improving energy efficiency (see Figure 4-22)41. Nonetheless, 19 percent of total aid expenditure and 12 projects implemented by the WBG in the Caribbean and Pacific were focused on institutional strengthening and policy reform while five projects, representing 15 percent of total energy aid expenditure were devoted to the construction, extension, repair and maintenance of electricity transmission and distribution infrastructure.

41 It should, however, be noted that there was an initiative undertaken in Haiti by the International Development Association aimed at reducing electricity losses, though this project was focused on improving the quality of electricity services largely through institutional strengthening of the local utility. For more see: World Bank. 2006b. Project Information Document (Appraisal Stage): Haiti Electricity Loss Reduction Project. Available: http://www- wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2006/04/17/000012009_20060417084 346/Rendered/PDF/35860.pdf [Accessed November 18, 2011]. 99

Figure 4-22: World Bank Group Energy Aid to the Caribbean & Pacific by sector

Figure 4-23: World Bank Group Energy Aid to the Caribbean and Pacific (by sector & number of projects)

When placed side by side, it becomes clear that there was a much greater emphasis on renewable energy in the Pacific by the World Bank Group (see Figure 4-24). This might be explained, at least in part, by the predominance of investments in hydroelectric projects (in PNG, Fiji, Samoa and the Solomon Islands). Conversely, the Caribbean

100 showed that emphasis had been placed on investments in (capital intensive) conventional thermal (primarily diesel-based) power generation equipment, as evidenced by the prevalence of fossil fuel based aid in Figure 4-25. In either region, it is likely that the least cost option would have been chosen, relative to the magnitude of local energy demand. As mentioned earlier, the average per capita energy consumption for electricity is higher in the Caribbean, which would make diesel based generation more economically competitive than many renewable energy alternatives. A greater volume of resources was also spent on institutional strengthening and policy reform in the Caribbean, where funds awarded for this purpose accounted for 24 percent of total energy aid expenditure (twice the proportion of funds allotted to the Pacific for the same purpose). It should be noted that projects of this nature in the Caribbean were primarily geared toward financial and legal advice along with increasing private participation in the power sector. In addition, 18 percent of energy aid to the Caribbean was channelled towards constructing or maintaining electricity transmission and distribution infrastructure, while half that amount (9 percent) was allocated to Pacific nations for the same purposes.

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Figure 4-24: World Bank Energy Aid to the Pacific (by sector) Figure 4-25: World Bank Energy Aid to the Caribbean (by sector)

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4.6.1.3 WBG Energy Aid Disbursements by Type

Energy aid from the World Bank Group in the Caribbean and Pacific could be described as loan-intensive. Between 1970 and 2010, approximately USD $1.5 billion was disbursed to the energy sector, of which just over USD$1.4 billion (92 percent) was available as loans. By contrast, only 1 percent of the assistance over the period was offered via grant funding (see Figure 4-26). Additionally, other more unique forms of aid accounted for 7 percent of allocations awarded to the energy sector during the aforementioned period.

Figure 4-26: World Bank Group Energy Aid to the Caribbean & Pacific by Type of Disbursement When both regions are compared however, the significant preponderance of loan aid in the Caribbean becomes obvious, where it accounted for 99 percent of total aid awarded by the World Bank Group between 1970 and 2010 (see Figure 4-27). While the proportion allotted to loans was also high in the Pacific, it was approximately 20 percent less than the Caribbean (see Figure 4-27). Disbursements from the World Bank Group to the Pacific were also more diverse as other more unique forms of aid accounted for 18 percent of energy aid while none were recorded for the Caribbean. That said, it should also be noted that grant aid was relatively low in both regions and only accounted for 3 percent in the Pacific and 1 percent in the Caribbean.

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Figure 4-27: WBG Pacific Energy Aid (by disbursement type) Figure 4-28: WBG Caribbean Energy Aid (by disbursement type)

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Overall (i.e. in both the Caribbean and Pacific), the great majority of funds were disbursed via 26 loans that fell between USD$5 million to USD$50 million (in $USD 2010) (see Figure 4-29). Following this, another nine loans between USD$50 million to USD $100 million were also approved by donor entities active in both regions. On the other hand, the majority of grant funded projects that were approved between 1970 and 2010 were worth less than USD$5 million.

Figure 4-29: World Bank Group Energy Aid in the Caribbean and Pacific - by amount approved

4.6.1.4 Summary: WBG Energy Aid to the Caribbean & Pacific (1970 – 2010)

Energy aid disbursements by the WBG between 1970 and 2010 fluctuated but were shown to be correlated to oil prices. With regards to WBG energy aid to Pacific, the relationship between oil prices and aid disbursements was maximised with a lag of less than one year when both 5 and 7 year moving averages were used. In the case of the Caribbean, the correlation between WBG energy aid and oil prices was maximised after a lag of one year when a 5 year moving average was used and 2 years when a 7 year moving average was used. This shows that WBG energy aid was more responsive to oil price shifts in the Pacific. This difference may be due to the presence of energy exporting nations in the Caribbean region (namely Trinidad and Tobago, and Venezuela), which could perhaps have served to make Caribbean island nations less sensitive to oil price shocks than their counterparts in the Pacific region.

In addition, there were a number of instances in both regions where aid allocations were specifically geared toward reducing the vulnerability of Caribbean and Pacific island nations to high oil prices (namely between 1974 and 1983, and 2008 to 2010). During the first such period (1974 – 1983), the Bank‘s emphasis lay on the development of indigenous energy resources, including hydropower, coal, geothermal, oil and gas. The Bank‘s decision in 1978 to extend support to oil and gas production was motivated by the fact that it was hitherto uneconomical for non-OPEC nations to produce petroleum due to low prices at the time. Conversely, support to the oil and gas (as well as the coal)

105 sector were no longer central to the World Bank‘s focus in the energy sector due to the primacy of concerns related to climate change. Thus, the emphasis of Bank financing to the sector from around 2008 was said to be directed toward cleaner forms of energy production. Yet still, the majority of funds dispensed to the Caribbean region (approximately 53 percent – see Figure 4-25) between 1970 and 2010 were allocated to projects involving fossil fuel based technologies. It should be recalled that the great majority of funds awarded to the Pacific (during the period being examined) were directed toward renewable energy applications (around 71 percent – see Figure 4-24).

To addto the above, WBG energy funding allocations to the Caribbean and Pacific could be described as loan intensive, accounting for 92 percent of overall assistance (see Figure 4-26). Reliance on loan financing was particularly noticeable in the Caribbean where this form of assistance accounted for approximately 99 percent of total funding transfers to the energy sector (see Figure 4-27). Though potentially not as high, 79 percent of funds awarded to the Pacific were disbursed via loan financing (see Figure 4-28). The impact of continued loan financing on debt accumulation may be a cause for concern, especially in the case of PNG, Haiti and Jamaica who received relatively large amounts of loan funding from the WBG between 1970 and 2010. However, it should be noted that Haiti would have accessed funds from the WBG in the form of ‗credits‘ and on very concessionary terms. This is due to the fact that Haiti receives its funding through the IDA as a poor nation. This would apply to some degree to Papua New Guinea, which is categorised as a ‗blend country‘ which means that it receives funding under both concessionary and market rates and conditions (International Development Association, 2012). Jamaica, however, would have received funding under near - market conditions, making debt accumulation a prime and valid concern.

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4.6.2 Asian Development Bank

The Asian Development Bank (ADB) was formed in 1966 with the remit to assist the economic development of countries in Asia and the Pacific, so as to help facilitate the alleviation of poverty in both regions (Asian Development Bank, 2012b). The ADB currently has 67 members (48 regional members and 19 non-regional members) (see Appendix II) (Asian Development Bank, 2012a) and offers assistance to its member countries primarily through loans, grants, policy dialogue, technical assistance and equity investments (Asian Development Bank, 2012b). The majority of the Bank‘s lending is offered at ―near-market terms to lower to middle-income countries‖ (Asian Development Bank, 2012d). However, according to the ADB, financing to the Bank‘s poorest member countries is provided through its Asian Development Fund (ADF) which is said to offer loans at very low interest rates (Asian Development Bank, 2012d).

4.6.2.1 Asian Development Bank Energy Aid to the Pacific (1970 - 2010)

As can be observed from Figure 4-30, disbursements to the energy sector from the Asian Development Bank (ADB) trended downwards on average (using 5 and 7 year moving average), but, much like the World Bank Group, does at times seem to be responsive to oil prices. In attempting to showcase the relationship between oil prices and energy disbursements, the same methodology outlined in section 4.6 was utilised. Thus, aid disbursements were compared with oil prices (using 5 and 7 year moving averages for aid disbursements) in constant US 2010 dollars. Figure 4-30 shows aid disbursements from the Asian Development Bank (ADB) to the energy sector in the Pacific against world oil prices and along with a 5 and 7 year moving average trendline.

Figure 4-30: ADB Energy Aid to the Pacific (1970 -2010)

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A regression analysis was performed to find the cross correlation coefficient between the price of oil, (X) at time t and the average value of the aid disbursement (Y) at time t- ∆T (using 5 and 7 year running averages for the aid disbursements). Using the same formula as above to find the cross correlation coefficient, r2 was then determined for various values of ∆T using the standard linear regression on Microsoft EXCEL; as shown in Table 4-1.

Table 4-5: Regression values showing the relationship (i.e. time delay) between oil prices and ADB energy aid disbursements in the Pacific

Using 5 Year Moving Average Using 7 Year Moving Average Lag Years Regression (r2) Value Lag Years Regression (r2) Value 0 0.530 0 0.560 1 0.340 1 0.477 2 0.206 2 0.307 3 0.143 3 0.149 4 0.077 4 0.096 5 0.080 5 0.028

Here it can be seen that a maximum correlation using both five and seven year moving averages was obtained for a lag of 0 years, that is, the lag was less than one year. The plot of oil price and the aid disbursement for a time lag ∆T of 0 years is shown in Figure 4-31and Figure 4-32.

Figure 4-31: Chart showing relationship between the price of oil and average ADB energy aid disbursements to the Pacific using a 5 year average (with 0 year delay)

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Figure 4-32: Chart showing relationship between the price of oil average ADB Energy Aid Disbursements to the Pacific using a 7 year moving average (for 0 years delay)

Using a 5 year moving average, for an r2 value of 0.530, r equals 0.728.With 37 data points this means that the probability of a correlation between oil price and aid disbursements of approximately100 percent (see Taylor (1997)). In the case of the 7 year moving average, for an r2 value of 0.560, r equals 0.748. With 35 data points this means that the probability of a correlation between oil price and aid disbursements is also approximately 100 percent (see Taylor (1997)42).

4.6.2.1.1 1970 to 1989 – Coping with Instability in the Middle East

A review of ADB operations in the energy sector in the Pacific between 1970 and 1990 (see Table 4-6) unveiled a distinct focus on the part of the Bank on reducing the vulnerability of the relevant island economies to high oil prices. These high oil prices were brought about, to a large extent, by instability in the Middle East, especially between 1970 and 1980. Reducing vulnerability to high oil prices was therefore pursued largely through projects aimed at developing indigenous energy sources (particularly hydroelectricity) in order to reduce the magnitude and need for energy imports. The following section therefore illustrates this general thrust and focus by the ADB by giving an account of the projects approved in the Pacific region between 1970 and 1989.

42 Specific data on probability of correlations can be found in Taylor, J. R. 1997. An Introduction to Error Analysis: The Study of Uncertainties in Physical Measurements, California, USA, University Science Books. Table C, p 291. 109

Table 4-6: Asian Development Bank Energy Aid to the Pacific (1970 - 1989).Disbursements have been rounded to three significant figures

Donor Recipient Year 2010 Project Name Aid Approved $USD form (000's))

ADB Samoa 1971 344 Technical assistance for Power Grant Supply project ADB Fiji 1972 24,500 Power Expansion Project Loan

ADB Samoa 1973 11,300 Power Project Loan

ADB Samoa 1973 184 Technical assistance for Power Grant (Project) ADB Samoa 1974 7 Technical assistance for Power Grant Supply project (supplementary) ADB Samoa 1975 5,670 Power Project (Supplementary) Loan

ADB Samoa 1975 59 Technical assistance for Power Grant [Project] (Supplementary) ADB Solomon 1976 881 Technical assistance for Lungga Grant Islands Hydropower ADB PNG 1977 360 Technical assistance for Grant Hydrological/Hydroelectric Planning ADB PNG 1977 9,710 Provincial Mini-hydropower Project Loan

ADB Solomon 1978 228 Technical assistance for Lungga Grant Islands Hydropower (Supplementary) ADB Fiji 1978 54,100 Second Power Project Loan

ADB Fiji 1979 210 Fiji Electricity Authority Tariff Study Grant

ADB Samoa 1979 210 Technical assistance for Tariff Study Grant and Revaluation of Assets ADB Samoa 1979 10,500 Second Power Project Loan

ADB PNG 1979 210 Technical Assistance for Electricity Grant Tariff Review ADB PNG 1979 36,900 Upper Warangoi Hydropower Loan

ADB Samoa 1980 920 Technical assistance for Feasibility Grant Study of Fagaloa/Afulilo Hydropower Scheme ADB Fiji 1981 38,381 Third Power Project Loan

ADB Fiji 1983 437 Rural Electrification Study Grant

ADB PNG 1983 547 Technical assistance for the Grant Institutional strengthening of the PNG Electricity Commission

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ADB Samoa 1983 324 Technical assistance for Energy Grant Planning and Institutional Support ADB Solomon 1983 328 Technical assistance for Power Grant Islands Development Study ADB Vanuatu 1983 324 Technical assistance for Energy Grant Planning and Institutional Support ADB PNG 1984 468 Ramu - Port Moresby Transmission Grant Interconnection Study ADB Samoa 1984 524 Technical assistance for Afiamalu Grant Pump - Assisted Hydropower ADB Kiribati 1986 1392 Tarawa Power Loan

ADB Samoa 1986 10,700 Afulilo Hydroelectric Project Loan

ADB Samoa 1986 398 Technical assistance for Grant Improvement of Electric Power Corporation's Financial Management ADB Solomon 1986 8,360 Power Expansion Project Loan Islands ADB Solomon 1986 430 Technical assistance for Upgrading Grant Islands of the Accounting and Management Information Systems in the Solomon Islands Electricity Authority (SIEA) ADB PNG 1986 298 Technical assistance for Divune Grant hydro power ADB PNG 1986 39,100 Ramu Grid Reinforcement Loan

ADB Solomon 1987 671 Technical assistance for Komarindi Grant Islands Hydropower ADB Vanuatu 1987 9 Technical assistance for Energy Grant Planning and Institutional Support (Supplementary) ADB Kiribati 1988 1660 Power Distribution Project Loan

ADB Cook 1989 N.A.* Power System Reinforcement in Grant Islands Rarotonga ADB PNG 1989 14775.47 Divune Hydropower Project Loan

ADB Kiribati 1989 175.90 Feasibility study of the Power Grant System Expansion in Tarawa ADB PNG 1989 905.88 Technical assistance for power Grant system planning study ADB Tonga 1989 175.90 Technical assistance for power Grant development

*N.A.: Data not available

111

The first allotment of aid featured in this study occurred in 1971, when oil prices were quite low (at USD$14.31).Grant funding was provided to Samoa worth approximately USD $345,000 (as a reminder, all disbursements and oil price quotations have been stated in USD$ 2010), for technical assistance in the form of a feasibility study related to a increasing the domestic supply of electricity. Power expansion activities also occurred in Fiji in 1972, where a loan for approximately USD$24.5 million was granted for a ―Power Supply‖ project (Asian Development Bank, 1973) 43. In 1973, as oil prices remained low (having only increased from USD$15.06 in the previous year to USD$15.92) Samoa received both a loan and a technical grant for a power project. The loan, which was related to and partially the result of aforementioned 1971 ADB technical assistance project in Samoa, was worth around USD$11.2 million and was primarily geared toward ―urgent rehabilitation and expansion‖ of the local power system (Asian Development Bank, 1974). The related technical assistance, valued at approximately USD$184,000, was meant to support these efforts. Supplementary technical assistance to the aforementioned 1973 power project in Samoa was approved in 1974 (Asian Development Bank, 1975), valued at approximately USD$6,600, as oil prices spiked to approximately USD$51.27 (the average price for the year in $USD 2010) as a result of the Arab-Israeli war of 1973/4. Also known as the ―Yom Kippur War‖, the oil crisis resulted from a decision by the Organization of the Petroleum Exporting Countries to reduce oil production by 5 percent per month from October 1973 in response to US support of Israel during the war (US Department of State: Office of the Historian).

In recognition of the impact of high oil prices on the electricity sector in its ‗Developing Member Countries‘ (DMCs), in 1974 the Bank noted that ―in light of the recent energy crisis, governments had to re-examine investment priorities in the sector and, in planning investments, to focus on projects based on indigenous sources of power generation‖ (Asian Development Bank, 1975). As a result, ―none of the new projects financed by the Bank in the power sector in 1974 involved the use of imported petroleum resources‖ (Asian Development Bank, 1975). Rather, project activities focused on exploration for and production of indigenous energy sources, including conventional (coal, oil, gas) and renewable sources, to reduce vulnerability to high oil prices.

In 1975, the ADB placed an emphasis on indigenous energy sources (with respect to the generation of electricity) (Asian Development Bank, 1976) and approved a further two supplementary power projects for Samoa. However, the first initiative, a loan valued at around USD$5.7 million, was put toward diesel-powered generation as ―there was no feasible indigenous energy source immediately available‖ to meet the electricity requirement at that time (Asian Development Bank, 1976). Regardless, approximately USD$59,000 was approved in conjunction with this loan, as grant funding for technical assistance.

43 Not only was this Fiji‘s 1st loan from the ADB, but in 1972 (as it was in 1971) there were more loans awarded to the power sector than any other area of economic industry or social activity. In 1972, 28.6 percent of all loans awarded by the ADB went to the Power Sector, though this was less than the percentage in 1971, when it accounted for 41.5 percent of ADB loans. For more, see: Asian Development Bank 1972. Annual Report 1971. Manila, Philippines, Asian Development Bank 1973. Annual Report 1972. Manila, Philippines. 112

As the Bank continued to place an emphasis on the development of indigenous energy sources (Asian Development Bank, 1977), a single technical assistance grant project for a small project entitled, ―Lungga Hydropower‖ (valued at approximately USD$881,000) was approved in 1976, as oil prices declined slightly to USD$44.26. Follow-up, supplementary technical assistance was approved in 1978 (to the tune of approximately USD$228,000) (Asian Development Bank, 1979). In 1977, as oil prices registered a faint increase to USD$45.02 (though still historically high), the Asian Development Bank again noted that its lending to the power sector would place an ―emphasis on the development of indigenous energy resources as well as on balanced growth of transmission and distribution facilities to ensure a better quality of supply and reduced energy losses‖ (Asian Development Bank, 1978). As a result, all power generation projects financed by the Bank in 1977 were focused on the development of hydroelectric facilities (Asian Development Bank, 1978).

In 1978, the ADB reported that its operations in the power sector would reflect a focus on balanced development of the sector (in terms of upgrades to transmission, distribution and generation facilities) in order to optimise efficiency and the establishment of new facilities utilising indigenous energy sources (Asian Development Bank, 1979). In fact, the Bank announced that the 1973-74 oil crisis brought about a shift in focus toward the development of indigenous sources of power generation, highlighted primarily by ―the fact that about 90 percent of the Bank‘s loans for power generation made in the period 1975 – 1978 [were]... for the development of power based on domestic fuel and hydropower resources‖ (Asian Development Bank, 1979). It might be worthwhile to note that climate change or environmental impacts were not central to the concerns raised during this period. Climate change did not begin its ascent as an important international environmental issue until the early 1990‘s, after the International Panel on Climate Change was formed in 1988 (Intergovernmental Panel on Climate Change), as will be discussed later in this case study. As such, efforts to locate and utilise domestic sources of fuel would have included oil, gas and even coal44. Yet still, aside from the aforementioned supplementary technical assistance to the ‗Lungga Hydropower Project‘ in the Solomon Islands, ADB financial assistance was also extended to Fiji through a loan valued at USD$54 million for an electricity transmission project (Asian Development Bank, 1979). Approximately USD$210,000 was also approved for the Fiji Electricity Authority to carry out an assessment of its ―tariff level and structure‖ (Asian Development Bank, 1979).

In 1979 funds were released for a similar tariff study in PNG and Samoa, though the study in Samoa also included a re-evaluation of assets (Asian Development Bank, 1980). Additionally, through a project entitled ―Second Power Project‖, around USD$10.5 million was provided to finance the Fale-ole-Fe‘e run-of-river hydroelectric facility in Samoa (Bodda, 2004). A further USD$37 million was put toward the Upper Warangoi Hydropower scheme in PNG (Asian Development Bank, 1980). Interestingly, the ADB in its annual report asserted that high oil prices continued to drive its efforts to utilise ―indigenous energy sources such as hydro-power, natural gas, lignite coal and geothermal power‖ (Asian Development Bank, 1980).

44 The ADB made the official decision in 1976 to fund coal mining projects. See Asian Development Bank 1981. Annual Report 1980. Manila, Philippines.p 35. 113

Oil prices rose sharply to USD$94.49 in 1980 as a result of the second oil crises brought about by the overthrow of the then monarch Shah Mohammad Reza Pahlavi (through popular uprisings and protest). This was followed by the Iran – Iraq War which lasted from 1980 to 1988, as leaders in Iraq sought to take advantage of the instability caused by the 1979 revolution in Iran (Baxter, 2009). Oil production in Iran was said to have dropped from approximately 5.8 million barrels per day to 445,000 barrels per day, largely as the result of the nationalisation of the petroleum industry and the expulsion of international oil companies by Ayatollah Ruhollah Khomeini, who led the Iranian revolution (Verleger et al., 1979; Baxter, 2009). Within the context of such a backdrop, the drive to utilise indigenous energy sources was sustained, and a technical assistance grant worth approximately USD$920,000 was awarded to Samoa in order to conduct a feasibility study of the Fagaloa/Afulilo Hydropower Scheme (Asian Development Bank, 1981). The ADB also noted that towards the end of 1979 (in light of high oil prices) a decision was made to extend its available financing to, inter alia, rural mini-hydro projects45, non-hydro renewable energy sources such as ―firewood, biogas and gasohol46‖; the preparation of energy master plans as well as ―energy demand management and conservation policies‖ (Asian Development Bank, 1981). Finally, in 1980 the Bank commissioned a ‗Regional Energy Survey‘ in order to ―formulate a more effective program of assistance to this sector‖ (Asian Development Bank, 1981).

The following year, the ADB approved a loan to Fiji valued at around USD$38 million. The Bank‘s emphasis on indigenous energy sources remained and as such the funds were to be utilised to ―maximise the energy potential of the Monasavu storage hydroelectric scheme by diverting additional water flows into the Monasavu catchment area and reservoir‖(Bodda, 2004). To add to this, the findings of the Regional Energy Survey were published. According to the ADB, the investigation revealed ―three principal dimensions of the energy problem: (i) the heavy and increasing foreign exchange burden imposed on Developing Member Countries (DMCs) by rising oil prices; (ii) the high capital costs associated with developing indigenous energy resources as alternatives to imported oil; and (iii) the greater demands being placed on the already diminished non-commercial energy resources of rural areas due to higher costs of alternative commercial fuels‖ (Asian Development Bank, 1982). In response, the Bank sought not only to increase its overall funding to the energy sector, but also to mobilise additional funding from other sources and donors while broadening the scope of assistance offered to energy projects (Asian Development Bank, 1982). A decision was also made to initiate a meeting of all major donor entities active in the Pacific region in order to ―review the scope and coverage of ongoing and planned energy development‖ so as to enhance donor coordination in the region (Asian Development Bank, 1982).

According to the ADB, its activities in 1982 were largely the result of the findings from its Regional Energy Survey which was published a year earlier. In tandem therefore, a number of region-wide activities were initiated. Indeed, a meeting of regional and

45 More specifically financing would be considered for mini hydro projects without costly transmission components or long gestation periods. Moreover, it was particularly geared to assist in the provision of electricity to ―low-income villages, small industries and agribusiness‖ where such installations did not need to be connected to the national grid. See ibid. p35. 46 Sometimes referred to as alcohol fuel, gasohol is a blend of ethanol and gasoline that is used in internal combustion engines. E10,( a commonly-known gasohol) contains 90 percent gasoline and 10 percent ethanol. 114 international funding agencies was held in 1982 and was attended by 17 donor entities active in Asia and the Pacific to discuss the finding of the Regional Energy Survey and to find ways of improving the coordination of technical assistance activities in the energy sector (Asian Development Bank, 1983). A region-wide symposium on Power Utility Tariffs was also held in order to discuss electricity pricing policies (Asian Development Bank, 1983). Further, a regional rural electrification study was initiated in 1982 in order to ―help remedy inadequacies in the assessment and evaluation of the efficiency and achievements of rural electrification programs‖ (Asian Development Bank, 1983). A region-wide training course for power utility staff was also held so as to ―enable them to formulate, evaluate and implement power development projects effectively and economically‖ (Asian Development Bank, 1983).

At this time the Bank continued to stress that its emphasis in the energy sector would be on the development of indigenous energy sources (Asian Development Bank, 1984). To this end, five technical assistance projects were approved in 1983 in the Pacific (as the cost of oil declined to USD $64.52, from USD$71.28 in 1982). To begin, two projects involving planning and institutional support to the energy sector were approved at a cost of approximately USD$324,000 each to Vanuatu and Samoa (Asian Development Bank, 1984). A study pertaining to the future development of the power sector in the Solomon Islands was also approved, valued at approximately USD$328,000 (Asian Development Bank, 1984). Fourthly, a project geared toward the institutional strengthening of the PNG Electricity Commission was initiated at a cost of approximately USD$547,000. Finally, a rural electrification study in Fiji was approved at a cost of around USD$438,000 (Asian Development Bank, 1984).

Forms of technical assistance continued in 1984 with the approval of funding for the Ramu-Port Moresby Transmission Interconnection Study in PNG, worth approximately USD$468,000. Additionally, USD$525,000 of grant funding was approved for technical support to the Afiamalu Pump - Assisted Hydropower scheme in Samoa. The Bank continued to emphasise that ―reducing the burden of energy imports remained a high priority objective of most DMCs‖ (Asian Development Bank, 1985). In response, in 1984, the majority loan financing from the Asian Development Bank was devoted to the energy sector (Asian Development Bank, 1985). Moreover, the Bank made a special note about the unique characteristics of its smaller South Pacific Developing Member Countries (SPDMCs)47, which acknowledged that a more flexible approach to its operations and disbursements in such nations was necessary (Asian Development Bank, 1985). In light of this and due to other operational difficulties faced (largely related to the pace of communication with the ADB Head Office and decision-making), the Bank established a South Pacific Regional Office (SPRO) in Vanuatu in 1984 (Asian Development Bank, 1985) 48.

47 South Pacific Developing Member Countries (SPDMCs) of the ADB comprise the Cook Islands, Kiribati, Solomon Islands, Tonga, Vanuatu and Western Samoa. It might be worthwhile to note that Fiji and PNG, though Developing Member Countries (DMCs) of the ADB, are not included in this group. See: Asian Development Bank 1985. Annual Report 1984. Manila, Philippines. p. 52 48 It should be noted that the name of the SPRO was changed to the South Pacific Regional Mission (SPRM) in 1995 and the office in Vanuatu was closed in 2005. Notwithstanding this, the ADB opened a South Pacific Sub-regional Office (SPSO) and a Pacific Liaison and Coordination Office (PLCO) in 2003 in Suva, Fiji and Sydney, Australia respectively. For more see: Asian Development Bank. Closing of South Pacific Regional Mission in Vanuatu. Available: http://www2.adb.org/Documents/Others/IN199- 05.pdf [Accessed 10 September 2012]. 115

The price of oil decreased significantly in 1986, to USD$28.20 (from USD$55.47 in 1985). At that time, seven energy projects were approved by the ADB across the Pacific, three of which were technical assistance initiatives. With regards to the technical assistance that was offered, around USD$398,000 was channelled toward improving the financial management of Samoa‘s Electric Power Corporation. A further USD$430,000 was approved for upgrading the accounting and management information system at the Solomon Islands Electricity Authority (SIEA). To add to this, around USD$298,000 was approved in order to provide technical support to the Divune Hydropower scheme in PNG. Four larger loan/credit financed projects were approved in 1986. Firstly, approximately USD$1.4 million (which was co-financed by the government of Australia) was approved in order to cater for the installation of a new diesel power generating unit in South Tarawa, Kiribati (Asian Development Bank, 1987). A loan to provide new diesel –fuelled electricity generating units for Honiara and the Noro Port complex in the Solomon Islands was also approved, valued at around USD$8.4 million (Asian Development Bank, 1987). A loan to Samoa, for the ―Afulilo Hydroelectric Project‖, was co-financed by the International Development Association (IDA), the European Investment Bank (EIB) and the European Economic Community (EEC). The project was worth approximately USD$10.7 million and was approved in order to provide ―hydroelectric power through the construction of a dam and the installation of generating equipment and transmission lines‖ (Asian Development Bank, 1987). In PNG, the ―Ramu Grid Reinforcement‖ project was approved at a cost of near USD$39 million to increase the capacity and reliability of the grid in that area (Asian Development Bank, 1987). The project consisted of the installation of two gas turbine units as well as a single circuit 80 kilometre, 132kV transmission line (Asian Development Bank, 1987). This project in PNG also included consultancy services meant to build significantly upon the aforementioned Ramu-Port Moresby Interconnection initiative as well as the ‗Divune Hydropower Project‘, both within the context of conducting feasibility studies and detailed engineering designs to facilitate future implementation of these projects (Asian Development Bank, 1987; Asian Development Bank, 1996b).

In 1987, as oil prices remained relatively depressed at USD$34.90, technical assistance was approved for the Komarindi Hydropower project in the Solomon Islands and for energy planning and institutional support to Vanuatu.

A single power project in Kiribati was approved in 1988 (as oil prices fell even further to USD$28.23) at cost of approximately USD$1.7 million. This loan served to ―provide an expansion of the power distribution system in Tarawa and the provision of tools and equipment for the Public Utilities Board workshops.‖ In 1989, oil prices rose slightly to USD$31.50. Meanwhile, an ADB Task Report on its SPDMCs recommended that the Bank should remain flexible in its operations in these small island economies, that a ―strong emphasis [should be placed] on technical assistance and that its South Pacific Regional Office in Vanuatu should have greater authority in matters relating to procurement and contract approvals‖ (Asian Development Bank, 1990). Three technical assistance projects were therefore approved in 1989. Two of these initiatives were related to planning and development in the power sector in Tonga and PNG, at a cost of USD$ 176,000 and USD$905,000 respectively. A feasibility study related to the expansion of the power system in Tarawa was also approved for Kiribati, valued at approximately USD$176,000. To add to this, the PNG received a loan toward the ‗Divune Hydropower Project‘ through which two 1.5MW units were to be installed as

116 part of a hydropower station, along with around ―85 kilometres of 22 kV lines for transmitting the hydropower to the load centers‖ (Asian Development Bank, 1989)49.

4.6.2.1.1.1 Summary: 1970 to 1989 – Coping with Instability in the Middle East

In sum, ADB assistance to the energy sector within (and even outside) SIDS between 1970 and 1990 was driven largely by a desire to reduce vulnerability to sudden spikes in the price of oil. The sudden increases in the price of oil between 1970 and 1990 were brought about by events in the Middle East that adversely affected petroleum production. As a result, particularly between 1973 and 1982, the Bank placed a specific emphasis on the development and utilisation of indigenous energy sources including coal, petroleum and renewable sources of energy. Even after 1982, the Bank‘s operations pertaining to the electricity sector in the Pacific region pointed to an overall focus on projects involving indigenous energy use, especially hydropower. In the period which followed (1990 to 2010), the ADB‘s project activities in the energy sector were shaped not only by a desire to reduce vulnerability to high oil prices, but also by a desire to enhance private participation in the power sector and to address concerns related to climate change.

4.6.2.1.2 1990 to 2010: Enhancing private participation, responding to climate change

A survey of energy initiatives approved by the ADB between 1990 and 2010 revealed a shift in primary areas of focus, from reducing vulnerability to oil to boosting private participation in the energy sector and mitigating climate change through the deployment of renewable and energy conserving technologies. In this regard, it should be noted that considerable resources remained geared toward the development of hydropower. Additionally, it should perhaps be noted that this period was also characterised by deliberate efforts by the Bank to increase the volume of technical assistance being channelled to the Pacific region (based to some degree on the recommendation made through an ADB Task Report on its South Pacific Developing Member Countries in 1989). Overall however, between 1990 and 2010, the Bank‘s primary areas of focus or emphasis were increasing the involvement of private companies in the power sector and responding to the issue of climate change, as demonstrated by the projects approved during this period.

49 It should be noted that was not implemented at that time in 1989. This initiative is, however, part of a project approved in 2010 entitled the ―Town Electrification Investment Program,‖ which is a Multitranche Finance Facility offered via the ADB. Data gathered from: Yu, X. & Taplin, R. 1997. A Survey: International Aid for Renewable Energy in the Pacific Islands since the 1970s. Energy Policy, 25, 501- 516, Kesterton, R. June 6 2011. RE: Research on Aid for Energy in the Caribbean and Pacific. Type to NILES, K. 117

Table 4-7: Asian Development Bank Energy Aid to the Pacific (1990 - 2010). Disbursements have been rounded to three significant figures.

Donor Recipient Year 2010 Project Name Aid Approved $USD form (000's) ADB Fiji 1990 267 Technical assistance to the Grant Fiji Electricity Authority for tariff study ADB Solomon 1990 7,840 Second power extension Loan Islands project: increase of diesel generating capacity ADB Solomon 1990 2,170 Technical assistance for Grant Islands Komarindi Hydropower ADB Samoa 1990 67 Consultancy Services Grant Related to the Western Samoa Emergency Power Rehabilitation Loan ADB Samoa 1990 834 Emergency (diesel) power Loan rehabilitation projects in Savaii ADB Samoa 1990 67 Technical assistance for Grant emergency (diesel) power rehabilitation projects in Savaii ADB Samoa 1990 234 Technical assistance for a Grant power system planning study ADB PNG 1991 296 Technical assistance for a Grant Gas Based Power Generation Study ADB Tonga 1991 584 Technical assistance for Grant institutional and financial development of the Tonga Electric Power Board ADB Tonga 1991 11,700 Power development project Loan ADB Federated 1992 543 Technical assistance for a Grant States of power sector development Micronesia project ADB Marshall 1993 302 Technical assistance for Grant Islands Outer Islands Electrification Study ADB Samoa 1993 3,019 Afulilo Hydroelectric Power Loan (Supp.) ADB Cook 1994 368 Technical Assistance: Outer Grant Islands Islands Power Development Study ADB Samoa 1994 515 Technical assistance for Grant institutional support and power development study for

118

EPC ADB Tonga 1994 147 Technical assistance for Grant second power development study ADB Fiji 1995 644 Institutional strengthening of Grant the Fiji Electricity Authority ADB Federated 1995 451 Technical assistance: power Grant States of system improvement and Micronesia institutional strengthening study ADB Tonga 1995 143 Technical assistance to plan Grant more diesel electricity ADB Marshall 1995 286 Technical assistance for Grant Islands Ebeye Power Development Study ADB PNG 1995 751 Technical assistance for Grant Hydrocarbon sector policy & strategy study ADB Samoa 1995 501 Technical assistance to Grant strengthen power sector management ADB Tonga 1996 N.A.* Institutional development of Grant the Tonga Electric Power Board (TEPB) & for Rural Electrification ADB Tonga 1997 6,790 Second power development Loan project ADB Kiribati 1998 1,610 Technical Assistance: Grant Management & Financial Advisory Services for the Public Utilities Board ADB Region- 1998 N.A.* Impact Evaluation Study of n.a. wide Assistance to the Power Sector in the Pacific ADB Marshall 1999 1,200 Ebeye Health and Loan Islands Infrastructure ADB Samoa 1999 196 Technical Assistance: Grant Institutional Strengthening of EPC ADB PNG 2000 411 Technical Assistance: Grant Review of Mining and Hydrocarbons Tax Regimes ADB PNG 2001 862 Technical Assistantance for Grant Gas Pipeline Development ADB Samoa 2001 N.A.* Power Sector Improvement Loan Project ADB Samoa 2001 185 Strengthening Energy Loss Grant Reduction and Maintenance Management Capacity of the Electric Power Corporation ADB Samoa 2001 6,160 Promotion Of Renewable Grant Energy, Energy Efficiency and Greenhouse Gas

119

Abatement (PREGA) ADB Fiji 2002 485 Technical Assistance: Rural Grant Electrification Project ADB Samoa 2002 364 Technical Assistance: Grant Preparing the Savai'i Renewable Energy Project ADB Regional 2003 711 Renewable Energy and Grant Energy Efficiency Program (REEP) for the Pacific ADB Federated 2004 13,000 Omnibus Infrastructure Loan States of Development Project Micronesia ADB PNG 2005 1,120 Technical assistance Grant Preparing the PNG Gas Project ADB Nauru 2005 419 Technical Assistance: Grant Reform of the Nauru Phosphate Corporation ADB Fiji 2006 757 Technical Assistance: Grant Improving Infrastructure Services ADB Fiji 2006 703 Renewable Power Sector Grant Development ADB Samoa 2006 811 Technical assistance: Grant Preparing the Power Sector Expansion Program ADB Fiji 2007 263 Renewable Power Sector Grant Development (supplementary) ADB Samoa 2007 44,200 Power Sector Expansion Loans Project & Grants ADB Samoa 2007 1,950 Technical assistance: Grant Implementing the Samoa National Energy Policy ADB PNG 2007 526 Technical Assistance for Grant Power Sector Development Plan ADB PNG 2008 1,220 Technical Assistance for Grant Power Sector Development ADB Regional 2008 248 Technical assistance: Grant preparing a response to high prices ADB Regional 2008 1,420 Technical assistance: Grant Promoting Energy Efficiency in the Pacific ADB Samoa 2008 1,220 Technical assistance for Grant Afulilo Environmental Enhancement ADB Multi- 2008 11,700 Promoting Energy Efficiency &AusAid country in the Pacific (Phase II) ADB Regional 2009 2,900 Technical Assistance: Grant Establishment of the Pacific

120

Infrastructure Advisory Centre (Power Utility Benchmarking Component) ADB Regional 2009 3,050 Technical Assistance: Grant Promoting Access to Renewable Energy in the Pacific ADB Regional 2009 5,050 Technical Assistance: Grant Strengthening the Capacity of Pacific Developing Member Countries to Respond to climate change ADB PNG 2010 57,300 Town Electrification Loan Investment Program, Tranche 1 ADB Marshall 2010 1,760 Improved Energy Supply for Grant Islands Poor Households ADB Marshall 2010 9,500 Public Sector Program Loan Islands

*N.A.: Data not available

The aforementioned emphasis on technical assistance in the South Pacific (based on the recommendation made in 1989) was maintained in 1990 and several projects of this nature were approved. In Fiji, funding was granted to the tune of approximately USD$267,000 in order to fund a tariff study at the local utility. The Solomon Islands also received around USD$2.2 million to support the Komarindi Hydropower Project50.

In addition, the Solomon Islands also received a loan toward increasing their local power generation capacity using diesel as the required fuel. Samoa was also awarded a grant worth approximately USD$233,000 to fund a power system planning study aimed at preparing an electricity ―generation and transmission development programme at the local utility‖ (Asian Development Bank, 1991b). Moreover, when Samoa was struck by a hurricane in February 1990, emergency funding (via a loan worth approximately USD$834,000) was released in order to replace damaged power generation units (Asian Development Bank, 1991a). Technical input was also made available to support these efforts at a cost of around USD$67,000 (Asian Development Bank, 1991a).

In 1991, the Bank financed a gas-based power generation study via grant financing worth USD$296,000 in PNG. A further USD$584,000 was released (as a grant) to Tonga for technical support aimed at providing advice related to the institutional and financial strengthening of the Tonga Electric Power Board. Tonga also received a loan valued at around USD$11.7 million aimed at improving the domestic supply of electricity and reducing energy losses (Asian Development Bank, 1992). It should, however, be noted that though world oil prices were relatively low at the time (approximately USD$31), ―the energy sector dominated bank lending in 1991, and its share of total lending increased from 26 per cent in 1990 to 36 per cent. (Asian

50 It should be noted that the Komarindi Hydro project never came to fruition as it was thought to have been technically infeasible, which may have been due to ―extensive limestone geology in the area‖ Information from: Kesterton, R. June 6 2011. RE: Research on Aid for Energy in the Caribbean and Pacific. Type to NILES, K. 121

Development Bank, 1992). The Bank also noted that its emphasis in the sector was upon ―the use of indigenously available energy sources in an environmentally friendly manner‖(Asian Development Bank, 1992)51.

As oil prices decreased again in 1992 to USD$29.58 (a yearly average in $USD 2010), the energy sector once again attracted the lion‘s share of loan funding from the ADB. Yet still the only energy project on record for that year that was approved within the Pacific was a technical assistance project in the Federated States of Micronesia (FSM) which was geared toward power sector development at a cost of around USD$544,000 (Asian Development Bank, 1993).

A pivotal event which occurred in 1992 was the United Nations Conference on Environment and Development which occurred in Rio de Janeiro, Brazil. This gathering was the first inter-governmental meeting52 to call for action addressing the link between the use of fossil fuels by human beings and climate change, which led to the formulation and development of the 1992 United Nations Framework Convention on Climate Change (UNFCCC) (United Nations, 1997) from which the 1997 Kyoto Protocol emanates. Concerns related to climate change therefore rose to a significant degree of prominence on the international policy agenda which, in practice, meant that decisions relating to investments in energy technologies (on the part of donor and state entities) were thenceforth significantly influenced by the climate change impact of such devices.

In 1993, the Bank approved a study focused on the electrification of the outer islands in the Marshall Islands with a grant worth approximately USD$302,000. A supplementary loan was also approved to support the earlier work done under the earlier Afulilo Hydroelectric Project (approved in 1986) in order to enhance Samoa‘s supply of hydro power (Asian Development Bank, 1994a). In 1994, as oil prices slumped even further to USD$23.46, the Bank‘s emphasis on technical assistance remained as three grant- funded projects of this nature were approved. The first was for an outer islands development study in the Cook Islands valued at around USD$368,000. The other two initiatives were both for studies geared toward the development of the power sector in Tonga and Samoa, though the latter included a component of institutional support to the local utility and cost approximately USD$515,000 (Asian Development Bank, 1995a). The support approved for Tonga was geared toward the preparation of a future, larger project with the Bank (Asian Development Bank, 1995a).

Interestingly, in the following year (1995), the ADB asserted that its approach to the energy sector would thenceforth be geared toward increasing private participation, especially for large projects (Asian Development Bank, 1996a). As a result, competition was to be encouraged within electricity subsectors (generation, transmission and distribution) (Asian Development Bank, 1996a). Even more so, the ADB noted that it would only ―finance new capacity additions if it satisfied that the utility is paying adequate attention to supply efficiency and demand management‖ (Asian Development Bank, 1996a). Notwithstanding this, the emphasis on technical assistance remained and six such projects were approved in South Pacific Developing Member Countries in

51 It should be noted that the primary environmental concerns at this time were mainly related to minimising pollution and degradation. 52 The conference was said to be attended by representatives of 172 countries. For more info see: United Nations. 1997. Earth Summit: Un Conference on Environment and Development [Online]. Department of Public Information. Available: http://www.un.org/geninfo/bp/enviro.html [Accessed 10 September 2012]. 122

1995. To begin, assistance aimed towards helping the Fiji Electricity Authority undertake planning activities related to tariffs, diesel generation projects and long term development was approved (Asian Development Bank, 1998b; Asian Development Bank, 1995c). The Federated States of Micronesia also received grant funding worth approximately USD$450,000 for preparatory feasibility studies related to improving the capacity of the Yap and Chuuk Islands‘ power systems, which were ―urgently required because of the poor condition of existing diesel generating plant and distribution systems‖ (Asian Development Bank, 1999b). In Tonga, approximately USD$143,000 was released for planning related to expanding diesel-fuelled electricity generation. The Marshall Islands also received a grant of USD$286,000 for feasibility studies pertaining to the rehabilitation and possible expansion of power generation and transmission facilities (Asian Development Bank, 1999a). Support to strengthen power sector management in Samoa was also approved at a cost of around USD$500,000, and a policy and strategy study for the Hydrocarbon sector PNG was also approved valued at approximately USD$750,00053(Asian Development Bank, 1998c; Asian Development Bank, 1995b).

In 1996, as oil prices increased slightly from USD$24.61 in 1995 to USD$28.32, a single technical assistance project was approved so as to provide institutional support to the Tonga Electric Power Board and to determine the feasibility of installing additional diesel power generation units on the outer islands of Tonga; but this project was withdrawn by the government of Tonga and therefore not implemented (Bodda, 2004). Notwithstanding this, the ADB did approve a loan valued at approximately USD$6.8 million toward the ―Second Power Development Project‖ in Tonga, which was geared toward an expansion of generating capacity, particularly in the outer islands of Tonga (Asian Development Bank, 1997; Monenco AGRA Inc, 1996). However, as it pertains to the electricity sector as a whole, the Bank did maintain its focus on the ―corporatisation and commercialisation of government owned utilities...[and on boosting] competition in the areas of power generation and power distribution in particular‖ (Asian Development Bank, 1996a).

Two years later in 1998, as oil prices sank to a decade-low price of USD$17.49, Kiribati received a grant worth USD$1.6 million to cover the cost of expert management and financial advice to the local utility, the Public Utilities Board (Asian Development Bank, 2004b)54. More importantly perhaps, in December 1998, a report evaluating the impact of ADB assistance to the power sector in its Pacific Developing Member Countries was published. The report indicated that the Bank‘s assistance up until that time was primarily focused on meeting the costs of purchasing equipment and on the

53 According to the ADB, this Technical Assistance project―was to entail the assessment of the institutional framework for policy review and sector management; a review of policy in the areas of gas pricing, utilization, taxation, petroleum pipeline sharing and management, environmental protection and safety; recommendations for policy changes‖. For more, see: Asian Development Bank 1998c. Technical Assistance Completion Report: Hydrocarbon Sector Policy and Strategy Study (Ta 2418 Png). Manila, Philippines. 54 It should however be noted that this initiative was more focused on the provision of water and sanitation services, which also fall under the purview of the Public Utilities Board (PUB) in Kiribati. For more information, see: Asian Development Bank. 2004b. Technical Assistance Completion Report - Management & Financial Advisory Services for the Public Utilities Board - Kiribati (Ta 3108). Available: http://www.adb.org/Documents/TACRs/KIR/tacr-kir-3108.pdf. p 1. 123 commercialisation55 of utilities (Asian Development Bank, 1998a). Notwithstanding this, the report listed ―institutional strength and not capital finance...[as] the principal constraint‖ facing power utilities in the Pacific at the time (Asian Development Bank, 1998a). The report also lamented the lack of coordination between donors active in the power sector in the region and noted that the projects of different agencies ―often work to duplicate and occasionally are at cross purposes‖ and as such are inefficient (Asian Development Bank, 1998a). Increased emphasis on technical assistance, especially through direct support for institutional support, along with better coordination among donors, was therefore recommended (Asian Development Bank, 1998a).

In 1999, oil prices remained low but increased marginally to USD$23.54. At that time, a single loan worth USD$1.2 million was approved to the Marshall Islands for an initiative entitled the ―Ebeye Health and Infrastructure Project‖. A large portion of this initiative was devoted to the power sector, particularly for the rehabilitation of the power station, the installation of auxiliary generating units, the laying of underground transmission lines as well as the deployment of pre-paid meters (Asian Development Bank, 2004a)56. Samoa also received a grant of USD$196,000 in the same year, toward institutional strengthening of the local utility.

At the turn of the century, as the price of oil commenced its upward climb at that time to USD$35.75, the ADB approved a review of hydrocarbon and mining tax regimes in PNG (at a cost of around USD$411,000) so as to make these sectors more appealing to foreign investors (Asian Development Bank, 2003b). PNG received further technical assistance in 2001 for a gas pipeline development project at a cost of approximately USD$862,000, and sought to enhance the existing regulatory framework governing the sector so as encourage private sector participation (Asian Development Bank, 2006a). Two grant-funded technical assistance projects were also approved in Samoa in 2001. The first was geared towards ―Strengthening Energy Loss Reduction and Maintenance Management Capacity of the Electric Power Corporation‖ through the input of external expertise (John Worrall PTY Ltd., 2004). The other project focused on the mitigation of climate change and on the deployment of alternative technologies and was entitled ―Promotion of Renewable Energy, Energy Efficiency and Greenhouse Gas Abatement (PREGA)‖. This was a regional project that was to be implemented throughout eighteen Developing Member Countries of the ADB. However, of the eighteen countries selected, Samoa was the only Pacific Island nation. That said, according to the ADB, the initiative aimed ―to promote investments in renewable energy, energy efficiency and greenhouse gas (GHG) abatement technologies that would increase access to energy services by the poor, realize other strategic sustainable development objectives, and help reduce GHG emissions‖ (Asian Development Bank, 2007b).

In 2002, though remaining relatively low, the price of oil registered a very moderate increase from USD$29.96 in 2001 to $30.25. In the same year, a rural electrification project was approved in Fiji valued at approximately USD$484,000 and was aimed at providing ―extensions of the Fiji national grid networks to rural villages on the main islands and installation of 3,200 solar home systems in villages in remote areas‖

55 Within this context, the term ‗commercialisation‘ refers not merely to privatisation but perhaps more so to the process through which an entity (in this case a power utility) is made more competitive (especially on market terms), particularly through streamlining internal processes to become more efficient. 56 The Ebeye Health and Infrastructure Project served to implement some of the findings of the technical assistance project executed in the Marshall Islands in 1995. 124

(SMEC, 2005). Grant funds were also released to locate and conduct feasibility studies on possible sites for hydroelectric development that could have then led to increased private sector involvement as well as a loan in Savai‘i, Samoa (Asian Development Bank, 2005)57. It should perhaps be noted that in 2002, the ADB hosted a regional seminar on electricity sector reform where it was ―agreed that deregulation and privatization are essential elements of a power sector development strategy for the region‖ (Asian Development Bank, 2003a). Thus, an emphasis on the role of private participation in the power sector was emphasised once more.

During the following year, the ADB approved a regional project entitled the ―Renewable Energy and Energy Efficiency Program (REEP) for the Pacific‖ which focused on improving the access of rural communities in Pacific Developing Member Countries to ―commercially viable energy services using mature renewable energy and energy efficiency applications‖ (Asian Development Bank, 2007c). Emphasis was placed on enhancing private sector involvement so as to develop a market based rural energy sector (Asian Development Bank, 2007c; BURGEAP, 2006)58. In 2004, as oil prices rose from USD$24.37 in 2003 to USD$43.59, the Bank approved an infrastructural loan project worth approximately USD$13 million, to the Federated States of Micronesia which extended support to water works and the energy sector. As it pertains to the latter, the financing provided was aimed at the rehabilitation of generation and transmission facilities, especially as the power generation system that existed at that time was said to be ―on the verge of collapse‖ (GlobalWorks, 2004).

In the year 2005, technical support was provided to PNG (valued at approximately USD$1.1 million) to explore the possibility, in collaboration with the private sector, of producing natural gas for export to Australia by pipeline (Asian Development Bank, 2009b)59. In Nauru, around USD$418,000 was devoted to reforming the local utility company in order to achieve much-needed improvements in the quality of local electricity supply (Asian Development Bank, 2008f).

In terms of international concerns related to climate change, the year 2005 was pivotal, as the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), was published. The report offered further evidence for the anthropogenic forcing of climate change and also provided deeper analysis of region-specific impacts (including a chapter on the small islands). Moreover, the Kyoto Protocol (adopted in 1997), an optional addition to the United Nations Framework Convention on Climate Change through which developed/industrialised (also known as Annex I) countries made commitments to reduce their emissions of greenhouse gases, entered into force in 2005 (United Nations Framework Convention on Climate Change, 2012b). The Protocol also allowed industrialised countries to reduce their emissions, through use of the

57 The ADB however noted that this project failed ―mainly due to political and social sensitivities‖, largely related to community based objections and concerns, pertaining especially issues surrounding to access to land. See: Asian Development Bank 2005. Technical Assistance Completion Report: Preparing the Savai‘i Renewable Energy Project, Samoa. Manila, Philippines. 58 Though this initiative was approved as region-wide, Samoa and Fiji were selected as the target or recipient countries for implementation. 59 It should be noted that this TA project was eventually abandoned as the lead private sector partner (Exxon Mobil) withdrew interest in the pipeline, but later opted to explore the development of Liquefied Natural Gas.Asian Development Bank. 2009b. Technical Assistance Completion Report: Preparing the Png Gas Project (Ta 4710-Png). Available: http://www.adb.org/Documents/TACRs/PNG/39584-PNG- TCR.pdf [Accessed 22 April 2011]. 125 carbon market (via emissions trading), and through projects that decreased emissions in developing countries (known as the Clean Development Mechanism [CDM]) as well as through partnerships with other developed countries (known as Joint Implementation [JI]) (United Nations Framework Convention on Climate Change, 2012b).

In 2006, approximately USD$811,000 was granted to Samoa in order to undertake feasibility and engineering design studies of a potential hydroelectric generation facility on the Vaita‘i stream, along with the necessary transmission infrastructure in Savai‘i, Samoa (Tonkin and Taylor International Ltd, 2007). In addition to this, the project sought to examine other possible power generation sites, and to encourage a comprehensive reform programme in order to produce ―more effective management structures and a regulatory framework that would enable private sector participation and enhance the efficiency in the sector‖ (Tonkin and Taylor International Ltd, 2006). In Fiji, USD$757,000 was approved as grant funding for a project entitled the ―Renewable Power Sector Development project‖, which sought to support the introduction of a multi-sector regulatory commission (including the power sector) and to develop a rural electrification strategy (Asian Development Bank, 2006c). Additional grant funding valued at approximately USD$703,000 was also approved to support the Fiji Electricity Authority‘s ―investment program by assisting in the preparation of a least-cost expansion program for renewable and indigenous resources, and the upgrading of the transmission and distribution networks‖ (Asian Development Bank, 2006b).

In 2007, as oil prices climbed further to USD$74.80, approximately USD$263,000 was approved as supplementary funding toward the aforementioned 2006 Renewable Power Sector Development project in Fiji (Asian Development Bank, 2008a). In addition, the feasibility studies and preparatory work done in Samoa in the preceding year resulted in a combined grant and loan project which received funding of approximately USD$44 million. The project, entitled the ―Power Sector Expansion Project‖ comprised, inter alia, the upgrade of transmission and distribution facilities, the installation of pre-paid meters for customers, as well as the implementation of transmission and power generation sub-projects (Asian Development Bank, 2007a). Approximately USD$2 million of grant funding was also released to Samoa to support the implementation of their National Energy Policy (which was published in the same year). Technical assistance (valued at USD$525,000) was approved for a ―Power Sector Development Plan‖ in PNG, which focused primarily on extending electricity access on the island through, amongst other things, a review of relevant policy and legislation as well as an ―assessment of power sector demand and supply‖ (VisionRI Connexion Services Private Limited, 2009).

The year that followed was indeed significant. Yearly averaged oil prices peaked at USD$98.28 and the ADB published its long-term strategic framework for 2008 to 2020, known as ‗Strategy 2020‘ (Asian Development Bank, 2009a). This strategic policy document listed the ABD‘s five core operational areas as being ―infrastructure; environment, including climate change; regional cooperation and integration; finance sector development; and education‖ and stated that ―alignment of 80 [percent] of ADB operations with the five core operational areas will be achieved by 2011‖ (Asian Development Bank, 2009a). The Bank asserted that Strategy 2020 ―aims to help developing member countries mitigate and adapt to climate change‖ (Asian Development Bank, 2009a) and also acknowledged renewable energy as a key sector within this framework (Asian Development Bank, 2009a). In tandem therefore, in 2008

126 the ADB approved a regional project entitled ―Energy for All‖ which sought to ―develop new approaches and methodologies for promoting access of the poor to reliable and affordable modern energy services‖ (Asian Development Bank, 2008g) particularly through involving the ―private sector, financial institutions and community organisations‖ (Asian Development Bank, 2008b). In addition, approximately USD$248,000 was approved to conduct a regional policy study on preparing for and coping with high oil (and food60) prices (Asian Development Bank, 2009a). Moreover, around USD$1.4 million was approved in order to conduct further studies (so to lead to pilot projects) on improving energy efficiency in the Pacific region, particularly through, inter alia, the establishment of an energy efficiency baseline along with the ―preparation of policy and regulatory measures‖ (Asian Development Bank, 2008d; Asian Development Bank, 2008e). The Bank also approved approximately USD$1.2 million to Samoa in order to ―investigate the integrity of the dam structure and compliance with the International Committee on Large Dams (ICOLD), and conduct a dam break analysis‖ (Asian Development Bank, 2008c) of the Afulilo Hydroelectric facility and ―to recommend measures to improve dam safety‖ if necessary (Asian Development Bank, 2008c).

In 2009, annual average oil prices (though remaining relatively high) dropped to USD$62.78. Simultaneously, the ADB published an Energy Policy report geared toward making its operations in the energy sector coherent with its ‗Strategy 2020‘ which according to the Bank was based upon ―three key pillars: [namely] promoting energy efficiency and renewable energy; maximizing access to energy for all; and promoting energy sector reform, capacity building, and governance‖ (Asian Development Bank, 2010b). In addition, the ADB‘s Energy Efficiency Initiative, which sought to mobilise investments in ‗clean energy‘, was renamed the ‗Clean Energy Program‘ and ―monitored the extent to which ADB‘s clean energy investments reduced greenhouse gas emissions, saved kilowatt-hours, and produced megawatts from renewable energy sources‖ (Asian Development Bank, 2010b). The Bank also sought to place greater emphasis on climate change not only through increasing its investments in low-carbon technologies as well as promoting scientific and policy studies, but also through region- specific planning, such as the ‗Climate Change Implementation Plan for the Pacific‘, which sought to give nations in the region ―a framework for developing and implementing climate change investments and action plans [up until] 2015‖ (Asian Development Bank, 2010b). Moreover, the ADB also published ‗The Pacific Approach 2010-2014‘ which was geared toward improving the overall effectiveness of future assistance from the Bank (Asian Development Bank, 2010b). In terms of disbursements, the ADB issued grant funding for two region-wide projects. The first sought to establish a benchmarking initiative for power utilities as part of the Pacific Infrastructure Advisory Centre (PIAC) in an attempt to enhance the performance electricity service providers in the region. Approximately USD$3 million was also approved in order to conduct feasibility studies for small scale renewable energy projects in PNG, Solomon Islands and Vanuatu, with the hope that such initiatives could possibly be scaled up in the future. (Asian Development Bank, 2009c)

60 Between 2007- 2008, the price of rice and wheat was noted to have increased by 75 and 120 percent respectively which was thought to have contributed to food riots in several countries worldwide, including Haiti, Bangladesh and Egypt. Source: CNN.com. 2008. Riots, Instability Spread as Food Prices Skyrocket. Planet in Peril [Online]. Available: http://edition.cnn.com/2008/WORLD/americas/04/14/world.food.crisis/ [Accessed 11 September 2012]. 127

As oil prices rose to USD$79.03 in 2010, loan-financed projects were approved for PNG and the Marshall Islands. The initiative in PNG, valued at approximately USD$57 million, was meant to enhance electricity access via renewable energy generation in lieu of using conventional sources (Asian Development Bank, 2011c). The project therefore included, inter alia, the ―construction of about six run-of-river hydropower plants to supply provincial centres, [and the] construction of transmission systems to connect provincial centres‖ (Asian Development Bank, 2011c). In the Marshall Islands, around USD$9.5 million was disbursed to undertake significant public sector reform, inclusive of implementing a recovery plan for the local utility which faced significant financial and operational challenges due to the aforementioned high price of oil in 2008 (Asian Development Bank, 2010c; Marshalls Energy Company). The Marshall Islands also received grant funding of approximately USD$1.8 million geared towards extending electricity access to impoverished segments of the population, and also to utilise a coconut oil/diesel blend in power generators and for the installation of pre-payment meters (Asian Development Bank, 2011b). The ADB also released a study entitled ―Responding to Climate Change in the Pacific‖, which detailed the Bank‘s strategy to boost climate change mitigation and adaptation in the Pacific region, to boost clean energy deployment and also, inter alia, to enhance the capacity of Pacific Developing Member Countries to utilise the Clean Development Mechanism (Asian Development Bank, 2010a). On the whole, in 2010, the Bank re-emphasised the centrality and importance of climate change and expanded the volume of funds available through its ‗Clean Energy Program‘ for financing and extending climate-friendly energy access (Asian Development Bank, 2011a; Asian Development Bank, 2010a). In fact, the ADB highlighted that in 2010 it ―incorporated its Energy Efficiency Initiative into the Clean Energy Program to double an annual clean-energy-investment target of $1 billion (2008–2012) to $2 billion from 2013‖ (Asian Development Bank, 2011a).

4.6.2.1.2.1 Summary: 1990 to 2010: Enhancing private participation, responding to climate change

To summarise, between 1990 and 2010, enhancing private participation and climate change became important considerations that influenced disbursements of aid by the ADB to the energy sector in the Pacific. Particularly after 1995, the ADB‘s approach to the energy sector was explicitly geared toward increasing private participation. The Bank‘s focus on climate change also became increasingly clear as oil prices began to rise in 2000 and the Bank launched its ―Promotion of Renewable Energy, Energy Efficiency and Greenhouse Gas Abatement (PREGA)‖ project which sought to bring together the aims of reducing vulnerability to high oil prices (through the deployment of alternative energy technologies) and climate change mitigation. Thus, while the ADB did place a considerable degree of emphasis on increasing private participation in the energy sector and on the provision of technical assistance, the volume of funds awarded to clean energy projects progressively increased. Hence, between 1990 and 2010, concerns related to high oil prices were coupled with the desire to enhance climate change mitigation and as such contributed greatly to increased investments in indigenous and renewable energy sources (as opposed to investments in indigenous non-renewable sources, like coal and petroleum - which was facilitated by the Bank between 1970 and 1990.)

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4.6.2.1.3 Summary: Asian Development Bank Energy Aid to the Pacific (1970 - 2010)

Akin to the World Bank Group, ADB energy aid disbursements between 1970 and 2010 were found to be linked to oil prices. In this regard, ADB energy aid showed a correlation to oil prices with no delay. That said, this case study also confirmed that the ADB placed an emphasis on energy aid during (or directly following) periods of particularly high oil prices, especially between 1974 and 1979. In fact, the Bank‘s assistance to the energy sector was often aimed at reducing vulnerability to high oil prices, highlighted by the fact (as mentioned earlier) that ―about 90 percent of the Bank‘s loans for power generation made in the period 1975 – 1978 [were]... for the development of power based on domestic fuel and hydropower resources‖ (Asian Development Bank, 1979). Indeed, an increased focus on reducing the impacts of high oil prices was sustained until around 1986. A significant emphasis on alternative energy sources and reducing the impacts of high oil prices did not re-emerge until between 2008 and 2010.61 Instead, what is easily observed about the assistance offered by the Asian Development Bank was the shift in focus from mitigating high oil price impacts to enhancing private sector participation in the energy sector (particularly from 1995 up until 2008) in an attempt to boost commercial efficiency. This proved to be significant to their endeavours in the power sector in the Pacific Islands where the small size of the electricity markets and difficulties related to the access and ownership of land often hindered private involvement (Asian Development Bank, 1998a).

Moreover, what was also interesting about the approach adopted by the ADB was the organisation‘s explicit support for coal and petroleum production as an indigenous energy source in order to reduce oil imports (particularly around 1979 when climate change was not a major concern on the global agenda). Instead, support for climate change mitigation became a significant theme of ADB assistance from around 2008. Notwithstanding this, it should be noted that the Bank did place a great deal of effort and resources into developing hydropower (as an indigenous resource) between 1970 and 1990. Another key observation about ADB assistance that can be drawn from the period being studied was the emphasis placed on technical assistance from 1989 onwards. This thrust was reinforced in 1998 by recommendations made after an evaluation of ADB aid to the power sector in the Pacific region. In this vein, a considerable amount of technical support was devoted to institutional strengthening and policy reform in the Pacific as a total of 23 projects were focused on this aspect. Another observation that can be drawn after examining the Bank‘s aid to the energy sector between 1970 and 2010 is that there seems to have been a dearth of projects solely devoted to energy efficiency. Indeed, only one initiative existed (entitled ―Promoting Energy Efficiency in the Pacific,‖ approved in 2008), was entirely geared towards enhancing energy efficiency. To add to this, and much like the Inter-American Development Bank (which will be discussed later in this thesis), most regional initiatives by the ADB were geared toward reducing fossil fuel dependency and vulnerability to oil prices, particularly through promoting enhanced use of energy efficient or renewable energy technologies

61 Though it should be recalled that the ―use of indigenously available energy sources in an environmentally friendly manner‖ was mentioned as a priority in 1991 Asian Development Bank 1992. Annual Report 1991. Manila, Philippines. 129

4.6.2.2 Nature of ADB Energy Aid to the Pacific (1970 – 2010)

The largest volume of funds (48 percent) disbursed to the energy sector by the Asian Development Bank (ADB) were devoted to renewable energy, via 20 projects (Figure 4-33 and Figure 4-34). This is likely to be related to the emphasis placed on hydropower between 1970 and 1990, which is connected to the significant emphasis placed on the development of indigenous energy sources in order to mitigate the impacts of high oil prices. Following this emphasis, just over a quarter (26 percent) of total energy aid from the ADB was allocated to 13 fossil fuel based projects. A large portion of that expenditure pertained to the expansion of power generating capacity using conventional fuels (usually diesel) and also to the development of natural gas in PNG. Simultaneously, around fifteen percent of aid allocations to the energy sector were focused on the construction, maintenance and repair of electricity transmission and distribution facilities. That said, even though institutional strengthening and policy reform accounted for only six percent of total energy aid expenditure, this was implemented through 23 different project activities (more than any other sector represented in this study). As mentioned, this is indicative of the considerable resources that were spent on promoting private sector participation in the power sector and the large portion of funds put toward the privatisation, commercialisation and/or corporatisation of power utilities. Finally, the project entitled ―Promoting Energy Efficiency in the Pacific,‖ was cumulatively worth approximately USD$13 million and therefore constituted around five percent of ADB aid to the energy sector and (as the only project geared exclusively toward energy efficiency) represented the total volume of aid that was focused solely on energy efficiency.

Figure 4-33: ADB Energy Aid in the Pacific (1970 - 2010) by sector

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Figure 4-34: ADB Energy Aid to the Pacific (by sector & number of projects)

4.6.2.3 ADB Energy Aid Disbursements by Type

Insofar as the types of disbursements are concerned, a total of 25 loans were approved by the ADB between 1970 and 2010 to the sum of approximately USD$413 million. Eight of these loans were allocated to Samoa and totalled around USD$86 million. Five of the loan programmes were allotted to PNG, but at a sum of approximately USD $158 million. Similarly, only three loan projects were awarded to Fiji but the total sum of funds borrowed for these initiatives amounted to approximately USD$117 million. The quantity of funds borrowed by Samoa, PNG and Fiji does raise concerns related to debt accumulation. That said, it should be noted that loans awarded to Samoa were likely to have been from the Bank‘s Asian Development Fund (ADF). According to the ADB, financing from the ADF is concessionary, offered at below-rates and is reserved for the Bank‘s poorest members. This would apply to some extent to PNG which, though eligible to receive financing under the ADF, has in the past received some loans under ‗blended‘ terms, i.e., under a mix of concessionary and near- market conditions. The Republic of Fiji however, would have received funding at commercial or near-market rates and conditions, making debt repayment and accumulation a key consideration. Notwithstanding concerns related to debt accumulation, during the period being examined, a total of 71 grant-funded projects were approved at a cost of approximately USD$52 million. Thus, while there were far more grant projects than loans approved by the ADB between 1970 and 2010 in the Pacific, the volume of funds disbursed through loans was far greater. As (Figure 4-35) illustrates, 89 percent of total aid expended on the energy sector was awarded as loans while 11 percent of funds were dispensed as grants.

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Figure 4-35: ADB Energy Aid to the Pacific (1970 - 2010)

Figure 4-36: ADB Energy Aid in the Caribbean - by amount approved

Notwithstanding the above, it should also be noted that the majority of ADB‘s grant funded initiatives were for projects worth less than USD$5 million. In fact 41 of the 71 grant projects approved between 1970 and 2010 cost less than USD$500,000. On the other hand, the majority of loan projects approved were valued between USD$5 million and USD$50 million. Only two loan projects were worth less than USD$1 million. This simply confirms that projects involving larger disbursements were usually funded via loan finance.

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4.6.2.4 Summary

ADB energy aid to the Pacific demonstrated an overall emphasis on increasing private participation in the power sector and on the development of indigenous energy sources. This was directly related to minimising the impact of high oil prices and was executed through a deliberate and specific focus on the development of hydropower. Nonetheless, the Bank‘s emphasis on the development of indigenous energy sources was not continuous, but rather, was responsive to the price of oil. Thus between 1974 and 1979 as well as between 2008 and 2010, there was much more of a pronounced focus on the development of ―indigenous energy sources in an environmentally friendly manner‖ (Asian Development Bank, 1992). It should be noted, however, that the ADB‘s initial definition of ‗indigenous energy sources‘ did include lignite (low grade coal) and that environmental concerns prior to the 1990‘s were primarily related to pollution and degradation. Climate change began its ascent to primacy only after the establishment of the Intergovernmental Panel for Climate Change in 1988 and the signing of the United Nations Framework Convention in 1992. Even more so a pronounced focus (on the part of the ADB) on enhancing the deployment of climate friendly technologies occurred between 2000 and 2010 (but especially between 2008 and 2010). It should also be noted that throughout the entire period being studied, only one project (though it was relatively large at USD$13 million) was solely devoted to energy efficiency. Finally, there were far more disbursements made as grants rather than loans. Eighty-nine percent of the funds dispensed by the ADB between 1970 and 2010 were released as loan financing. This is partly due to the fact that quite a large number of grant projects were feasibility studies meant to ascertain the viability of possible (and larger) loan projects (for which a greater volume of funds would be required for implementation).

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4.6.3 The Inter-American Development Bank

The Inter-American Development Bank (IDB) was established in 1959 and is the ―largest source of development financing for Latin America and the Caribbean‖(Inter- American Development Bank, 2012a). The Bank is funded by 22 developed nations (known as Non-borrowing Countries) coverage extends to 26 developing countries (known as Borrowing Member Countries (see Appendix II) in the two aforementioned regions and it seeks to support efforts to reduce poverty and inequality and aims to ―bring about development in a sustainable, climate-friendly way‖ (Inter-American Development Bank, 2012a). The IDB Group, of which the Bank is a part, also includes both the Inter-American Investment Corporation,which focuses on support for small and medium-sized businesses and the Multilateral Investment Fund which promotes private sector growth through grants and investments, with an emphasis on microenterprise (Inter-American Development Bank, 2012b). According to the IDB, its Fund for Special Operations (FSO) is used to provide development support via loan financing on concessionary terms to its ‗most vulnerable‘ or ‗less advantaged‘ member countries (Inter-American Development Bank, 2012a; Inter-American Development Bank, 2012ba). This thesis will therefore survey the energy projects approved by the IDB in the Caribbean between 1970 and 2010.

4.6.3.1 Inter-American Development Bank Energy Aid to the Caribbean (1970 - 2010)

The average flow of aid to the Caribbean energy sector from the Inter-American Development Bank (IDB) (using 5 and 7 year moving averages) peaked around 1991, some 11 years after oil peaked in price in 1980. Unless an 11 year lag can be envisaged, the data is suggestive of an anti-correlation between oil prices and aid delivery, although it is also possible that aid disbursements have been affected by events other than oil prices. To examine the relationship between oil prices and energy aid disbursements from the IDB, the same methodology that was adopted for the World Bank Group and the Asian Development Bank was utilised. Aid disbursements were compared with oil prices (using 5 and 7 year moving averages for aid disbursements) in constant US 2010 dollars. Figure 4-37 shows aid disbursements from the IDB to the energy sector in the Caribbean against world oil prices, along with a 5 and 7 year moving average trendline.

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Figure 4-37: IDB Energy Aid to the Caribbean (1970 -2010)

As with the World Bank Group (WBG) and the Asian Development Bank (ADB), a regression analysis was performed to find the cross correlation coefficient between the price of oil (X) at time t and the average value of the aid disbursement (Y) at time t- ∆T (using 5 and 7 year running averages for the aid disbursements). Using the same formula (as with the other case studies) to find the cross correlation coefficient, r2 was then determined for various values of ∆T, using the standard linear regression on Microsoft EXCEL; as shown in Table 4-8

Table 4-8: Regression values showing the relationship (i.e. time delay) between oil prices and IDB energy aid disbursements in the Caribbean

Using 5 Year Moving Average Using 7 Year Moving Average Number of Years Regression (r2) Value Number of Years Regression (r2) Value 0 0.114(anti-correlation) 0 0.186(anti-correlation) 1 0.072(anti-correlation) 1 0.096(anti-correlation) 2 0.031(anti-correlation) 2 0.038(anti-correlation) 3 0.014(anti-correlation) 3 0.001(anti-correlation) 4 0.000 4 0.002 5 0.021 5 0.022

Here it can be seen that there is an anti-correlation correlation after 0 years (less than one year). The plots of oil price and aid disbursement for a time lag ∆T of 7 years are therefore shown inFigure 4-38 and Figure 4-39.

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Figure 4-38: Chart showing relationship between the price of oil average IDB Energy Aid Disbursements to the Caribbean using a 5 year moving average (for a 0 year delay)

Figure 4-39: Chart showing relationship between the price of oil average IDB Energy Aid Disbursements to the Caribbean using a 7 year moving average (for a 0 year delay)

Using a 5 year moving average, for an r2 value of 0.114, r equals 0.337. With 37data points, this means that the probability of a correlation between oil price and aid disbursements is approximately 92 percent (see Taylor (1997)). In the case of the 7 year moving average, for an r2 value of 0.186, r equals 0.431. With 35data points, this means that the probability of a correlation between oil price and aid disbursements is approximately 98.3percent (see Taylor (1997)62).

62 Specific data on probability of correlations can be found in Taylor, J. R. 1997. An Introduction to Error Analysis: The Study of Uncertainties in Physical Measurements, California, USA, University Science Books. Table C, p 291. 136

However, the slope of the curves in Figure 4-38 and Figure 4-39 shows a negative correlation between oil price and aid disbursements after one year: that is, high oil prices and low disbursements appear to be correlated. Due to the paucity of the data (i.e. two non-overlapping peaks) it is likely that no correlation exists for this Bank and that the disbursements are related to events other than oil price. Indeed, the absence of a positive correlation between oil prices and IDB energy aid disbursements in the Caribbean could be due to the presence of oil-exporting nations in the Caribbean or to the fact a number of small and vulnerable island nations in the region are not members of the Bank, such as St. Lucia, St. Vincent and the Grenadines, St. Kitts and Nevis, Grenada and Dominica.

4.6.3.1.1 1970 to 1989: Reducing dependence on petroleum amidst volatile oil prices

Having examined both the IDB project data and the Annual Reports for each year between 1970 and 2010, it became clear that the projects were shaped around primary areas of concern or emphasis by the Bank at specific periods of time, largely as a result of key international events or issues. It seems clear that between 1970 and 1990 (see Table 4-9) the Bank placed a significant amount of focus on extending access to electricity (especially to rural areas) and on reducing the vulnerability of its Developing Member Countries (DMCs) to high oil prices. These priorities were primarily the result of instability in the Middle East.

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Table 4-9: Inter-American Development Bank Energy Aid to the Caribbean (1970 to 1989). Disbursements have been rounded to three significant figures.

Donor Recipient Year 2010 Project Name Aid form Approved $USD (000's)) IDB Jamaica 1973 942 Feasibility Study for Rural Contingent Electrification (Technical Technical Cooperation) Cooperation IDB Jamaica 1975 37,300 Rural Electrification First Loan Stage IDB Jamaica 1977 8,990 Rural Electrification Loan Programme IDB Jamaica 1979 27,600 Rural Electrification III Loan IDB Guyana 1980 40 Prefeasibility Study: Grant Thermo-Electrical Project IDB Guyana 1980 1,390 Feasibility Study, Electrical Grant Energy Generation IDB Haiti 1980 2,970 Feasibility Study for Grant Hydroelectric Project; la Chapelle (Technical Cooperation) IDB Haiti 1980 19 Pe's Cooperative, Grant Hydroelectrical Centrals (Technical Cooperation) IDB Jamaica 1980 62,200 Hydrocarbon & Geological Loan Exploration (a) IDB Bahamas 1982 1,100 Plan for Electrical Energy Grant System IDB Barbados 1982 3,390 Electricity Generation With Grant Wind Turbines (Technical Cooperation) IDB Jamaica 1982 45 Development of Solar Grant Lagoons Project IDB Suriname 1982 45 Research On Wood Grant Gasification IDB Guyana 1983 28 Br's Cooperative, Industrial Grant Charcoal Production (Technical Cooperation) IDB Guyana 1984 50 Loan Request, Electrical Grant System Rehabilitation (Technical Cooperation) IDB Haiti 1984 2,600 Study, Factory for Electrical Grant Generation (Technical Cooperation) IDB Haiti 1984 3,380 Institutional Strength, Grant Oficina Minas y Energia (Technical Cooperation) IDB Bahamas 1985 20 Chile's Cooperation to the Grant Bahamas Electricity Cooperation

138

IDB Guyana 1985 32,600 Guyana Electricity Loan Corporation Rehabilitation IDB Guyana 1985 18 Co's Coop, Hydroelectric Grant Microcentrals IDB Suriname 1985 53 Advisory, Ministry of Grant Natural Resorts IDB Jamaica 1986 10 Br's Coop, Rural Grant Electrification Program IDB Bahamas 1987 58 Study of Market: Electrical Grant Expansion IDB Guyana 1987 940 Utilization of Bagasse for Grant Electricity Generation IDB Suriname 1987 2010 Electric & Diesel Factory in Contingent Tambaredjo (Technical Technical Cooperation) Cooperation IDB Bahamas 1988 201,000 Electric Power Expansion Loan Program IDB Bahamas 1988 302 Bahamas Electricity Grant Corporation (Technical Cooperation) IDB Haiti 1988 23 Ch's Coop, Electrical Energy Grant (Technical Cooperation) IDB Trinidad 1989 24 Study: Secondary Petroleum Grant & Recuperation (Technical Tobago Cooperation)

To begin, all of the IDB projects (on record) between 1973 and 1979 (the years of two oil crises) were related to rural electrification in Jamaica (Inter-American Development Bank, 2012o; Inter-American Development Bank, 2012p; Inter-American Development Bank, 2012q). These projects, which were geared toward extending electricity access, cost approximately USD $74.8 million dollars and began with a feasibility study in 1973 followed by a three-stage/tranche initiative implemented in 1975, 1977 and 1979 (Inter-American Development Bank, 2012o; Inter-American Development Bank, 2012p; Inter-American Development Bank, 2012q)63. The great majority of funding for this initiative (around USD $ 73.9 million total) was provided as loans. It should perhaps be noted that the Bank‘s response to the oil crisis of 1974 (brought about by the Arab-Israeli war of 1973/4) was to provide support for financing oil imports in the short term, to support efforts to explore untapped hydroelectric and oil resources and to utilise other energy resources, ―such as coal and nuclear power‖ (Inter-American Development Bank, 1975).

In 1979, the second oil crisis occurred following a political uprising and revolt in Iran and oil prices rose sharply to a yearly average of USD$89.59 [in USD 2010]. The IDB stated that at that time it ―approved loans amounting to USD$396 million‖ and that ―this lending reflected the Bank‘s continuing interest in fostering the development of renewable energy resources in its member countries, encouraging the reduction of fuel oil and in providing electric distribution facilities to low-income beneficiaries in rural and urban areas‖ (Inter-American Development Bank, 1980), In the following year, as

63 The projects were entitled ―Rural Electrification First Stage‖, ―Rural Electrification Programme‖ and ―Rural Electrification III‖ respectively. 139 the international price of oil rose even further to a yearly average of USD$94.49, the IDB covered the cost of three separate feasibility studies all pertaining to power generation. Two of these projects occurred in Guyana and were entitled ―Prefeasibility Study: Thermo-Electrical Project‖ and ―Feasibility Study, Electrical Energy Generation‖ respectively (Inter-American Development Bank, 2012x; Inter-American Development Bank, 2012y). The former (as implied by its name) was focused on conventional thermal electricity generation and cost approximately USD $40,000 while the latter placed its emphasis on power generation from renewable energy sources at an estimated cost of around USD$1.4 million. A feasibility study for a hydro-electric power generation facility was conducted in Haiti in the same year at a cost of approximately USD $3 million (Inter-American Development Bank, 2012z). It should be noted that all three of the aforementioned feasibility studies were grant funded. That said, in the same year, through what the IDB described as a ―major policy innovation‖, the decision was made to begin loan financing for oil and gas exploration (Inter- American Development Bank, 1981). The first disbursement by the IDB for this purpose was a loan to Jamaica in 1980, valued at approximately USD$62 million for oil exploration activities geared towards locating and producing oil from indigenous sources (Inter-American Development Bank, 1981). Such a project (if it resulted in oil production) could have helped to reduce local vulnerability to high international oil prices and price shocks by reducing the need for oil imports (Inter-American Development Bank, 2012r).

Even though there were no funds awarded in 1981, disbursements in 1982 did reflect an overall emphasis on reducing vulnerability to oil price shocks through the development of renewable energy. Efforts in 1982 to increase the utilisation of alternative energy sources are perhaps important to note; oil prices (which then stood at USD$71.28) were still relatively high since rising during the second oil crisis in 1979. Barbados received grant funding to execute a technical cooperation project entitled ―Electricity Generation with Wind Turbines‖ valued at approximately USD$3.3 million dollars (Inter-American Development Bank, 2012ab). In Jamaica, a project entitled the ―Development of Solar Lagoons‖ was launched (Inter-American Development Bank, 2012t) while a project entitled ―Research on Wood Gasification‖ commenced64 in Suriname (Inter-American Development Bank, 2012ad). Both initiatives cost around USD$45,000 and were grant funded, as was an electrical planning project in the same year which occurred in the Bahamas at a cost of approximately USD$1.1 million (Inter-American Development Bank, 2012ac).

Interestingly, all energy-related IDB disbursements to Caribbean nations in the two years that followed (1983/4) were awarded as grants. One of these projects included a request for a loan in order to rehabilitate the electric utility company in Guyana (Inter- American Development Bank, 2012af)65 which cost approximately USD$50,000. This was accompanied by two projects in Haiti: one geared toward the development of alternative energy sources (valued at around USD$2.6 million) and the other directed toward institutional strengthening at the government department responsible for energy

64 It should perhaps be noted that similar efforts to increase the use of biomass gasification to produce power were made in the Pacific around the same time. See: Sanday, H. & Lloyd, B. 1991. Biomass Gasifiers in the Pacific. Suva, Fiji: Energy Studies Unit, Institute of Natural Resources, University of the South Pacific. 65 This project was entitled ―Loan Request, Electrical System Rehabilitation‖. 140

(at a cost of approximately USD$3.4 million) (Inter-American Development Bank, 2012ag; Inter-American Development Bank, 2012ah).

In 1985, as oil prices were on the decline (at USD$55.47, as a yearly average in USD 2010), around USD$20,000 was allocated as grant funding to the Bahamas in order to strengthen the existing thermal power generation at the Bahamas Electricity Company (the local electric utility) (Inter-American Development Bank, 2012ai). In addition, the loan to rehabilitate the electric utility company in Guyana (which was requested in the preceding year) was approved in 1985 at a cost of approximately USD$33 million (Inter-American Development Bank, 2012aj). Approximately USD$18,000 of grant funding was also allocated to Guyana toward a hydroelectric project in the same year (Inter-American Development Bank, 2012ak). In 1986, oil prices slumped to USD$28.20 and the only project approved in the Caribbean at this time was a rural electrification project in Jamaica valued at approximately USD$10,000 (Inter-American Development Bank, 2012u). In the following year however, the Bahamas received a grant to fund a study of their domestic electricity market, within the context of expanding the existing power supply in the country (Inter-American Development Bank, 2012am). Following this, Suriname received funding toward diesel based power generation at a cost of approximately USD$2 million (Inter-American Development Bank, 2012v). Guyana also received approximately USD$939,000 which was put toward a project seeking to use bagasse (a by-product of the sugar industry) to generate electricity, so as to lessen dependence on oil imports and reduce vulnerability to price volatility (Inter-American Development Bank, 2012ae).

In 1988, while oil prices were still low (at a yearly average of USD$27.23, in USD 2010), the Bahamas accessed a loan in order to undertake a large power expansion program at a cost of approximately USD$200 million (Inter-American Development Bank, 2012ao). In the same year, the local electric utility company was also awarded a grant worth around USD$302,000 as a form of technical assistance related to the upcoming power expansion (Inter-American Development Bank, 2012an). Haiti was also awarded approximately USD$23,000 worth of grant funding for technical assistance to its power sector. Trinidad and Tobago also accessed approximately USD$24,000 of grant funding in 1989, when the price of oil was still relatively low (USD$31.50), to meet the cost of research into ‗Secondary Petroleum Recuperation‘ (Inter-American Development Bank, 2012aq). This was followed by a loan worth approximately USD$404 million to execute a project entitled ―Secondary Recovery of Oil & Refinery Modification‖ which sought to ―expand the country's oil-exporting capacity and, ultimately, its foreign exchange earnings, by modernizing and expanding oil extraction infrastructure and by upgrading its refinery facilities‖ (AidData, 2010b).

4.6.3.1.1.1 Summary: 1970 to 1989: Reducing dependence on petroleum amidst volatile oil prices

IDB assistance to the energy sector in SIDS was characterised by a general thrust to reduce vulnerability to high oil prices through direct financial support and by lessening local demands for petroleum imports. In order to support efforts to cut local oil imports, the Bank extended financial assistance to the development of local petroleum and coal as well as renewable energy resources (especially hydropower). Overall therefore, though the IDB did place some emphasis on rural electrification, the overarching theme

141 of assistance to the energy sector between 1970 and 1990 was on abating the impacts of high oil prices on SIDS in the Caribbean.

4.6.3.1.2 1990 – 2010: Increased focus on Private Participation & Sustainable Energy

Akin to the ADB, between 1990 and 2010, the Inter-American Development Bank (IDB) devoted considerable technical and financial resources to the promotion and facilitation of private participation in the power sector. Climate change mitigation also featured as a primary theme of energy aid disbursements, especially toward the latter half of the period, largely due to the proliferation of scientific evidence and information about climate change and the development of the international climate change treaty regime. The projects approved between 1990 and 2010 (see Table 4-10) were therefore meant to highlight and demonstrate the IDB‘s thrust toward increasing private participation in the energy sector and on boosting the deployment of climate-friendly and energy conserving technologies.

142

Table 4-10: Inter-American Development Bank Energy Aid to the Caribbean (1990 - 2010). Disbursements have been rounded to three significant figures.

Donor Recipient Year 2010 Project Name Aid form Approved $USD (000's) IDB Bahamas 1990 250 Family Islands Electrification: Grant Project Preparation [Facility] IDB Haiti 1990 248 Project Preparation Facility: Grant Generation and Transmission Project (Technical Cooperation) IDB Jamaica 1990 137,000 Rehabilitation of Loan Hydroelectric Power IDB Jamaica 1990 125 Project Preparation Facility: Grant Improvement Electric Services (Technical Cooperation) IDB Haiti 1991 48 Electric Energy Transmission Grant (Technical Cooperation) IDB Haiti 1991 48 Electric Transmission Grant (Technical Cooperation) IDB Trinidad 1991 404,000 Secondary Recovery of Oil & Loan & Refinery Mod Tobago IDB Bahamas 1993 48,000 Family Islands Electrification Loan Program IDB Jamaica 1994 2,140 Establishment of Office of Grant Utilities Regulation (Technical Cooperation) IDB Jamaica 1994 8,460 Private Sector Energy Loan Development Program IDB Jamaica 1994 220 Energy Conservation in Grant Industrial Sector (Technical Cooperation) IDB Suriname 1994 7 Energy Tariff Structure Grant Revision (Technical Cooperation) IDB Guyana 1995 1,070 Electricity Sector Hybrid Grant Program (Technical Cooperation) IDB Haiti 1995 143,000 Emergency Program - Grant Electrical Component (Technical Cooperation) IDB Bahamas 1996 78,000 Power Expansion Program II Loan IDB Guyana 1996 63,000 Electricity Sector Program Loan IDB Guyana 1996 1,380 Execution Electricity Sector Grant Program (Technical Cooperation for Electricity Sector Program) IDB Guyana 1996 209 New Alternatives Sources of Grant

143

Energy (Technical Cooperation) IDB Haiti 1996 1,630 Legal/Regulatory Reform Grant Electric Sector IDB Haiti 1999 196 Electricity Sector's Grant Modernization Programme (Technical Cooperation) IDB Haiti 1999 392 Private Participation Electric Sector IDB Guyana 2001 308 Electrification Project for Loan Unserved Areas IDB Haiti 2001 111 Renewable Alternative Grant Energy Sources (Technical Cooperation) IDB Guyana 2002 33,000 Unserved Areas Loan Electrification Program IDB Guyana 2003 592 Strengthening Electricity Grant Sector Regulation in Support of Private Investment (Technical Cooperation) IDB Belize 2004 577 Strengthening of Public Grant Utililities Commission IDB Jamaica 2004 52 Establishment of an Energy Grant Efficiency Fund IDB Suriname 2004 231 Power Sector Assessment and Grant Alternatives for its Modernization (Technical Cooperation) IDB Guyana 2005 167 Power Sector Assessment and Grant Development Strategy (Technical Cooperation) IDB Trinidad 2005 463 Improving Health, Safety & Grant & Environmental Standards Tobago among SMEs in Energy Sector IDB Trinidad 2005 11 Standards in the Energy Grant & Sector (Technical Tobago Cooperation) IDB Haiti 2006 19,600 Rehabilitation Of The Loan Electricity Distribution System In Port-Au-Prince IDB Haiti 2006 270 Support for Port-au-Prince Grant Electrical Distribution Rehabilitation Program (Technical Cooperation) IDB Regional 2006 161 Development of the Grant Caribbean Energy Sector IDB Guyana 2007 12,600 Power Sector Support Loan Program IDB Bahamas 2008 709 Strengthening the Energy Grant Sector in The Bahamas IDB Guyana 2008 253 Expanding Bioenergy Grant Opportunities in Guyana

144

(Technical Cooperation) IDB Guyana 2008 684 Expanding Bioenergy Grant Opportunities in Guyana (Technical Cooperation) IDB Bahamas 2009 1,020 Implementing Sustainable Grant Energy Projects in the Bahamas IDB Bahamas 2009 762 Promoting Sustainable Energy Grant in the Bahamas IDB Barbados 2009 1,020 Sustainable Energy Grant Framework for Barbados (Technical Cooperation) IDB Barbados 2009 508 Support Studies for the Grant Upgrade and Expansion of the Natural Gas Network (Technical Cooperation) IDB Guyana 2009 457 Supporting Guyana's Low Grant Carbon Development Strategy (Technical Cooperation) IDB Guyana 2009 233 Measurement of climate Grant change Impacts and Eco- system Services in Iwokrama (Technical Cooperation) IDB Guyana 2009 152 Climate Change and Grant Biodiversity Mainstreaming through Avoided Deforestation (Technical Cooperation) IDB Haiti 2009 610 Support to the Design of the Grant HA-L1035 Program (Technical Cooperation) IDB Jamaica 2009 603 Support to Promote Energy Grant Efficiency, Energy Conservation and Sustainable Energy (Technical Cooperation) IDB Jamaica 2009 4 Wind and Solar Development Grant Program IDB Jamaica 2009 356 Energy Efficiency and Grant Conservation Technical Assistance (Technical Cooperation) IDB Suriname 2009 407 Support to the Energy Sector: Grant Renewable and Bioenergy (Technical Cooperation) IDB Regional 2009 546 Energy Efficiency and Grant Renewable Energy Project for CARILEC IDB Regional 2009 1,020 Caribbean Hotel Energy Grant Efficiency Action Program ( Technical Cooperation) IDB Regional 2009 244 Promoting Energy Security Grant for the Americas

145

IDB Bahamas 2010 500 Promotion of Energy Efficient Grant Residential Lighting IDB Barbados 2010 45,000 Support for Sustainable Loan Energy Framework for Barbados (SEFB) I IDB Barbados 2010 1,000 Support to the Sustainable Grant Energy Framework for Barbados IDB Barbados 2010 10,000 Sustainable Energy Loan Investment Program IDB Guyana 2010 735 Developing Capacities in Grant Implementing REDD+ IDB Guyana 2010 1,210 Amaila Falls Hydroelectric Grant Project Preparation Studies (Technical Cooperation) IDB Haiti 2010 100 Towards a Sustainable Energy Grant Sector Haiti - White Paper (Technical Cooperation) IDB Haiti 2010 429 Bioenergy Action Plan Grant (Technical Cooperation) IDB Haiti 2010 150 Bioenergy Action Plan Grant (COFAB component) IDB Haiti 2010 14,000 Rehabilitation of the Loan Electricity Distribution System in Port-au-Prince IDB Haiti 2010 1,000 SECCI: Emergency Program Grant for Solar Generation IDB Haiti 2010 500 GEF Emergency Program for Grant Solar Power Generation and Lighting IDB Regional 2010 400 Support to the Caribbean Grant Sustainable Energy Road Map

146

Hence, in 1990, Jamaica undertook a project entitled ―Rehabilitation of Hydroelectric Power‖ in order to repair and restore existing hydroelectric facilities (Inter-American Development Bank, 2012as). The project was financed via a loan worth approximately USD$137 million. In the same year, Jamaica received a grant of USD$125,000 to prepare a project aimed at improving services related to the provision of electricity (Inter-American Development Bank, 2012ar). In addition, the Bahamas received approximately USD$250,000 in order to prepare a project focused on the electrification of the ‗Family Islands‘. This initiative was succeeded by a USD$48 million loan three years later (in 1993) in order to implement the electrification project on the Family Islands (Inter-American Development Bank, 2012at). In 1990, Haiti also received a grant for approximately USD$248,000 to prepare a project on electricity generation and transmission (Inter-American Development Bank, 2012au). This was followed in 1991, by two grant projects (each worth approximately USD $50,000) aimed at improving electricity transmission in Haiti (Inter-American Development Bank, 2012av; Inter- American Development Bank, 2012aw).

In 1994 (while the oil price was still relatively low at a yearly average of USD$23.46 – USD 2010), steps toward encouraging private sector participation in the power sector were made. The IDB approved an USD$85 million loan project in Jamaica entitled ―Private Sector Energy Development Program‖, primarily as ―a contribution to a government fund for loans to private sector developers‖ that was developing electricity generation (low speed diesel and gas turbines) and transmission facilities (Inter- American Development Bank, 2012c). In the same year, Jamaica also received USD$2.1 million toward the establishment of the Office of Utilities Regulation (OUR) as a support mechanism catering for increased private sector participation in the energy sector (particularly with regards to electricity generation) (Roccili and Gordon, 1998)66. In addition, a grant valued at approximately USD$220,000 was awarded to Jamaica to implement a project entitled ―Energy Conservation in Industrial Sector‖ (Inter- American Development Bank, 2012ax). Suriname also received approximately USD$6000 for a project aimed at revising the structure of local electricity tariffs (Inter- American Development Bank, 2012ay).

Oil prices remained relatively low in 1995 at a yearly average of USD$24.62, in USD 2010. At this time, the Bank focused its efforts on emergency assistance to Haiti, electricity capacity expansion in the Bahamas and on continuing its thrust toward enhanced private sector participation in Guyana. To begin, Guyana was awarded a grant valued approximately USD$1 million to implement a project entitled the ―Electricity Sector Hybrid Program‖ (Inter-American Development Bank, 2012az). In the same year, Haiti was also awarded approximately USD$143 million via grant funding to implement the electrical component of an ―Emergency Economic Recovery Programme‖. The programme was instituted to help Haiti recover from the effects of a domestic political crisis including the impact of embargoes instituted during the crisis

66 The Private Sector Energy Development Programand the efforts to establish the OUR are quite likely to have been complementary to the World Bank project entitled ―Energy Sector Deregulation and Privatization Project‖ in 1992, which sought to solicit private sector participation in expanding power generation. 147

(Inter-American Development Bank, 1996)67. In the following year, as oil prices increased slightly to USD$28.32 the Bahamas received a loan to implement a project entitled ―Power Expansion Program II‖ (as a follow-up to the 1988 project in the Bahamas mentioned earlier) through which the projected electricity demand in New Providence could be met and the operational efficiency of BEC improved (AidData, 2010a). The loan, valued at approximately USD$78 million, sought to facilitate the ―installation of a 30MW single low-speed diesel generating unit, 25 km of 132kV transmission lines and two 80 MVA substation expansions (Inter-American Development Bank, 1997). Guyana also received around USD$62 million to support the ―privatisation of the Guyana Electricity Corporation (GEC) through a public-private joint venture‖ (Inter-American Development Bank, 1997). In addition, a grant worth USD$1.4 million was awarded to Guyana to undertake the legislative and policy-related reforms in order to undergird the implementation of the aforementioned loan involving the privatisation of the local utility (Inter-American Development Bank, 1997). Moreover, approximately USD$208,000 was spent on a technical cooperation project aimed at examining new or alternative sources of energy in Guyana (Inter-American Development Bank, 2012w). Haiti also received a USD$1.6 million grant aimed at ―reorganising the electricity sector to make it more efficient and effective‖ (Inter- American Development Bank, 1997), particularly through attempting to increase private participation in the sector (Inter-American Development Bank, 1997).

In 1999, the price of oil stood at a yearly average of USD$23.54 (in USD 2010). In that year, the IDB approved and initiated two technical cooperation projects, both seeking to utilise the input of expert financial and legal consultants in order to modernise and boost private participation in the power sector (Inter-American Development Bank, 2012m; Inter-American Development Bank, 2012n). While the Bank‘s emphasis on boosting private participation remained, its focus on enhancing the uptake of sustainable energy continued to increase. Two years later in 2001, while oil prices were relatively low (USD$29.96), Haiti received a grant valued at approximately USD$110,000 for a technical cooperation project focused on renewable energy sources. In the following year, the IDB approved a USD $33 million loan towards a project aimed at extending electricity access to around 40,000 (mostly low-income) households through laying down around 200 kilometres of transmission lines (Inter-American Development Bank, 2003).

In 2003, the Bank‘s support for private investment and sustainable energy options (including energy efficiency) continued. Via a grant project entitled ―Strengthening Electricity Sector Regulation in Support of Private Investment,‖ Guyana accessed approximately USD$593,000 to bolster ―legal, regulatory and institutional frameworks in order to enhance private investor participation‖ in the power sector‖ (Hay, 2008). In the following year when oil prices rose to USD$43.59 (from USD$24.37), Belize received a grant worth approximately USD$577,000 aimed at strengthening the regulatory capacity of the Public Utility Commission (under which the power sector is included) (Inter-American Development Bank, 2005d). Jamaica was also able to access approximately USD $52,000 in 2004 to help facilitate the establishment of an energy efficiency fund. Suriname also received grant funding of around USD$231,000 for a project entitled ―Power Sector Assessment and Alternatives for its Modernization‖

67 The political crisis was related to a coup d‘etat led by the local army. Haiti returned to constitutional rule in 1994. For further information see: BBC. 2010. Haiti's History of Misery [Online]. Available: http://news.bbc.co.uk/2/hi/americas/8456728.stm [Accessed 30 July 2012]. 148 which sought ―to contribute to the improvement of the long-term supply of electricity throughout Suriname and set the basis for ensuring efficiency and sustainability‖ (Inter- American Development Bank, 2005b).

As oil prices continued to rise (to a yearly average of USD $59.57 – in USD 2010) in 2005, the IDB‘s focus on sustainable energy (particularly in Guyana) and on enhancing private participation in the energy sector (specifically in Trinidad & Tobago) remained. A project named ―Power Sector Assessment and Development Strategy‖ was approved at a cost of around USD$167,000 in Guyana and like the aforementioned project in Suriname, it also sought to ―contribute to the improvement of the long-term supply of electricity throughout Guyana and set the basis for ensuring sector efficiency and sustainability‖ (Inter-American Development Bank, 2005e). In addition, Trinidad and Tobago received two grants in 2005. The first was geared towards enhancing private sector involvement in the energy sector and was entitled ―Improving Health, Safety and Environmental Standards among Smaller Enterprises in the Energy Sector‖. This initiative (costing approximately USD$463,000) sought to ―increase market opportunities for small and medium enterprises in Trinidad & Tobago, especially in the energy sector‖ by promoting internationally recognised standards across the industry (Inter-American Development Bank, 2005a). Trinidad and Tobago also received around USD$11,000 to implement a project focused on Standards in the Energy Sector which aimed ―to develop and gain consensus on an approach and action plan to address the development of national health safety and environmental standards in the Trinidad & Tobago energy sector‖ (Inter-American Development Bank, 2005c).

A loan worth approximately USD$20 million was approved for Haiti in 2006 (as the global price of oil continued its ascent to USD$69.52) for a project geared toward the rehabilitation of the electricity distribution system in the nation‘s capital city, Port-Au- Prince, so as to sustain the quality of service to customers (Inter-American Development Bank, 2006a). This loan programme was accompanied by a technical assistance grant project (worth approximately USD$270,000) which sought to facilitate planning and strengthening of the local electric utility company (Inter-American Development Bank, 2006b). The IDB also approved a region-wide grant project entitled ―Development of the Caribbean Energy Sector‖ which aimed to ―assist the Caribbean countries in evaluating the potential for, and advantages and disadvantages of, integration in the energy sector‖ (Inter-American Development Bank, 2012d). In 2007, as oil prices continued to climb upwards (to USD$74.80), a single energy loan was approved for Guyana to the tune of approximately USD$12 million to implement the ―Power Sector Support Program‖ which was initiated in order to ―support the efforts of the Government of Guyana to promote a more sustainable and efficient energy sector‖ (Inter-American Development Bank, 2007).

In 2008, the average price of oil for the year was USD$98 (and peaked in July 2008 at USD$147) (Khan, 2009). At the time, the IDB stated that ―sustainable energy and climate change was one of its priority areas of focus‖ (Inter-American Development Bank, 2009f). Perhaps unsurprisingly therefore, The Bahamas received grant funding of around $708,000 to execute a project entitled ―Strengthening the Energy Sector in The Bahamas‖ which was meant to boost the capacity of the government ministry with responsibility for energy and ―to provide alternatives to minimize the Bahamas‘ dependency on fossil fuels‖ (Inter-American Development Bank, 2009e). Guyana also

149 received grants worth USD$253,000 and USD$684,000, both aimed at facilitating the development of a local bioenergy sector (Inter-American Development Bank, 2008).

In 2009, ‗sustainable energy and climate change‘ remained a priority for the IDB (Inter- American Development Bank, 2010d) as oil prices decreased somewhat but remained historically high (at USD $62.78, as a yearly average, in USD 2010). This priority was reflected in the approved projects for this year. To begin, two grant projects were initiated in The Bahamas entitled ―Implementing Sustainable Energy Projects in The Bahamas‖ and ―Promoting Sustainable Energy in The Bahamas‖ and valued at approximately USD$1 million and USD$762,000 respectively. Both projects were aimed at promoting ―sustainable energy, including Renewable Energy (RE) and Energy Efficiency (EE) programs in order to ensure a sustainable development in The Bahamas, providing alternatives to minimize the dependency on fossil fuels‖ (Inter-American Development Bank, 2009i; Inter-American Development Bank, 2009d). Two grant projects were also approved in Barbados entitled the ―Sustainable Energy Framework for Barbados‖ and ―Support Studies for the Upgrade and Expansion of the Natural Gas Network‖. The former project was granted approximately USD$1 million and like the aforementioned projects in The Bahamas (during the same year), it was meant ―to promote and support sustainable energy and energy conservations programs in order to ensure a sustainable development in Barbados and provide alternatives to minimize the dependency on fossil fuels.‖ (Inter-American Development Bank, 2009k; Inter- American Development Bank, 2009l). The project entitled ―Support Studies for the Upgrade and Expansion of the Natural Gas Network‖ was awarded approximately USD$508,000 in order to assess the local natural gas transmission and distribution infrastructure needs in light of different gas import options that were being considered by the government68(Inter-American Development Bank, 2009j).

A single project valued at USD$610,000 was approved for Haiti in 2009 in order to design a follow-up project to the 2006 ―Rehabilitation of the Electricity Distribution System in Port-Au-Prince‖ project. The loan project which followed in 2010 therefore constituted phase II of the original 2006 project and sought primarily to restore and maintain quality of service after the major earthquake in Haiti (in January 2010), as well as to support the development of high, medium and low voltage electricity transmission infrastructure (Inter-American Development Bank, 2009g) at a cost of around USD$14 million. Three projects were approved in Jamaica by the IDB in 2009. Firstly, a project entitled ―Support to Promote Energy Efficiency, Energy Conservation and Sustainable Energy in Jamaica‖ was approved at a cost of around USD$603,000 ―to facilitate the use of energy efficiency (EE) practices and technologies‖ and to showcase the ―benefits of EE measures within Small and Medium-sized Enterprises (SMEs) in Jamaica‖ (Inter- American Development Bank, 2009b). Following this, the ―Wind and Solar Development Program‖ received grant funding of approximately USD$5000 to ―undertake wind resource assessments of potential wind sites in Jamaica to facilitate the development of additional wind energy installations in Jamaica‖ and to ―conduct a feasibility study for a proposed residential solar power generation facility.‖ (Inter- American Development Bank, 2009c). Further, the ―Energy Efficiency and Conservation Technical Assistance‖ project was initiated at a cost of approximately

68 The different options being considered by the government of Barbados at this time were: (i) shipped liquefied natural gas; (ii) shipped compressed natural gas (CNG); and (iii) CNG transported by pipeline. For more see: ―Inter-American Development Bank 2009j. Plan of Operations: Support Studies for the Upgrade and Expansion of the Natural Gas Network. Washington D.C.‖ 150

USD$356,000 in order ―to provide technical assistance to prepare a potential EE loan program.‖

Suriname was also approved for USD$406,000 grant funding in 2009 to implement a project entitled ―Support to the Energy Sector: Renewable and Bioenergy‖ which was aimed at supporting the use of renewable energy (particularly in the hinterlands of Suriname) and to assist the government in identifying potential commercial RE projects so as to reduce dependency on fossil fuels (Inter-American Development Bank, 2009m). Three region-wide projects were also approved in 2009. The first was entitled ―Energy Efficiency and Renewable Energy Project for CARILEC [i.e. the Caribbean Electric Utility Service Corporation]‖ which cost around USD$545,000 and was geared toward promoting ―energy efficiency and use of renewable energy in the electric utility sector in the Caribbean‖ (Inter-American Development Bank, 2009a). To add to this, the ―Caribbean Hotel Energy Efficiency Action Program‖, also known as the ‗CHENACT‘ project, was initiated via an IDB grant for approximately USD$1 million, aimed at supporting the ―implementation of energy efficiency practices in the Caribbean hotel sector‖ (Inter-American Development Bank, 2009h). The third regional project approved by the IDB in 2009 was entitled ―Promoting Energy Security for the Americas‖. At a cost of USD$243,000, it was meant ―to promote and support more effective integration and collaboration among the countries and public/private companies of the Americas in the energy sector‖ by facilitating meetings and dialogue between stakeholders (Inter-American Development Bank, 2012e).

In 2010, the average annual price of oil rose to USD $79.03 and the Bank listed ―Environment, Sustainable Energy and Climate Change‖ as a priority area (Inter- American Development Bank, 2011) and as such, the energy projects undertaken during the year in the Caribbean reflected this focus to a large extent. To begin, the Bahamas received grant funding for approximately USD$500,000 to implement a project entitled ―Promotion of Energy Efficient Residential Lighting‖ which sought ―to promote the sustainable use of compact fluorescent lights (CFLs) in low income households in the Bahamas‖ (Inter-American Development Bank, 2010a). In Barbados, two components of the ―Support for Sustainable Energy Framework for Barbados‖ project were approved. The first component, a policy-based loan69 worth approximately USD$45 million dollars, was geared towards decreasing Barbados‘s dependence on fossil fuels through policy reforms including the ―development of a Sustainable Energy Framework for Barbados (SEFB)... measures [pertaining to] mitigation and adaptation to climate change in the energy sector...and institutional strengthening, capacity building and public education‖ (Inter-American Development Bank, 2010f). The second component of this project was a grant to implement ―energy efficiency pilot projects; identify and promote the most effective alternatives for RE generation, and to implement renewable energy pilot projects‖ (Inter-American Development Bank, 2010c) at a cost of approximately USD$1 million. In addition, a USD$10 million loan was approved for Barbados in 2010 for a project entitled the ―Sustainable Energy Investment Program‖

69 According to the IDB, ―These loans provide flexible support for institutional and policy reforms on the sector or sub-sector level, through fast-disbursing funds. At the request of the borrower, a sector adjustment loan may include an investment component, in which case it becomes a Hybrid Loan.‖ For more see: Inter-American Development Bank. 2012f. Policy Based Loans [Online]. Washington D.C. Available: http://www.iadb.org/en/about-us/idb-financing/policy-based-loans-pbls,6057.html [Accessed 29 June 2012]. Policy based loans were also addressed during the interviews which were conducted as a part of this research and as such, a discussion of this topic is featured in section 5.4. 151 which was approved in order to ―facilitate the increasing use of RE and implementation of energy efficiency measures through the creation of the Smart Fund, a package of economic instruments, that will facilitate funding for investments in renewable energy and energy efficiency” (Inter-American Development Bank, 2010g).

In addition, Guyana received grant funding of approximately USD$1.2 million for ―Amaila Falls Hydroelectric Project Preparation Studies‖ which sought to assess the feasibility of an initiative involving the installation of hydroelectric facilities (Inter- American Development Bank, 2010h). There was also significant IDB involvement in Haiti in 201070. To begin, around USD$100,000 was disbursed to Government of Haiti to help ―identify and develop a comprehensive strategy for the energy sector‖71 (Inter- American Development Bank, 2012g). In addition, a project entitled ―Bioenergy Action Plan‖ received a total of USD$579,000 of grant funding (through co-financing from the IDB and the Organisation of American States) aimed at promoting the ―development of biofuels as an alternative [energy source], the diversification of the energy mix [and] reducing dependence on foreign fuel supply‖ (Inter-American Development Bank, 2012h; Inter-American Development Bank, 2012i). Moreover, USD$1 million of grant finance was approved following the January 2010 earthquake in Haiti in order to ―ensure the provision of solar power generators and solar powered refrigerators to provide electricity and appropriate conditions for vaccine conservation for emergency centres and key establishments during disaster management and reconstruction‖ (Inter- American Development Bank, 2012j). A further USD$500,000 was disbursed for the same purpose via a project entitled the ―Global Environment Facility (GEF) Emergency Program for Solar Power Generation and Lighting‖, but this was financed as a partnership between the GEF and the IDB (Inter-American Development Bank, 2012k). A single region-wide grant project was approved in 2010 entitled ―Support to the Caribbean Sustainable Energy Road Map‖. The project is said to involve ―support for Caribbean Renewable Energy, Energy Efficiency, Bioenergy Programs‖ (Inter- American Development Bank, 2012l) as well as ―capacity building for research and development (R&D) related to sustainable energy‖ (Inter-American Development Bank, 2010b).

4.6.3.1.2.1 Summary: 1990 – 2010: Increased focus on Private Participation & Sustainable Energy

Between 1990 and 2010 Inter-American Development Bank (IDB) operations in the energy sector in the Caribbean reflected a great degree of focus on enhancing the participation of privately owned companies in the energy sector. This was done primarily through the provision of support to initiatives geared towards assisting private entities wishing to become involved in electricity generation (also known as Independent Power Producers [IPPs]). Additionally, significant Bank resources were channelled toward reducing the vulnerability of Caribbean nations to high oil prices through the development of indigenous energy resources. However, unlike the former period (1970 to 1990), the extraction and development of coal no longer attracted Bank support as concerns related to climate change caused the environmental impact of energy choices to be taken into much greater account. Thus, considerable resources

70 It should be recalled that the ―Rehabilitation of the Electricity Distribution System in Port-Au-Prince‖ loan project constituted phase II of the original 2006 project and sought primarily to restore and maintain quality of service after the major earthquake in Haiti, was also in 2010. 71 Project was entitled ―Towards a Sustainable Energy Sector Haiti - White Paper‖. 152 were channelled toward the acquisition and deployment of renewable and energy efficient technologies.

4.6.3.1.3 Summary: Inter American Development Bank Energy Aid to the Caribbean (1970 - 2010)

As mentioned earlier, no evidence was found of a positive correlation between oil prices and IDB energy aid disbursements; in fact, a negative or anti-correlation is more likely. However, it is also clear that during periods following years of particularly high prices (namely 1979 to 1982 and 2008 to 2010), a greater emphasis was placed on the development of alternative energy sources and on reducing dependence on fossil fuels. Moreover, from 2008 to 2010, the IDB made ―Sustainable Energy and Climate Change‖ priority areas of focus, a choice which was reflected in the nature of most energy projects that were approved during this period. In tandem, it would perhaps be remiss not to highlight that there were no IDB energy projects in the Caribbean solely focused on energy efficiency (EE) until the ―Energy Conservation in the Industrial Sector‖ initiative in Jamaica in 1994. Following this, the only other project focused on EE was the 2004 project geared toward the establishment of an ―Energy Efficiency Fund‖, also in Jamaica. Initiatives focused solely on EE only became more numerous in 2009 when there were four different initiatives in the Caribbean devoted to enhancing efficiency.

In addition, there were a total of 20 projects which focused primarily on institutional strengthening or energy policy reform. Specific emphasis on reforms of this nature seem to have been prevalent during particular periods of time as seven of these projects occurred between 1994 and 1999 and 12 such initiatives occurred between 2003 and 2009. In this regard, it should also be noted that projects involving institutional strengthening and policy reform often had the overarching objective of promoting private participation in the power sector. Finally, another interesting observation relates to the fact that all region-wide initiatives undertaken by the IDB between 1970 and 2010 incorporated aspects towards reducing fossil fuel dependency and vulnerability to oil prices, through, inter alia, facilitating increasing utilisation of energy efficient or renewable energy technologies.

4.6.3.2 Nature of IDB Energy Aid to the Caribbean (1970 – 2010)

Unlike the Asian Development Bank, insofar as it pertains to the disbursements made, the lion‘s share (74 percent) was awarded to 22 local fossil fuel based projects. Simultaneously, 15 percent of total aid expenditure was to 31 projects (Figure 4-40 and Figure 4-41) involving the utilisation of renewable energy. Thus, even though a far greater proportion of funds were awarded to fossil fuel based projects, there were a larger number of (small) renewable energy initiatives approved by the IDB between 1970 and 2010. In addition, 20 projects accounting for eight percent of aid disbursements were dedicated to institutional strengthening and policy reform measures. Funding for this purpose not only included training and capacity building for energy planners and other stakeholders but also encouraged privatisation efforts and the drafting and/or introduction of policy mechanisms related to regulation of the power sector. Projects devoted primarily to the extension of repair of electricity transmission and distribution facilities attracted three percent of funds released to implement a total of six projects in the Caribbean. Projects designed with the sole (or chief) intention of enhancing energy efficiency did not attract a significant proportion of funding (less than

153 one percent) but represented six projects that were implemented by the IDB during the period being assessed.

Figure 4-40: IDB Energy Aid in the Caribbean (1970 & 2010) by sector

Figure 4-41: IDB Energy Aid to the Caribbean (by sector & number of projects)

4.6.3.3 IDB Energy Aid Disbursements by Type

With regards to the type of disbursements made, it should be noted that there were 19 loans between 1970 and 2010 to the sum of approximately USD$1.3 billion. Five of these loans were allocated to Jamaica, which borrowed a total of around USD$357 million; five were allotted to Guyana, which accrued a total of approximately USD$141 million. It should however be noted that the terms of the loans to Guyana would have emanated from the IDB‘s Funds for Special Operations (FSO) (mentioned earlier in this 154 case study) and would have been on concessionary terms. Funds awarded to Jamaica however, would not have been awarded through the FSO, though the Bank has stated that its interest rates are below those available on the commercial market and tend to vary between one and two percent (Inter-American Development Bank, 2010e). Yet still, even though IDB member countries are able to access loan financing at concessionary or below market rates, the overall impact on debt accumulation still needs to be taken into account, especially for countries like Jamaica that have borrowed relatively large sums of money without discount mechanisms.

It may perhaps also be useful to note that during the period being examined, there were a total of 73 projects funded through grant financing to the tune of approximately USD$185 million. All of these grants were approved for projects worth less than USD$ 5 million; 57 of which were valued at less than USD$1 million (see Figure 4-43). Conversely, of the 19 loans projects approved by the IDB, only one project was valued at less than USD$1 million. Hence, much like the ADB, while there were far more grant projects than loans undertaken by the IDB between 1970 and 2010 in the Caribbean, the volume of finance dispensed through loans was far greater. Indeed, as is illustrated in Figure 4-42, 88 percent of the total aid expenditure by the IDB was disbursed in the form of loans. This is likely to be because a considerable number of grant projects were in fact scientific or feasibility studies geared toward the development of larger loan projects that could be financed by the Bank.

Figure 4-42: IDB Energy Aid to the Caribbean (1970 - 2010) by type of disbursement

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Figure 4-43:IDB Energy Aid in the Caribbean - by amount approved

4.6.3.4 Summary

IDB financial aid to the energy sector in the Caribbean can be said to have been dominated by fossil fuel based projects. Only 15 percent of total disbursements made were associated with renewable energy projects, though these initiatives were greater number than thefossil fuel based projects between 1970 and 2010. Additionally, an anti- correlation between oil prices and IDB energy aid disbursements was found with zero or less than a year‘s delay. Nonetheless, greater emphasis was placed on projects geared toward the development of alternative energy sources and reducing dependence on fossil fuels in periods immediately following oil price spikes/shocks. Thus between 1979 and 1982, and also between 2008 and 2010, more funds were channelled toward the deployment of alternative energy technologies. In fact, during the latter period, the IDB listed ―Sustainable Energy and Climate Change‖ as ‗Priority Areas‘. Moreover, in periods where the price of oil was not a prime concern (particularly in the 1990s), emphasis was placed on promoting and enhancing private participation in the power sector. This is indeed likely to be related to the global thrust by international financial institutions (such as the structural adjustment programs of the International Monetary Fund, for example) to promote privatisation and/or to enhance private participation in electricity markets (Jamasb, 2006). With regard to the type of disbursements made, loans accounted for 88 percent of financing released between 1970 and 2010. However, while there were only 19 loan projects overall during the period being examined, there were 73 grant-funded projects. Thus, (akin to the ADB), while loans may have accounted for a larger volume of funds, there were far more grant-related activities undertaken by the IDB between 1970 and 2010.

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Chapter 5. Results (Interviews)

5.1 Introduction

It should be recalled that as a part of this research project, a total of 76 interviews were carried out with energy officials and stakeholders in the Pacific and Caribbean.

This section of the thesis will therefore review the major themes covered in these discussions and in so doing will unveil the findings of the research undertaken. As noted in section 2.5, the interviews focused primarily on the perspectives of energy planners and professionals working for state agencies and power utility companies, as well as those representing relevant international, regional and national (non/supra – government) organisations (see Table 5-1). In addition, as mentioned in section 2.5, the purpose of these interviews was to be able to verify or cross-check key information extracted from the project data with the perspectives and input of those ‗on the ground‘ in the countries featured in this study. The research featured in this chapter has therefore attempted to trace common views among the various respondents from the Caribbean and the Pacific and to highlight differences of opinion where they exist. That said, due to the large number of respondents involved, the analysis of the various issues raised is of necessity somewhat complex.

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Table 5-1: Breakdown of Interviews by Type of Organisation

Type of Organisation Number of interviews State Agencies72 31 Donor Entities73 4 Utility 16 Representatives74 International/National 19 Organisations75 Private Sector 6

In terms of the stakeholders that were interviewed, the following tables list their names, organisations and the length of the interviews, (grouped according to the actual trips made to the different locations).

72 Refers to any Government entity including, Ministries with responsibility for Energy, State Owned Entities or persons working attached to or on behalf of a government office. 73 As mentioned in Chapter 2, the term ‗‗donor entity or agency‘ is used to describe international or regional organisations (usually based in a developed country) that awards or allocates funds to other entities or organisations (like power utilities or government ministries) in less developed economies. 74 Refers to persons representing electricity utilities, whether publicly or privately owned, as well as persons representing associations of utility companies (in this case the Pacific Power Association and the Caribbean Electric Utility Service Corporation). 75 Refers to relevant international, regional and national (non-donor and non-private sector) stakeholders, including the Secretariat of the Pacific Community, the Caribbean Community, the University of the West Indies (UWI), the University of the South Pacific (USP) and International Union for the Conservation of Nature (IUCN). 158

Table 5-2: Interviews from Field Research in Samoa

INTERVIEWS IN SAMOA

Interview Name of Interviewee Organisation & Length of Date Position interview 28th May Ms.Sili‘a Kilepoa Ualesi Energy Coordinator, 56 minutes 2010 Ministry of Finance Mr. Eddie Winterstein Manager, 35 minutes Renewable Energy & Environment, Scientific Research Organisation of Samoa Mr.Mataia Uaine Silailai Assistant CEO & 37 minutes Head, Renewable Energy Division, Ministry of Natural Resources & Environment. 31st May Mr.Chikara Yoshida Project Coordinator, 41 minutes 2010 Greenhouse Gas Abatement Strategy, Ministry of Natural Resources & Environment Mr. Taito Nakalevu Programme 34 minutes Manager, Pacific Adaptation to Climate Change, South Pacific Regional Environment Programme. Mr.Wairarapa Young Renewable Energy 21 minutes Officer, Electric Power Corporation Mr. Joseph Walter Chief Executive 54 minutes Officer, Electric Power Corporation

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Table 5-3: Interviews from Field Research in Fiji

INTERVIEWS IN FIJI Interview Name of Interviewee Position& Organisation Length of Interview Date 16 Mr. Speedo Hetutu General Manager, 21 minutes September Niue Power Corporation 2010 Mr Thomas Tafia General Manager, 48 minutes Department of Energy, Government of Tokelau. Mr. John Korinihona Director for Energy. 28 minutes Ministry of Mines, Energy and Rural Electrification, Government of Solomon Islands. Mr Moli Janjea Senior Energy Officer 21 minutes Ministry of Lands, Geology, Mines, Water Resources, Energy & Environment, Government of Vanuatu Mr. Greg Decherong Director, 27 minutes Ministry of Public Infrastructure, Industry and Commerce. Government of Palau 17 Mr. Peter Johnston Environmental and 1 hour 17 minutes September Energy Consultants, Ltd. 2010 20 Ms. Makereta Director, Department of 41 minutes September Sauturaga Youth & Sports, 2010 Government of Fiji(former Director, Department of Energy) Mr. Peceli Director, 57 minutes Nakavulevu Department of Energy, Government of Fiji Mr. Thomas Jensen Environmental and 1 hour 19 minutes Energy Specialist, United Nations Development Programme, Pacific Centre. 21 Dr.Atul Raturi Head of Department, 19 minutes 30 seconds September Physics. University of the 2010 South Pacific Mr.Eparama Tawake General Manager, 49 minutes 44 seconds Generation. Fiji Electricity Authority Ms.Katerina Senior Engineer, IT 1 hour 56 minutes Syngellakis Power Mr.Anare Matakiviti - Energy Programme 50 minutes Coordinator, International 160

Union for the Conservation of Nature (IUCN) Ms.Arieta Gonelevu International Union for 12 minutes the Conservation of Nature (IUCN) Mr. Tony Neil Executive Director, 58 minutes Pacific Power Association 22 Ms.Kirti Chaya 2nd National 38 minutes September Communication to the 2010 UNFCCC Coordinator, Department of Environment, Government of Fiji Ms. Larissa Brisbane Volunteer, Department of 5 minutes (portion of Environment, interview not Government of Fiji recorded) Mr.Rupeni Mario Energy Adviser, 1 hour 3 minutes Economic Development Division, Secretariat of the Pacific Community (SPC) Mr. Timothy Martyn Economist, Land 32 minutes Resources Division, Secretariat of the Pacific Community (SPC) 23 Dr.Ulukalesi Tamata Fellow, Environment 36 minutes September Unit, 2010 Institute of Applied Science. University of the South Pacific (USP) Dr.Anirudh Singh Senior Lecturer, 43 minutes Associate Professor, Physics Division, School of Engineering and Physics, USP Dr.Rafiuddin Ahmed Senior Lecturer, Interview not recorded Department of Physics, (photographs taken – USP tour of engineering lab) 24 Mr.Hasmukh Patel Chief Executive 11 minutes September Officer,Fiji Electricity 2010 Authority (FEA) Mr. Richard Noss Project Manager, Niu Interview not Industries (Fiji) Ltd. recorded. (photographs taken – tour of plant & office) Dr. Tony Weir Programme Manager, 54 minutes (portion of Pacific Centre for interview not Environment & recorded) Sustainable Development

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Table 5-4: Interviews from Field Research in the Caribbean

INTERVIEWS IN TRINIDAD & TOBAGO Interview Name of Interviewee Position & Organisation Length of Date Interview 20 Sept., Mr. Randy Maurice Senior Planning Officer, 50 minutes 2011 Ministry of Energy & Energy Affairs, Trinidad & Tobago 22nd Sept., Mr. Garvin Alexander Asst. Executive, Director, 1 hour, 41 2011 Technical Operations, minutes Regulated Industries Commission 23rd Sept., Dr.Indra Haraksingh Lecturer, Department of 30 minutes 2011 Physics, University of the West Indies (UWI) 26th Sept., Mr. Allen Clarke Senior Engineer, Generation 1 hour, 27 2011 Interface, Senior Engineer, minutes Generation Interface, Trinidad & Tobago Electricity Commission (T&TEC) 28th Sept., Mr. Christopher Dohm VP, Marketing & 45 minutes 2011 Communications. Green Building Council Mr.Micheal Ross Project Manager/Engineer, 30 minutes Sandia National Laboratories 29th Sept., Mr. Andre Escalante Managing Director, Energy 49 minutes 2011 Dynamics Ms.Nadita Ramachala & Standards Officer, 46 minutes Mr. Darryl Thompson Standardisation Division, Trinidad & Tobago Bureau of Standards Dr.Thackwray Driver Chief Executive Officer, The 1 hour, 4 Energy Chamber, Trinidad & minutes Tobago Dr.Hadyn Furlonge Head, LNG & Investment 39 minutes Analysis, National Gas Company of Trinidad & Tobago 3rd Oct., Ms. Felicia Cox RE Coordinator, Barbados 40 minutes 2011 National Oil Company, 4th Oct., Mr. Oral Rainford Principal Director, Policy 24 minutes 2011 Planning & Development Division, Ministry of Mining & Energy, Jamaica 5th Oct., Mr. Donald Baldeosingh Chief Executive Officer, 17 minutes 2011 Enman Services Ltd. 6th Oct., Mr. Ralph Avallone Secretary General, 43 minutes 2011 International Green Energy Council

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Ms. Marcia Maynard Team Leader, Business 32 minutes Development, National Energy Corporation of Trinidad & Tobago Ltd. INTERVIEWS IN BARBADOS 10th Oct, Mr. Stephen Worme Chief Marketing Officer, 1 hour, 20 2011 Barbados Light & Power Co. minutes Ltd. Mr. Leighton Waterman Project Manager 41 minutes Sustainable Energy Framework for Barbados, Office of the Prime Minister, Barbados 12th Oct. Dr. Raymond Nurse Geothermal Project 21 minutes 2011 Manager, Chairman, Geothermal Energy Committee, Grenada. Mr. William Hinds Head, Energy Efficiency and approximate Renewable Energy Unit, ly 10 Ministry of Energy and minutes Environment, Barbados (interview not recorded) Mr. Joseph Williams Programme Manager, 42 minutes Energy. The Caribbean Community 13th Oct. Ms. Felicia Whyte Renewable Energy Adviser, 12 minutes 2011 Caribbean Electric Utility Service Corporation (CARILEC) Mr. Nigel Hosein Former Executive Director, 30 minutes Caribbean Electric Utility Service Corporation (CARILEC) Dr. Adam Warren Regional Initiatives 16 minutes Deployment & Market Transformation, National Renewable Energy Laboratory (NREL) ‗Akau‘ ola Special Advisor to Prime 38 minutes Minister of Tonga Dr. Ellis Burris Chief Administrator, Tobago 10 minutes House of Assembly Ms. Judith Ephraim Sustainable Development & Environment Officer, Ministry of Physical Development, Environment and Housing, St. Lucia 39 minutes Ms. Allison Davis Portfolio Manager, Economic Infrastructure Division, Caribbean Development Bank Mr. Robert Hall Assistant Engineer, Bahamas 24 minutes

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Electricity Corporation Mr.Christiaan Gischler Senior Energy Specialist, 13 minutes Inter-American Development Bank Mr. Fitzroy Vidal Principal Director for 49 minutes Energy, Ministry of Mining & Energy, Jamaica 14th Oct. Mr. Ernie Stapleton Permanent Secretary, 26 minutes 2011 Ministry of, Natural Resources & Environment, Nevis Island Administration Mr. Mark Lambrides Director, Energy Division, 22 minutes Organisation of American States Ms. Maxine Nestor Energy Policy Analyst, 17 minutes Energy Programme, the Caribbean Community. Mr. Jim Hok Minister, Ministry of Natural 17 minutes Resources, Suriname Mr. Jason Timothy Project Coordinator, 16 minutes Geothermal Project Management Unit, Dominica Mr. Robert Blenker Vice President, Renewable 23 minutes Energy, WRB Enterprises, Inc Mr. Curtis Deenah Technical Information approximate Officer, Scientific Research ly 10 Council. (Caribbean Energy minutes Information System (CEIS)). (interview not recorded) INTERVIEWS IN ST. VINCENT & THE GRENADINES 17th Oct. Mr. Kenrick Burke Assistant Engineer, Planning 42 minutes 2011 Dept, VINLEC Mr. Ricky Wright Senior Planning Engineer, 48 minutes St. Vincent Electricity Services Limited (VINLEC) Mr. Herbert ‗Haz‘ Samuel President, Green Island Inc. 1 hour, 22 minutes 18th Oct., Mr. Anthony Bowman Head, Physical Planning 2011 Unit, Town & Country Planning 1 hour, 1 minute Mr. Ellsworth Dacon Director, Energy Unit, St. Vincent & the Grenadines Dr. Vaughn Lewis Manager, Engineering, St. 19 minutes Vincent Electricity Services Limited (VINLEC) Mr.Thornley Myers CEO, St. Vincent Electricity 24 minutes Services Limited (VINLEC)

164

As outlined in section 2.5 the interviews were conducted using a qualitative research method known as ‗directed content analysis‘ (Hsieh and Shannon, 2005). Respondents were asked a series of different questions in a semi-formal setting, based on the organisation they represented. In practice, more open-ended questions would follow. The initial questions posed to respondents were centred on the following basic topics:

the nature of the energy and power sector in the respondents‘ country or region relevant energy policies past and current initiatives by donor agencies in the energy and/or power sector major barriers and challenges encountered

From these structural topics, the following major themes arose during the interviews in both regions (though the specific issues being raised with each theme often differed regionally):

1. Barriers & Challenges to transitioning to Renewable Electricity 2. Oil price volatility: impacts 3. Perceived role & impact of aid 4. Regulation and the role of Independent Power Producers 5. Emerging Concerns 6. The Way Forward: Proposed Solutions

This Chapter will therefore detail and juxtapose the perspectives expressed under these themes, so as to capture and highlight the key points made during the interviews.

5.2 Barriers & Challenges to transitioning to Renewable Electricity

Though the responses to questions on barriers to transitioning to renewable electricity generation were quite diverse, the greatest number of respondents (14 in the Pacific and 11 in the Caribbean – as illustrated in Figure 5-1) claimed that the most significant hindrance was a lack of financial resources due to the high cost of renewable energy technologies. Mr. Robert Blenker (Vice President, Renewable Energy, WRB Enterprises, Inc76) and Mr. Ellsworth Dacon (Director, Energy Unit, St. Vincent & the Grenadines), both agreed that Small Island Developing States (SIDS) have limited financial resources and due to their small size often experience diseconomies of scale, making it difficult to attract private investment (Blenker, 2011, Thesis Interview; Dacon, 2011, Thesis Interview). Mr. Thomas Tafia (General Manager, Department of Energy, Government of Tokelau) agreed with this assertion and added that this is exacerbated by the dependence of island economies on funds from donor entities and the unwillingness of local state agencies (with responsibility for energy) to utilise local funds to finance the cost of energy infrastructure (Tafia, 2010, Thesis Interview). Mr. Nigel Hosein (Vice President of Engineering at GENIVAR Trinidad & Tobago Ltd77

76 ―WRB owns and operates the public electric utilities for the Caribbean nations of Grenada and The Turks & Caicos Islands‖. For more see WRB Enterprises Inc. 2000. Electric Utilities [Online]. Available: http://www.wrbenterprises.com/electric.asp [Accessed 18 August 2012]. 77 GENIVAR Trinidad & Tobago Ltd is a multi discipline engineering consulting firm, which is part of a larger global consulting and design firm. For more see: WSP Group. 2012. About Wsp Group [Online]. 165 and Former Executive Director, Caribbean Electric Utility Service Corporation (CARILEC78) agreed and noted that the unwillingness of government authorities to purchase energy infrastructure is related to the limited resources of Caribbean and Pacific SIDS and the fact that such devices, particularly power generation equipment as well as electricity transmission and distribution facilities, are usually capital intensive in nature.

Figure 5-1: Most prevalent barriers to transition to Renewable Energy in the Caribbean & Pacific

In fact, according to Thomas Tafia and Fitzroy Vidal (Principal Director for Energy, Ministry of Mining & Energy, Jamaica), some governments (in both the Caribbean and the Pacific) have in the past adopted explicit policy positions expressing their unwillingness to use funds from their local treasury to meet the costs of acquiring capital equipment for the power sector (Tafia, 2010, Thesis Interview; Vidal, 2011, Thesis Interview). Moli Janjea (Senior Energy Officer, Ministry of Lands, Geology, Mines, Water Resources, Energy & Environment, Government of Vanuatu) agreed, and said that energy infrastructure of this nature is usually financed by donor agencies (Janjea, 2010, Thesis Interview). Mr.Thornley Myers (Chief Executive Officer, St.

Available: http://www.wspgroup.com/en/WSP-Group/About-WSP-Group/ [Accessed 21 August 2012 2012]. 78 CARILEC is an association of Caribbean electricity utilities that serves to enhance communication among power utilities and act―as the focal point for general and technical information.‖ Source: Caribbean Electric Utility Services Corporation (CARILEC). 2012. About Us [Online]. Available: http://www.carilec.com/index2.php?menu=about&title=About%20Us [Accessed 21 August 2012]. 166

Vincent Electricity Services Limited (VINLEC)79) added that this reality was particularly relevant to a sustainable energy transition due to the fact that preference has often been given to the technology or equipment with the lowest operating costs (Myers, 2011, Thesis Interview). In this regard Joseph Walter (Chief Executive Officer, Electric Power Corporation (Samoa)), lamented that even though the international prices of some renewable energy technologies (RETs) have been on the decline in recent years80, with the exception of hydroelectric power, these devices are often still more expensive than conventional thermal options (usually employing the use of diesel or Heavy Fuel Oil) (Walter, 2010, Thesis Interview)81. In tandem therefore, it should be noted that only two power utility representatives interviewed as a part of this study, namely Kenrick Burke (Assistant Engineer, Planning Department, St. Vincent Electricity Services Limited [VINLEC]) and Hasmukh Patel (Chief Executive Officer, Fiji Electricity Authority [FEA]) (both from publicly owned utilities), noted that their organisations made decisions to utilise their own resources to purchase and install wind turbines for the [proposed] Ribishi Point Wind Farm in St. Vincent and the [completed] Sigatoka Wind Farm in Fiji (Patel, 2010, Thesis Interview; Burke, 2011, Thesis Interview). Thus, the financial constraints faced by utilities and state agencies in SIDS were greatly emphasised by the majority of persons interviewed as a significant barrier to a sustainable energy transition.

5.2.1 Funding difficulties

Meanwhile, some representatives of aid agencies, namely Allison Davis (Portfolio Manager, Economic Infrastructure Division, Caribbean Development Bank) and Thomas Jensen (Environmental and Energy Specialist, United Nations Development Programme, Pacific Centre) argued that there is no shortage of funds devoted to the energy sector in the Caribbean or Pacific (Davis, 2011, Thesis Interview; Jensen, 2010, Thesis Interview). In fact, Jensen postulated that due to the spike in the oil prices in 2008 and to concerns related to climate change, a much greater volume of funds are now available to SIDS via donor finance, particularly for investments in renewable energy (Jensen, 2010, Thesis Interview). Despite the increased amount of funds available, Lynn Tabernacki (Managing Director, Renewable Energy and Environmental Finance, Overseas Private Investment Corporation) raised concerns about the relatively slow rate at which funds are being accessed and utilised by SIDS in the Caribbean and Pacific (Tabernacki, 2011, Personal Communication). Representatives of other international development agencies (namely Mónica Arevalo, Loan Officer, European Investment Bank and Mark Lambrides, Director, Energy Division, Organisation of American States) concurred with this sentiment and attributed this to the ability (or lack thereof) of recipient states to meet procedural and other conditions or requirements of donor agencies and also due to problems pertaining to preparing and negotiating energy projects (Lambrides, 2011, Thesis Interview; Arevalo, 2011, Personal Communication).

79 The St. Vincent Electricity Services Limited (VINLEC) is the national (government owned) power utility of St.Vincent and the Grenadines and delivers electricity to―customers in St. Vincent, Bequia, Canouan, Union Island and Mayreau‖. For more see: St. Vincent Electricity Services Limited (VINLEC). 2006. About Us [Online]. Available: http://www.vinlec.com/article1.asp?articleid=102&zoneid=23 [Accessed 21 August 2012]. 80 This is especially applicable in the case of solar photovoltaic and wind energy technologies 81 It should be noted that the cost of using conventional technologies is usually considered cheaper, when the external costs (such as those related to greenhouse gas emissions and pollution) are not accounted for. 167

Hence, though there was widespread acknowledgement of the difficulty associated with attracting private participation and investment in the energy sector, several respondents propounded that financial resources (particularly from donors) are indeed available. Notwithstanding the availability of donor funds, those wishing to access these resources seemed to face signigicant obstacles.

5.2.2 Small Size

Linked to the difficulties associated with attracting investment to the power sector, the small size of electricity markets was listed by representatives of state authorities, donor entities and national organisations, including Thackwray Driver (Chief Executive Officer, The Energy Chamber, Trinidad & Tobago), Ernie Stapleton (Permanent Secretary, Ministry of, Natural Resources & Environment, Nevis Island Administration, St. Kitts & Nevis) and Judith Ephraim (Sustainable Development & Environment Officer, Ministry of Physical Development, Environment and Housing, St. Lucia) as a significant hurdle to the development and deployment of renewable energy (Driver, 2011, Thesis Interview; Ephraim, 2011, Thesis Interview; Gischler, 2011, Thesis Interview; Hosein, 2011, Thesis Interview; Stapleton, 2011, Thesis Interview; Timothy, 2011, Thesis Interview). These respondents claimed that the small size of the power sector in SIDS not only presented challenges related to economies of scale but also related to promoting private participation and competition within the generation, transmission and distribution subsectors. Furthermore, Allen Clarke (Senior Engineer, Generation Interface, Trinidad & Tobago Electricity Commission [T&TEC] and Nigel Hosein (Vice President of Engineering at GENIVAR Trinidad & Tobago Ltd and Former Executive Director, Caribbean Electric Utility Service Corporation [CARILEC]) emphasised that in most cases, the island economies in the Caribbean and Pacific are much too small to facilitate competition in the power sector, not merely for economic reasons, but also due to reasons related to health and safety82(Hosein, 2011, Thesis Interview; Clarke, 2011, Thesis Interview). Indeed, speaking from the perspective of power utilities, Nigel Hosein and Stephen Worme (Chief Marketing Officer, Barbados Light & Power Company Limited.) asserted that even if many of the island nations in question did possess adequate regulations related to electricity grid connection standards, few SIDS possess an adequate human resource base to facilitate competition in the electricity market (Hosein, 2011, Thesis Interview; Worme, 2011, Thesis Interview). Maxine Nestor (Energy Policy Analyst, Energy Programme, the Caribbean Community [CARICOM]83) added that many nations in the Caribbean and Pacific consider the electricity transmission and distribution subsectors as being natural monopolies, as competition is usually not feasible due to the geographically small size of these markets (Nestor, 2011, Thesis Interview).

82 Allen Clarke, Senior Engineer at Trinidad & Tobago Electricity Commission (the national/state-owned power utility in Trinidad and Tobago) was referring largely to issues related to human safety – particularly of utility workers that repair and maintain transmission lines. It should perhaps be noted that this interview took place shortly after the death (by electrocution) of a utility employee that died while working on a power transmission cable. 83 It should perhaps be noted that Ms. Nestor vacated this position in CARICOM while this thesis was being written. 168

Moreover, though only one respondent from the Pacific specifically listed ‗size‘ as a major barrier to renewable energy development, both Nigel Hosein and Joseph Walter noted that in both regions that the limited demand for electricity that exists in the Caribbean and Pacific makes it more difficult to engage and effectively negotiate with the manufacturers of RETs in order to facilitate the acquisition of such devices (Hosein, 2011, Thesis Interview; Walter, 2010, Thesis Interview). This is perhaps largely due to the fact manufacturers (and even some developers) of RETs often prefer to supply equipment to larger markets where greater sales can be made and larger profits enjoyed. This has the overall effect of making the acquisition of RETs more costly (due to diseconomies of scale) which by extension, makes a transition to sustainable energy in the power sector more challenging.

5.2.3 Human Resources

With regard to the dearth in human resources that often exists in SIDS, a number of representatives of government ministries with responsibility for energy as well those from utilities; namely Speedo Hetutu (General Manager, Niue Power Corporation), Makereta Sauturaga (Director, Department of Youth & Sports, Government of Fiji), Sili‘a Ualesi (Energy Coordinator, Ministry of Finance, Samoa84) and Ricky Wright (Senior Planning Engineer, St. Vincent Electricity Services Limited [VINLEC]) noted that it was exceedingly difficult to recruit, train and retain skilled employees in the energy sector (Sauturaga, 2010, Thesis Interview; Ualesi, 2010, Thesis Interview; Wright, 2011, Thesis Interview; Hetutu, 2010, Thesis Interview). In fact, according to Sili‘a Ualesi, at the time of the interview in Samoa (May 2010), there were only two full time members of staff in the Energy Unit (based in the Ministry of Finance), charged with inter alia, negotiating the supply of oil to Samoa with international energy companies, the development and implementation of the Samoa National Energy Policy, as well as coordinating all national, regional and international energy programmes (Ualesi, 2010, Thesis Interview). The existing lack of skills and knowledge related to energy policy and planning was therefore mentioned as formidable barrier to a sustainable energy transition.

Concerns related to staff shortages were reinforced by representatives of power utility companies (especially in the Pacific), namely Speedo Hetutu (General Manager, Niue Power Corporation) and Apii Timoti (Chief Executive Officer, TeApongaUira85) who lamented the shortage of technical skills, specifically in the form of qualified engineers to operate and maintain equipment being acquired (especially renewable energy technologies) (Hetutu, 2010, Thesis Interview; Timoti, 2010). Peceli Nakavulevu (Director, Department of Energy, Government of Fiji) attributed this to the fact that government agencies as well as power utilities (though to a lesser extent) would often lose skilled workers to higher-paying jobs in the private sector or abroad in more

84 It should perhaps be noted that Ms. Ualesi left this position at the Ministry of Finance in Samoa while this thesis was being written. 85 TeApongaUira (TAU) is the Government-owned power utility responsible for the generation, distribution and retailing of electricity on the island of Rarotonga, Cook Islands. Source: Te Aponga Uira (TAU). 2012. Te Aponga Uira: Powering the Future. Home [Online]. Available: http://www.teaponga.com/ [Accessed 21 August 2012]. 169 developed nations - a process commonly referred to as ‗brain drain‘ (Nakavulevu, 2010).

A number of respondents from electricity utilities and international development agencies, namely, Robert Blenker (Vice President, Renewable Energy, WRB Enterprises, Inc), Mark Lambrides (Director, Energy Division, Organisation of American States), Stephen Worme (Chief Marketing Officer, Barbados Light & Power Company Limited) and Katerina Syngellakis (Senior Engineer, IT Power)86 also emphasised that the lack of professional skills was a significant obstacle to effective project execution (Blenker, 2011, Thesis Interview; Lambrides, 2011, Thesis Interview; Syngellakis, 2010, Thesis Interview; Worme, 2011, Thesis Interview). These respondents concurred that the lack of skilled labour not only affects the use and deployment of technical instruments and devices, but also adversely influences the delivery of key professional services (such as contract negotiation and project management). They added that the absence of a large coterie of skilled workers in the power sector in most Caribbean and Pacific SIDS often exacerbates a reliance on expatriate workers or temporary foreign consultants – especially in preparing and implementing aid projects. While this may be true, Tony Weir (Programme Manager, Pacific Centre for Environment & Sustainable Development, University of the South Pacific) did argue that even when skilled and relevant expertise was available locally, donors at times still preferred to utilise specialists from their own countries (Weir, 2010, Thesis Interview). Notwithstanding this, the lack of qualified energy professionals was noted as a significant impediment to greater deployment of renewable energy technologies (RETs), particularly in the power sector.

5.2.4 Political will

Donor and government representatives, Christiaan Gischler (Senior Energy Specialist, Inter-American Development Bank), Kireua Kaiea (Head, Energy Planning Unit, Ministry of Public Works and Utilities, Kiribati) and Sili‘a Ualesi (Energy Coordinator, Ministry of Finance, Samoa) also highlighted a lack of political will as well as a lack of clear policy and legislation as key obstacles to greater utilisation of renewable energy, particularly in the power sector (Gischler, 2011, Thesis Interview; Kaiea, 2012, Thesis Interview; Ualesi, 2010, Thesis Interview). In fact, Tony Weir and Herbert Samuel (President, Green Island Inc87.) argued that many governments only make energy a priority as a reaction to high oil prices (Weir, 2010, Thesis Interview; Samuel, 2011, Thesis Interview). Thus, Samuel and Weir propounded that in times of crisis (such as oil price spikes) greater attention was paid by donor and state entities to transitioning to

86 IT Power is an international energy consultancy firm ―which specialises in sustainable energy technologies and policy, and related economic, financial, commercial and environmental work‖. Source: IT Power. 2012. About Us [Online]. Available: http://www.itpower.co.uk/Company [Accessed 21 August 2012].In addition, KaterinaSyngellakis, at the time, was also the Team Leader of ‗REP-5‖, an EU funded programme that supported and undertook renewable energy and energy efficiency projects in the Federated States of Micronesia (FSM), Nauru, Niue, Palau and the Republic of Marshall Islands. For more see: REP-5. 2010. Rep-5: Support to the Energy Sector in Five Acp Pacific Island Countries [Online]. European Union. Available: http://www.rep5.eu/ [Accessed 20 August 2012]. 87 Green Island Inc. is a clean energy consulting firm active in St. Vincent and the Grenadines. Herbert Samuel is also the founder of ―Welectricity‖ an online energy efficiency geared toward reducing household power consumption. 170 alternative forms of energy that would decrease the need for fossil fuel imports (Samuel, 2011, Thesis Interview; Weir, 2010, Thesis Interview). They added, however, that this increased attention, would then probably dwindle if oil prices decreased – as occurred, following the oil crises in the 1970s (Weir, 2010, Thesis Interview; Samuel, 2011, Thesis Interview). Thus, it was asserted that greater attention was being paid to energy security by state entities, at present, primarily due to the high price of oil. In spite of this however, Thomas Jensen (Environmental and Energy Specialist, United Nations Development Programme, Pacific Centre) opined that ―energy was still not high on government agendas‖ (Jensen, 2010, Thesis Interview). He asserted that political statements and even energy policies often do not affect budgetary allocations to the energy sector – a claim that was supported by independent energy consultant Peter Johnston (Environmental and Energy Consultants Ltd.) as well as government representatives Peceli Nakavulevu (Director, Department of Energy, Government of Fiji) and Sili‘a Ualesi (Energy Coordinator, Ministry of Finance, Samoa) and Mark Lambrides (Director, Energy Division, Organisation of American States) (Jensen, 2010, Thesis Interview; Johnston, 2010, Thesis Interview; Lambrides, 2011, Thesis Interview; Nakavulevu, 2010; Ualesi, 2010, Thesis Interview).

5.2.5 Lack of clear policy and legislation

In fact, a lack of clear policy and legislation in SIDS was commonly said to be a key impediment to attracting investment to the power sector. This is largely related to claims by representatives from donor entities, national organisations and government authorities (including Christiaan Gischler, Peter Johnston, Nigel Hosein and Kireua Kaiea that the energy policies in many SIDS lack fervent institutional backing, especially from the state, and also lack clarity on specific measures being taken (Gischler, 2011, Thesis Interview; Hosein, 2011, Thesis Interview; Johnston, 2010, Thesis Interview; Kaiea, 2012, Thesis Interview; Silailai, 2010, Thesis Interview). Gischler and Hosein therefore lamented not only the absence of a regulatory framework in the power sector in many SIDS (particularly with regards to the participation of independent power producers [IPPs]) but also the ambiguous and general nature of provisions even when regulations do exist (Gischler, 2011, Thesis Interview; Hosein, 2011, Thesis Interview). Hence, according to Stephen Worme in practice, because local regulatory provisions are unclear or non-existent, the process of seeking to invest in the power sector, particularly as an independent power producer, is bureaucratic and onerous (Worme, 2011, Thesis Interview). Notwithstanding this, government representatives from Barbados and St. Kitts and Nevis, namely William Hinds (Head, Energy Efficiency and Renewable Energy Unit, Ministry of Energy and Environment, Barbados) and Ernie Stapleton (Permanent Secretary, Ministry of, Natural Resources & Environment, Nevis Island Administration, St. Kitts and Nevis), argued that government policy can be expressed in many ways, including through political manifestos and budget speeches, which could serve to inform relevant stakeholders of the state‘s intentions to develop the energy sector (Hinds, 2011, Thesis Interview; Stapleton, 2011, Thesis Interview).

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5.2.6 Dependence upon donors

The dependence of SIDS upon donor entities was often mentioned as a hindrance to increased utilisation of renewably generated electricity. Indeed, one could argue that the unwillingness of many island nations in the Caribbean and the Pacific to utilise their own resources to invest in RETs inevitably places their ability to acquire such technologies largely in the hands of donors. According to Moli Janjea, Kireua Kaiea and Sili‘a Ualesi, in practice, a dependence upon external sources of finance means that some functions or initiatives, even those which are relatively minor in nature, such as public education and awareness campaigns along with public consultations are often only done if donor funds are made available (Janjea, 2010, Thesis Interview; Ualesi, 2010, Thesis Interview; Kaiea, 2012, Thesis Interview). In fact, Kaiea (2012, Thesis Interview) (Head, Energy Planning Unit, Ministry of Public Works and Utilities, Kiribati) highlighted that as an energy official in Kiribati (for the past ten years) every single energy project that he worked on was donor funded. Moli Janjea and Thomas Tafia as government representatives from Vanuatu and Tokelau added that this usually also meant that a significant portion of time on the part of energy planners and officials is devoted to meeting and negotiating with representatives of donor entities as well as to designing and packaging project activities (usually small grant programmes)88 in order to satisfy the requirements of each agency (Janjea, 2010, Thesis Interview; Tafia, 2010, Thesis Interview). Thus, the time lag between ideas and the completion of energy projects is highly dependent upon, inter alia, the pace of negotiations and the ability of the state to meet the stipulations of the relevant donor. To add to this, some respondents noted that it is easier to attract funding for larger projects. As Sili‘a Ualesi (Energy Coordinator, Ministry of Finance, Samoa) noted, some donors prefer to fund big projects (Ualesi, 2010, Thesis Interview). Thus, a reliance on donor finance in places with small electricity markets (like SIDS) might be said to have the overall effect of ‗slowing down‘ the transition to renewable electricity since money must first be sourced and negotiations undertaken with an aid agency before the initiative can proceed.

5.2.7 Lack of Project Management Skills

Due to the fact that energy – related activities are primarily project based, skills related to project development and management are essential. Hence, representatives from regional and international organisations, namely Mark Lambrides (Director, Energy Division, Organisation of American States) and Felicia Whyte (Renewable Energy Adviser, Caribbean Electric Utility Service Corporation [CARILEC]) cited a lack of project management skills (especially in the Caribbean) as a key barrier to transitioning to renewable energy in the power sector (Lambrides, 2011, Thesis Interview; Whyte, 2011, Thesis Interview). Lambrides, along with Robert Blenker (Vice President, Renewable Energy, WRB Enterprises, Inc) and Fitzroy Vidal (Principal Director for Energy, Ministry of Mining & Energy, Jamaica) all propounded that there was indeed a shortage of persons with the professional skills required to engage in negotiations with

88 Larger loan projects, especially those involving the acquisition of capital equipment (such as RETs) are usually negotiated directly between the power utility, the Ministry with responsibility for Finance and the interested donor entity (Johnston, P. 17 September 2010. RE: Interview with Peter Johnston. Environmental and Energy Consultants, Ltd. Suva, Fiji.) 172 donor agencies and potential investors, and also to prepare, package and implement projects in an efficient manner (Blenker, 2011, Thesis Interview; Lambrides, 2011, Thesis Interview; Vidal, 2011, Thesis Interview). In fact, claims were made by Mark Lambrides and Ricky Wright (Senior Planning Engineer, St. Vincent Electricity Services Limited [VINLEC]) that some nations were rushing into deals with developers and manufacturers of RETs and in so doing, signing legally binding documents that were detrimental to the interests of their countries (Lambrides, 2011, Thesis Interview; Wright, 2011, Thesis Interview). Thus, it was asserted by Lambrides, as well as a utility representative (namely, Robert Blenker) and government representatives (Kaiea and Vidal) that greater emphasis urgently needs to be placed on training in professional skills, particularly project management (Blenker, 2011, Thesis Interview; Kaiea, 2012, Thesis Interview; Lambrides, 2011, Thesis Interview; Vidal, 2011, Thesis Interview).

5.2.8 Land Access

Gaining access to land on which renewable energy technologies (RETs) can be situated was also listed as a significant impediment to the deployment of such devices. This may indeed be due to the fact that some renewable energy technologies, such as grid connected solar photovoltaic devices, require large areas of available land (approximately 2 to 4 hectares per megawatt). As explained by utility representatives from Samoa and Fiji, namely Joseph Walter (Chief Executive Officer, Electric Power Corporation [Samoa]) and Eparama Tawake (General Manager, Generation. Fiji Electricity Authority [FEA]); this scale of acreage, when compared to local demands for electricity, may be difficult to access due to traditional or community ownership of land – as occurs in the Pacific region (Tawake, 2010, Thesis Interview; Walter, 2010, Thesis Interview). John Korinihona (Director for Energy, Ministry of Mines, Energy and Rural Electrification, Solomon Islands) added that this does not mean that the land is wholly unavailable, but rather that extensive negotiations need to be undertaken in order for access to be considered or granted (Korinihona, 2010, Thesis Interview). In this regard, several power utility representatives, namely John Korinihona, Eparama Tawake and Wairarapa Young (Renewable Energy Officer, Electric Power Corporation, Samoa) noted that it is difficult to negotiate land access in order to implement a renewable energy scheme (especially hydropower) on communally owned land on economically viable terms (Young, 2010, Thesis Interview; Tawake, 2010, Thesis Interview; Korinihona, 2010, Thesis Interview). Joseph Walter implied that some communities have in the past attempted to charge unreasonably high rents for access to their land, and lamented that ―people think that the Electric Power Corporation [Samoa] is a bank‖ (Walter, 2010, Thesis Interview).

Moreover, Stephen Worme (Chief Marketing Officer, Barbados Light & Power Company Limited) repined that land space is also restricted by high rates of population density in island nations like Barbados, Haiti, South Tarawa in Kiribati and the Marshall Islands (Worme, 2011, Thesis Interview). As such, it may be more difficult to minimise the impact of renewable electricity generation devices (such as wind turbines, large scale hydroelectric dams or even large scale PV) on the environment and on citizens. Both Burke (Assistant Engineer, Planning Dept, St. Vincent Electricity Services Limited [VINLEC]) and Worme noted that in cases of large wind turbines, it was quite difficult to locate such installations far away from residential areas – which they said

173 made planning considerations more difficult to resolve (Burke, 2011, Thesis Interview; Worme, 2011, Thesis Interview). In addition, Burke and Timothy (Project Coordinator, Geothermal Project Management Unit, Dominica) pointed out that locations that are appropriate for installation of RETs (such as wind turbines and geothermal power plants) are often situated in locations that are quite hard to reach, especially with large pieces of machinery (Burke, 2011, Thesis Interview; Timothy, 2011, Thesis Interview). Thus, in this regard, access to land is a concern not just because of issues related to ownership but also because of difficulties associated with the physical location of appropriate development sites. Overall therefore, it should be noted that if land is not available or accessible on which RETs can be installed, unless currently fossil fuelled power plants can be retrofitted and made to run primarily or entirely on renewable sources (such as biomass) then a transition to renewable electricity generation will be exceedingly difficult.

5.2.9 Supply of coconuts for Biofuels

Additionally, in the Pacific, problems related to the supply of coconuts in order to produce biofuel for power generation (and transportation) were highlighted. Respondents from government agencies in Samoa, namely Uaine Silailai (Assistant Chief Executive Officer & Head, Renewable Energy Division, Ministry of Natural Resources & Environment), Eddie Winterstein (Manager, Renewable Energy & Environment, Scientific Research Organisation of Samoa) and Sili‘a Ualesi all noted that the gross supply of coconuts was usually not consistent, which not only influenced the price of the nut but also made it hard to plan future biofuel production (Silailai, 2010, Thesis Interview; Ualesi, 2010, Thesis Interview; Winterstein, 2010, Thesis Interview). Winterstein added that the wide variety of possible uses of the coconut also increases overall demand and exerts upward pressure on the price of the nut89(Winterstein, 2010, Thesis Interview). Interestingly, Timothy Martyn (Economist, Land Resources Division, Secretariat of the Pacific Community [SPC]) went further and commented that ―too much donor funding has created a false market‖ for coconut biofuels and in so doing created economic activity that otherwise would not have existed (Martyn, 2010, Thesis Interview). Martyn (2010, Thesis Interview) asserted that aid agencies effectively subsidised the production of a few enterprises (either through donated machinery and financial support) that could not and did not exist without such support. Thus, he asserted that when such assistance from donor entities was withdrawn most of the commercial enterprises engaged in coconut biofuel production failed. This experience, according to Martyn (2010, Thesis Interview) has ―muddied the waters‖ and made farmers sceptical about growing coconuts to be used to make biofuel.

Overall therefore, Ualesi and Winterstein conclude that while there has been interest in using coconut biofuel to power electricity generators, the supply and price of the nut has simply been too volatile as the quantity produced is often dependent upon a variety of factors, including, the number of farmers engaged in coconut production, the price available at the local market (which fluctuates daily) as well as the demand from entities wishing to use the nut for other (competing) applications (such as for virgin coconut oil) (Ualesi, 2010, Thesis Interview; Winterstein, 2010, Thesis Interview). Martyn also

89 It should perhaps be noted that the most prevalent alternative uses for coconut production in the Pacific are for direct sale as a cash crop/food product, and for the production of virgin coconut oil. 174 recommended that the approach adopted by donors seeking to support biofuel production needs to be modified or at the very least revisited (Martyn, 2010, Thesis Interview).

5.2.10 Lack of Data

A lack of independent, accurate and reliable data was often said to be a key obstacle to efforts to transition to renewable electricity. According to Curtis Deenah (Technical Information Officer, Scientific Research Council, Caribbean Energy Information System [CEIS]) and Rupeni Mario (Energy Adviser, Economic Development Division, Secretariat of the Pacific Community [SPC]), this was particularly in relation to the shortage of detailed statistics pertaining to available energy sources as well as energy access and consumption in the Caribbean and Pacific; though efforts to improve data collection were said to be underway (Mario, 2010, Thesis Interview; Deenah, 2011, Thesis Interview). Even further, Joseph Williams (Programme Manager, Energy, the Caribbean Community [CARICOM]) confirmed that there is no uniform or harmonised framework for the collection of energy statistics in most SIDS (Williams, 2011, Thesis Interview). Instead, Williams noted that many times, ―data is driven by what you‘re going to use it for‖, that is (usually) to justify or support project activities (Williams, 2011, Thesis Interview). This is supported by Joseph Walter who agrees that having data about which resources (such as wind, wave or solar) are available (and in which locations) is invaluable when seeking to transition to more sustainable energy (Walter, 2010, Thesis Interview). As such, Raturi, Tawake and Walter made special mention of the lack of accurate data pertaining to the location and characteristics of renewable energy sources (RES) that can be accessed within their borders, as a key hindrance to transitioning to sustainable energy in the power sector (Raturi, 2010, Thesis Interview; Tawake, 2010, Thesis Interview; Walter, 2010, Thesis Interview).

5.2.11 Other Barriers

The barriers raised under the ―other‖ category include competing interests for resources, a lack of public awareness, environmental and political risks and a lack of foresight (on the part of political leaders). As SIDS are noted for their narrow resource bases, competing interests for their limited resources, might be expected. Thus, Ricky Wright (Senior Planning Engineer, St. Vincent Electricity Services Limited) and Judith Ephraim (Sustainable Development & Environment Officer, Ministry of Physical Development, Environment and Housing, St. Lucia) both noted that even access to water (for a hydroelectric scheme, for example) can be problematic, as its impact upon agriculture and the availability of potable water need to be considered, along with other uses for the stream or river in question (such as for household duties or fishing) (Wright, 2011, Thesis Interview; Ephraim, 2011, Thesis Interview). They acknowledged that this could have the overall effect of making project execution slower and more complex, as more extensive planning considerations and consultations may be necessary (especially in the absence of a regulatory framework to guide decision making) (Ephraim, 2011, Thesis Interview; Wright, 2011, Thesis Interview).

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Respondents from state authorities, namely Ellsworth Dacon (Director, Energy Unit, St. Vincent & the Grenadines) and Nadita Ramachala (Trinidad & Tobago Bureau of Standards), highlighted a lack of public awareness as a key barrier to a sustainable transition to renewable energy in the power sector and noted that general knowledge about issues related to energy is often poor (Dacon, 2011, Thesis Interview; Ramachala, 2011, Thesis Interview). Dacon said that this was especially the case with regards to energy efficiency and the reasons why energy should be conserved (Dacon, 2011, Thesis Interview). Thus, he stated that greater efforts on the part of state agencies and utilities should be devoted towards public education and promoting energy efficiency. Interestingly however, Joseph Walter, Chief Executive Officer of the Samoa Electric Power Corporation (EPC) argued that public education is not the responsibility of electricity utilities, but rather that of the state (Walter, 2010, Thesis Interview). Walter (2010, Thesis Interview) asserted that the role of the EPC is not to educate the community but rather to generate and provide electricity. Similarly, he contended that the real mandate of the EPC is not to encourage people to use renewable energy, but simply to generate power in a reliable manner (Walter, 2010, Thesis Interview). However, regardless of where persons thought the responsibility to engage in public education lay, all respondents agreed that it was indeed necessary.

5.2.11.1 Environmental Risks

With regards to the environmental risks mentioned, Robert Blenker (Vice President, Renewable Energy, WRB Enterprises, Inc.) raised the fact that the Caribbean is particularly vulnerable to natural disasters such as hurricanes, which means that the likelihood of damage being done to energy infrastructure is greater (Blenker, 2011, Thesis Interview). As such, he commented that decisions pertaining to the acquisition of RETs need to take this risk into consideration. Blenker added that increased chances of hurricanes also affect the type and size of devices that can be deployed on islands (Blenker, 2011, Thesis Interview). Blenker and Nakavulevu (Director, Department of Energy, Government of Fiji) also pointed to political risks and a lack of foresight (referring to the short terms of political appointees and leaders) as a barrier to long term sustainable development. They both argued that at times, choices made (especially with regard power generating technologies and electricity prices/tariffs) are based on short- term political interests rather than in the interest of a medium to long term transition to renewable energy (Blenker, 2011, Thesis Interview; Nakavulevu, 2010).

5.2.12 Summary

According to those interviewed, the primary barrier faced in both the Caribbean and Pacific relates to a lack of funding. Other impediments, such as a lack of human resources and the small size of electricity markets in SIDS were also highlighted as key barriers to a renewable electricity transition in the Caribbean and Pacific. Indeed, a large number of interviewees (from various backgrounds) in both regions indicated that a lack of energy planning skills, technical skills and professional skills constituted a significant hindrance to transitioning to sustainable energy. Conversely, it should be noted that some barriers (such as the supply and price of coconuts in the Pacific) were focused upon only by respondents in one region. Finally, a number of respondents pointed to a lack of accurate and reliable data pertaining to available energy sources and energy consumption as obstacle to the deployment of RETs in Caribbean and Pacific SIDS. 176

5.3 Oil Price Volatility: Impacts

A number of respondents, from both the Pacific and Caribbean, including Peter Johnston, Herbert Samuel, Tony Weir and Ricky Wright, all postulated that perhaps one of the most key imperatives driving a transition to sustainable energy in the power sector was oil price volatility (Johnston, 2010, Thesis Interview; Weir, 2010, Thesis Interview; Wright, 2011, Thesis Interview; Samuel, 2011, Thesis Interview). Further, the evidence provided in section 4.6 showed that energy aid disbursements from the World Bank Group and the Asian Development Bank were indeed related to the price of oil. That said, most respondents noted specific impacts of oil price volatility upon: the state utility companies the end user/consumer

What follows therefore is a discussion of the impact of high oil prices and oil price volatility on the three aforementioned groups.

5.3.1 Impacts on the State

To begin, several interviewees, namely Greg Decherong (Director, Ministry of Public Infrastructure, Industry and Commerce Government of Palau), Peter Johnston (Environmental and Energy Consultants, Ltd.), Rupeni Mario (Energy Adviser, Economic Development Division, Secretariat of the Pacific Community [SPC]) and Tony Weir (Programme Manager, Pacific Centre for Environment & Sustainable Development, University of the South Pacific) all pointed to the severe impact that sustained high oil prices can have on state foreign exchange reserves (Johnston, 2010, Thesis Interview; Mario, 2010, Thesis Interview; Weir, 2010, Thesis Interview; Decherong, 2010, Thesis Interview). Moreover, Mario, Weir and Nakavulevu (Director, Department of Energy, Government of Fiji) suggested that increased government spending on oil was said to divert attention and allocated expenditure away from other important public responsibilities (such as food, education and housing) (Mario, 2010, Thesis Interview; Nakavulevu, 2010; Weir, 2010, Thesis Interview). In tandem, energy stakeholders in Trinidad and Tobago, namely Thackwray Driver (Chief Executive Officer, The Energy Chamber, Trinidad & Tobago), Raymond Franco (Natural Gas Vehicles Task Force, Trinidad and Tobago) and Randy Maurice (Senior Planning Officer, Ministry of Energy & Energy Affairs, Trinidad & Tobago) also postulated that high oil prices have (in a number of cases) contributed to significant pressure being placed on state authorities to remove internal subsidies on fossil fuels in order to minimise expenditure on oil products (Driver, 2011, Thesis Interview; Maurice, 2011, Thesis Interview; Franco, 2011). Thomas Jensen and Peter Johnston also noted that increased expenditure on oil has served to increase the dependence of state agencies on donor entities, especially when faced with difficulties related to financing the cost of imports (Jensen, 2010, Thesis Interview; Johnston, 2010, Thesis Interview). In this regard, Johnston, Jensen, Weir and Makereta Sauturaga (Director, Department of Youth & Sports, Government of Fiji) noted that there was substantially more donor activity (in the form of projects and financial aid to meet the cost of oil imports) in the Caribbean and Pacific in periods of and immediately following oil crises (i.e. between 1974 – 83 and 2008 – 2010) (Jensen, 2010, Thesis Interview; Johnston, 2010, Thesis Interview; 177

Sauturaga, 2010, Thesis Interview; Weir, 2010, Thesis Interview). Weir added that this heightened interest in the energy sector, particularly in renewable energy, was said to have dwindled when oil prices fell in the intervening period (Weir, 2010, Thesis Interview).

Furthermore, Johnston, Sauturaga and Weir commented that the importance of oil price volatility is also marked by the fact that a number of government departments or ministries with responsibility for matters pertaining to energy, were actually formed following spikes in the price of petroleum during the 1970‘s (Johnston, 2010, Thesis Interview; Sauturaga, 2010, Thesis Interview; Weir, 2010, Thesis Interview). According to a number of respondents, namely Christiaan Gischler (Senior Energy Specialist, Inter-American Development Bank), Kireua Kaiea (Head, Energy Planning Unit, Ministry of Public Works and Utilities, Kiribati), Mark Lambrides (Director, Energy Division, Organisation of American States) and Ernie Stapleton (Permanent Secretary, Ministry of, Natural Resources & Environment, Nevis Island Administration, St. Kitts & Nevis), this was said to be due not only to the desire on the part of the state to reduce expenditure on oil, but also to alleviate pressure from the general public to increase access to, while reducing the cost of electricity to consumers (Gischler, 2011, Thesis Interview; Kaiea, 2012, Thesis Interview; Lambrides, 2011, Thesis Interview; Stapleton, 2011, Thesis Interview). Thus, the price of oil was propounded (particularly by the representatives of international development agencies, Gischler and Lambrides) to be the greatest impetus driving state interest in renewable electricity (Gischler, 2011, Thesis Interview; Lambrides, 2011, Thesis Interview). Indeed, Jensen, Johnston and Weir commented that state agencies often prioritised those forms of renewable energy, via decentralised generation (such as solar home systems) or centralised systems (like geothermal) that they believe would allow them to reduce dependence on oil, lower the cost of power (often through eliminating fuel surcharges), while extending coverage to more customers (Jensen, 2010, Thesis Interview; Johnston, 2010, Thesis Interview; Weir, 2010, Thesis Interview).

5.3.2 Impacts on Power Utilities

Notwithstanding the above, high energy costs brought on by high oil prices often leads to more pressure being placed on utility companies to reduce their demand for oil. As a result, Lambrides, Nakavulevu and Silailai noted that this has led to utilities being urged to increase their efficiency, reduce generation and transmission losses and to transition to alternative energy sources (Lambrides, 2011, Thesis Interview; Nakavulevu, 2010; Silailai, 2010, Thesis Interview). It was therefore noted that pressure related to energy costs has contributed to the efforts that power utilities have made (often in conjunction with donor entities) to undertake energy audits and technical studies related to renewable energy sources and reducing electricity losses. Conversely, Johnston, Weir and Syngellakis (Senior Engineer, IT Power) noted that this has also contributed to rushed deployment of renewable energy technologies (RETs) in some cases (Johnston, 2010, Thesis Interview; Syngellakis, 2010, Thesis Interview; Weir, 2010, Thesis Interview). According to Johnston (2010, Thesis Interview) immature and untested prototype renewable energy devices have been deployed in the past, but ultimately failed. This was usually due to a lack of spare parts as well as local capacity to operate and maintain the equipment. In addition, he asserted that in some cases, technologies

178 were installed that were not suited for a tropical environment and as such failed due to technical malfunctions. Joseph Walter and Garvin Alexander (Asst. Executive, Director, Technical Operations, Regulated Industries Commission) stated that these negative experiences of RETs were particularly damaging as it adversely influenced the opinion of the community and general public on matters pertaining to alternative energy sources (Walter, 2010, Thesis Interview; Alexander, 2011, Thesis Interview). Finally, Ricky Wright (Senior Planning Engineer, St. Vincent Electricity Services Limited) also mentioned that the tendency to commit too early (or in a rushed manner) to agreements seeking to develop renewable energy sources has the added effect of making such initiatives ineligible for donor funding, usually due to the specific commercial procedures and regulations of donor agencies not being followed (Wright, 2011, Thesis Interview).

5.3.3 Impacts on End Users

In addition to the efforts of power utilities to become more energy efficient and make greater use of renewable energy sources, Joseph Walter, Stephen Worme and Leighton Waterman (Project Manager Sustainable Energy Framework for Barbados, Office of the Prime Minister, Barbados) also observed attempts from end-users to do the same (Walter, 2010, Thesis Interview; Waterman, 2011, Thesis Interview; Worme, 2011, Thesis Interview). In a bid to lower the electricity costs (especially in times when oil prices and fuel surcharges were high), Waterman and Hetutu (General Manager, Niue Power Corporation) noted a greater demand from customers for energy conserving devices, particularly compact fluorescent light (CFL) bulbs (Hetutu, 2010, Thesis Interview; Waterman, 2011, Thesis Interview). Further, Joseph Walter, Stephen Worme and Hasmukh Patel (Chief Executive Officer, Fiji Electricity Authority [FEA]) commented that increased interest has been shown by private individuals wishing to generate electricity for their own use, from renewable and conventional sources (Patel, 2010, Thesis Interview; Walter, 2010, Thesis Interview; Worme, 2011, Thesis Interview). In Fiji and Samoa, the Heads of both power utilities (Joseph Walter and Hasmukh Patel respectively) admitted that high oil prices have acted as a backdrop for increased interest by private individuals and entrepreneurs wishing to generate electricity for their own use and as independent power producers (IPPs) wishing to sell excess power back to the utility (Patel, 2010, Thesis Interview; Walter, 2010, Thesis Interview). In the case of Fiji, Patel (2010, Thesis Interview) noted that his utility welcomes the participation of IPPs, as long as the electricity generated is being produced from a renewable source. He stated that they are not interested in conventional thermal generation from the private sector (Patel, 2010, Thesis Interview). In Samoa, a least cost approach has been adopted, as Walter (2010, Thesis Interview) clarified that ―as long as they [the IPP] can sell us [the Electric Power Corporation] electricity cheaper than we can generate it, then I‘m all for it.‖ Thus, it seems safe to assert that high oil prices have stimulated significant interest by end-users wishing to reduce electricity costs and enjoy long term savings by utilising both energy conserving and generating technologies.

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5.3.4 Summary

In sum, there was general agreement that high oil prices had a significant adverse effect on government reserves of foreign exchange as expenditure on imports are forced upwards. Not only was this said to divert funds away from other public goods such as health and education but it was also said to exacerbate dependence on donors to meet the cost of import bills and to finance capital investments in energy. On the part of the utility, respondents noted that high oil prices usually leads to significant pressure to increase their efficiency and to transition to alternative energy sources. In spite of this, some officials underscored the need for proper planning to ensure that appropriate renewable energy technologies (RETs) are being deployed. Other interviewees pointed to the fact that even consumers were searching for ways to reduce energy costs. This is being pursued primarily via efforts to acquire energy efficient technologies and to generate power for their own individual use. Some entrepreneurs expressed the desire to generate their own electricity, while selling the excess power generated back to the utility: a prospect that looks somewhat more likely in the future as global solar PV prices, in particular, fall further.

5.4 Perceived role & impact of aid

In light of the aforementioned barriers related to financing, this section seeks to provide insight into the views expressed by those interviewed on the role and impact of international development assistance to the energy sector.

As a lack of financial resources was emphasised as the chief barrier to the deployment of renewable electricity, it is unsurprising that a number of interviewees, namely Syngellakis, Janjea, Tafia Timothy (Project Coordinator, Geothermal Project Management Unit, Dominica) and Tony Neil (Executive Director, Pacific Power Association90) indicated that these developments rarely ever occur without donor funding (Janjea, 2010, Thesis Interview; Syngellakis, 2010, Thesis Interview; Tafia, 2010, Thesis Interview; Timothy, 2011, Thesis Interview; Neil, 2010, Thesis Interview). As indicated by Janjea, the size of the electricity market in most SIDS contributes to diseconomies of scale, making private sector investment unattractive, and as such donor entities provide a vital source of financial support for the deployment of RETs (Janjea, 2010, Thesis Interview). Thus, Johnston, Vidal (Principal Director for Energy, Ministry of Mining & Energy, Jamaica) and ‗Akau‘ola (Special Advisor to Prime Minister of Tonga91) emphasised that the role of donor entities is to provide human, technical and financial support to facilitate the accomplishment of local and national objectives in the energy sector (Johnston, 2010, Thesis Interview; Vidal, 2011, Thesis Interview; ‗Akau‘ola, 2011, Thesis Interview). In practice, therefore, Vidal asserted that it is important that countries have their own policies and implementation plans, so that donors can support activities that are a part of a wider national development framework (Vidal, 2011, Thesis Interview). This was emphasised by Vidal and Wright who asserted that donors often enter countries with project ideas and even technologies that

90 It should perhaps be noted that Mr. Tony Neil left this position during the course of this research 91 ‗Akau‘ola was deeply involved in the drafting and formulation of the Tonga Energy Roadmap. For more see: Tonga Energy Road Map. 2010. „Akau„Ola to Take on New Challenges [Online]. Available: http://www.tonga-energy.to/?p=1212 [Accessed August 21 2012]. 180 they would like to establish (Vidal, 2011, Thesis Interview; Wright, 2011, Thesis Interview). Vidal and Johnston therefore opined that the role of donor agencies should not be to implement ideas of their own, but rather to support national development plans (Johnston, 2010, Thesis Interview; Vidal, 2011, Thesis Interview).

Some respondents also questioned the nature and motives of aid initiatives in the power sector. To begin, Wright (2011, Thesis Interview)92 noted that there is often a considerable pressure on utilities from members of the international community ―to go green‖ (i.e. to transition to sustainable energy sources) ―whose developers, whose business people want to get into the Caribbean‖. Wright (2011, Thesis Interview) went further and added that in order to do this, ―one of the things they‘ve targeted is policy‖ in order to open markets and create an enabling framework for private participation in the private sector. Indeed, both Wright and Syngellakis postulated that aid to the power sector has at times served to promote the entrance of developers and/or technologies from nations providing financial support (Syngellakis, 2010, Thesis Interview; Wright, 2011, Thesis Interview). Johnston and Wright added that this was often achieved was through the introduction of legislation and regulations seeking to promote competition in the generation sub-sector to allow for the participation of IPPs (Johnston, 2010, Thesis Interview; Wright, 2011, Thesis Interview) or through implicit arrangements in aid agreements to source expertise and equipment from the country disbursing the required funds. Waterman noted that sometimes ‗policy-based loans‘ are disbursed by donor entities to facilitate legislative and regulatory reforms (Waterman, 2011, Thesis Interview). He noted that these loan facilities appear to be more flexible (in their explicit requirements of governments), but are, in reality, often used to drive implementation in targeted policy areas and hence, at times,are used as a means of ―pressuring governments to do things which otherwise would have taken much longer‖ (Waterman, 2011, Thesis Interview).

Williams (2011, Thesis Interview), (Programme Manager for Energy at the Caribbean Community [CARICOM]) insisted that the ―foreign relations element is key‖ and asserted that ―nations do not have friends, they have interests.‖ He clarified the point by suggesting that aid to the power sector has not been altruistic, but rather,has been a form of functional cooperation that is meant to ensure that all parties to the agreement benefit in some way (Williams, 2011, Thesis Interview). As the supra-national/regional body representing many Caribbean states, Williams asserted that CARICOM aims to highlight and facilitate opportunities for joint initiatives (with donors) in the power sector, while safeguarding the strategic interests of Caribbean nations. Mario (2010, Thesis Interview) (Energy Adviser at the Secretariat of the Pacific Community [SPC]) confirmed that the regional organisation plays a similar role in the Pacific of coordinating activities in the energy sector, while assisting/facilitating engagement and cooperation between member states and international development agencies.

5.4.1 Summary

Respondents confirmed that while aid was thought necessary due to the limited resource base of SIDS, it has not always been altruistic. Rather financial assistance from donor

92 It should be noted that Mr. Ricky Wright, as the Senior Planning Engineer, of the St. Vincent Electricity Services Limited (VINLEC) spoke particularly from the perspective of electricity utilities. 181 entities has at times served to facilitate the economic interests of the countries from which the funds were being sourced. This lack of altruism referred to by interviewees was said to manifest itself primarily through the export of expertise and equipment from donor nations, in order to implement energy projects in Caribbean and Pacific SIDS. Claims were also made that efforts by aid entities to support the creation of an enabling regulatory framework through the formulation and implementation of clear legislation and policy initiatives, has at times served to open markets to business interests from donor nations. Notwithstanding this, it was observed that aid to the power sector in SIDS represents a form of functional cooperation, through which, mutual benefits can be enjoyed by either party to the agreement. In light of this, safeguarding the strategic interests of the recipient nation was thought to be critical, so as to ensure that the assistance being rendered is congruent with the relevant national development plans of the receiving state, in order to facilitate a transition to sustainable energy.

5.5 Regulation and the role of Independent Power Producers

Private participation in the power sector was also brought to the fore during the interviews conducted. Respondents however focused on the role and importance of regulation within the context of the participation of independent power producers (IPPs). The discussion of this theme is therefore structured and written accordingly and focuses on the following themes:

Health and safety standards Impacts on tariffs Compensation to utilities Appropriate policy mechanisms

5.5.1 Health, Safety & Standards

As mentioned earlier, it was clear that high oil prices ushered in increased interest from companies and individuals wishing to generate power to sell to the local grid using both conventional and renewable energy sources. According to Hasmukh Patel, Joseph Walter and Fitzroy Vidal, in practice, this has meant that state authorities as well as utilities have had to revisit, and in some cases, revise the process through which such applications can be considered (Patel, 2010, Thesis Interview; Vidal, 2011, Thesis Interview; Walter, 2010, Thesis Interview). Yet, regardless of whether respondents were in favour of or against the participation of IPPs in the power sector, most agreed that specific regulation of the activities of private entities was vital due to risks to the electrical system, as well as to human life involved (Alexander, 2011, Thesis Interview; Clarke, 2011, Thesis Interview; Worme, 2011, Thesis Interview). In this regard, Stephen Worme (Chief Marketing Officer, Barbados Light & Power Company Limited) noted that because some forms of renewable electricity generation are intermittent, they can contribute to instability and malfunction if the grid connection is not made correctly (Worme, 2011, Thesis Interview). Garvin Alexander (Assistant Executive Director, Technical Operations, Regulated Industries Commission) and Nadita Ramachala (Standards Officer, Standardisation Division, Trinidad & Tobago Bureau of Standards) added that regulation should also address technical and procedural issues, such as

182 electrical standards and interconnection stipulations (Alexander, 2011, Thesis Interview; Ramachala, 2011, Thesis Interview). These two respondents, along with Allen Clarke (Senior Engineer, Generation Interface, Trinidad & Tobago Electricity Commission) noted that regulation should include minimum health and safety requirements in order to cater for the practical elements of making electrical connections (Alexander, 2011, Thesis Interview; Clarke, 2011, Thesis Interview; Ramachala, 2011, Thesis Interview).

5.5.2 Impact upon Tariffs

Uaine Silailai (Assistant Chief Executive Officer & Head, Renewable Energy Division, Ministry of Natural Resources & Environment, Samoa) and Thomas Tafia (General Manager, Department of Energy, Tokelau) added that IPPs are unlikely to be practical in small markets (like those in SIDS) and asserted that the participation of ‗profit motivated‘ entities in the power sector will almost certainly result in higher tariffs (Silailai, 2010, Thesis Interview; Tafia, 2010, Thesis Interview). According to Tafia (2010, Thesis Interview), prospective IPPs are unlikely to get involved in power generation unless they receive adequate compensation from the utility (or consumers – if they engage in direct sale to the end-user) and are able to enjoy significant profit margins. In such an environment, prices would increase, especially since private power producers would not face social obligations to minimise the cost of power to the customer (Tafia, 2010, Thesis Interview).

5.5.3 Compensation to Utilities

Simultaneously, several utility representatives, namely Joseph Walter and Wairarapa Young (both of the Electric Power Corporation [Samoa] as well as Stephen Worme along with Raymond Nurse (Geothermal Project Manager, Chairman, Geothermal Energy Committee, Grenada), also raised concerns related to compensation and the price that should be paid to IPPs (Walter, 2010, Thesis Interview; Worme, 2011, Thesis Interview; Young, 2010, Thesis Interview; Nurse, 2011, Thesis Interview).

Walter (2010, Thesis Interview) (Chief Executive Officer, [Samoa] Electric Power Corporation) opined his unwillingness to pay an IPP more than it would cost his utility to generate power and asserted that there are inherent economic risks involved in buying electricity from an independent company as this would normally require a medium to long term purchasing power agreement (PPA) based on current or recent average avoided costs93. According to Walter (2010, Thesis Interview), should the price of oil fall drastically, the utility could be stuck in a legally binding agreement where they would be made to pay very high rates for electricity from an IPP (based on avoided costs when oil prices were high). Walter also raised concerns related to compensation in cases where the utility acts as a ‗back – up‘ source of electricity, particularly at times when the power being generated by the IPP fails. In addition, Thornley Myers (2011, Thesis Interview) (Chief Executive Officer, the St. Vincent Electricity Services Limited [VINLEC]) and Stephen Worme (2011, Thesis Interview) (Chief Marketing Officer,

93 The term avoided cost refers to the normal expenditure that would be incurred by the utility, if they were to undertake such generation themselves. 183

Barbados Light & Power Co. Ltd. [BL&P]), both expressed concerns related to compensation to the utility in cases where electricity generated from an IPP is being ‗wheeled‘. The term ‗wheeling‘ refers to the transportation of electricity generated by one entity (such as an IPP) via power lines usually owned by a utility company, and then sold to another organisation or entity (United States Environmental Protection Agency, 2009; ESKOM). In relation to compensation paid to power companies, utility representatives Thornely Myers, Hasmukh Patel and Ricky Wright as well as Herbert Samuel (President, Green Island Inc.) commented that ultimately, the utility, should not be responsible for determining the price it pays for electricity on a long term on-going basis (via a PPA) or the amount paid to it, for use of its transmission facilities or for acting as a standby or back-up source of power (Patel, 2010, Thesis Interview; Samuel, 2011, Thesis Interview; Wright, 2011, Thesis Interview; Myers, 2011, Thesis Interview). Rather, Garvin Alexander as well as Myers and Samuel asserted that matters related to compensation should be left to an independent regulatory body to promote transparency in the operations of the power sector (Alexander, 2011, Thesis Interview; Samuel, 2011, Thesis Interview; Myers, 2011, Thesis Interview).

5.5.4 Appropriate policy mechanisms

Utility representatives Robert Blenker and Joseph Walter as well as Nigel Hosein, Maxine Nestor (Energy Policy Analyst, Energy Programme, the Caribbean Community [CARICOM]) and Ellsworth Dacon (Director, Energy Unit, St. Vincent & the Grenadines) also expressed uncertainty as to which policy mechanism (such as feed-in- tariffs, net-metering or net-billing) would be best to facilitate the participation of IPPs in the power sector in SIDS (Blenker, 2011, Thesis Interview; Dacon, 2011, Thesis Interview; Hosein, 2011, Thesis Interview; Nestor, 2011, Thesis Interview; Walter, 2010, Thesis Interview). The key issue here, according to Nestor (2011, Thesis Interview), is the compensation paid to the utility as opposed to the rate paid to the independent power producer (IPP). Nestor (2011, Thesis Interview) explained that policies promoting self-generation by using renewable energy and paying a premium for such electricity, (via a relatively high feed-in tariff for example) may result in higher tariffs for non-power generating consumers, as any additional costs incurred by the utility is likely to be passed onto all consumers. Nestor and Worme noted that options of this nature are said to be particularly frowned upon as more affluent customers including larger businesses are likely to be the only individuals able to afford to engage in self-generation (Nestor, 2011, Thesis Interview; Worme, 2011, Thesis Interview). Nestor, Worme and Kenrick Burke (Assistant Engineer, Planning Department, St. Vincent Electricity Services Limited [VINLEC]) added therefore that higher tariffs in such an environment would be patently unfair and socially unjust to lower-income consumers, as they would be forced to pay more for electricity (Burke, 2011, Thesis Interview; Nestor, 2011, Thesis Interview; Worme, 2011, Thesis Interview).

Notwithstanding the uncertainty surrounding appropriate policy mechanisms, both Dacon and Vidal asserted that IPPs do represent a useful means of deferring the economic risk involved in expanding generating capacity, particularly using RETs (Dacon, 2011, Thesis Interview; Vidal, 2011, Thesis Interview). Further, as a lack of financial resources is often a prime concern in Caribbean and Pacific SIDS, Dacon, Vidal and Young (Renewable Energy Officer, Electric Power Corporation) propounded

184 that the involvement of IPPs is an important component of attracting investors to the power sector (Dacon, 2011, Thesis Interview; Vidal, 2011, Thesis Interview; Young, 2010, Thesis Interview). Dacon, Stapleton and Timothy added that this is particularly applicable to geothermal development, where capital intensive exploration activities have to be undertaken to determine if the resource can be accessed and utilised in a commercially viable and environmentally benign manner (Dacon, 2011, Thesis Interview; Stapleton, 2011, Thesis Interview; Timothy, 2011, Thesis Interview). Timothy (Project Coordinator, Geothermal Project Management Unit, Dominica) postulated that due to the cost and risk involved in geothermal exploration, it would not be prudent to utilise public funds, and as such, it was noted that without the intervention of private sector or donor finance, capital intensive renewable energy applications of this nature would remain undeveloped (Timothy, 2011, Thesis Interview). Thus, while some government officials opposed the involvement of IPPs in SIDS due to fears that it could result in higher tariffs (Silailai, 2010, Thesis Interview; Tafia, 2010, Thesis Interview), other state representatives, namely Dacon, Timothy, Vidal and Ephraim argued that electricity production by private entities represents an avenue through which capital intensive investments could be undertaken (Dacon, 2011, Thesis Interview; Ephraim, 2011, Thesis Interview; Timothy, 2011, Thesis Interview; Vidal, 2011, Thesis Interview).

It is therefore within the context of the aforementioned issues that the issue of regulation becomes important to facilitating the participation of private participants in the power sector. Unsurprisingly therefore, Alexander, Myers, Nestor, Patel and Tawake all noted that greater attention is currently being paid to the issue of power sector regulation by state authorities (Alexander, 2011, Thesis Interview; Nestor, 2011, Thesis Interview; Patel, 2010, Thesis Interview; Tawake, 2010, Thesis Interview; Myers, 2011, Thesis Interview).

5.5.5 Summary

High oil prices seem to have brought to the fore both private companies and individuals wishing to become involved in power generation (on a large and small scale), for own- use and for sale to the grid. The issue of private involvement in the power sector has by extension cast the subject of regulation into the limelight, not only in terms of compensation to electricity utilities and the establishment of technical standards but also in terms of choosing the appropriate policy mechanisms to ensure that utilities or end- users are not adversely affected by the introduction of IPPs. For these reasons, many state authorities with responsibility for the power sector in the Caribbean and Pacific have now placed a greater degree of emphasis on the establishment of appropriate regulatory frameworks within their own national jurisdictions.

5.6 Emerging Concerns

Having outlined the chief barriers encountered by SIDS in the Caribbean and Pacific as well as other key issues surrounding a transition to renewable electricity, this section of the thesis focuses on ‗cross-cutting‘ emerging concerns that were raised by respondents. Specifically, such concerns focused on:

185

The difficulties of donor engagement and project execution; Differing priorities between state and aid agencies; Donor agency coordination; Urgency in Deployment of renewable energy technologies and Energy efficiency

5.6.1 Donor Engagement and Project Execution

In light of the aforementioned lack of financial resources (as discussed in section 5.2 – dealing with Barriers), the ability to access funds to invest in renewable energy technologies (RETs) is a critical component of a transition to renewably generated electricity in SIDS. However, according to Lambrides (2011, Thesis Interview), (Director, Energy Division, Organisation of American States), SIDS (particularly in the Caribbean) lack the ability to comprehensively respond to ‗Calls for Proposals‘ or to effectively engage with donors in order to broker project agreements for the power sector, due to a severe lack of project management services and skills. Other respondents, namely, Fitzroy Vidal (Principal Director for Energy, Ministry of Mining & Energy, Jamaica), Monica Arevalo (Loan Officer, European Investment Bank [EIB]) and Nigel Hosein (Vice President of Engineering at GENIVAR Trinidad & Tobago Ltd and Former Executive Director, Caribbean Electric Utility Service Corporation [CARILEC] confirmed this claim by stating that often potential projects are not completed due to problems related to the business model applied, the deal making process or commercial skills (Arevalo, 2011, Personal Communication; Hosein, 2011, Thesis Interview; Vidal, 2011, Thesis Interview). Arevalo lamented that while funds are available for renewable energy development ―for one reason or another, all the projects that have been ‗put on the table‘ have not been bankable,‖ largely due to procedural issues, such as a lack of international tendering‖ (Arevalo, 2011, Personal Communication).

Rayburn Blackmoore (2011, Personal Communication) (Minister of Public Works, Energy and Ports, Dominica) explained that small island nations seeking to access funds for project implementation ―do not possess the ability to mobilise the requisite resources, to take it [i.e. an initiative in the energy sector] from a programme to commercial reality‖. Lambrides (2011, Thesis Interview) went further, and added that in practice therefore ―countries struggle with day to day execution of funds, like writing deliverables, managing timeline, accounting...procurement systems so that there‘s transparency in bidding [and] writing Terms of Reference‖ largely due to an overall dearth in Human Resources. He noted that ―when you only have four people in your Ministry [of Energy] you can‘t be expected to have that depth of service‖ Lambrides (2011, Thesis Interview).

The concerns raised by respondents therefore went beyond those related only to a basic lack of human resources. Rather, Blackmoore, Hosein, Lambrides and Vidal all highlighted the adverse impact that the dearth of technical and legal skills required to manage a project activity from an idea to execution often has on the ability of SIDS to receive funding from donor entities (Blackmoore, 2011, Personal Communication; Hosein, 2011, Thesis Interview; Lambrides, 2011, Thesis Interview; Vidal, 2011, Thesis Interview). Sili‘a Ualesi (Energy Coordinator, Ministry of Finance, Samoa) and

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Thomas Scheutzlich (Principal Adviser, German Technical Cooperation Agency - Caribbean Renewable Energy Development Programme [GiZ – CREDP]) noted that this not only makes it difficult to meet the procedural requirements of individual donors but makes it near impossible to meet the stipulations of international financing facilities like the Clean Development Mechanism (CDM)94 (Ualesi, 2010, Thesis Interview; Scheutzlich, 2011, Personal Communication). In this regard, Scheutzlich and Nakavulevu (Director, Department of Energy, Fiji) asserted that attempting to combine or ‗bundle‘ projects across island states in order to reduce costs and enjoy economies of scale was said to be exceedingly challenging, especially if different technologies are involved, and that efforts of this nature have often failed in the past (Scheutzlich, 2011, Personal Communication; Nakalevu, 2010, Thesis Interview). Government representatives Vidal and Stapleton propounded that in order to reduce the reliance on external consultants and specialists, greater emphasis on knowledge transfer and capacity building – specifically in the fields of commercial negotiation and project preparation and management - was said to be necessary (Stapleton, 2011, Thesis Interview; Vidal, 2011, Thesis Interview). Lambrides (2011, Thesis Interview) added that perhaps the establishment and promotion of a consortium of professional service providers would help to solve this problem.

5.6.2 Differing priorities between state and aid agencies

It should be recalled that respondents collectively indicated that a lack of financial resources constitutes perhaps the greatest hurdle to a renewable energy transition. Simultaneously, interviewees from funding institutions, namely Arevalo and Tabernacki (Managing Director: Renewable Energy and Environmental Finance at Overseas Private Investment Corporation [OPIC]) noted that funds are indeed available for power sector investment (Arevalo, 2011, Personal Communication; Tabernacki, 2011, Personal Communication). Given this backdrop, Hughes (2012, Thesis Interview) (Senior Energy Specialist, World Bank) expressed reservations pertaining to whether SIDS in the Caribbean and Pacific have actually grasped the strategic motivation for the provision of most donor funds for investments in renewable energy in the power sector. According to Hughes (2012, Thesis Interview), while state authorities desire to transition to renewable energy in order to reduce their vulnerability to oil prices, many multilateral donor entities are interested in such investments largely due to mandates (from donor nations) to make investments toward on climate change mitigation. Hughes (2012, Thesis Interview) therefore describes the existing mutual interest in renewable energy as a ‗lucky co-incidence of drivers and priorities,‘ since, in the case of SIDS, the motivations behind why funds are being provided differ from the reasons that they are desired.

Hughes, along with Johnston and Syngellakis therefore opined that this often leads to a supply-driven approach, through which technologies and expertise (especially those

94 ―The Clean Development Mechanism (CDM), defined in Article 12 of the [Kyoto] Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets.‖ For more see: United Nations Framework Convention on Climate Change. 2012a. Clean Development Mechanism (Cdm) [Online]. Bonn, Germany. Available: http://unfccc.int/secretariat/contact/items/2782.php [Accessed 16 August 2012]. 187 from donor countries) are channelled into SIDS (Johnston, 2010, Thesis Interview; Syngellakis, 2010, Thesis Interview; Hughes, 2012, Thesis Interview). Hence, Hughes and Vidal note that the resulting ‗donor-push‘, rather than ‗recipient pull‘ often occurs due to the fact that donors usually have pre-conceived ideas of what they want to spend their money on (Vidal, 2011, Thesis Interview; Hughes, 2012, Thesis Interview). By extension therefore, according to Hughes, Johnston and Vidal, national priorities and development plans may not always be taken into account as projects can, at times, be based donor priorities and interests (Johnston, 2010, Thesis Interview; Vidal, 2011, Thesis Interview; Hughes, 2012, Thesis Interview).

As a result, Vidal and Williams (Programme Manager, Energy, The Caribbean Community) indicated that state authorities in recipient countries should have their own clear and strategic development plans for the power sector, to ensure that national interests and needs are satisfied (Vidal, 2011, Thesis Interview; Williams, 2011, Thesis Interview). On the other hand, Nakavulevu, Jensen (Environmental and Energy Specialist, United Nations Development Programme, Pacific Centre) and Maurice (Senior Planning Officer, Ministry of Energy & Energy Affairs, Trinidad & Tobago) argued that SIDS should perhaps view the desire of donor entities to take action on climate change as an opportunity to package energy projects such a way that aid agencies and recipient nations are able benefit from the international carbon market (Nakalevu, 2010, Thesis Interview; Maurice, 2011; Jensen, 2010, Thesis Interview). However, as SIDS already suffer from a lack of human resources and the associated professional skills, Scheutzlich, Syngellakis, Ualesi and Mario (Energy Adviser, Economic Development Division, Secretariat of the Pacific Community [SPC]) expressed frustration with trying to meet the additional procedural requirements of carbon sensitive funding facilities like the CDM (Syngellakis, 2010, Thesis Interview; Ualesi, 2010, Thesis Interview; Scheutzlich, 2011, Personal Communication; Mario, 2010, Thesis Interview). Further, Scheutzlich, Ualesi and Yoshida (Project Coordinator, Greenhouse Gas Abatement Strategy, Ministry of Natural Resources & Environment, Samoa) doubted whether small island nations could effectively compete on the carbon market with larger developing nations (such as Brazil, China or India) where greater carbon savings (and by extension carbon credits) could be gained (Ualesi, 2010, Thesis Interview; Scheutzlich, 2011, Personal Communication; Yoshida, 2010, Thesis Interview).

5.6.3 Donor Co-ordination

A number of aid and energy officials, namely, Thomas Jensen, Christiaan Gischler (Senior Energy Specialist, Inter-American Development Bank), Allison Davis (Portfolio Manager, Economic Infrastructure Division, Caribbean Development Bank) and Peter Johnston (Environmental and Energy Consultants, Ltd) also raised concerns related to a lack of coordination among donor entities active in the Caribbean and Pacific (Davis, 2011, Thesis Interview; Gischler, 2011, Thesis Interview; Jensen, 2010, Thesis Interview; Johnston, 2010, Thesis Interview). Vidal asserts that this is due to the fact that donors effectively ‗compete‘ for projects so as to meet their goals and targets (Vidal, 2011, Thesis Interview). Gischler (2011, Thesis Interview) (Senior Energy Specialist, Inter-American Development Bank) admits that there is some duplication of efforts in the Caribbean, but viewed it as inevitable as ―some donors need to justify their

188 existence‖. Notwithstanding this, Hughes (2012, Thesis Interview) commented that government authorities have at times used the lack of donor coordination to their strategic advantage in order avoid politically inconvenient reforms or conditionalities that may accompany some aid agreements. Thus, Hughes (2012, Thesis Interview) notes that in this case, countries are able to use donor competition and the lack of coordination to their advantage, by choosing to partner with the aid agency whose terms and conditions are most congruent with state interests and objectives.

Yet still, in both regions, Jensen, Lambrides, Vidal and Johnston all noted that while evidence of a lack of aid coordination between donor entities still exists, there have been improvements in the recent past as the incidence of such occurrences have decreased (Jensen, 2010, Thesis Interview; Johnston, 2010, Thesis Interview; Lambrides, 2011, Thesis Interview; Vidal, 2011, Thesis Interview). Jensen and Lambrides linked this advancement to increased communication between donors active in the energy sector in either region (Jensen, 2010, Thesis Interview; Lambrides, 2011, Thesis Interview). In the Pacific, the ―Pacific Energy Donors Working Group‖ was formed toward the end of 2008 (chaired by the World Bank) to discuss on-going and planned initiatives in the energy sector. According to Hughes, Jensen and Johnston, the group meets quarterly primarily to list and review energy developments in the Pacific in order to avoid accidental duplication of project activities and to foster greater cooperation among aid agencies in the actual planning and execution of initiatives (Jensen, 2010, Thesis Interview; Johnston, 2010, Thesis Interview; Hughes, 2012, Thesis Interview). Jensen noted that these meetings are open to all donors in the region and no application procedures were said to exist (at the time of the interview) (Jensen, 2010, Thesis Interview). Jensen (2010, Thesis Interview) also highlighted the ―Pacific Regional Infrastructure Facility (PRIF)‖95 (mentioned in the previous chapter) as another form of donor coordination as this exists chiefly as a vehicle through which development agencies can partner in the implementation (and financing) of projects. On the other hand, in the Caribbean, donor representatives Lambrides, Davis and Gischler listed the Caribbean Sustainable Energy Dialogue, chaired by the Organisation of American States as an initiative of the Energy and Climate Partnership of the Americas (ECPA)96, as the primary form of donor coordination in the region (Davis, 2011, Thesis Interview; Gischler, 2011, Thesis Interview; Lambrides, 2011, Thesis Interview). As explained by Lambrides, this annual event, which occurs as a private side event of a larger energy conference (the Caribbean Regional Energy Forum [CREF]) is meant to serve as a forum where donor and government officials can not only be updated on contemporary developments in the energy sector but also voice any relevant concerns they may have (Lambrides, 2011, Thesis Interview). Interestingly, a number of

95 PRIF is a is a multi- development agency infrastructure coordination and financing mechanism that was ―initiated in 2008 by the Asian Development Bank (ADB), the Australian Agency for International Development (AusAID), the New Zealand Government via the New Zealand Aid Programme (NZMFAT95), and the World Bank Group (WBG).... [the] European Commission (EC) and the European Investment Bank (EIB) became members of the joint initiative in 2010.‖ For more see: Pacific Region Infrastructure Facility (PRIF). 2012b. Home: The Pacific Region Infrastructure Facility (Prif) [Online]. Sydney, Australia. Available: http://www.theprif.org/ [Accessed 1 June 2012]. 96 ECPA was establish, among other things, ―to facilitate regional dialogue and assist Caribbean governments promote and implement sustainable energy policies and programs‖ and is meant to ―focus on energy efficiency, renewable energy, cleaner and more efficient use of fossil fuels, energy poverty, and infrastructure.‖ For more see, Energy and Climate Partnership of the Americas. 2012. Ecpa Caribbean Intiatives [Online]. Washington D.C. Available: http://www.ecpamericas.org/initiatives/default.aspx?id=25 [Accessed 16 August 2012]. 189 interviewees, in both regions namely Davis, Gischler, Hughes, Jensen, Johnston and Lambrides, noted that that some donor nations (but particularly China), often do not participate in the aforementioned forms of multilateral donor agency dialogue (Davis, 2011, Thesis Interview; Gischler, 2011, Thesis Interview; Jensen, 2010, Thesis Interview; Johnston, 2010, Thesis Interview; Lambrides, 2011, Thesis Interview; Hughes, 2012, Thesis Interview).

5.6.4 Urgency in Deployment of renewable energy technologies

A number of respondents from various backgrounds/sectors, namely Hebert Samuel, Wairarapa Young, Atul Raturi (Head of Department, Physics, University of the South Pacific) and Vaughn Lewis (Manager, Engineering, St. Vincent Electricity Services Limited) voiced (with a degree of urgency) the need to transition to greater renewable energy use in the power sector in both the Caribbean and the Pacific (Raturi, 2010, Thesis Interview; Samuel, 2011, Thesis Interview; Young, 2010, Thesis Interview; Lewis, 2011, Thesis Interview).

One reason for the urgency was to reduce vulnerability to high oil prices. In this regard Blenker, Dacon, Lewis, Samuel and Worme (Chief Marketing Officer, Barbados Light & Power Company Limited) commented that renewable energy was the obvious choice in terms of long term future investments in the power sector (Blenker, 2011, Thesis Interview; Dacon, 2011, Thesis Interview; Samuel, 2011, Thesis Interview; Worme, 2011, Thesis Interview; Lewis, 2011, Thesis Interview). As put by Samuel and Waterman, (Project Manager, Sustainable Energy Framework for Barbados, Office of the Prime Minister, Barbados) the challenge being faced however, in trying to acquire, install and deploy RETs ―on the ground level‖ were said to be related to cost, as these devices are still relatively expensive, both for utilities and individuals (Samuel, 2011, Thesis Interview; Waterman, 2011, Thesis Interview). Samuel and Waterman (though based in different countries), both asserted that in order to increase the acquisition and deployment of RETs by private citizens, funding mechanisms, including micro-finance, primarily through commercial banks were necessary (Samuel, 2011, Thesis Interview; Waterman, 2011, Thesis Interview). Thus, while some commented on the need for power utilities to transition to renewable energy, Samuel, Waterman and Burke (Assistant Engineer, Planning Dept, St. Vincent Electricity Services Limited [VINLEC]) noted that policy mechanisms and funding facilities should be put in place to allow for the widespread deployment of RETs by individuals and companies. (Burke, 2011, Thesis Interview; Samuel, 2011, Thesis Interview; Waterman, 2011, Thesis Interview).

In order to facilitate a sustainable energy transition however, Micheal Ross (Project Manager/Engineer, Sandia National Laboratories), Eparama Tawake (General Manager, Generation, Fiji Electricity Authority), Joseph Walter (Chief Executive Officer, Electric Power Corporation, Samoa) and Joseph Williams (Programme Manager, Energy. The Caribbean Community [CARICOM]) noted that more attention needs to be paid to feasibility and technical studies, including in-depth energy resource maps (Tawake, 2010, Thesis Interview; Walter, 2010, Thesis Interview; Williams, 2011, Thesis Interview; Ross, 2011, Thesis Interview). Adam Warren (Regional Initiatives, Deployment & Market Transformation, National Renewable Energy Laboratory

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[NREL]) and Joseph Walter therefore propounded that the deployment of RETs needs to be guided by sound scientific and technical data on which resources are available and which devices are most appropriate for use in the Caribbean and Pacific (Walter, 2010, Thesis Interview; Warren, 2011, Thesis Interview). As such, Warren asserted that a greater emphasis on implementing small scale pilot projects where technologies could be tested was necessary before such devices are commercialised (Warren, 2011, Thesis Interview). Peter Johnston (Environmental and Energy Consultants, Ltd.), Kireua Kaiea (Head, Energy Planning Unit, Ministry of Public Works and Utilities, Kiribati) and Tony Weir (Programme Manager, Pacific Centre for Environment & Sustainable Development, University of the South Pacific) said that proper trialling of technologies, along with the provision of scientific and technical data, is probably the only way to ensure that mistakes of the past, where devices failed after a short period of time, are not repeated (Johnston, 2010, Thesis Interview; Kaiea, 2012, Thesis Interview; Weir, 2010, Thesis Interview).

Thus, in order to facilitate a transition to sustainable energy, respondents commented that an increased deployment of RETs was necessary, not only on the part of utilities but also by individuals. For this to occur however, issues related to financing and the provision of accurate data and appropriate technologies would need to be addressed. Finally, Kaiea and Syngellakis (Senior Engineer, IT Power) noted that a significant thrust toward training and capacity building would also be required to ensure proper operation and maintenance of RETs (Kaiea, 2012, Thesis Interview; Syngellakis, 2010, Thesis Interview).

5.6.5 Energy efficiency

A wide cross section of respondents noted the inextricable link between renewable energy and energy efficiency; namely Syngellakis, Raturi, Mario, Maurice, Ualesi, Vidal, Neil (Executive Director, Pacific Power Association) and Chaya (2nd National Communication to the UNFCCC Coordinator, Department of Environment, Fiji) (Mario, 2010, Thesis Interview; Maurice, 2011, Thesis Interview; Neil, 2010, Thesis Interview; Raturi, 2010, Thesis Interview; Syngellakis, 2010, Thesis Interview; Ualesi, 2010, Thesis Interview; Vidal, 2011, Thesis Interview; Chaya, 2010, Thesis Interview). Maurice (2011, Thesis Interview) (Senior Planning Officer, Ministry of Energy & Energy Affairs, Trinidad & Tobago) opined that energy efficiency can be viewed from ―two angles: one is to promote renewable energy and one is to have energy efficiency‖. Blenker and Yoshida noted that this is due to the fact that even if electricity was being renewably generated, it would indeed be wasted without an appreciation or understanding of the need for conservation (Blenker, 2011, Thesis Interview; Yoshida, 2010, Thesis Interview). Hence, a number of energy officials across different countries (namely Burke, Chaya, Driver and Silailai) all noted that people should be educated about the importance of energy and why it should be conserved (Burke, 2011, Thesis Interview; Driver, 2011, Thesis Interview; Silailai, 2010, Thesis Interview; Chaya, 2010, Thesis Interview). Alexander, Maurice and Furlonge (Head, LNG & Investment Analysis, National Gas Company of Trinidad & Tobago) - all of Trinidad and Tobago, stated the importance of energy efficiency as it extends the life of available resources (conventional and renewable) (Alexander, 2011, Thesis Interview; Maurice, 2011, Thesis Interview; Furlonge, 2011, Thesis Interview). Even further, Alexander, Maurice,

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Samlal (Director and Founder, Omega Telecom Limited) and Ward (Director of the Office of the Americas, U.S. Department of Energy) described initiatives geared toward enhancing energy efficiency as the ―lowest hanging fruit‖ and as such should be prioritised (Alexander, 2011, Thesis Interview; Maurice, 2011, Thesis Interview; Samlal, 2011; Ward, 2011).

In spite of the aforementioned, Judith Ephraim (Sustainable Development & Environment Officer, Ministry of Physical Development, Environment and Housing, St. Lucia) and Leighton Waterman (Project Manager Sustainable Energy Framework for Barbados, Office of the Prime Minister, Barbados) lamented that access to funding for energy conserving technologies was often problematic (Ephraim, 2011, Thesis Interview; Waterman, 2011, Thesis Interview). Davis, Ephraim and Escalante (Managing Director, Energy Dynamics97) noted that there are not many funding facilities (via commercial banks or donor entities) or established competent service suppliers in the Caribbean or Pacific through which energy efficiency initiatives could be pursued (Davis, 2011, Thesis Interview; Ephraim, 2011, Thesis Interview; Escalante, 2011, Thesis Interview). Moreover, Dacon, Kaiea and Samuel admitted that efficiency was not considered a priority until the recent spike in oil prices (Dacon, 2011, Thesis Interview; Kaiea, 2012, Thesis Interview; Samuel, 2011, Thesis Interview). Further, Dacon, Samuel, Ephraim, Haraksingh (Lecturer, Department of Physics, University of the West Indies), and Rainford (Principal Director, Policy Planning & Development Division, Ministry of Mining & Energy, Jamaica) bemoaned the lack of government policy mechanisms to encourage energy efficiency and others added that even where policy incentives existed, they were unclear and could not be effectively accessed or implemented (Dacon, 2011, Thesis Interview; Ephraim, 2011, Thesis Interview; Rainford, 2011, Thesis Interview; Samuel, 2011, Thesis Interview; Haraksingh, 2011, Thesis Interview). Maurice, Ramachala and Dohm (Vice President, Marketing & Communications, Green Building Council) therefore asserted that clearer energy standards, inclusive of certification and labelling, was necessary in order to provide a more effective policy framework for enhancing energy efficiency in the Caribbean and Pacific (Maurice, 2011, Thesis Interview; Ramachala, 2011, Thesis Interview; Dohm, 2011, Thesis Interview). Notwithstanding this, some power utility representatives (namely those in Fiji and St. Vincent, i.e. Tawake, Burke and Wright) noted that their organisations have put programmes in place to reward customers that performed energy audits or acquired energy conserving technologies (Burke, 2011, Thesis Interview; Tawake, 2010, Thesis Interview; Wright, 2011, Thesis Interview). Nonetheless (akin to concerns related to the thrust toward renewable energy), Escalante, Syngellakis and Cox (Renewable Energy Coordinator, Barbados National Oil Company) noted that there is a definite need for a greater focus on energy audit training and product testing of energy conserving technologies and appliances for use in the Caribbean and Pacific (Syngellakis, 2010, Thesis Interview; Escalante, 2011, Thesis Interview; Cox, 2011, Thesis Interview)

97 Energy Dynamics is a consulting firm that focuses on energy efficiency and is based in Trinidad and Tobago. 192

5.6.6 Summary

Donors do play a quintessential role in supporting the acquisition and deployment of renewable energy technologies. However, there appears to be much scope for enhancing the professional skills required to package and implement projects that can be executed in partnership with donors. Further, in seeking to access funds from donor entities, it was clear that state authorities need to ensure that national strategic interests are taken into consideration so that eventual project activities are congruent with local development plans. Improving communication and coordination among donor agencies should also be viewed as a priority as some level of project duplication still exists in both the Caribbean and the Pacific.

Moreover, there was consensus that in order for a transition to sustainable energy to occur, the deployment of renewable and energy conserving devices need to be pursued with a greater degree of urgency.

Yet still, in order to facilitate the acquisition of such devices, issues related to financing, the availability of accurate data and capacity building and training would need to be addressed.

5.7 The Way Forward: Proposed Regional Solutions

In addition to highlighting the problems and challenges facing the power sector in the Caribbean and Pacific, some respondents also put forward solutions and recommendations that they believed would promote or assist in a transition to renewable electricity. While some spoke conceptually or theoretically, others spoke within the context of the strategic energy development paths being pursued on a regional level. The section that follows therefore details the responses given by those interviewed on region-wide strategies that could be pursued. With regards to the Caribbean, interviews focused on energy trade in reference to transporting natural gas by pipeline and to the laying of subsea cables to facilitate an electricity interconnection. In the Pacific, respondents focused on the need to make investments in fuel storage facilities.

5.7.1 The Caribbean: Energy Trade

A number of respondents in the Caribbean asserted that regional solutions, where varying forms of energy could be traded within a group of nations, are perhaps among the best means to reduce vulnerability to oil prices. In this regard, two primary solutions were proposed, both involving energy trading: i. building an inter-island pipeline to transport natural gas for electricity generation and ii. an electrical interconnection of islands (particularly in the Eastern Caribbean)98.

98 Proposed solutions like inter-island pipelines or sub-sea electrical interconnections may not be applicable among the SIDS of the Pacific region where the islands are generally separated by greater distances and the energy consumption per capita is usually less, as illustrated in Figure 4-8. 193

5.7.1.1 Transitioning to Gas – the Eastern Caribbean Gas Pipeline

A number of respondents from state agencies and utilities (namely Vidal, Rainford, Waterman Lewis and Worme) voiced a preference for natural gas-fuelled electricity generation, not only because of its lower price on the international market in recent times in comparison to oil but also because it emits less carbon dioxide into the atmosphere than oil (Lewis, 2011, Thesis Interview; Vidal, 2011, Thesis Interview; Waterman, 2011, Thesis Interview; Worme, 2011, Thesis Interview; Rainford, 2011, Thesis Interview). Worme therefore expressed optimism about plans to construct a pipeline (of approximately 300km) to transport this cheaper and cleaner fuel between Trinidad and Tobago99 and Barbados to be used primarily for power generation. Allen Clarke (Senior Engineer, Generation Interface, Trinidad & Tobago Electricity Commission [T&TEC]) stated that the pipeline, which should be laid specifically between Tobago and Barbados, could have the potential to be extended to other Caribbean nations (Clarke, 2011, Thesis Interview). Interestingly, some energy officials from other Caribbean nations (not involved in the pipeline project), such as Lewis, Rainford and Vidal registered their support for the idea of a transition to gas as a more stable (in terms of price) and environmentally friendly fuel (Lewis, 2011, Thesis Interview; Rainford, 2011, Thesis Interview; Vidal, 2011, Thesis Interview). In fact, Worme noted that a number of Caribbean nations are currently seriously contemplating acquiring gas-fired power stations in order to reduce vulnerability to high oil prices (Worme, 2011, Thesis Interview). In this regard, Rainford (2011, Thesis Interview) (Principal Director, Policy Planning & Development Division, Ministry of Mining & Energy, Jamaica) noted that the Jamaican government has mandated that any new conventional (thermal) power plants must be combined cycle natural gas facilities – as these are more efficient than simple single cycle gas power plants.

Notwithstanding the above, it should be noted that the enthusiasm related to a regional transition to natural gas was not shared by all. Indeed, Blenker(2011, Thesis Interview) (Vice President, Renewable Energy, WRB Enterprises, Inc100) asserted that moving from oil to gas ―in [his] personal opinion, is like trading your crack addition for a crystal meth addiction.... You‘re still addicted.‖ Blenker (2011, Thesis Interview) went further and added that there are ―supply-chain issues‖ with gas, in addition to being harder to source due to the small quantities used in the Caribbean. Concerns related to transport and supply were also voiced by Lewis (2011, Thesis Interview) who agreed that gas- fired power plants are cheaper and cleaner to run but questioned where such gas would be sourced from in the long term and stated that he was not aware that Trinidad and Tobago was willing to satisfy the small demand of other Caribbean nations. Lewis and Vidal therefore expressed hope that gas from Trinidad and Tobago could be traded to other Caribbean nations (as Liquefied Natural Gas [LNG] by boat), preferably at a preferential price (Lewis, 2011, Thesis Interview; Vidal, 2011, Thesis Interview).

99 At the end of 2010, Trinidad and Tobago was said to have 13.46 tcf of proven natural gas reserves. It should be noted however, that the country‘s reserves stood at 14.42 tcf in 2009, and is as such, said to be in decline. For more see: Williams, C. 2011. Ryder Scott: Trinidad and Tobago's Proved Gas Reserves Decline. Oil And Gas Journal [Online]. Available: http://www.ogj.com/articles/2011/08/ryder-scott- trinidad-and-tobagos-proved-gas-reserves-decline.html [Accessed 16 August 2012]. 100 ―WRB owns and operates the public electric utilities for the Caribbean nations of Grenada and The Turks & Caicos Islands‖. For more see WRB Enterprises Inc. 2000. Electric Utilities [Online]. Available: http://www.wrbenterprises.com/electric.asp [Accessed 18 August 2012]. 194

Overall therefore, a number of respondents viewed a transition to gas as desirable and viable, regardless of whether the fuel was to shipped or transported via pipeline. Some opined that the Eastern Caribbean Gas Pipeline from Trinidad and Tobago to Barbados meant that future power plants in Barbados would be gas-fired. This was confirmed by Worme (2011, Thesis Interview), who explained that the Barbados Light and Power Company chose to acquire dual-fired power plants which can utilise bunker fuel as well as natural gas as a part of the country‘s transition to natural gas. Lewis and Vidal noted that while they may not be immediately interested in the extension of the pipeline to their shores, they were interested in enhancing regional trade in natural gas (Lewis, 2011, Thesis Interview; Vidal, 2011, Thesis Interview).

5.7.1.2 Electricity Interconnection

The second regional alternative that was espoused by those interviewed (that is, apart from enhancing trade in natural gas) was the idea of an electrical connection between islands by subsea cable (Blackmoore, 2011, Personal Communication; Lambrides, 2011, Thesis Interview; Nurse, 2011, Thesis Interview; Stapleton, 2011, Thesis Interview; Timothy, 2011, Thesis Interview). In this case, rather than making use of fossil fuelled power, electricity could be generated using geothermal energy. Nigel Hosein (Vice President of Engineering at GENIVAR Trinidad & Tobago Ltd and Former Executive Director, Caribbean Electric Utility Service Corporation [CARILEC]) and Raymond Nurse (Geothermal Project Manager, Chairman, Geothermal Energy Committee, Grenada) asserted that this option is made possible due to the volcanic arc of islands in the Eastern Caribbean (see Figure 5-2) along with the fact that many nations that comprise the archipelago are in relative close proximity to one another (as compared to the Pacific, where the islands are more scattered) (Hosein, 2011, Thesis Interview; Nurse, 2011, Thesis Interview). More specifically, Ernie Stapleton (Permanent Secretary, Ministry of, Natural Resources & Environment, Nevis Island Administration) and Jason Timothy (Project Coordinator, Geothermal Project Management Unit, Dominica) expressed hope about the possibility of generating geothermal electricity particularly in St. Kitts and Nevis (to be traded with Puerto Rico) and in Dominica (to be traded with Guadeloupe and/or Martinique). Stapleton and Timothy therefore highlighted that feasibility studies, scientific testing as well as geothermal exploration activities were currently under way in St. Kitts and Nevis and Dominica. Blackmoore (Minister, Public Works, Energy and Ports, Dominica), Blenker (Vice President, Renewable Energy, WRB Enterprises, Inc) and Dacon (Director, Energy Unit, St. Vincent & the Grenadines) all explained that a geothermal electricity interconnection was particularly desirable as it could serve as ‗base-load‘101 in the source countries and dramatically reduce dependence on fossil fuel imports (Blackmoore, 2011, Personal Communication; Blenker, 2011, Thesis Interview; Dacon, 2011, Thesis Interview). Further, Blackmoore, Dacon and Timothy noted that selling electricity to other Caribbean nations could serve as a valuable source of foreign exchange and boost the local economies of the source countries (Blackmoore, 2011,

101 The term ‗base-load‘ is usually used to refer to consistency of supply. As explained by Diesendorf,―A conventional base-load power station is one that is in theory available 24 hours a day, seven days a week, and operates most of the time at full (rated) power.‖ Though he notes that, ―In practice, base-load power stations break down from time to time and, as a result, can be out of action for weeks. Therefore, base- load power stations must have back-up.‖ Diesendorf, M. 2010. The Base Load Fallacy and Other Fallacies Disseminated by Renewable Energy Deniers. Available: http://www.energyscience.org.au/BP16%20BaseLoad.pdf [Accessed 18 August 2012]. 195

Personal Communication; Dacon, 2011, Thesis Interview; Timothy, 2011, Thesis Interview).

Figure 5-2: Map showing Volcanic Islands of the Eastern Caribbean Source: (Seismic Research Centre: University of the West Indies, 2009)

Simultaneously however, Joseph Williams (Programme Manager, Energy, The Caribbean Community [CARICOM]) asserts that the foreign relations element of the electrical interconnection between Caribbean nations is fundamental to understanding the operation of and mobilisation of funds for this proposed solution (Williams, 2011, Thesis Interview). Williams (2011, Thesis Interview) opined that the electricity interconnections, rather than taking place with developing countries in the region (like Antigua and Barbuda) are more likely to occur with Puerto Rico or with Guadeloupe and Martinique – as these nations are politically linked to the USA and France respectively102. According to Williams (2011, Thesis Interview), not only do the USA and France possess the institutional and financial resources necessary to mobilise the funds required for such a venture, but it is also important to both countries to reduce the dependency of their associated states on oil. These assertions were given credence, in the case of the USA, not only by the official explicit support given to the Nevis – Puerto Rico connection by the White House (Caribbean 360: News Around The Caribbean, 2011) but also by the comments of Ambassador Carlos Pascual (2011, Personal

102 Puerto Rico is a protectorate of the USA, while Guadeloupe and Martinique are Overseas Departments of France (commonly referred to as DOMs). 196

Communication) (Special Envoy and Coordinator for International Energy Affairs, U.S. Department of State). He stated that ―where you have, for example, in Nevis, the potential for great geothermal possibilities...you have to have the ability to export it to other markets and these interconnections would be key‖ (Pascual, 2011, Personal Communication). In the case of France and the potential connections between Dominica and Guadeloupe and Martinique, Timothy (2011, Thesis Interview) (Project Coordinator, Geothermal Project Management Unit, Dominica) confirmed that ―the reason [geothermal energy development in Dominica] is being looked and given assistance is because of the possibility of [electricity] exports to Martinique and Guadeloupe‖ and not simply to reduce domestic vulnerability to fossil fuels (Timothy, 2011, Thesis Interview). Thus, one could perhaps postulate that the interest in geothermal electricity interconnection is being driven primarily by a desire to reduce dependence on oil, not only on the part of independent Caribbean states but also on the part of developed (traditional donor) nations that wish to enhance the energy security of their associated island nations in the region.

The enthusiasm surrounding the prospect of geothermal electricity interconnection in the Caribbean is, however, not shared by all. Blenker (2011, Thesis Interview) notes that there are major technical issues that still need to be addressed, including the presence of very deep trenches in the Caribbean Sea. He also pointed to the fact that trade in electricity may have adverse implications for the energy sovereignty of the importing nations that would be dependent upon a reliable supply from the source countries in question (Blenker, 2011, Thesis Interview). Dacon (2011, Thesis Interview) went further and referred to the electrical interconnection scheme as a ―theory that will not take place during his lifetime‖. He pointed to the fact that such an undertaking would be very costly (a sentiment shared by Blenker) and also noted that the plate tectonics of the Caribbean region would make such a project technically complex (Dacon, 2011, Thesis Interview). Dacon (2011, Thesis Interview) (Director, Energy Unit, St. Vincent & the Grenadines) instead added that St. Vincent and Grenadines (as a volcanic island) is very interested in developing its geothermal resources, but noted the country is ―first interested in [satisfying] its own demand.‖

5.7.2 The Pacific: Investments in fuel storage facilities

While a number of respondents from the Pacific expressed support for the idea of an urgent transition to renewable energy, Nakavulevu, Syngellakis and Walter admitted that oil and gas would still be necessary in the foreseeable future (Nakavulevu, 2010; Syngellakis, 2010, Thesis Interview; Walter, 2010, Thesis Interview). A number of interviewees, namely Thomas Jensen (Environmental and Energy Specialist, United Nations Development Programme, Pacific Centre), John Korinihona (Director for Energy, Ministry of Mines, Energy and Rural Electrification, Solomon Islands), Rupeni Mario (Energy Adviser, Economic Development Division, Secretariat of the Pacific Community (SPC), Katerina Syngellakis (Senior Engineer, IT Power) and Greg Decherong (Director, Ministry of Public Infrastructure, Industry and Commerce, Palau) therefore stressed the need for a region-wide thrust for all Pacific island nations to make investments so as to transition tostate-owned fuel storage facilities (Decherong, 2010, Thesis Interview; Jensen, 2010, Thesis Interview; Korinihona, 2010, Thesis Interview; Mario, 2010, Thesis Interview; Syngellakis, 2010, Thesis Interview). According to

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Syngellakis, Neil (Executive Director, Pacific Power Association) and Ualesi (Energy Coordinator, Ministry of Finance, Samoa) only a few Pacific nations at present possess such independent, state owned facilities (namely, Kiribati, Niue, Samoa, FSM, Palau and the Republic of Marshall Islands103) (Neil, 2010, Thesis Interview; Syngellakis, 2010, Thesis Interview; Ualesi, 2010, Thesis Interview). According to Mario (2011, Personal Communication), in all other Pacific nations, the oil storage infrastructure (that is, oil tanks) is owned by current suppliers. As such, he explained that in practice, most Pacific island countries not only have to pay the cost of oil on the world market (in addition to a transportation premium for remote islands) but also have to pay for the leasing and operation of the petroleum storage tanks, which are owned by the international oil companies supplying these nations (Mario, 2010, Thesis Interview).

In light of the above, Syngellakis asserted that petroleum storage facilities are of critical importance in order to reduce the cost of oil in the Pacific. In order to illustrate this point, Syngellakis (2010, Thesis Interview) (Senior Engineer, IT Power)104 highlighted that Samoa (at that time) paid less for oil than Fiji, even though the latter possesses around five times the population of Samoa. Syngellakis (2010, Thesis Interview) argued that this was primarily due to the fact that Samoa has ownership of its fuel storage infrastructure. She added that investments in such facilities are not only important in order reduce expenditure on oil in the short to medium term, but also to a transition to more sustainable (bio)fuels in the long term (Syngellakis, 2010, Thesis Interview). Hence, Syngellakis propounded that if the Pacific region was going to transition to more sustainable energy and increase its production of biofuels, acquiring storage infrastructure would remain important (Syngellakis, 2010, Thesis Interview). Jensen and Mario noted that other proposals like regional bulk fuel procurement105 are to some degree contingent on the presence of storage on the islands in the region (Jensen, 2010, Thesis Interview; Mario, 2010, Thesis Interview). As such, Decherong, Jensen, Korinihona, Mario and Syngellakis argued that investments in fuel storage facilities should be made a priority across the Pacific region (Decherong, 2010, Thesis Interview; Jensen, 2010, Thesis Interview; Korinihona, 2010, Thesis Interview; Mario, 2010, Thesis Interview; Syngellakis, 2010, Thesis Interview).

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Having detailed the results of the case study data that was collected as well as the interviews, the chapter that follows will attempt to synthesise the findings of each set of results within the context of a sustainable energy transition in the power sector. The theoretical framework (expressed in the academic literature) surrounding sustainable energy transitions will therefore be revisited and discussed, particularly within the

103 American Samoa and Guam were also said to possess fuel storage facilities (Neil, T. 21 September 2010. RE: Interview with Tony Neil. Executive Director, Pacific Power Association. Suva, Fiji ) However, as non-independent US territories, they are not included in this study. 104 KaterinaSyngellakis, at the time, was also the Team Leader of ‗REP-5‖, an EU funded programme that supported and undertook renewable energy and energy efficiency projects in the Federated States of Micronesia (FSM), Nauru, Niue, Palau and the Republic of Marshall Islands. For more see: REP-5. 2010. Rep-5: Support to the Energy Sector in Five Acp Pacific Island Countries [Online]. European Union. Available: http://www.rep5.eu/ [Accessed 20 August 2012]. 105 An option known as the ―Pacific Petroleum Project‖ which entails purchasing oil as a group of collective nations in lieu of acquiring fuel via individual national contracts with energy companies. For more see: Secretariat of the Pacific Community 2010. Toward an Energy Secure Pacific: A Framework for Action on Energy Security in the Pacific.p 22. 198 context of what currently obtains in the power sector in the Caribbean and Pacific. In so doing, this thesis aims to examine and comment upon the role of and efforts made by international development agencies in supporting a sustainable energy transition in the power sector, especially as it pertains to increased deployment of renewable electricity and energy conserving technologies.

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Chapter 6. Discussion of Research Findings

6.1 Introduction

This chapter seeks to pull together the large and diverse information retrieved from international development agencies regarding their project activities (especially those presented via the case studies) and from the interviews conducted with relevant stakeholders. Establishing coherency from such a wide ranging set of perspectives was indeed challenging. That said, the common viewpoints expressed by respondents along with the opinions of those persons whose perspectives differed will be highlighted in light of whether or not they align or diverge from the prevailing schools of thought in the academic literature.

The results of this research (revealed through the project data and the interviews) will therefore be discussed in relation to the role of international aid in a sustainable energy transition in light of the unique difficulties faced by Small Island Developing States (SIDS). Thus, in each section of this chapter, the perspectives expressed in the academic literature surrounding sustainable energy transitions will be interwoven with the findings of this research.

6.2 Background & Context

It should be recalled from Chapter 3 that Caribbean and Pacific SIDS have been identified by numerous scientific literature sources as being are particularly vulnerable to the impacts of climate change and peak oil. To reiterate: in the Preamble to the United Nations Framework Convention on Climate Change (UNFCCC), ―low-lying and other small island countries, countries with low-lying coastal, arid and semi-arid areas or areas liable to floods, drought and desertification, and developing countries with fragile mountainous ecosystems are particularly vulnerable to the adverse effects of climate change [emphasis added]‖(United Nations Framework Convention on Climate Change, 1992). In fact, according to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), climate change will force SIDS to grapple with inundation, coastal erosion, a loss of biodiversity along with more extreme and frequent hurricanes (Mimura et al., 2007). With regards to peak oil, it was noted that SIDS have been largely dependent upon fossil fuels for electricity generation and as such are susceptible to the impacts of oil price volatility. Even further, due to limited demand along with the relative geographic isolation of many Caribbean and Pacific SIDS, nations in both regions are often made to pay higher-than-market rates for petroleum (largely due to diseconomies of scale and transportation premiums) (Weisser, 2004a). These issues indeed suggest that a transition to sustainable forms of energy supply, should it occur, would have to emerge from a low base of existing sustainable energy supply and that the transition may be more difficult than for many other countries.

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Moreover, the need to transition to sustainable energy was elucidated within the more specific context of the impacts of climate change and peak oil on key sectors in SIDS, namely tourism and agriculture. It is therefore within the context of the physical and socio-economic impacts of climate change and peak oil, as well as the development constraints faced by SIDS, that the role of international aid was introduced within this thesis. As explained by Poirine (1999), SIDS are not only greatly dependent upon international aid, but also receive up to nine times more (on average) than less developed countries. The dependence of SIDS upon aid was corroborated by the interviews conducted during this research, particularly by Kaiea (Head, Energy Planning Unit, Ministry of Public Works and Utilities, Kiribati), Tafia (General Manager, Department of Energy, Government of Tokelau) and Vidal (Principal Director for Energy, Ministry of Mining & Energy, Jamaica) who noted that governments often choose to rely upon financial assistance from international development agencies in order to make investments in energy infrastructure. A transition to renewable energy and energy conserving technologies is a critical component of mitigating and building resilience to climate change and peak oil (Heinberg, 2005; Venema and Rehman, 2007; Venema and Cisse, 2004). In this regard, the importance of international aid to the acquisition of renewable energy and energy conserving technologies in the Caribbean and Pacific can hardly be overstated.

The results of this research (revealed through the project data and the interviews) will therefore be discussed in relation to the role of international aid in a sustainable energy transition, particularly in light of the unique difficulties facing SIDS including the specific impacts of climate change and peak oil. Perspectives expressed in the academic literature surrounding sustainable energy transitions will therefore be revisited, within the context of the research findings of this thesis.

6.3 Structure of Discussion for Research Findings

The thesis postulates that international aid (from donor agencies and entities) has contributed (in some form) to a sustainable transition in the power sector in SIDS in the Caribbean and Pacific. In order to respond to this assertion, the extent to which a transition has been made from a fossil fuel based power sector to a more sustainable, renewable energy based power sector must first be illustrated. It is within the context of a transition to a sustainable power sector that the contribution of international aid will be discussed in light of the major findings of this research. Problems pertaining to the delivery of aid to the power sector in the Caribbean and Pacific that were encountered during this research will then be reviewed. To conclude, this chapter will summarise the findings of this thesis and comment on the role of international aid towards a sustainable energy transition in the Caribbean and Pacific.

The discussion of the research findings of this thesis will therefore be structured as follows:

6.4. Research Finding Number 1: Caribbean and Pacific SIDS have not substantially transitioned to sustainable energy sources in the electrical power sector . The current path: a sustainable transition in the Caribbean and Pacific power sector.

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The future of conventional power generation in the Caribbean and Pacific Renewable energy and energy efficiency in the power sector in the Caribbean and Pacific

6.5. Research Finding Number 2: Donor entities active in the Caribbean and Pacific have had significant impacts on the power sector through:

. Aid to facilitate investment in energy technologies . Aid in support of energy policy development

6.6. Research Finding Number 3: Donor entities placed a deliberate emphasis on enhancing the involvement of private companies in the power sector.

. Donor entities sought to stimulate private investment in the power sector . Donor entities encouraged enhanced private sector participation through regulatory reform to facilitate the introduction of Independent Power Producers (IPPs)

6.7. Research Finding Number 4: Aid has been vital in helping SIDS to cope with high oil prices.

. Aid in response to oil price shocks

6.8. Other Research Findings (not covered in Numbers 1-4): including Problems or emerging concerns pertaining to the delivery of Aid to the Power Sector in the Caribbean and Pacific.

. Technology Transfer was at times related to export promotion . Political Rivalry and Donor Competition have led to aid based on motives other than the socio-economic development of recipient countries . Loan Dominated Aid has raised concerns related to debt accumulation

6.4 Research Finding Number 1: Caribbean and Pacific SIDS have not substantially transitioned to sustainable energy sources in the power sector.

Upon examination of Table 6-1 and Table 6-2 (below), it is clear that the volume of electricity generated increased in most cases between 1970 and 2008 (as the latest year for which data was available). However, it is also clear that only a few of the countries featured in this study (namely Belize, Fiji and Suriname) have managed to transition to a position where a majority of their electricity production emanates from renewable sources (all from hydroelectricity).

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Table 6-1: Net Installed Capacity of Electric Generating Plants by Type in selected SIDS - 1970 Country Net Percentage distribution (1970) Installed Thermal Hydro Non-hydro Capacity renewables (in MW) Antigua and Barbuda* 14 100.0 0.0 0 Bahamas, The 174 100.0 0.0 0 Barbados 39 100.0 0.0 0 Belize* 7 100.0 0.0 0 Cook Islands 2 100.0 0.0 0 Dominica* 5 40.0 60.0 0 Fiji 54 100.0 0.0 0 Grenada 5 100.0 0.0 0 Guyana* 160 100.0 0.0 0 Haiti 43 100.0 0.0 0 Jamaica 405 94.8 5.2 0 Kiribati 1 100.0 0.0 0 Nauru 8 100.0 0.0 0 Niue - - - - Papua New Guinea 69 39.1 60.9 0 Saint Kitts and Nevis 6 100.0 0.0 0 Saint Lucia 7 100.0 0.0 0 Saint Vincent/Grenadines 4 50.0 50.0 0 Samoa 6 83.3 16.7 0 Solomon Islands 3 100.0 0.0 0 Suriname* 260 30.8 69.2 0 Tonga 2 100.0 0.0 0 Trinidad and Tobago 334 100.0 0.0 0 Vanuatu* 4 100.0 0.0 0

Pacific Total 149 71.1 28.9 0 Caribbean Total 1463 85.9 14.1 0 Combined Caribbean & 1612 84.6 15.4 0 Pacific Total

Source: (United Nations, 1981)

* United Nations Statistical Office Estimate

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Table 6-2: Net Electricity Generation by Type in selected SIDS - 2008 Country Net Percentage Distribution (2008) Installed Thermal106 Hydro Non-hydro Absolute Capacity renewable107 Change in (in MW) Net Installed Capacity108 Antigua and 13.1 100.0 0.0 0.0 -0.9 Barbuda Bahamas, The 233.9 100.0 0.0 0.0 59.9 Barbados 115.3 100.0 0.0 0.0 76.3 Belize 24.6 5.3 94.7 0.0 17.6 Cook Islands 3.7 100.0 0.0 0.0 1.7 Dominica 9.9 63.6 37.7 0.0 4.9 Fiji 116.2 26.5 64.9 8.6 62.2 Grenada 21.7 100.0 0.0 0.0 16.7 Guyana 93.5 100.0 0.0 0.0 -66.5 Haiti 53.2 62.0 38.0 0.0 10.2 Jamaica 835.4 96.0 2.0 2.0 430.4 Kiribati 2.5 100.0 0.0 0.0 1.5 Nauru 3.7 100.0 0.0 0.0 -4.3 Niue 0.3 100.0 0.0 0.0 0.3 Papua New Guinea 338.2 69.6 30.4 0.0 269.2 Saint Kitts and 14.8 100.0 0.0 0.0 8.8 Nevis Saint Lucia 37.8 100.0 0.0 0.0 30.8 Saint 15.1 82.2 17.8 0.0 11.1 Vincent/Grenadines Samoa 12.1 54.7 45.2 0.0 6.1 Solomon Islands 8.9 100.0 0.0 0.0 5.9 Suriname 180.2 44.6 55.4 0.0 -79.8 Tonga 4.6 100.0 0.0 0.0 2.6 Trinidad and 846.3 99.9 0.0 0.1 512.3 Tobago Vanuatu 5.2 94.7 0.0 5.3 1.2 Pacific Total 495 60.9 37.1 2.1 346 Caribbean Total 2494 92.6 6.7 0.7 1031 Combined Caribbean & Pacific Total 2990 87.3 11.7 0.9 1378

106 Electricity generated from coal, oil, and gas. 107 Includes electricity generated from geothermal, solar, wind, and biomass and waste. 108 It should be noted that the values calculated for Antigua and Barbuda, Belize, Dominica, Guyana, Suriname and Vanuatu may not be accurate as these are based upon United Nations Statistical Office estimates 204

Source: Energy Information Administration, 2011, (Raturi, 2013; Alliance for Rural Electrification)

Indeed, upon examination of the fuel sources used for electricity generation in 1970 and 2008 (Figure 6-1 and Figure 6-2), it would seem that the utilisation of fossil fuels for conventional thermal power production has increased in Caribbean and Pacific SIDS. That said, it should also be noted that overall absolute generation from renewable energy sources (apart from hydropower) in the Caribbean increased from an insignificant amount in 1970 to 0.6 percent in 2008, while the proportion of power production from hydroelectricity actually decreased from 15.4% to 11.8%.

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Figure 6-1: Power Generation Mix in Caribbean and Pacific Figure 6-2: Power Generation Mix in Caribbean and Pacific SIDS (1970) SIDS (2008)

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However, when the regions were disaggregated, it became clear that the nature of a transition to greater utilisation of renewable energy sources differed in each region. In the Pacific, power generation from renewable energy sources (both hydro and non- hydro) increased between 1970 and 2008 (see Figure 6-4 and Figure 6-3). Fossil fuel based power production also decreased during this period. Hence, one could argue that some degree of transition toward greater utilisation of renewable electricity generation had occurred in the Pacific. Nonetheless, because of the growth of electricity usage between the two dates, the actual absolute installed capacity of fossil fuelled electricity generation increased by 195MW.

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Figure 6-3: Power Generation Mix in the Pacific (1970) Figure 6-4: Power Generation Mix in the Pacific (2008)

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Figure 6-5: Power Generation Mix in the Caribbean (1970) Figure 6-6: Power Generation Mix in the Caribbean (2008)

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On the other hand, the percentage conventional (i.e. fossil fuel based) electricity generation increased in the Caribbean between 1970 and 2008 from 86 percent to 92 percent (see Figure 6-5 and Figure 6-6) as well as absolutely growing by 1,052MW. During the same period, the proportion of power generated from hydroelectric sources decreased from 14 to seven percent. Notwithstanding this, power production from non- hydro renewable energy sources (such as solar and wind energy), which did not exist in 1970, did represent one percent of electricity generation in 2008.

Another observation that can perhaps be made is the emphasis that was placed on the development of hydroelectric resources in the Pacific. This was clearly supported by the data (collected during this research) pertaining to project activities approved by donor entities active in the Caribbean and Pacific. This data, showcased by the case studies in Chapter 4, illustrated the proclivity of some aid agencies (particularly the Asian Development Bank) toward the development of hydropower as an indigenous source of energy in order to reduce vulnerability to high oil prices. Greater deployment of hydropower may be positive and desirable as a renewable source of energy, but Heinberg (2005) highlights that ―hydroelectric dams typically pose a range of environmental problems: they often ruin streams, cause waterfalls to dry up and interfere with marine habitat‖. The deleterious environmental impacts of hydropower is exacerbated by recent scientific literature confirming that hydroelectric dams (especially those in tropical environments) are not carbon free but rather emit carbon dioxide and methane, the latter of which causes considerably more atmospheric warming than the former (Barros et al., 2011; Giles, 2006; Gunkel, 2009; Wehrli, 2011). In fact, according to Giles (2006), due to methane emissions from hydroelectric reservoirs, ―the global- warming impact of hydropower plants can often outweigh that of comparable fossil fuel power stations.‖

Nonetheless, the overall predominance offossil fuel based generation in Caribbean and Pacific SIDS is obvious. It should however be noted that in six of the ten countries where hydroelectric developments occurred, the growth in electricity production between 1970 and 2010 was accompanied by a decrease in the proportion of power generated from other renewable sources. Thus, in reality, in some cases, the proportion of power generated from renewable energy sources during the period being examined actually decreased.

This is illustrated in Figure 6-7, which shows the degree of transition to renewable electricity by various Caribbean and Pacific Small Island Developing States (SIDS) between 1970 and 2010. In this regard, it should be noted that Belize managed to make the greatest transition to renewable (albeit carbon-emitting) electricity generation, as this Caribbean nation progressed from having no power production from renewable sources in 1970 to a situation where 94.9 percent of its electricity was generated from hydroelectricity in 2008.

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Figure 6-7: Change in Renewable Electricity Generation in selected SIDS in Percentage Points *Based on United Nations Estimates N.B: Changes in Solomon Islands, Tonga and Trinidad & Tobago were very small or non-existent

Sources: United Nations 1981, Energy Information Administration 2011.

The aforementioned data therefore supports the finding that Caribbean and Pacific SIDS have not substantially transitioned to sustainable energy sources in the power sector. The overall proclivity toward expanded fossil fuelled electricity is therefore supported by this research and is well documented (Stuart, 2006; Weisser, 2004a; Weisser, 2004b).

As it pertains to the role of international aid in the promoting and facilitating the acquisition of RETs, these findings are significant, particularly in light of the conclusions of Yu (1998) who asserted in reference to the Pacific that ―sustainable energy has not been identified as a priority area for international assistance by many donors‖. Additionally, Weisser (2004b) noted that ―international lending institutions as well as private financial bodies appear to be biased against RETs in comparison with conventional energy technologies‖ That said, it should be noted that both Yu‘s and Weisser‘s comments were made prior to the belated thrust by donor entities between 2004 and 2010 to encourage the deployment of RETs as a means of climate change mitigation. As shown in Chapter 4, between 1970 and 2010, a significant amount of donor funding was channelled to projects involving the deployment renewable energy particularly following periods of high oil prices (1974 – 1983 and 2004 to 2010). This was especially the case in the Pacific where funding for renewable energy between 1970 and 2010 was about twice the amount devoted to projects involving fossil fuels. Thus, in

211 contrast to Yu‘s findings, sustainable energy was identified as a priority area by many donors, particularly between 2004 and 2010, but this is likely to be due to high oil prices and to concerns related to climate change. Nonetheless, as illustrated by this research (and supported by widespread consensus in the academic literature), SIDS in the Caribbean and Pacific are still overwhelmingly dependent upon fossil fuels for electricity generation and have not made a substantial transition to sustainable energy.

6.4.1 The current path: a sustainable transition in the Caribbean and Pacific power sector

It is within the context of a sustainable energy transition that the perspectives expressed during this research (in the academic literature and during the interviews) on the current state of this transition and on ‗the way forward‘ need to be discussed. The section which follows therefore details the perspectives of those interviewed on the desired nature of a possible transition to renewable energy in the power sector. In this regard, this research found wide consensus among interview respondents in the Caribbean and Pacific that power generation using oil and gas will be necessary for the foreseeable future. Further, Caribbean interviewees expressed a desire to utilise natural gas as a ‗transition fuel‘ to eventual renewable energy deployment. To add to this, this research confirmed that while there is some desire to enhance renewable energy use, interview respondents in both regions generally affirmed that a greater thrust and sense of urgency is required to boost the uptake of alternative energy technologies.

6.4.1.1 The Future of Conventional Power Generation in the Caribbean and Pacific

To begin, it should be noted that regional energy policy documents from both the Caribbean and Pacific indicate the intention of nations in both regions to continue using oil and gas, at least in the short to medium term. As an example, in the case of the Pacific, the ―Framework for Action on Energy Security in the Pacific‖ propounds that ―petroleum products will remain a major source of energy for the region for a long time to come‖ for transport and electricity generation (Secretariat of the Pacific Community, 2010). This perspective was supported by Joseph Walter (during the interviews) (Chief Executive Officer, Electric Power Corporation, Samoa) and Katerina Syngellakis (Senior Engineer, IT Power) who asserted that fossil fuelled power will still be necessary for the foreseeable future, not only because of the relatively massive capital investment required to purchase renewable energy devices, but also because of the time required for the supporting infrastructure to be put in place to ensure grid stability.

This research therefore confirms that in both regions, stakeholders believe that fossil fuels will need to continue to be utilised, at least in the near to medium term: where the medium term might be interpreted as the foreseeable future. This direction has the following implications in terms of peak oil and climate change: In the short term, a great deal of emphasis needs to be placed on stabilising the price of oil (to whatever degree possible), The existing energy mix needs to be diversified to include natural gas.

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6.4.1.1.1 Stabilising the price of oil

As oil is forecasted to remain in use for the foreseeable future in both the Caribbean and the Pacific, stabilising and minimising the price paid for petroleum will be a key consideration. Both regions have expressed interest in multi-country bulk fuel procurement whereby several nations can purchase larger quantities of fuel so as to benefit from economies of scale (Caribbean Community (CARICOM) Secretariat, 2007; Secretariat of the Pacific Community, 2010). Mario (2011, Personal Communication) noted however, that this can be exceedingly difficult to coordinate and each country often requires different types of fuel and a different times. Mario (2011, Personal Communication) also propounded that the current/existing legal agreements between individual countries and oil suppliers also makes supply harmonisation more challenging. According to Mario (2011, Personal Communication), this difficulty is exacerbated by the fact that each supply agreement began, and therefore terminates, at very different times.

This predicament is worsened to some degree by the absence of government owned fuel storage facilities in many SIDS. As mentioned in section 5.7.2, there is a considerable dearth of state-owned petroleum storage units in the Pacific. Fuel storage facilities, where they do exist are often owned by private companies.

In the Pacific and to a lesser extent the Caribbean, more emphasis is currently being placed on the improvement of storage infrastructure with the eventual intention of securing oil through bulk purchases (Mario, 2011, Personal Communication; Secretariat of the Pacific Community, 2010; Syngellakis, 2010, Thesis Interview). Unsurprisingly therefore, in 2008, the Secretariat of the Pacific Community launched the Pacific Petroleum Project which sought to, inter alia, ―to improve the cost and security of supply of petroleum fuels to Pacific Island countries by running a bulk procurement process for petroleum supply to a number of countries‖ and also to ―harmonise petroleum products and standards‖ in the Pacific (Kumar, 2010; Kumar, 2011). Up until 2010 however, only five Pacific island nations (namely, the Cook Islands, Niue, Nauru, Tuvalu and the Republic of the Marshall Islands) had signed the Memorandum of Understanding to become signatories to the Project. According to Kumar (2010), the Secretariat of the Pacific Community ―combined these countries only have 140-145 million litres petroleum demand which is small volume by petroleum supply standards, less than many of the other island states on their own. To obtain economies of scale that will be attractive to suppliers more volume will be required‖.

This thrust toward bulk fuel procurement is in congruence with the prevailing views expressed in the academic literature. Jayaraman (2009; 2011) argues strongly for the introduction of bulk fuel procurement in the Pacific, by asserting that at present ―each PIC enters into a contract with suppliers of fuel, most of which is imported from Singapore. Instead, a common procurement programme through a competitive tendering process would help in obtaining larger reduction in fuel prices‖ (Jayaraman and Choong, 2009; Jayaraman and Lau, 2011). Reducing (or at the very least, stabilising) oil prices is particularly important to the power sector, as a recent benchmarking study

213 noted that ―fuel accounts for the overwhelming bulk of generation costs‖ in the majority of diesel-based power utilities in the Pacific (Pacific Power Association, 2011).

6.4.1.1.2 Diversifying the energy mix to include natural gas

This option, to lower carbon dioxide emissions, is more applicable in the Caribbean. With regards to the future use of fossil fuels, the regional energy policy as well as the interviews conducted confirmed that a concerted effort is being made to enhance fuel diversification by increasing the use of natural gas as a cleaner energy source, particularly through the deployment of more efficient combined cycle gas turbines (Rainford, 2011, Thesis Interview; Vidal, 2011, Thesis Interview; Worme, 2011, Thesis Interview; Caribbean Community (CARICOM) Secretariat, 2007). As mentioned (in the results chapter), this is being pursued not merely through the acquisition of new gas turbines, but also through attempts to boost trade in natural gas by ship and pipeline.

In tandem therefore, Wright (2010) refers to natural gas as ―the cleanest fossil fuel‖ and states that it ―is regarded as a transition fuel as we move away from oil toward a new energy agenda that will include renewables‖. Wright (2010) emphasises the role of natural gas as a transition fuel by adding that it is ―non-toxic, odourless, non-corrosive, and non-carcinogenic. It presents no environmental threats to soil, surface water or groundwater.‖ Tertzakian and Hollihan (2009) referred to natural gas as the ‗fuel of the future‘ and added that natural gas emits less greenhouse gases when it is utilised, is more efficient and has a higher rate of Energy Returned On Energy Invested (EROEI).

As a counter to the above, Hall and Klitgaard (2011) question the wisdom of such a temporary transition, and argue that at best, ―natural gas may not peak for several decades but is unlikely to do more than compensate for declining oil.‖ Campbell (2000) goes further, and added that while global gas resources ―are less depleted than oil, [they] will likely peak around 2020‖. To add to this, Heinberg (2005) propounds that natural gas reserves naturally deplete more quickly than oil. He argues that a transition to natural gas, even if for an intermediary period, may further exacerbate dependence on fossil fuel and waste time and financial resources in ―the enlargement of an infrastructure that will soon be obsolete anyway‖, rather than focussing on the deployment of renewable energy technologies (Heinberg, 2005). It therefore seems safe to assert that a switch (partial or full) to natural gas cannot be considered as a long-term solution but is, at best, a temporary bridge to sustainable energy that must be pursued in conjunction with an increased uptake of renewable energy (Tertzakian and Hollihan, 2009) or, at worse, a distraction and waste of resources (Heinberg, 2005). Thus, even if Caribbean countries progress toward a switch to natural gas, it seems clear this would need to be part of a wider program of fuel and energy diversification that includes increasing the uptake of renewable energy (Tertzakian and Hollihan, 2009).

6.4.1.2 Renewable energy and energy efficiency in the power sector in the Caribbean and Pacific

6.4.1.2.1 Urgent Deployment of renewable energy and Energy Efficient Technologies necessary

Regional policy documents, a large number of donor initiatives, as well as the interviews conducted confirm that there is a

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definite desire in both regions to boost the uptake of renewable energy and energy conserving technologies in the power sector.

A number of respondents argued that renewable energy and energy efficiency are inextricably linked to each other, so that one cannot be pursued without the other (Johnston, 2010, Thesis Interview; Maurice, 2011, Thesis Interview; Sauturaga, 2010, Thesis Interview; Williams, 2011, Thesis Interview) In this regard, some respondents, namely Herbert Samuel (President, Green Island Inc.), Wairarapa Young (Renewable Energy Officer, Electric Power Corporation, Samoa), Atul Raturi (Head of Department, Physics, University of the South Pacific) and Vaughn Lewis (Manager, Engineering, St. Vincent Electricity Services Limited) noted that SIDS in the Caribbean and Pacific need to urgently hasten their deployment of renewable and efficient energy appliances in order to reduce vulnerability to high oil prices and to assist in the global effort to mitigate climate change (Raturi, 2010, Thesis Interview; Samuel, 2011, Thesis Interview; Young, 2010, Thesis Interview; Lewis, 2011, Thesis Interview).

In terms of regional energy policy, the ―Framework for Action on Energy Security in the Pacific‖ refers to renewable energy and energy efficiency as the ―twin pillars of sustainable energy‖ (Secretariat of the Pacific Community, 2010). The document also notes that ―most renewable energy investments in the Pacific have been for small scale uses for rural communities and isolated households but there has recently been increased emphasis on larger grid connected systems‖ (Secretariat of the Pacific Community, 2010). In the Caribbean, the CARICOM draft regional energy policy stipulates that member states ―identify, develop and promote alternative or renewable energy sources, technologies and systems for electricity generation‖ (Caribbean Community (CARICOM) Secretariat, 2007). The regional energy policy in the Caribbean also speaks directly to the opportunities that exist for electrical interconnections and notes that Member States will ―explore the opportunities for import, export and cross-border trade in electricity‖ (Caribbean Community (CARICOM) Secretariat, 2007). The potential to increase renewable generation through geothermal energy development is therefore being viewed as a viable means to aid the region‘s transition to sustainable energy.

Indeed, a transition to renewable energy coupled with enhanced energy efficiency have been widely affirmed as the means through which climate change and peak oil can be mitigated, and through which a sustainable energy future can be achieved (Intergovernmental Panel on Climate Change, 2011; Lloyd and Forest, 2010; Subbarao and Lloyd, 2011; Venema and Rehman, 2007; Wilbanks et al., 2003). Perhaps the most pronounced feature of the literature however, is the sense of urgency that experts insist is required in order to abate and adapt to the impacts of both climate change and peak oil (Campbell and Laherrère, 1998; Heinberg, 2005; Heinberg, 2006b; Lloyd and Forest, 2010; Subbarao and Lloyd, 2011; Venema and Rehman, 2007; Wilbanks et al., 2003). This is particularly important for SIDS (as mentioned in section 3.6), not merely due to the adverse impacts on the viability of key industries in island states (namely tourism and agriculture), but also because climate change threatens the very existence of some SIDS. Even though the absolute contribution of SIDS to climate change (in global terms) is minute, any form of avoided emissions does add to global mitigation efforts. Moreover, Venema and Rehman (2007) argue that some forms of climate change

215 mitigation (including the deployment of renewable energy devices) often make countries more resilient in adapting to the impacts of global warming.

6.4.1.2.1.1 Greater attention needs to be paid to reducing demand

In addition to the enhanced deployment of renewable and/or energy efficient devices, several commentators noted that the mitigation of climate change and peak oil can perhaps be best achieved through simply reducing overall consumption and demand for energy (Daly and Farley, 2004; Hall and Klitgaard, 2011; Heinberg, 2005). In this regard, in order for an effective transition to a sustainable energy future, changes to behaviour (in terms of promoting less energy-intensive lifestyles), along with the modification, retrofitting and replacement of technologies are necessary (Daly and Farley, 2004; Hall and Klitgaard, 2011). In light of this, it seems safe to assert that a greater emphasis on demand - side measures (particularly public education, targeting energy consumption) rather than a supply-side technology push (on the part of donors, state agencies and utilities in acquiring climate-friendly and energy conserving devices) may indeed be appropriate, in order for a sustainable energy transition in the power sector of Caribbean and Pacific SIDS to occur.

In this regard, Speedo Hetutu, the General Manager of the local power utility in Niue agreed that Demand-Side Management (on the part of utilities) was an important component of reducing consumer demand for electricity and encouraging greater energy conversation (Hetutu, 2010, Thesis Interview). Hetutu noted measures aimed at reducing consumer demand for electricity could be beneficial to both utilities109 and the environment (especially if power is being generated from fossil fuels). Efforts aimed at encouraging the conservation of energy and reducing consumption are also particularly important in light of the ―Jevon‘s paradox‖ as articulated by Herring and Sorrell (2008). Also known as ―the Rebound Effect‖, they argued that focussing solely on the increasing the efficiency of clean energy devices could actually increase overall energy consumption and may in some cases, actually decrease the proportion of energy generated from sustainable sources (Herring and Sorrell, 2008; Polimeni and Polimeni, 2006; Sorrell, 2009). This is due to the fact that efficiency gains may lead to increased consumption, as the initial savings enjoyed may encourage a reallocation of resources toward further energy use (Alcott, 2005; Polimeni and Polimeni, 2006). Simply put, the energy (and perhaps financial) resources gained from efficiency savings may lead to investments in other energy-intensive activities, which could then lead to increased energy consumption.

A concerted focus on reducing the demand for energy through demand side management as well through public education and engagement should as such be considered an integral component of a transition to sustainable energy.

109 As explained by the Pacific Power Association, Demand Side Management can be beneficial to utilities by ―reducing the rate of growth of maximum demand or shifting loads to different times of day‖. For more see: Pacific Power Association 2011. Performance Benchmarking for Pacific Power Utilities. Suva, Fiji: Pacific Infrastructure Advisory Centre (PIAC). 216

It should be noted however, that the need to conserve energy and reduce demand is a global challenge which will become increasingly important as peak oil forces petroleum prices upward and global warming worsens (Hall and Klitgaard, 2011; LePage, 2012)

6.4.1.2.2 Renewable energy a key means of enhancing energy equity

As mentioned earlier, approximately 1.6 billion persons across the globe still lack access to electricity (Armaroli and Balzani, 2006; Birol, 2007). With regards to this research, as mentioned in Chapter 5, per capita energy consumption in the Caribbean is greater that of the Pacific. The same applies to access to electricity. Unsurprisingly therefore, concerns related to the extending electricity to all households were expressed primarily in reference to the Pacific region, where average electrification rates are lower than those of the Caribbean (see Figure 6-8)110. Peceli Nakavulevu (Director, Department of Energy, Fiji) explained that responsibility for rural electrification (providing electricity to the outer islands of Fiji) lies with the Rural Electrification Unit within the Department for Energy rather than with the local utility (Nakavulevu, 2010). This was said to be reflective of the fact that electrical power was viewed as a public good to which all members of public should have access, rather than a private or economic good that should be available to those able to afford it. As a result, extending electricity access to unreached areas was said to be a concern not only of the utility, but also the government. In fact, according to Joseph Walter (Chief Executive Officer, Electric Power Corporation, Samoa), extending access to electricity in Samoa is included in a budgetary allocation made each year known as the ―Community Service Obligation‖ (Walter, 2010, Thesis Interview).

110 Haiti is a notable exception in the Caribbean, with regards to it its low electrification rates. The low electrification rates in Haiti are largely driven by widespread abject poverty, poor physical infrastructure, continuous significant natural disasters and political instability. 217

Figure 6-8: Electricity Access in Caribbean and Pacific SIDS.

N.B: Countries with very low electrification rates are highlighted in red.

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Sources: (Pacific Region Infrastructure Facility (PRIF), 2011; Williams, 2010)

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Renewable energy was therefore promulgated to be a key means through which access to modern energy services could be extended to un-electrified areas and households (Kaiea, 2012, Thesis Interview; Nakavulevu, 2010, Thesis Interview).

While rural electrification can occur through extending the existing grid, the majority of electrification projects seek to make use of distribution generation, with most using solar home systems (Kaiea, 2012, Thesis Interview; Syngellakis, 2010, Thesis Interview; Nakavulevu, 2010, Thesis Interview). Distributed generation refers to the decentralisation of power generation and usually occurs when power is generated at its point of sale or use. Solar home systems, have been propounded (both in the academic literature and by interviewees) to be a common and somewhat preferred means of extending access to electricity to rural areas, especially in light of falling global PV prices (Armaroli and Balzani, 2006; Cherni, 2004; Kaiea, 2012, Thesis Interview; Kanagawa and Nakata, 2008; Syngellakis, 2010, Thesis Interview; Venema and Cisse, 2004; Wade, 2011). Solar home systems were also thought to be desirable since transmission lines (which are usually costly) were not necessary and because this mode of electrification usually circumvents the need to acquire land (Korinihona, 2010, Thesis Interview).

In spite of this, Akau‘ola warns against the widespread deployment of solar home systems or any other technology used for rural electrification without the necessary feasibility studies and public consultation required to ascertain what the best form and application of renewable energy technologies would be. According to Akau‘ola, the rush (often on the part of donor agencies) to deploy solar home systems without first finding out what the energy needs of the respective communities is the equivalent of providing ―a very expensive torch‖ (‗Akau‘ola, 2011, Thesis Interview). In this regard, he opined that much emphasis has been placed on providing lighting for individual households when in fact refrigeration may be useful to members of the community due to its domestic and economic applications111(‗Akau‘ola, 2011, Thesis Interview). He argues that donors and policymakers need to engage rural communities in order to ascertain how they would use electricity if they had it and what they could afford (‗Akau‘ola, 2011, Thesis Interview). Raturi (2011) also emphasised the need to ensure that technologies being deployed are appropriate and selected after relevant feasibility studies have been undertaken. Deploying technologies based on the needs of the end- user was also strongly advocated by Schumacher (1973) in his book ―Small is Beautiful: A Study of Economics as if People Mattered‖. According to Schumacher, equipment or technology should make ―best use of modern knowledge and experience, is conducive to decentralisation, compatible with the laws of ecology, gentle in its use of scarce resources and designed to serve the human person‖. These sentiments were echoed by Biswas (2001) in specific reference to using renewable energy technologies in rural areas. Hence, while rural electrification may be an important component of energy equity, this objective should be pursued through the use of appropriate technologies designed unreached areas after consultation with such communities.

111 Akau‘ola argues that refrigeration is often more useful to outer-island rural communities since these areas are usually comprised of fishing villages that can use such technologies to refrigerate their daily or weekly catch. 220

6.4.2 Summary

The finding that Caribbean and Pacific nations have not yet transitioned to renewable electricity is not very surprising in light of the widespread consensus among respondents that fossil fuelled power generation is likely to be necessary for the foreseeable future. In this regard, it should be noted that the desire among Caribbean stakeholders in particular to utilise natural gas as a ‗transition fuel‘ may have the effect of delaying a complete transition to renewable energy in the power sector. Nonetheless, attempts to stabilise the price of oil in the Caribbean and Pacific are being made. In the Caribbean, the draft regional energy policy makes a specific note that efforts will be made to pursue bulk fuel procurement. Simultaneously, by 2010, five countries had signed the ―Pacific Petroleum Project‖ which sought to explore bulk procurement by the signatory states. This research also found that a number of respondents were adamant that greater urgency was required with regards to the deployment of renewable energy technologies in both regions and that such efforts should be coupled with initiatives to boost energy efficiency. In tandem, it was propounded that a greater thrust toward reducing consumer demand for power would also help to mitigate climate change and peak oil and should be included as a component of a sustainable energy transition. Engaging the general public on the importance of energy conservation was said to be particularly important in order to ensure that efficiency gains are not lost through more energy intensive re-investments of such savings. Finally, the issue of energy equity was highlighted within the context of rural electrification in the Pacific. In this regard, while some postulated that renewable energy is a central means of extending access to power to unreached areas, others noted that it is vital that technologies are deployed based on the needs of the end-user after they have been consulted.

6.5 Research Finding Number 2: Donor Entities active in the Caribbean and Pacific have had significant impacts on the Power Sector through:

i. Aid to facilitate investment in energy technologies ii. Aid in support of Energy Policy Development

While the USD$4.8 billion (in USD 2010) spent on 550 aid projects geared toward the energy sector in the Caribbean and Pacific between 1970 and 2010 did not result in a complete transition to renewable energy, it did contribute to the expansion of overall generating capacity and, in some cases, to boosting nations‘ renewable electricity capacity through supporting investments in energy technologies. Financial and technical assistance channelled to energy policy development also led to the drafting of regulations and legal frameworks specifically related to the energy sector – which for the most part, did not exist before the insertion of aid. Furthermore, this research has found that the emphasis placed on enhancing private participation in the power sector did contribute to the facilitation of independent power producers in the Caribbean and Pacific and to a degree of privatisation of electric utility companies in the Caribbean. This section therefore illustrates the finding that investments in energy technologies rarely occur without the provision of aid. Also, this research found that the provision of aid was vital to the development of energy policies in SIDS. The sub-sections which

221 follow discuss these findings in more detail in light of views expressed both by interviewees and from experts within the academic literature.

6.5.1 To facilitate investment in energy technologies

During the course of the interviews conducted, Tafia (2010, Thesis Interview) asserted that without the presence of external aid, capital investment in the energy sector infrastructure in SIDS would be virtually non-existent, as indigenous government budget allocations to the energy sector have been historically minute compared to what has been required or spent. As confirmed in the academic literature, due to the limited financial, human and institutional resource constraints of SIDS, and the capital intensive nature of acquiring energy-related technologies, being able to access donor funding has been a critical part of the acquisition process for both conventional and renewable energy equipment (Marconnet, 2007; Yu, 1998; Yu and Taplin, 1997). This effect is heightened by the fact that a limited demand for electricity and fuel – owed largely to diseconomies of scale (primarily due to the small size of the island economies) - has made it difficult to attract financing from capital markets or private investment (Weisser, 2004b; Wohlgemuth and Madlener, 2000).

Hence, government representatives from both regions, namely Judith Ephraim (Sustainable Development & Environment Officer, Ministry of Physical Development, Environment and Housing, St. Lucia), Moli Janjea (Senior Energy Officer, Ministry of Lands, Geology, Mines, Water Resources, Energy & Environment, Government of Vanuatu), Makereta Sauturaga (Director, Department of Youth & Sports, Government of Fiji), Uaine Silailai (Assistant Chief Executive Officer & Head, Renewable Energy Division, Ministry of Natural Resources & Environment, Samoa), Thomas Tafia and Fitzroy Vidal commented that as a result of the scale of investment required, most state authorities/entities have (as a policy stance) decided not to invest in electricity generating equipment from public funds. Instead, they noted that investments of this nature are encouraged via incentives to the private sector or sought from international donor agencies (Tafia, 2010, Thesis Interview; Janjea, 2010, Thesis Interview; Vidal, 2011, Thesis Interview; Silailai, 2010, Thesis Interview; Sauturaga, 2010, Thesis Interview; Ephraim, 2011, Thesis Interview). In fact, Yu and Taplin (1997) stated that between 1980 and 1990, ―nearly US $430 million was spent in the [Pacific] region on developing renewable energy‖ (Yu and Taplin, 1997). In sum therefore, it is difficult to overstate the role played by international development agencies in the acquisition, development and deployment of energy–related technology in SIDS.

6.5.2 To support the development and formulation of energy policies

The interviews conducted as a part of this research, namely those with Robert Blenker (Vice President, Renewable Energy, WRB Enterprises, Inc.), Katarina Syngellakis (Senior Engineer, IT Power) and Mark Lambrides confirmed that the inability of many governments in SIDS to competently engage in complex commercial and legal negotiations (over power purchasing agreements, for example) with prospective investors. This, they argued, is a significant barrier to attracting investment in the power sector in SIDS (Blenker, 2011, Thesis Interview; Lambrides, 2011, Thesis Interview;

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Syngellakis, 2010, Thesis Interview). As highlighted by Mark Lambrides (Director, Energy Division, Organisation of American States), the existing dearth in commercial and skills has contributed to increased donor focus on institutional capacity support and policy reform. This is largely due to the fact that donor agencies often possess or can access the technical, legal and professional services required to draft policy or review institutional structures such as tariffs or operating and management procedures (Lambrides, 2011, Thesis Interview). Lambrides went further and gave an example by stating that in order to help create an enabling environment to promote geothermal energy use in the Caribbean, an energy project entitled the ―Caribbean Sustainable Energy Program‖ (CSEP) was executed by the Organisation of American States (OAS). He stated that the project provided assistance with the drafting of geothermal energy bills in St. Lucia, Dominica, Grenada and St. Vincent and the Grenadines. According to Lambrides (2011, Thesis Interview) assistance with legal provisions such as these (including environmental regulations) can be critical to attracting financial support for energy projects. Both Yu (1997) and Stuart (2006) have noted ―many donors consider islands to be lacking in skilled human resources [necessary]…to implement renewable energy projects‖. The lack of institutional and human resource capacity in SIDS and the adverse implications this has on energy policy development was also expounded upon by Weisser (2004a), who asserted that ―there are no holistic long-term energy policies and electricity provision models in SIDS, which would allow a more sustainable approach to electricity planning‖. This research therefore confirms that the development of a number of policies in the energy sector in SIDS were formulated and established (at least partially) due to the influence of donor agencies driving this process (see Table 6-3).

Table 6-3: Illustration (using a few examples) showing relationship between Energy Aid Projects and Policy Development

TABLE ILLUSTRATING RELATIONSHIP BETWEEN ENERGY AID PROJECTS AND POLICY DEVELOPMENT Donor Entity Project Name Recipient Project Result Countries United Nations Pacific Islands Niue National Energy Development Energy Planning Tuvalu Policies 112 Programme and Strategic Tokelau developed Action Planning Fiji project (PIEPSAP) Tonga Tonga Renewal Energy Bill drafted15 Solomon Islands National energy Samoa policy frameworks Vanuatu develop and 113 Nauru endorsed Palau Palau Energy Conservation

112 Taken from Jensen, T. L. & Mitchell, J. 2007. Undp Assistance to Sustainable Energy in the Pacific Island Counties (Pics) – Overview of Ongoing and Planned Interventions. Pacific Regional Energy Officials Meeting (REM) Rarotonga, Cook Islands: United Nations Development Programme. 113 Taken from: United Nations Development Programme 2009. Overview of Undp Assistance to Sustainable Energy in the Pacific Island Countries: Development Partner Updates. Pacific Regional Energy Officials Meeting (REM). Nukua‘lofa, Tonga. 223

Strategy (PESC) endorsed2 Multilateral Donor Tonga Energy Road Tonga Tonga Energy Cooperation Map (TERM) Road Map endorsed and passed Organisation of Caribbean Antigua & First draft National American States Sustainable Energy Barbuda Energy Policy Program (CSEP)114 submitted in October 2010 Bahamas Policy Framework Formulation On- going Dominica First draft National Energy Policy presented in July 2009 Grenada First draft National Energy Policy presented in July 2010 St. Kitts & Nevis First draft National Energy Policy presented in April 2010. St. Lucia National Energy Policy was submitted to the Government in January (after initial support for 6 years by CREDP-GIZ. GesellschaftfürInter Caribbean St. Vincent and Draft renewable nationaleZusammen Renewable the Grenadines energy Policy arbeit (GIZ) Development submitted Programme

St. Lucia Draft renewable energy Policy submitted to government Suriname Establishment of a renewable energy draft

In addition to sourcing specialist input necessary for the formation of policies, Kireua Kaiea (Head, Energy Planning Unit, Ministry of Public Works and Utilities, Kiribati)

114 Taken from: Organisation of American States 2011. Caribbean Sustainable Energy Program: Project Review Workshop. Bridgetown, Barbados. 224 commented that donors often provide financial support for national consultations with relevant stakeholders to be conducted on issues relevant to policy decisions. He went further and noted that in some cases donor agencies cover the cost of booking venues, as well as the cost of transportation for stakeholders to get to and from consultations (Kaiea, 2012, Thesis Interview). Jensen, Kaeia and Lambrides added that aid agencies also possess the resources to facilitate functional policy cooperation and harmonisation on a regional level (and/or sub-regional level – through organisations like the University of the South Pacific or the Organisation of Eastern Caribbean States, for example) (Jensen, 2010, Thesis Interview; Kaiea, 2012, Thesis Interview; Lambrides, 2011, Thesis Interview). In fact, according to Jensen (2010, Thesis Interview), international development agencies often assist by financing or subsidizing the cost of travel and accommodation for regional meetings. Without these forms of practical assistance, regional cooperation and policy coordination would be far more difficult.

In some cases however, the development of domestic energy policy has been a prerequisite or condition to be able to access funds from donors.

The rationale behind such policy based assistance, as indicated by Leighton Waterman (Project Manager, Sustainable Energy Framework for Barbados, Office of the Prime Minister, Barbados), is likely to be related to urging policy implementation in specific areas of interest to donor entities (Waterman, 2011, Thesis Interview). Even further, as Ricky Wright (Senior Planning Engineer, St. Vincent Electricity Services Limited [VINLEC]) explained, policy-related intervention on the part of donors has at times served to open the electricity markets of recipient nations in order to facilitate the business interests of the donor nation (Wright, 2011, Thesis Interview). A number of experts have explicitly argued that aid has often been used to promote the socio- economic and political interests of donor nations (Brown, 2005; Hattori, 2001; Heckelman and Knack, 2008; Hughes and Lawrence, 2005). Weisser (2004b) also propounds that access to funds from donors has at times been made conditional upon the adoption of policies aimed at reforming the power sector which has resulted, on occasion, in hasty decision-making by state officials. Notwithstanding this, the provision of technical assistance toward the formulation of energy policies has been a central and important component of aid to Caribbean and Pacific SIDS between 1970 and 2010.

6.5.3 Summary

This research has illustrated that without the intervention of donor agencies, the acquisition of most new energy technologies is unlikely to have occurred. Further, aside from the provision of financial support, this thesis has shown that donors have also played an important role in policy formulation, both on national and regional level – through technical (often legal) assistance, and other forms of practical support such as paying for the cost of consultations and meetings. That said, some respondents also opined that efforts by donor entities to facilitate the formulation of energy policies were not entirely altruistic, but rather, have served to open the electricity markets of recipient

225 nations in order to facilitate the business interests of the donor nation (as discussed in Chapter 5). Experts have confirmed the non-altruistic nature of development assistance by noting that aid often serves to further the socio-economic and political interests of donor nations.

6.6 Research Finding Number 3: Donor entities placed a deliberate emphasis on enhancing the involvement of private companies in the power sector

As was shown in the project data featured in this thesis, and in particular through the case studies in the results chapter, donor entities placed a specific emphasis on increasing private participation in the power sector. In some cases, donor entities sought to establish microfinance and other funding schemes to stimulate investment by private individuals and/or small and large companies. In other instances, donor entities aimed to support the activities of independent power producers (IPPs) through the provision of equity financing and through the encouragement of regulatory reforms to facilitate private participation in the power. The sub-sections that follow therefore describe these findings in greater detail.

6.6.1 Donor entities sought to stimulate Private Investment in the power sector

International development assistance to Caribbean and Pacific SIDS has served to support private sector investment in the energy sector.

In some cases, individuals or small firms were awarded small loans in order to participate in the retail or distribution of energy-related devices within the domestic market. For example, in 2009, the Renewable Energy and Energy Efficiency Partnership (REEEP) (featured in the project data) launched a project entitled the ―Developing a framework for clean energy microfinance in the Pacific‖. Valued at approximately USD$141,000115, the project sought to ―build the commitment and interest of microfinance institutions (MFIs) in funding [renewable energy and energy efficiency] projects‖ (Renewable Energy and Energy Efficiency Partnership, 2012). In the Caribbean (more specifically, Barbados), the Inter-American Development Bank (IDB) launched the ―Sustainable Energy Investment Program‖ in 2010, (valued at around USD$45 million) which established a Smart Fund meant to encourage private sector (but primarily small companies) to invest in renewable energy or energy projects (Waterman, 2011, Thesis Interview). Both projects were therefore geared toward the development of loan products - specifically for clean energy or energy conserving devices. Such initiatives often aimed to boost the local supply of renewable and energy efficient technologies while also facilitating income-generating activities for small enterprises and entrepreneurs.

115 Quoted in USD 2010 dollars. 226

This research also confirmed that aid has served to facilitate or promote private participation (of both local and international companies) in the power sector. As revealed in the results chapter of this thesis, some donor entities - particularly the Asian Development Bank (ADB) and Inter-American Development Bank (IDB) placed a great degree of emphasis on enhancing private participation sector in the power sector in the Pacific and Caribbean respectively. Beder (2003) is quite scathing in her review of the role of donor agencies in the power sector and makes it clear that donors have been a central driving force behind privatisation and deregulation in the electricity sector in developing countries. As an example, she postulated that in 1995, the ADB (primarily due to the influence of the World Bank) registered its intention to ―introduce competition, [and] reorganise utilities into corporate, commercial entities, and ―allocate a greater role for the private sector116, particularly foreign companies‖ (Beder, 2003). Beder (2003) asserts that development banks and agencies have therefore often been used to pressure developing nations opening their electricity market to cater for private sector investment. According to Wamukonya (2003), one means through which this has been achieved in the past was through donor entities helping (particularly foreign) investors to secure government guarantees for power projects. He argued that such guarantees are often granted so as to make investments more secure in order to attract greater private sector participation (Wamukonya, 2003).

To add to the above, if debt (i.e. loan funding) was not used to finance the capital outlay involved in power projects, then donor entities at times helped to facilitate equity investment if necessary. Indeed, Wiser and Pickle (1998) postulated that equity investment is commonly used to facilitate private participation. However, the small size of the power sector in SIDS often makes attracting international investors more difficult (Bacon and Besant-Jones, 2001). Thus, direct equity participation was facilitated or undertaken by donor entities (or their partner agencies) in order to provide the injection of capital required for investments in the power sector. An example of this (featured in the project data of this thesis) occurred in 2010 when the International Finance Corporation (IFC - a member of the World Bank Group) supported the efforts of an Independent Power Producer via a lo - (International Finance Corporation, 2010a)117.

6.6.2 Donor entities encouraged enhanced private sector participation through regulatory reform to facilitate the introduction of Independent Power Producers

On a global scale, loan agreements between international financial institutions and developing countries, including SIDS, have often

116 Here, Beder (in her book ―Power Play: the Fight to Control the World‘s Electricity‖) captures a direct quote from an ADB policy paper. For more see: Asian Development Bank. 1994b. Bank Policy Initiatives for the Energy Sector. Available: http://www2.adb.org/water/topics/dams/pdf/energy_policy.pdf [Accessed 29 August 2012]. 117 The initiative was entitled: the "E-Power S.A." and was said to cost USD$50 million, which was to be ―financed 75% by debt and 25% by equity‖. Source: International Finance Corporation 2010a. Summary of Proposed Investment, E-Power S.A., Haiti. Washington DC, U.S.A: World Bank Group. 227

included provisions which oblige nations to commercialise, privatise or restructure their electricity generation, transmission and distribution sub-sectors.

For example, in the period ―between 1990 and 1999, private participation took place in the electricity sectors of over 75 developing countries and the total private investments amounted to approximately US$160.7 billion in 695 projects‖ (Jamasb, 2006). Table 6-4 illustrates the degree of power sector reform that has occurred in the Caribbean and Pacific. Suffice to say, there has been a greater degree of privatisation in the Caribbean region, as Vanuatu remained the only nation in the Pacific to privatise its power utility. The regional trend toward privatisation in the Caribbean could be related to the specific structural adjustment programmes of the International Monetary Fund in Latin America and the Caribbean (referred to in the literature). This trend, under which the deregulation and privatisation of state owned enterprises (particularly utility companies) was made a condition for receiving financial assistance (Beder, 2003; Klein, 2007; Wamukonya, 2003).

In tandem therefore, this research has shown that in order to facilitate the privatisation of electric utilities, the policies and legal framework regulating transmission and distribution have often been reformed many times in order to qualify for support from international development partners and institutions. According to Hasmukh Patel (Chief Executive Officer, Fiji Electricity Authority [FEA]) and Garvin Alexander (Assistant Executive Director, Technical Operations, Regulated Industries Commission, Trinidad and Tobago), similar (though not identical) regulatory changes have been proposed (and others implemented) in the Caribbean and Pacific in order to cater for the participation of Independent Power Producers (IPPs) (Alexander, 2011, Thesis Interview; Patel, 2010, Thesis Interview). Notwithstanding this, in either case, where reforms are motivated by a privatisation agenda or to cater for the participation of IPPs, the resulting changes made to the structure of the electricity sector in SIDS were generally not forged from a need or desire to ensure that nations possessed a sustainable and environmentally benign supply of electricity, Instead, changes resulted from largely economic imperatives to reduce costs and increase the economic efficiency of organisations responsible for generating, transmitting and distributing power (and at times, to enable loans to be repaid more easily). However, a pronounced focus on economic returns (along with the borrower‘s ability to meet their debt service) can be incongruent with attempts to transition to sustainable energy especially in cases where thermal generation (such as diesel gensets) are more commercially viable than renewable alternatives. The focus on economic returns being paramount to ecological impacts was criticised as being wrong by Daly and Farley (2004) in their book ―Ecological Economics‖. These authors assert that within conventional or standard economic ideology pertaining to growth and efficiency, resources are allocated so as to make the

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Table 6-4: Electricity Utilities in the Caribbean and Pacific: Public vs Private Ownership

Country Name of Utility Ownership Notes on Reform Other relevant information Measure State Private

Pacific Power Utilities Niue Niue Power 100% 0% Responsible for generation, distribution Corporation (NPC) and retail of electricity in Niue Cook Islands TeApongaUira 100% Privitisation 13 Outer Islands Run by island councils attempted in 1990s but unsuccessful. Nauru Nauru Phosphate 100% Responsible for generation, distribution Corporation (NPC) and retail of electricity Kiribati The Public Utilities 100% Supplies electricity and water and manages sewerage: Board (PUB) only to South Tarawa Kiribati Solar 100% Involved in Rural Electrification using renewable Energy Company energy, particularly via sale or lease of solar PV (KSEC) systems and relevant components Fiji Fiji Electricity 100% World Bank funded Supplies VitiLevu, Vanua Levu and Ovalau. (Public Authority reform study Works Department responsible for rural electrification) ongoing Federated 4 utility companies: 100% Each Utility supplies its own district – different tariffs States of i. Chuuk Public apply for each. Micronesia Utilities Corporation (CPUC), ii. Kosrae Utilities Authority (KUA) iii. Pohnpei Utilities Corporation (PUC)

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iv. Yap State Public Service Corporation (YSPSC) Marshall 2 Utility 100% MEC - Responsible for generation, distribution Islands Companies: i. and retail of electricity on Majuro, Jaluit&Wotje. Marshalls Energy KAJUR - the utility company providing Power, Water Company (MEC) & Sewerage services to the island community of Ebeye, ii. Kwajalein Atoll the Marshall Islands 2nd largest urban center located in Joint Utilities Kwajalein Atoll. Resources Inc (KAJUR) Palau Palau Public 100% PPUC supplies Koror, Babeldaob, Kayangel, Utilities Peleliu&Angaur Corporation (PPUC) Papua New PNG Power Ltd 100% Formerly the Papua Responsible for the generation, transmission, Guinea (PPL) New Guinea distribution and retailing of electricity throughout PNG Electricity Commission (ELCOM) Elcom, until 2002. Samoa Electric Power 100% Formerly Public Responsible for the generation, transmission, Corporation Works Department distribution and selling of electricity in Samoa. (known as the Electric Power Scheme) until 1972. Solomon Solomon Islands 100% Responsible for the generation, transmission, Islands Electricity distribution and sale of electrical energy in the Solomon Authority Islands. Tonga Tonga Power 100% 0% TPL was established in 2008. Replaced Shoreline Limited Power Company

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Tuvalu Tuvalu Electricity 100% 0% Responsible for the generation, transmission, Corporation distribution and sale of electricity. ―Serves nearly all islands in Tuvalu‖ (Wade et al., 2005) Vanuatu Union Electrique 0% 100% UNELCO awarded concessions to operate and serve de Vanuatu Efate, Santo Tanna and Malekula islands (UNELCO) Caribbean Power Utilities Antigua & Antigua Public 100% 0% Responsible for the generation, transmission, Barbuda Utilities Authority distribution and sale of electricity. Also responsible for (APUA) water and telecommunications services. The Bahamas The Bahamas 100 0% BEL is the primary distributor of electricity in Belize. Electricity Corporation (BEC) Grand Bahama 0% 100% Supplies electrical power to the island of Grand Power Company Bahama (GBPC) Belize Belize Electricity 27% 73% Responsible for generating electricity and the primary Limited distributor of electricity in Belize (inclusive of power purchased from various generators) Barbados The Barbados Light 100% Responsible for the generation, transmission, & Power Company distribution and sale of electricity in Barbados. Ltd (BLPC) Dominica Dominica 20% 80% Responsible for the generation, transmission, Electricity Services distribution and sale of electricity in the Ltd (DOMLEC) Commonwealth of Dominica Grenada Grenada Electricity 10% 90% The sole provider of electricity in Grenada, comprised Services Ltd of the islands of Grenada, Carriacou and Petite (GRENLEC) Martinique Jamaica Jamaica Public 19% 81% The sole distributor of electricity in Jamaica Service Company Ltd (JPSC)

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St. Lucia St. Lucia 48% 52% The sole distributor of electricity services in St. Lucia Electricity Services Ltd (LUCELEC) St. Kitts & St. Kitts Electricity 100% 0% A Government department operating under the Nevis Department direction, control and budget allocation of the Ministry of Public Works, Utilities, Transport and Posts. Responsible for the generation, transmission, distribution and sale of electricity Nevis Electricity 100% 0% The sole commercial generator, transmitter, distributor Company Ltd and seller of electrical energy in Nevis (NEVLEC).

Trinidad and Trinidad and 100% 0% Responsible for the design, construction, operation and Tobago Tobago Electricity maintenance of the country's electrical transmission and Commission distribution network. T&TEC purchases the bulk electric power from independent generation companies for resale, and is also responsible for securing fuel supplies for the generation companies.

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POWERGEN 51% 49% Responsible for the generation of electrical power to the national electrical grid of Trinidad and Tobago

St.Vincent and St. Vincent 100% 0% The sole provider of electricity in St. Vincent and the the Electricity Services Grenadines. Grenadines Ltd (VINLEC)

Sources: 1. Wade, H., P. Johnston, et al. (2005). Pacific Regional Energy Assessment 2004: an assessment of the key energy issues, barriers to the development of renewable energy to mitigate climate change, and capacity development needs to removing the barriers: Regional Overview. Apia, South Pacific Regional Environment Programme. 2. http://www.rep5.eu/.Accessed on December 8, 2010. 3. KEMA (2010). Benchmark Study of Caribbean Utilities. Sixth Update - Year 2009, Caribbean Electric Utility Service Corporation: 133. 4. http://www.mecrmi.net/KAJUR.htm

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greatest monetary return from the smallest possible investment (Daly and Farley, 2004). Environmental costs, along with concerns related to the long term sustainability of the investment are often ignored (Daly and Farley, 2004). From this point of view, greater priority and focus on resource constraints and environmental impacts of investments in the power sector (on the part of governments, donors and utilities) is therefore necessary if a sustainable transition is to be achieved; not only in SIDS but across the globe.

Furthermore, with reference to the pressure applied to developing countries to undertake power sector reform so as to increase private sector participation, Wamukonya (2003) propounds that ―despite the obvious differences across reforming countries, the processes have been similar everywhere.‖ These reforms have resulted in modes of supply that not only ignore environmental and resource concerns but are often ill-suited to countries that they have been deployed in (Daly and Farley, 2004; Wamukonya, 2003). As a consequence, power sector reform has at times resulted in high-tariffs for end users, retrenchment for workers in electricity companies in order to cut costs to achieve greater financial efficiency and retention or expansion of fossil fuel generation since these technologies tend to be economically cheaper (without accounting for the external costs of fossil fuel use) (Wamukonya, 2003). Indeed, these potential risks associated with power sector reform were reinforced by interviewees from the Pacific region. Thomas Tafia (General Manager, Department of Energy, Tokelau) and Uaine Silalai (Assistant Chief Executive Officer & Head, Renewable Energy Division, Ministry of Natural Resources & Environment, Samoa) both expressed concerns that the introduction of Independent Power Producers (IPPs) in small islands would result in increased tariffs.

According to Mayer (2000), power sector reforms in some cases have left many SIDS in particular with electricity supply modes that can potentially make them more vulnerable to natural disasters and hazards, especially in the absence of external continental transmission grids that can act as back-up or support systems in times of emergency (Mayer, 2000). This situation can also be attributed to the fact that reforms encouraging higher economic efficiency are often translated into measures designed to reduce short- term costs which can by extension result in lower resilience – as additional expenditure usually allocated to more durable materials, back-up systems or energy-conserving technologies is often foregone. Utility representatives from the Caribbean, Allen Clarke (Senior Engineer, Generation Interface, Trinidad & Tobago Electricity Commission [T&TEC]) and Thornley Myers (Chief Executive Officer, St. Vincent Electricity Services Limited [VINLEC]) added to this by noting that the introduction of IPPs in SIDS carry inherent risks, not only economically (to the utility) but also in terms of health and safety along with the reliability and stability of the electrical network or system (Clarke, 2011, Thesis Interview; Myers, 2011, Thesis Interview). This is particularly important in the absence of continental back-up transmission grids, as highlighted by Mayer (2000).

Beder (2003) argues not only that donor entities have encouraged the introduction of IPPs (as part of a wider private sector privatisation agenda) but also that generation by private companies has led to an expansion of capacity ―at a very high cost that, in fact, increases government spending and foreign debt, inhibits competition, blunts technological innovation, and increases consumer costs‖ (Beder, 2003). Thus, this thesis

234 has argued that if IPPs are to be introduced in SIDS, it should be because of the long- term financial and environmental benefits of investments being made (particularly investments in energy efficient and renewable energy technologies) and not because of short term economic benefits (such as relieving the state of power generation costs).

In light of the above, the comments of Ricky Wright (Senior Planning Engineer, St. Vincent Electricity Services Limited [VINLEC]) were indeed insightful when he noted (as mentioned in section5.4) that the pressure from international funding agencies to ―go green‖ was often from countries ―whose developers, whose business people want to get into the Caribbean‖. Further, he lamented that VINLEC had declined applications from potential IPPs in the development of a wind farm due to a lack of experience and knowledge (in operating power plants) and/or because of plans to utilise inappropriate or unproven technologies (Wright, 2011, Thesis Interview). In light of this, Wright propounded that the resistance of VINLEC (the national utility in St. Vincent and the Grenadines) to pressure from the international community to introduce IPPs (in this instance) resulted in VINLEC being made out ―to be the bad guy‖ (Wright, 2011, Thesis Interview). Wright therefore asserted that as a utility, efforts to transition to renewable energy need to be made within the context of long term planning considerations, in the interest of ―keeping the lights on‖ and cannot be made purely out of economic considerations (based primarily on the cost of generation) (Wright, 2011, Thesis Interview).

Finally, with regards to increasing private participation in the power sector, this thesis does note that the Caribbean Community (CARICOM) draft Regional Energy Policy does state that Member States will ―promote competition in power generation to encourage non-utility or independent power producers (IPPs)‖ (Caribbean Community (CARICOM) Secretariat, 2007). As a result, this thesis asserts that in seeking to promote private participation in the power sector in SIDS, through IPPs118, donor and state agencies as well as utilities need to take into account the unique characteristics of the relevant electricity market, the experience and knowledge base of the IPP in question and the choice of technology and fuel being made, and set these within the context of long-term planning for the sector, toward a sustainable energy transition.

6.6.3 Summary

This research has shown that whether through direct financial or technical support to state agencies or utilities, or through facilitating private sector participation, donor entities have in the past made deliberate attempts to promote private investment primarily through regulatory changes to the power sector in SIDS geared toward enhancing the participation of independent power producers (IPPs). This research has also shown that the privatisation of utilities and the introduction of IPPs can have adverse local consequences in the absence of appropriate regulation. Thus, decisions to introduce privately owned entities into the electricity market in SIDS need to be based on long term considerations related to, inter alia, the suitability of potential investors and the sustainability of planned investments.

118 It should be recalled that the transmission and distribution electricity sub-sectors have largely been excluded from privatisation efforts due to the fact that these are viewed as natural monopolies, particularly in SIDS where power markets are relatively small. 235

6.7 Research Finding Number 4: Aid has been vital in helping SIDS to cope with high oil prices

As has been discussed, SIDS are quite vulnerable to oil price increases and supply shortages associated with oil crises. This thesis has shown that the assistance of international development partners has been vital in helping SIDS to cope with spikes in the price of oil. This research confirms that donor entities active in the Caribbean and Pacific increased their allocations to SIDS in periods immediately following oil crises, not only to assist in meeting the increased cost of oil imports but also to support investments in renewable energy technologies to reduce long term vulnerability to oil price spikes. As mentioned earlier, financial support of this nature from donors is important as most SIDS have not been able to afford to make renewable energy investments solely from their public purse. That said, this research also showed that support for alternative energy development waned during the intervening periods between oil crises, when the price of oil fell significantly. Thus, in seeking to understand the contribution of international aid to a sustainable energy transition in SIDS, what follows is a discussion of the role of aid in response to oil price shocks in the Caribbean and Pacific between 1970 and 2010.

6.7.1 Aid in response to oil price shocks

Beyond the acquisition of capital intensive technologies and securing the input of specialists, this thesis has shown that international aid often helps to shield the energy sector from oil price shocks. This was evident from the case studies in this research, where each of the three agencies examined (the World Bank, Asian Development Bank and Inter-American Development Bank) amplified overall allocations to and focus on the energy sector in periods immediately following oil price shocks (between 1974 – 1983 and 2008- 2010). In addition, upon close examination, the case studies in this thesis showed that there was indeed some correlation between the global price of oil and disbursements of aid to the energy sector in Caribbean and Pacific, although more so in the Pacific. Only in the case of the Inter-American Development Bank was no correlation found – and this finding is likely to be related to the presence of energy exporting nations in the Caribbean region.

This research also confirmed that aside from providing financial support to meet the cost of oil imports, donor entities placed a great deal of emphasis on the development of indigenous energy sources. This emphasis was primarily due to the fact that the development and exploitation of energy resources available locally was viewed as the best means of reducing vulnerability to high oil prices (Polack, 2010; Stuart, 2006; Weisser, 2004a; Yu and Taplin, 1997; Yu and Taplin, 1998). This thesis also provided evidence to show that prior to 1990, before climate change made its ascent on the global environmental agenda, exploration for indigenous energy resources also included coal, oil and gas. This changed in the period between 1990 and 2010, and particularly after 2005, when the Kyoto Protocol to the UNFCCC came into force. Around that time, a much greater emphasis was placed on the deployment of climate-friendly technologies & fuels.

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It could also be observed that a notable increase in Overseas Development Assistance (ODA) to SIDS took place shortly after the second oil crisis in 1979 (see Figure 6-9). The price shock resulting from the oil crisis was of particular concern as the first oil crisis post 1973 had already had a significant impact on the financial resource base of island economies. As a result, according to Lloyd (1994) and confirmed by interviewees Peter Johnston (Environmental and Energy Consultants, Ltd.) and Tony Weir (Programme Manager, Pacific Centre for Environment & Sustainable Development, University of the South Pacific), a significant portion of aid was at that time allocated to exploring alternatives to fossil fuels; though (as mentioned), the allotment of aid for this purpose was not sustained when oil prices receded (Johnston, 2010, Thesis Interview; Weir, 2010, Thesis Interview; Lloyd, 1994). According to Johnston (2010, Thesis Interview), even though the average amount of ODA apportioned to SIDS between 1986 and 2003 increased (when the oil price was lower) these funds appear to have been allocated to other sectors (such as housing and education). These assertions were corroborated by Yu (1998) who noted that ―in the 1980s, many developed countries and international organisations were interested in developing renewable energy resources in the Pacific. Since 1990 however, their interests have shifted to other foci and other regions.‖ Nonetheless, in recent years as oil prices again began to rise in a sustained manner (particularly between 2003 and 2009), so too did the allocation of ODA to the energy sector in SIDS (see Figure 6-9). A large portion of this financial assistance was once again devoted to the development of alternative forms of energy, as confirmed by Thomas Jensen (Environmental and Energy Specialist, United Nations Development Programme, Pacific Centre) and Tony Weir (Weir, 2010, Thesis Interview; Jensen, 2010, Thesis Interview).

Figure 6-9: Net ODA per capita received by SIDS compared to World Oil Prices Sources: ODA Data – World Bank, 2012, World Commodity Oil Prices – IMF, 2012, Population Data – United Nations, Department of Economic and Social Affairs, 2010.

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6.7.2 Summary

This research has illustrated that aid disbursements (in the case of the World Bank Group and the Asian Development Bank) to the energy sector in the Caribbean and Pacific are likely to have been correlated to the price of oil globally in specific instances. Donor entities also intensified their support to SIDS in periods immediately following sustained high oil prices (between 1974 – 1983 and 2008- 2010). During such periods, donor entities also placed a greater degree of emphasis on the development of indigenous energy sources and, after 1990, on the acquisition of renewable energy technologies. However, it should be noted that interest in indigenous energy development waned in the intervening period, between 1983 and 2008, when oil prices receded.

6.8 Other Research Findings (not covered above): including problems or emerging concerns pertaining to the delivery of aid to the power sector in the Caribbean and Pacific

Inasmuch as aid has been critical to investment in the electricity sector in SIDS and is therefore likely to be an important component of a sustainable energy transition, it has been argued both in academic literature (Hughes and Lawrence, 2005; 'Ulukalala Lavaka 'Ata, 2002) and by Joseph Williams (Programme Manager, Energy. The Caribbean Community [CARICOM]) during the interviews that disbursements from donors have not been altruistic, but rather represent geopolitical and economic interests of donor entities and metropolitan nations (Williams, 2011, Thesis Interview). An examination of the demerits or possible adverse consequences of aid projects, particularly as it relates to its impact upon a sustainable energy transition, is therefore appropriate. Hence, the subsection which follows outlines problematic areas of aid to the power sector in the Caribbean and Pacific as articulated by persons interviewed via this research project and within the academic literature. As a result, the sub-section that follows will discuss the findings of this research, pertaining to problems related to: I. Technology Transfer & Promotion II. Political Rivalry and Donor Competition III. Debt Accumulation

6.8.1 Technology Transfer and Promotion

6.8.1.1 A lack of technical expertise

The narrow technical knowledge - resource base available to SIDS has far reaching implications regarding the avenues for development within SIDS. It has been asserted that a principle reason for the lack of growth of sustainable energy technologies in SIDS has been the apparent paucity of technical and policy related knowledge in island economies (The University of the West Indies Centre for Environment and Development, 2003). As a result (as has been confirmed by this research), the acquisition and utilisation of RETs for power projects in SIDS has been primarily driven by donor funds, expertise and knowledge (The University of the West Indies Centre for Environment and Development, 2003). This thesis has also argued that the 238 dearth of technical knowledge is exacerbated by ‗brain-drain‘ in Caribbean and Pacific SIDS (mentioned in Chapter 5), which refers to widespread emigration of skilled workers to higher-paying jobs abroad (Nakavulevu, 2010). The problem of a lack of technical expertise and the associated ‗brain drain‘ has been well document for some time in the academic literature and has as such been the subject of much research (Amuedo-Dorantes et al., 2010; Artana et al., 2007; Bertram, 2006; Bertram and Watters, 1985; Poirine, 1998).

The interviews conducted for this research, specifically with Robert Blenker (Director, Energy Division, Organisation of American States), Stephen Worme (Chief Marketing Officer, Barbados Light & Power Company Limited), Katerina Syngellakis (Senior Engineer, IT Power) and Lambrides, confirmed that the lack of a professional and technical skill base constitutes a significant barrier to the deployment of renewable energy and energy conserving devices in SIDS and exacerbates reliance on donors to provide energy-related expertise and technologies (Blenker, 2011, Thesis Interview; Lambrides, 2011, Thesis Interview; Syngellakis, 2010, Thesis Interview; Worme, 2011, Thesis Interview). Further, Stuart (2006) and Yu (1997) point out that donors have recognised that SIDS do not have the required human resource base to implement renewable project. Hence, the applications of renewable energy and energy efficient devices have often been very much donor driven with a strong ‗technology push‘ rather than a ‗recipient pull‘. Referring to the ‗technology push‘ approach adopted by many donors, Subbarao (2010) notes that ―a particular technology solution was often thrust on the users, without taking into account the needs of the users, the available resources within that area to meet these needs‖.According to Kozloff (1995a), this is largely due to the fact that ―many bilateral aid programs are designed to promote donor exports.... [as] donors often direct assistance to technologies in which they have a comparative advantage in domestic or world markets.‖ This practice, which is at times referred to as ‗tied aid‘, is meant to ensure that the recipient purchases or uses goods or services from donor countries in order to ensure some measure of economic return from the assistance rendered (Kozloff and Shobowale, 1994). Both Wright and Syngellakis provided evidence of this (see section 5.4) by indicating that in practice, aid to the power sector has at times served to promote the entrance of developers and/or technologies from nations providing financial support (Syngellakis, 2010, Thesis Interview; Wright, 2011, Thesis Interview). Haraksingh (2001) argues that joint ventures or partnerships between local companies or specialists and foreign firms can therefore serve not only to build local capacity but also to smoothen the transition to greater renewable energy deployment.

6.8.1.2 Inappropriate/Unproven technology

As confirmed by Wright (2011, Thesis Interview) and Syngellakis (2010, Thesis Interview), using aid to promote specific technologies manufactured in donor nations has at times resulted in the insertion of ‗unproven‘ or immature technologies, such as tidal energy production, biomass gasification and even Ocean Thermal Energy Conversion (OTEC) (Sanday and Lloyd, 1991). Martyn (2011) also provides specific insight into how investment in coconut biofuels in the Pacific created interest in a product and market that could not be sustained. The interviews also reinforced that premature deployment of technologies can have the effect of sending inaccurate signals to the market by creating interest and facilitating activities that might not have otherwise existed (Martyn, 2010, Thesis Interview; Syngellakis, 2010, Thesis

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Interview). Such tied aid may even represent an additional cost to the recipient nation if the equipment or technologies acquired happens to malfunction (which is conceivable particularly if these devices are unproven or prototypes). Further, as propounded by Jepma(1991), ―exports under tied aid are often overpriced compared to prevailing world prices, by between 10 and 40 percent‖, a claim supported by Easterly and Pfutze (2008). Initial acquisition of the technology would also signify a commitment to purchase spare parts or pay for specialised maintenance which (in most cases) would have to be financed by the recipient (Morrissey, 1993).

This research provides evidence to support the claim that tying external financial assistance to the use of specific technology produced in donor nations is often ineffective.

This is largely due to the fact that SIDS often do not possess the technical knowledge required for the operation and maintenance of such technology, and also because the technology produced in donor nations may not be suitable or appropriate in the tropical/marine environments of island nations (Sanday and Lloyd, 1991). In this way, tied aid constitutes a form of trade distortion as it narrows the choice of technology to those produced within the donor nation instead of allowing the recipient nation to select the most appropriate device from the international market (Morrissey, 1993; Suwa- Eisenmann and Verdier, 2007). Commenting on the acquisition and installation of renewable energy technologies in Pacific Island countries (particularly by donor organisations), Lloyd (1994) suggests that perhaps ―the most important lesson is not to place untested options in remote areas. Renewable energy technology should be fully operational on a commercial basis in developed countries before deployment to remote rural environments in developing countries.‖ Schumacher (1973) makes it clear that the inappropriate deployment of technologies by aid agencies is not a recent problem and should be discouraged. He argues that the equipment being utilised should be environmentally benign and suited to the needs of end users (Schumacher, 1973). Moreover, the findings of this thesis point to the fact that if sustainable energy devices are to be utilised and maintained in the long term, then it is important that the technology choice and demand for these products originate from and are driven by SIDS (Kozloff, 1995b).

6.8.1.3 Summary: Technology Transfer & Promotion

A dearth of technical knowledge and expertise therefore constitutes a considerable barrier to technology transfer and the deployment of renewable energy devices in Caribbean and Pacific SIDS. As a result, the acquisition and installation of such devices has been largely dependent on and driven by donor entities which, at times, has resulted in assistance being offered in order to promote the technologies of donor nations. One way of enhancing local technical knowledge in order to reduce reliance on external assistance could be to execute donor funded projects as joint ventures with local firms or specialists. Joint ventures may indeed be useful as they help to stimulate economic activity in the recipient country and also serve to ensure that local technicians are able to operate and maintain the equipment being deployed.

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In addition to a paucity of technical knowledge, the promotion of inappropriate or unproven technology has hampered effective technology transfer in the past. Donor promotion of specific technology has served to send inaccurate market signals and stimulate interest in technology that was not suitable for tropical environments. This thesis has highlighted the fact that such technologies were often priced above market rates and have brought additional costs to SIDS when these devices need repair or maintenance.

6.8.2 Political Rivalry and Donor Competition

There is a significant degree of political prestige and suasion that accompanies the provision of aid. Hattori (2001) argues that ―what most clearly defines foreign aid is the symbolic power politics between donor and recipient‖. Thus, in addition to being obliged to purchase goods or services from the donor (Suwa-Eisenmann and Verdier, 2007) aid has been widely use to promote or secure adherence to specific political ideologies, such as democracy (Brown, 2005; Ehrenfeld, 2004; Hook, 2008). This is in part due to the fact that some degree of political goodwill that inclines the recipient nation to align its foreign and economic policy to be congruent with the interests of the donor country.

The competition between donors described during the interviews by Vidal (Principal Director for Energy, Ministry of Mining & Energy, Jamaica) and Gischler (Senior Energy Specialist, Inter-American Development Bank) was therefore suggested to be indicative of a wider geopolitical struggle for prestige, prominence and influence in the Caribbean and Pacific (Gischler, 2011, Thesis Interview; Williams, 2011, Thesis Interview). Joseph Williams (Programme Manager, Energy, The Caribbean Community, [CARICOM]) went further, adding that aid from donor agencies is indeed linked to wider political objectives (Williams, 2011, Thesis Interview). As an example, Williams and Jason Timothy (Project Coordinator, Geothermal Project Management Unit, Dominica) both argued that aid provided by the USA and France for geothermal exploration and development in the Caribbean was indeed linked to the potential benefits that could be accrued through the export of power to their overseas territories in the region: namely Puerto Rico, Guadeloupe and Martinique (see section 5.7.1.2) (Timothy, 2011, Thesis Interview; Williams, 2011, Thesis Interview). Yet even beyond this, Williams (2011, Thesis Interview) pointed out that aid from metropolitan countries (especially the USA) to the energy sector in the Caribbean may also be an attempt to counter-balance the geopolitical influence exerted by Venezuela primarily via its ―Petro-Caribe‖ initiative (through which nations in the region can purchase oil at set prices under a deferred payment scheme119). In the Pacific, Heckelman and Knack (2008) argue that aid to Pacific island economies has often been tied to trade benefits accrued to donor nations. Rhiannon (1995), in her observations of Australian energy aid postulated that ―every time Australia provides money to a developing nation either directly or via the World Bank for a coal related project, we are effectively creating future markets for Australian coal.‖ (Yu, 1998; Rhiannon, 1995).

119 PetroCaribe was established by the government of Venezuela in 2005, allowing Caribbean nations to access purchase oil at set prices under a deferred payment scheme.The scheme also includes direct assistance with the transportation and storage of petroleum products, in order to help stabilise the cost of transport by removing the need for private sector participation in this sector. 241

This thesis also provides evidence to support the claim that energy aid to SIDS in the Caribbean and Pacific was at times tied to the implementation of specific policies (or, in some cases, to agreements not to pursue other political objectives or principles120). Notwithstanding this, while political suasion can be used to support a transition to sustainable energy or to help resolve global environmental problems (Naito, 2003), it is not uncommon for such issues to be sidelined in light of more traditional security concerns and economic interests (Hook, 1998). This research has provided evidence to show that aid projects based primarily on the achievement of political objectives may not account for or prioritize long term implications or factors like climate change or peak oil but may only reflect short term interests. In fact, expert opinion expressed in the academic literature, as well as Peter Johnston (Environmental and Energy Consultants, Ltd.) and Tony Weir (Programme Manager, Pacific Centre for Environment & Sustainable Development, University of the South Pacific), made it clear that energy aid in SIDS in the past has wavered based upon the priorities of donors and the political importance of energy issues and not due to environmental concerns (Johnston, 2010, Thesis Interview; Lloyd, 1994; Weir, 2010, Thesis Interview; Yu, 1998; Yu et al., 1996).

As a result, this research confirms that aid disbursements to the energy sector in the Caribbean and Pacific between 1970 and 2010 were indeed influenced by short term political interests – often related to the cost of energy imports but also towards wider political and economic objectives.

This thesis therefore suggests that an environment of political expediency and donor competition is not conducive to a long term focus on curbing fossil fuel use or enhancing sustainability energy use – as both donor entities and recipient nations tend to focus on meeting their respective short term project quotas or political objectives.

6.8.2.1 Summary: Political Rivalry & Donor Competition

International aid to the power sector in SIDS has in the past been used to promote political objectives or ideologies. In tandem therefore, external assistance to the sector has wavered, based upon the political importance of energy. This thesis therefore asserts that aid allocations should be based upon the accomplishment of long term national strategic goals for the energy sector, rather than being based upon short term political objectives.

6.8.3 Loan Dominated Aid & Debt Accumulation

As illustrated in the results chapter of this thesis, 89 percent of the financial assistance rendered by donor entities to SIDS in the Caribbean and Pacific was disbursed in the

120 During the Cold War, many developing nations (especially Caribbean island states) were awarded aid by Western nations in return for not pursuing communist policies. See: Ehrenfeld, D. 2004. Foreign Aid Effectiveness, Political Rights and Bilateral Distribution. Journal of Humanitarian Assistance. 242 form of loans. To add to this (as mentioned in the case studies of this thesis), 92 percent of all energy aid from the World Bank Group and 89 percent of energy aid from the Asian Development Bank was awarded in the form of loans, while 88 percent of Inter- American Development Bank assistance to the energy sector in the Caribbean was loan funded. However, this research also revealed that most of the loan financing disbursed to Caribbean and Pacific SIDS was awarded on concessionary terms through institutions or mechanisms formed to assist poorer nations; namely, the International Development Association (IDA), the Asian Development Fund (ADF) and the IDB‘s Fund for Special Operations (FSO). However, loans disbursed to wealthier countries (nations with a higher GNP per capita) like Barbados, Jamaica, Trinidad and Tobago, Fiji and Papua New Guinea121 were not likely to have been on concessionary terms. In this regard, this thesis suggests that state authorities seeking to transition to sustainable energy in such countries need to consider the long term implications (in terms of debt accumulation) of acquiring renewable and energy conserving technologies via loan/debt financing. Debt accumulation is particularly worrisome due to the principle of compound interest, where even a small amount of interest can accrue and result in an increased amount debt over a long period of time if the loan remains unpaid. Alternative funding mechanisms, such as equity financing to facilitate joint ventures between donor agencies and power utilities (or IPPs) should therefore be explored.

Another problematic implication of utilising debt financing to acquire sustainable energy technologies, is that there is a link between debt and resource depletion in SIDS (see Chapter 3). Mackay and Probert (1995) state that ―developing countries are heavily overexploiting their natural resources in a vain attempt to pay off their crippling debt to the developed countries‖. Indeed, due to the limited resource base of SIDS, a number of nations in the Caribbean and Pacific have already been driven to the point or brink of resource depletion as a result of economic pressures like debt accumulation and high import bills (Briguglio, 1995). Briguglio (1995) asserts that ―some SIDS have experienced depletion or near depletion [of resources]...for example, in the case of Fiji (gold), Vanuatu (manganese), Haiti (bauxite), Nauru (phosphate) and Trinidad and Tobago (oil)‖. The stress placed on island economies by debt coupled with high oil prices therefore cannot be understated. As articulated by Yu and Taplin (1998) in reference to the Pacific region, in the past ―in order to pay for imported petroleum, Pacific Island nations have had to increase exports of timber, cash crops and marine products‖.

Debt accumulation, in some cases, can therefore be said to have the twin impacts of exacerbating reliance on donors for financial assistance and accelerating resource depletion. In both cases, the ability of future generations to continue or embark upon a transition to a sustainable energy future is compromised.

It would perhaps be remiss not to highlight that problems related to debt accumulation are becoming more of a pressing concern across the globe, particularly in developed economies. In recent times, rising debt levels in countries that have traditionally been donor nations has also been underscored as a threat to future sustainable development

121 Papua New Guinea often receives funds on ‗blended‘ terms; that is, using a mix of concessionary and ordinary/near market conditions. 243

(Jackson, 2009). To solidify the concern about rising debt levels, Heinberg (2011a) postulates that ―debt has grown faster than economic output in all but one of the past 50 years‖. Mounting levels of debt worldwide bring to the forefront serious concerns not merely about repayment but also about the potential ecological impacts of the increased resource extraction that might be necessary to raise the funds required to service debt repayments.

6.8.3.1 Summary: Loan Dominated Aid & Debt Accumulation

In sum therefore, a great majority (89 percent) of the funds released from donor entities to Caribbean and Pacific SIDS was disbursed in the form of loans. Though many island nations were able to access debt finance on concessionary terms, wealthier SIDS borrowed funds at market rates for energy projects, leading to concerns related to debt accumulation. It has been noted that mounting debt not only exacerbates dependence upon donors but has also contributed to resource depletion. As a result, this thesis asserts that in order to ensure that future generations are in possession of adequate financial and physical resources to transition to a sustainable supply of electricity, closer attention should be paid to reducing the degree of loan finance being accessed. This is particularly important for island states like Jamaica and Papua New Guinea that tend to receive loans at near-market rates and conditions. Yet, it should be recalled that concerns related to debt accumulation are in no way restricted to SIDS and that rising debt levels across the globe remain an important threat to sustainable development worldwide.

6.8.4 Summary of Other Research Findings (not covered in Numbers 1-4)

In light of the dearth of national financial resources within Caribbean and Pacific SIDS, it seems certain that funding from donor entities has not only been necessary but also useful in the acquisition of energy infrastructure. Within this context, this research found that energy aid to Caribbean and Pacific, at times served to promote the technologies and political interests of donor nations. Hence, this thesis asserts that island states in the Caribbean and Pacific need to ensure that the provision of aid does not serve to facilitate the acquisition and deployment of inappropriate or unproven technologies. Instead, state authorities should ensure that technology and fuel choices are being driven by local requirements and development plans, and not by the economic interests of donor nations. Nonetheless, while aid may represent or reflect the geopolitical interests of the countries from which funds emanate, if a transition to sustainable energy sources is to be achieved, SIDS need to ensure that policy and planning decisions are based on the strategic national long-term objectives of enhancing energy efficiency and shifting power production from being fossil fuel based to renewable-energy driven. Furthermore, the problematic implications of relying on debt finance to execute energy projects need to be considered, both in terms of debt accumulation and resource depletion – particularly for countries that do not receive such finance on concessionary terms, such as Jamaica and Papua New Guinea.

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6.9 Summary of Discussion

It seems clear that international aid has a role to play not only in abating the impacts of high oil prices (through technical and financial support), but also in acquiring renewable and energy conserving technologies and in facilitating the formulation of energy policies. However, inasmuch as assistance provided by donor agencies has been useful to SIDS seeking to transition to a sustainable supply of electricity, it seems clear from the interviews conducted that the conditions through which such support is accessed has (at times) been unhelpful.

To begin, this research confirms that international aid to Caribbean and Pacific SIDS has often been provided in order to encourage market-oriented reforms. It is quite likely that this was driven by a neo-liberal paradigm that sought to promote free trade and competition in order to promote economic development (a school of thought known as the ‗Washington Consensus‘). Assistance to the energy sector has therefore often been made conditional upon reforms requiring liberalisation of the power sector. In tandem therefore, this thesis has provided evidence to illustrate that privatisation and deregulation (in order to cater for independent power producers) led, inter alia, to a pronounced focus on economic efficiency and the financial returns of projects rather than on a transition to sustainable energy.

To add to this, this research also argued that the practice of tying aid to the export of technologies produced in donor countries has in some cases served to hinder progress toward a sustainable energy transition. Tied aid can also potentially result in SIDS acquiring technologies that are not suited to their local environments and at prices above those on the international market. It was also highlighted that acquiring such technologies has in some instances, committed recipient nations to the costs of maintenance and sourcing spare parts. Hence, this thesis argues that SIDS seeking to utilise aid to transition to sustainable energy need to consider how to balance the competing political interests of donor entities seeking to secure their fill of projects during the financial year, and the strategic interests and objectives of their own national development plans.

Furthermore, the project data collected and the interviews conducted provided sufficient evidence that SIDS in the Caribbean and Pacific intend to continue utilising fossil fuels for power generation for the foreseeable future. In this regard, natural gas is being viewed as a ‗transition fuel‘ (particularly in the Caribbean). While this research did highlight the perspectives of some commentators that registered their objections to enhancing the use of natural gas for power generation, it also revealed that there was widespread consensus surrounding the need for renewable electricity to remain the long-term goal and objective of a sustainable energy transition. Simultaneously therefore, this thesis also noted that there was a significant degree of interest in renewable energy and energy conserving technologies in both regions, particularly within the context of reducing vulnerability to high oil prices. Interestingly however, what was most absent from the responses of those interviewed, the energy projects implemented by donors, and the energy policy documents of Caribbean and Pacific SIDS, was a focus on behavioural change and demand-side measures aimed at lowering overall energy consumption. Instead, the primary focus remained on the acquisition and deployment of power generating equipment. While this may indeed be understandable

245 on islands where access to electricity is low (and an expansion of power generating capacity is therefore required), a greater focus on public education and reducing consumption may yield efficiency gains and help to move SIDS toward long term sustainability.

Finally, this thesis propounds that in seeking to transition to cleaner technologies, island economies should be weary of the impact of doing so via loan funding. In this regard, this thesis argues that the loan intensive nature of energy aid in the Caribbean and Pacific between 1970 and 2010 is a cause for concern, particularly for countries like Jamaica and Papua New Guinea that have accessed loans at market or near-market rates and conditions. A greater degree of scrutiny (along with a thorough canvassing of alternative options) is therefore required on the part of state authorities when attempting to acquire energy devices via loan finance.

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In this chapter, the results of this research project were detailed in light of the prevailing views expressed within academic literature. The chapter that follows will briefly review what has been covered in each chapter of the thesis. The major findings of this research project will then be summarised and recommendations made. In addition, as the chapter concluding this thesis, potential areas of future research will be highlighted.

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Chapter 7. Conclusions & Recommendations

7.1 Conclusions

This chapter will outline the conclusions of this research. Following this, a brief discussion of the conclusions will be presented before a few recommendations are made. This chapter will then conclude by advancing possible areas for future research.

This research set out to respond to the thesis: ―International aid (from donor agencies and entities) has contributed significantly to a sustainable transition in the power sector in Small Island Developing States (SIDS) in the Caribbean and Pacific‖. In responding to this thesis, (as explained in Chapter 1.3) this research has sought to:

a. Assess the energy projects of international donors in the Caribbean and Pacific so as to give some indication of the focus of these agencies between 1970 and 2010, specifically with reference to types of projects that received funding (i.e. projects focused on renewable energy, energy efficiency or fossil fuels). b. Investigate whether international aid has facilitated the acquisition and deployment of renewable and energy conserving technologies. c. Highlight key barriers, challenges and development constraints encountered by government and development agencies. d. Give some indication of the degree of dependence that recipient nations in the Caribbean and Pacific have on external financial assistance - with specific reference to the development of the power sector

In light of the evidence that has been presented, it is safe to conclude that the majority of financial assistance from donor organisations active in the Caribbean and Pacific between 1970 and 2010 was channelled toward projects based around the use or deployment of fossil fuelled technologies. Upon closer examination of both regions however, it was found that in the Pacific, the largest portion of funding from donor entities was allocated to renewable energy project activities. The converse was true of the Caribbean region, where the majority of funds awarded were allotted to fossil fuelled projects.

This thesis therefore concludes that donor entities have played a pivotal role in acquiring energy technologies as well as in formulating and developing energy policies in the Caribbean and Pacific. That said, while this thesis does recognise that some progress has been made toward a renewable energy transition, it also argues that the pace of the uptake of alternative energy technologies has been too slow.

This research also concludes that SIDS face considerable barriers related to, inter alia, limited human, financial and natural resource bases, a lack of accurate and reliable energy data, a lack of political will (to transition to renewable electricity), a lack of clear policy and legislation as well as the small size of their electricity markets. Special note was also made of the lack of professional, legal and commercial skills in Caribbean and

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Pacific SIDS. If a transition to greater utilisation of renewable energy sources is to occur, then the barriers related to a dearth of human, financial and natural resources (particularly those related to access to land) must be tackled alongside the challenges that SIDS face due to the impacts of climate change and peak oil.

This research also makes it safe to conclude that SIDS are very dependent upon donor entities to provide the financial and technical resources required to acquire and install renewable and energy conserving technologies. In fact, it was shown that on most occasions, investments in new energy infrastructure are rarely ever made without the insertion of funding from international development agencies. Further, evidence was provided to support the finding that SIDS are also dependent upon donors to assist in the formulation of energy policy and legislation and for the provision of commercial and professional skills (particularly those related to negotiating with prospective developers and to project management).

In addition, this research has also served to unveil the link between aid disbursements to the energy sector and oil prices. In the case of both the World Bank Group (WBG) and the Asian Development Bank (ADB), energy aid disbursements showed a positive correlation to high oil prices, especially in the Pacific region where the correlations were stronger than those found for the Caribbean. Moreover, the results show a timely response to the rise in oil prices particularly on the part of the ADB.

This research also confirms that the assistance provided by donor entities to the Caribbean and Pacific SIDS between 1970 and 2010 was dominated by debt/loan finance. However, it should also be noted that a great portion of these funds were provided on concessionary terms and below market rates. Wealthier islands nations, such as Trinidad and Tobago, Jamaica, Barbados and Fiji have received loans at market rates and under stricter terms and should therefore take into account the adverse implications of accumulating debt in order to purchase and install energy infrastructure. Yet still, because compound interest does accrue over time, all SIDS should consider alternatives to loan funding, such as equity financing.

This research has also found that donor entities made very deliberate attempts to encourage and facilitate private sector participation in the power sector. This became evident through the explicit support of several donors featured in this section 4.6, namely the WBG, ADB and IDB, for privatisation of electric utilities and through the promotion of Independent Power Producers (IPPs). It was noted that the privatisation of utilities occurred to a greater extent in the Caribbean, which was likely to be related to structural adjustment programs undertaken by the International Monetary Fund (IMF), throughout Latin America and the Caribbean. Notwithstanding this, greater attention is now being paid to regulation of the power sector, particularly as it relates to the inclusion of IPPs.

It also became evident that there were problems pertaining to the delivery of energy aid to Caribbean and Pacific SIDS. In some cases, energy technologies financed by aid agencies were tied to the promotionof specific devices from donor nations. This had the effect of sending inaccurate market signals and stimulating interest in equipment that would not have existed without the input of donor entities and could not be sustained in their absence. Inappropriate technologies not suited to tropical environments were at times deployed on islands where there was no local capacity (i.e. skill) or spare parts to

248 cater for repair or maintenance. A lack of coordination amongst donor entities also adversely affected the efficacy of assistance to the energy sector in the Caribbean and Pacific. However, this thesis also noted that efforts are afoot in both regions to enhance communication and coordination amongst donor entities, particularly to reduce project duplication.

This research has also shown that insufficient attention has been placed on energy efficiency initiatives as well as public education programs aimed at encouraging behavioural change with regards to energy consumption and conservation. It is the opinion of the author that this is perhaps to due to the emphasis placed on extending electricity to unserved areas, especially in countries with low rates of access to power. Placing less focus on energy efficiency and conservation may also be due to the fact that reducing electricity consumption can lead to less economic returns in comparison to purchasing power generating equipment which facilitates increased sales for the project developer (selling the technology) and the utility (from the sale of electricity).

Finally, this research has concluded that international aid has not been always altruistic. Rather, it has often served to further the geopolitical and economic interests of donor nations. Aid to the energy sector in the Caribbean and the Pacific has therefore, at times, served as a form of functional cooperation through which business opportunities could be sought for project developers from donor nations. It has also served as a mechanism through which sustainable sources of energy could be sourced for overseas territories and dependents of donor countries (as shown in the case of the electricity interconnection in the Caribbean – see section 5.7.1.2). As a result, this thesis asserts that Caribbean and Pacific nations receiving funds from international development agencies should ensure that aid projects are congruent with their national development objectives as well as with their strategic plans for the development of the power sector.

7.2 Recommendations:

This thesis therefore advances the following recommendations:

 Project implementation through joint ventures should be encouraged with enhanced participation from the recipient countries

 Greater emphasis should be placed on skill transfer and capacity building – especially as it relates to professional and commercial skills.

 Greater emphasis should be placed on Public Education & Engagement – toward energy conservation, by government agencies and utilities

 Efforts should be made to streamline, standardise and strengthen the collection of energy-related statistics

 Enhanced communication should be established amongst donors entities, especially in the Caribbean

 Climate change and peak oil mitigation and adaptation should be mainstreamed into the planning of energy policies and projects

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These recommendations will now be discussed in more detail.

7.2.1 Promote project implementation through joint ventures

Given the significant human and financial resource limitations that SIDS face (as outlined in Chapter 5), and in light of the fact that foreign expertise is often brought in by donors for project execution, ensuring that energy projects are implemented in partnership with local firms could be invaluable to building local capacity. Combining foreign expertise and local knowledge can not only serve to ensure adherence to international best practices and standards, but it can also help to guarantee that methodologies and technologies being deployed are appropriate to local conditions. This is particularly important, as it was clear from this research that failure to account for and adjust to local circumstances has caused many problems in past project implementation (see section 6.8.1). In sum therefore, implementing donor projects via joint ventures can serve as a mechanism for technology and skill transfer. In this way, local technical expertise and capability can be developed and benefit from international best practices.

7.2.2 Greater emphasis should be placed on skill transfer and capacity building – especially as it relates to professional and commercial skills.

As revealed in this thesis, Caribbean and Pacific SIDS currently grapple with a severe shortage of locally-available professional, legal and commercial services (see section 5.2). Island nations in both regions were at times unable to engage in complex commercial negotiations with prospective IPPs or to formulate or draft important legal agreements, which in turn have perpetuated a reliance on donor entities to provide these services. Thus, aside from training and technical capacity building that is largely geared toward the operation and maintenance of energy technologies, emphasis should be placed on developing professional, commercial and legal skills in SIDS. Skill transfers should also include training pertaining to meeting the general and technical stipulations of donor entities when submitting project proposals in order to receive funding by aid agencies. Moreover, efforts should be made to ensure that personsare retained in the recipient countryaftertraining is complete, perhaps through obligatory service to local state agencies or power utilities.

7.2.3 Greater emphasis should be placed on Public Education & Engagement – toward energy conservation, by government agencies and utilities

In addition to the current thrust to acquire energy-related equipment, a much greater emphasis on public education (particularly focused on energy efficiency and conservation) is required in order for a sustainable transition in the power sector to occur. State agencies and utilities therefore need to encourage end users not only to

250 purchase more energy efficient devices but also to be thriftier in their consumption of energy. In this regard, efforts on the part of state agencies and utilities to lower their own energy consumption may be a useful tool to encourage the general public to do the same.

7.2.4 Efforts should be made to streamline, standardise and strengthen the collection of energy-related statistics

A lack of data was recognised (in Chapter 5) as a significant barrier to a sustainable energy transition in the power sector. The collection of accurate and reliable energy statistics should therefore be viewed as a priority. The Caribbean Energy Information System (CEIS) has already embarked upon the task of collating and centralising energy data collection for the Caribbean region. A similar mechanism may indeed be useful in the Pacific. However, in both regions, streamlining energy data according to the ―International Recommendations for [the collection of] Energy Statistics‖ as advanced by United Nations Statistics Division in 2011 (United Nations Statistics Division, 2011), may be prudent and helpful, particularly in terms of being able to collaborate, share and exchange information with other nations and regions.

7.2.5 Enhanced communication should be established amongst donor entities, especially in the Caribbean

Strengthening and improving the existing fora for communication among donor entities is perhaps the simplest means of enhancing collaboration and reducing project duplication. As noted in section 5.6.3, the ―Pacific Energy Donors Working Group‖ was formed toward the end of 2008 to increase communication among aid agencies, foster greater cooperation and to help minimise the duplication of project activities. The author recommends that a similar mechanism be considered for the Caribbean region. In the Caribbean, donors meet only once a year (as a side event of a larger energy conference) to provide updates on their activities in the region. More in-depth and frequent meetings (perhaps similar to the quarterly meetings held by the aforementioned Working Group in the Pacific) can indeed serve to enhance collaboration and facilitate an exchange of ideas amongst donors in order to optimise their assistance to the power sector in the Caribbean.

7.2.6 Climate change and peak oil mitigation and adaptation should be mainstreamed into the planning of energy policies and projects

As SIDS are and will continue to be impacted by the mutually reinforcing impacts of climate change and peak oil (see section 3.6), both energy policies and project activities need to be formulated so as to increase the resilience of the power sector in Caribbean and Pacific nations to these phenomena. Initiatives seeking to aid a transition to sustainable energy sources should therefore also aim to boost the adaptive capacity of the power sector to cope with the impacts of climate change (including more intense and more frequent cyclones). Simultaneously, as peak oil is likely to exert upward pressure

251 on oil prices, reducing the reliance of SIDS on fossil fuelled power should be viewed as an urgent priority. In this regard, concerns related to climate change and peak oil should be mainstreamed (i.e. made a central consideration) not only as it pertains to policy formulation and acquiring energy technologies, but also with respect to public engagement and education.

7.3 Scope for Further Research

In light of the findings and conclusions of this research, the following questions are hereby proposed for further investigation:

I. What are the technical, legal, geo-political and socio economic ramifications of the proposed subsea electricity interconnection in the Caribbean?

II. What political, legal and economic provisions are required to enable or support bulk fuel procurement in both the Caribbean and Pacific?

III. What actions or measures can and should be taken at national, regional and international levels to enhance the capacity of Small Island Developing States to take greater advantage of the UNFCCC Clean Development Mechanism? How can the mechanism be reformed to aid sustainable energy development in SIDS?

IV. What frameworks or regulations currently exist to cater for the collection and analysis of energy statistics in the Caribbean and Pacific? How do they vary and how can they be improved?

V. Has international aid (from donor agencies and entities) contributed significantly to a sustainable transition in the transportation sector in Small Island Developing States (SIDS) in the Caribbean and Pacific?

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Appendices

Appendix I: List of Countries included in this study

The list of primary countries that will be considered in thesis are as follows:

Self-governing, full members of the Self-governing members of the regional grouping known as the Secretariat of the Pacific Community Caribbean Community (CARICOM) (SPC) that are Small Island Developing States (SIDS)

N.B. Montserrat is a member of N.B: American Samoa, French CARICOM but it is a British Overseas Polynesia, Guam, New Caledonia, Territory and is not self-governing. Northern Mariana Islands, Pitcairn Islands, Tokelau and Wallis and Futuna are members of the SPC but are not self-governing.

284

Appendix II: Members of organisations featured in Case Studies

285

Asian Development Bank (ADB) Members

Samoa Regional Members Singapore Afghanistan Solomon Islands Armenia Sri Lanka Australia Taipei, China Azerbaijan Tajikistan Bangladesh Thailand Bhutan Timor-Leste Brunei Darussalam Tonga Cambodia Turkmenistan China, People's Republic of Tuvalu Cook Islands Uzbekistan Fiji Vanuatu Georgia Viet Nam Hong Kong, China Non-Regional Members India Austria Indonesia Belgium Japan Canada Kazakhstan Denmark Kiribati Finland Korea, Republic of France Kyrgyz Republic Germany Lao PDR Ireland Malaysia Italy Maldives Luxembourg Marshall Islands The Netherlands Micronesia, Federated States of Norway Mongolia Portugal Myanmar Spain Nauru Sweden Nepal Switzerland New Zealand Turkey Pakistan United Kingdom Palau United States Papua New Guinea Philippines

*Pacific SIDS included in this study are emphasised in bold and italics

286

Asian Development Fund (ADF) Eligibility

ADB recipient nations eligible to receive funds from the Asian Development Fund (on concessionary/below market rates and terms)

Afghanistan Bhutan Cambodia Kiribati Kyrgyz Republic Lao People‘s Democratic Republic Maldives Nauru Nepal Samoa Solomon Islands Tajikistan Tonga Tuvalu Vanuatu

ADB recipient nations eligible to receive funds from the under ordinary or ‗blended‘ terms or from the Asian Development Fund:

 Armenia  Bangladesh  Georgia  Republic of Marshall Islands  Federated States of Micronesia  Mongolia  Pakistan  Palau  Papua New Guinea  Sri Lanka  Timor-Leste  Uzbekistan  Viet Nam

Source: (Asian Development Bank, 2012c)

287

Inter-American Development Bank (IDB) Member Countries

Non-borrowing Borrowing Countries countries Argentina Austria The Bahamas Belgium Barbados Canada Belize China Bolivia Croatia Brazil Denmark Chile Finland Colombia France Costa Rica Germany Dominican Republic Israel Ecuador Italy El Salvador Japan Guatemala The Netherlands Guyana Norway Haiti Portugal Honduras Republic of Korea Jamaica Slovenia Mexico Spain Nicaragua Sweden Panama Switzerland Paraguay United Kingdom Peru United States Suriname Trinidad & Tobago Uruguay Venezuela

*Caribbean SIDS included in this study are emphasised in bold and italics Source: (Inter-American Development Bank, 2012b)

288

IDB Fund for Special Operations (FSO) Eligibility

Recipient nations eligible to receive financing from the Inter-American Development Bank Fund for Special Operations (FSO) on concessionary/below market terms or conditions:

 Bolivia  Guyana  Honduras  Nicaragua  Haiti

Though Haiti has traditionally benefited from the FSO resources, it received exclusively grants from the Inter-American Development Bank since 2007.

Source: (Inter-American Development Bank, 2012ba).

289

International Bank for Reconstruction and Development (also known as the World Bank) Member Countries

Congo, Rep. Afghanistan Costa Rica Albania Cote d'Ivoire Algeria Croatia Angola Cyprus Antigua and Czech Republic Barbuda Denmark Argentina Djibouti Armenia Dominica Australia Dominican Republic Austria Ecuador Azerbaijan Egypt, Arab Rep. Bahamas, The El Salvador Bahrain Equatorial Guinea Bangladesh Eritrea Barbados Estonia Belarus Ethiopia Belgium Fiji Belize Finland Benin France Bhutan Gabon Bolivia Gambia, The Bosnia and Georgia Herzegovina Germany Botswana Ghana Brazil Greece Brunei Darussalam Grenada Bulgaria Guatemala Burkina Faso Guinea Burundi Guinea-Bissau Cambodia Guyana Cameroon Haiti Canada Honduras Cape Verde Hungary Central African Iceland Republic India Chad Indonesia Chile Iran, Islamic Rep. China Iraq Colombia Ireland Comoros Israel Congo, Dem. Rep. Italy

290

Jamaica Panama Japan Papua New Guinea Jordan Paraguay Kazakhstan Peru Kenya Philippines Kiribati Poland Korea, Rep. Portugal Kosovo Qatar Kuwait Romania Kyrgyz Republic Russian Federation Lao People's Rwanda Democratic Republic Samoa Latvia San Marino Lesotho Sao Tome and Liberia Principe Libya Saudi Arabia Lithuania Senegal Luxembourg Serbia Macedonia, FYR Seychelles Madagascar Sierra Leone Malawi Singapore Malaysia Slovak Republic Maldives Slovenia Mali Solomon Islands Malta Somalia Marshall Islands South Africa Mauritania South Sudan Mauritius Spain Mexico Sri Lanka Federated States of St. Kitts and Nevis Micronesia St. Lucia Moldova St. Vincent and the Mongolia Grenadines Montenegro Sudan Morocco Suriname Mozambique Swaziland Myanmar Sweden Namibia Switzerland Nepal Syrian Arab Netherlands Republic New Zealand Tajikistan Nicaragua Tanzania Niger Thailand Nigeria Timor-Leste Norway Togo Oman Tonga Pakistan Trinidad & Tobago Palau Tunisia

291

Turkey Turkmenistan Tuvalu Uganda Ukraine United Arab Emirates United Kingdom United States Uruguay Uzbekistan Vanuatu Venezuela, RB Vietnam Yemen, Republic of Zambia Zimbabwe

*Caribbean and Pacific SIDS included in this study are emphasised in bold and italics.

Source: (World Bank, 2012a).

292

Countries featured in this study that are eligible for funding on concessionary terms via the International Development Association (IDA)

Pacific Caribbean Federated States of Micronesia2 Haiti Tuvalu2 Guyana3 Solomon Islands St. Vincent and the Grenadines1, 2 Marshall Islands2 Grenada 1, 2 Tonga2 Dominica1, 2 Samoa2 St. Lucia1, 2 Kiribati2 Vanuatu2 Papua New Guinea1

1 Blend countries 2 Small island economy exception 3 Borrowing on blend terms

Across the globe, 81 countries are eligible to access funding on concessionary terms from the IDA. Of these countries, 64 access funds solely from the IDA while 17 access funds on ‗blended‘ terms, that is, a mix of below market/concessionary and ordinary/near market terms. The small island economy exception applies to countries that may have a relatively high GNI per capita ―but lack the creditworthiness needed to borrow from the International Bank for Reconstruction and Development (IBRD)‖ (International Development Association, 2012).

Source: (International Development Association, 2012).

293

International Finance Corporation (IFC) Members

Albania Afghanistan Angola Algeria Argentina Antigua and Barbuda Australia Armenia Azerbaijan Austria Bahrain Bahamas Barbados Bangladesh Belgium Belarus Benin Belize Bolivia Bhutan Botswana Bosnia and Herzegovina Bulgaria Brazil Burundi Burkina Faso Cameroon Cambodia Cape Verde Canada Chad Central African Republic China Chile Comoros Colombia Congo, Republic of Congo, Democratic Republic of Cote d'Ivoire Costa Rica Cyprus Croatia Denmark Czech Republic Dominica Djibouti Ecuador Dominican Republic El Salvador Egypt, Arab Republic of Eritrea Equatorial Guinea Ethiopia Estonia Finland Fiji Gabon France Georgia Gambia, The Ghana Germany Grenada Greece Guinea Guatemala Guyana Guinea-Bissau Honduras Haiti Iceland Hungary Indonesia India Iraq Iran, Islamic Republic of Israel Ireland Jamaica Italy Jordan Japan Kenya Kazakhstan Korea, Republic of Kiribati

294

Kuwait Kosovo Lao People's Democratic Republic Kyrgyz Republic Lebanon Latvia Liberia Lesotho Lithuania Libya Macedonia, FYR of Luxembourg Malawi Madagascar Maldives Malaysia Malta Mali Mauritania Marshall Islands Mexico Mauritius Moldova Micronesia, Federated States of Montenegro Mongolia Mozambique Morocco Namibia Myanmar Netherlands Nepal Nicaragua New Zealand Nigeria Niger Oman Norway Palau Pakistan Papua New Guinea Panama Peru Paraguay Poland Philippines Qatar Portugal Russian Federation Romania Samoa Rwanda Saudi Arabia Sao Tome and Principe Serbia Senegal Sierra Leone Seychelles Slovak Republic Singapore Solomon Islands Slovenia South Africa Somalia Spain South Sudan St. Kitts and Nevis Sri Lanka Sudan St. Lucia Swaziland Suriname Switzerland Sweden Tajikistan Syrian Arab Republic Thailand Tanzania Togo Timor-Leste Trinidad and Tobago Tonga Turkey Tunisia Uganda Turkmenistan United Arab Emirates Ukraine United States United Kingdom Uzbekistan Uruguay Venezuela, Republica Bolivariana Vanuatu de

295

Yemen, Republic of Vietnam Zimbabwe Zambia

Caribbean and Pacific SIDS included in this study are emphasised in bold and italics.

Source: (World Bank, 2011c).

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Appendix III

Letter to Request Data from Donors

297

Good day,

My name is Keron Niles and I am currently enrolled as a PhD Candidate in the field of Energy Studies at the University of Otago (New Zealand). I am currently undertaking an analysis of the financial assistance afforded to Small Island Developing States in the Caribbean and Pacific in order to acquire renewable energy and energy efficiency technologies. In this regard, the work of your organisation is critical to my research.

As a result, I am now attempting to develop a model of financial aid/assistance disbursed to developing Caribbean and Pacific island states to support the energy sector in the areas of renewable energy and energy efficiency. The aim of the model will be to assess which forms of aid have contributed to a transition to sustainable sources of energy in the recipient countries. This data for the model will be organised according to the respective donor, the recipient, the amount approved and the form of assistance being rendered (such as Loans, Grants or In-kind support).

Finally, this study covers the period from 1970 to 2010. I would appreciate if you could fill out the form below with energy projects that your organisation has been involved in during the aforementioned period (in the fields of renewable energy and energy efficiency). The table below is meant to provide an example of how the data can be easily supplied. However, please feel free to provide any lists (or matrices) of energy sector assistance that you possess - in their existing formats, even if the time period or format is different. Alternatively, if you could direct me to where this information can be sourced (including online sources) that would be greatly appreciated. I would also be happy to speak with or interview any person whom you believe, would be able to assist.

It should be noted that the outcomes of this study will eventually be published and will inform energy sector development at the Regional level (in both the Caribbean and Pacific). It is therefore considered important that any contributions from your organization over the years to any of the countries or regional organizations, relevant to this study, be included.

Kindly confirm receipt of this letter. It would be greatly appreciated if you could indicate approximately how long it will take for you or your organisation to fulfil this request. If no response to this letter is received in fourteen days, I propose to contact your office to enquire into the status of this request and to answer any questions you may have.

Many thanks for your time and kind consideration.

Yours respectfully,

Keron Niles

Recipient Year Project Project Form of Current General Overall Country/ Name/ Cost* Assistance status of area Effectiveness/ Entity Title project covered Rating (1-5) by 5: Great Project success activity 1: Failure (Date of (in USD (Grant, Loan, (completed, (e.g. commencement/ $,000) In-kind cancelled, renewable project approval) support) on-going) energy, energy efficiency) * If the exact amount donated by the relevant organisation cannot be recalled or identified, please feel free to give an approximate value. However, please signify approximated values through the use of an asterisk (*). Department of Physics PO Box 56, Dunedin 9054, New Zealand Tel +64 3 479 7749 • Fax +64 3 479 0964 • Email [email protected] www.physics.otago.ac.nz www.physics.otago.ac.nz/eman

298

Appendix IV: GDP per capita and Population Data for the Caribbean and Pacific

Caribbean Small Island Developing States

Country Population in thousands GDP per capita (2010) (2010) Antigua and Barbuda 89 13,006.30 Bahamas 343 22,664.86 Barbados 273 15,034.88 Dominica 68 6,963.87 Grenada 104 7,499.52 Haiti 9,993 663.91 Jamaica 2,741 5,133.44 Montserrat 6 - Saint Kitts and Nevis 52 12,846.84 Saint Lucia 174 6,890.28 Saint Vincent and the 109 Grenadines 6,171.70 Trinidad and Tobago 1,341 15,613.73 Belize 312 4,064.40 Guyana 754 2,994.45 Suriname 525 8,292.46 Caribbean Total 16,886 127,840.64 Caribbean Average 1,126 9,131.47

299

Pacific Small Island Developing States

Country Population in thousands GDP per capita (2010) (2010) Fiji 861 3,686.99 Papua New Guinea 6,858 1,382.28 Solomon Islands 538 1,261.04 Vanuatu 240 2,874.62 Kiribati 100 1,518.65 Marshall Islands 54 3,015.21 Micronesia (Fed. States of) 111 2,678.20 Nauru 10 - Palau 20 8,369.75 Cook Islands 20 - Niue 1 - Samoa 183 3,249.37 Tonga 104 3,435.42 Tuvalu 10 3,190.39 Pacific Total 9,111 34,661.92 Pacific Average 651 3,151.08

Source of Population Data: United Nations, Department of Economic and Social Affairs

Source of GDP per capita Data: World Bank, 2012

300

Appendix V – Data relating Human Development Index Rankings of Caribbean and Pacific SIDS.

HDI Country Change in Ranka rank 2006– 2010– 2011 2011

47 Barbados -2 0 49 Palau -5 0 53 Bahamas -3 0 60 Antigua and Barbuda .. 1 62 Trinidad and Tobago 2 1 67 Grenada .. 0 72 Saint Kitts and Nevis .. 0 79 Jamaica -2 -1 81 Dominica -7 -1 82 Saint Lucia .. 0 85 Saint Vincent and the .. -1 Grenadines 90 Tonga -5 0 93 Belize -3 -1 99 Samoa -6 0 100 Fiji -5 -3 104 Suriname -3 0 116 Micronesia (Federated -5 0 States of) 117 Guyana 1 2 122 Kiribati .. 0 125 Vanuatu .. -2 142 Solomon Islands -5 0 153 Papua New Guinea 1 -1 158 Haiti -2 1 a – a positive value indicates an improvement in rank

Source: United Nations Department of Economic and Social Affairs (UNDESA), 2012

N.B.: The Human Development Index, according to the United Nations, is a composite index measuring average achievement in three basic dimensions of human development—a long and healthy life, knowledge and a decent standard of living.

301

Appendix VI – Land Size of Caribbean and Pacific SIDS, in square kilometres.

Antigua and 440 Fiji 18,270 Barbuda Kiribati 810 Bahamas, The 10,010 Marshall 180 Barbados 430 Islands Belize 22,810 Micronesia, 700 Dominica 750 Fed. Sts. Grenada 340 Palau 460 Guyana 196,850 Papua New 452,860 Haiti 27,560 Guinea Jamaica 10,830 Samoa 2,830 St. Kitts and Nevis 260 Solomon 27,990 Islands St. Lucia 610 Tonga 720 St. Vincent and the 390 Tuvalu 30 Grenadines Suriname 156,000 Vanuatu 12,190 Trinidad and 5,130 Pacific 517,040 Tobago Total

Caribbean Total 432,410

Source: World Bank, 2012

302

Appendix VII: Ethical Approval for this research

303

304

Appendix VIII – Full List of Energy Aid Projects to the Pacific Region

Table 8-1: Energy Aid to the Pacific between 1970 and 2010 (rounded to three significant figures)

Donor Recipient Year Project Name Aid form 2010 Approved $USD (000's)

ADB Samoa 1974 Technical assistance for Power Grant 7 Supply project (supplementary)

ADB Solomon 1976 Technical assistance for Lungga Grant 881 Islands Hydropower ADB PNG 1977 Technical assistance for Grant 360 Hydrological/Hydroelectric Planning ADB Solomon 1978 Technical assistance for Lungga Grant 228 Islands Hydropower (Supplementary) ADB Samoa 1979 Technical assistance for Tariff Grant 210 Study and Revaluation of Assets ADB PNG 1979 Technical Assistance for Grant 210 Electricity Tariff Review ADB Samoa 1980 Technical assistance for Grant 921 Feasibility Study of Fagaloa/Afulilo Hydropower Scheme

305

ADB Fiji 1983 Rural Electrification Study Grant 438

ADB PNG 1983 Technical assistance for the Grant 547 Institutional strengthening of the PNG Electricity Commission ADB Samoa 1983 Technical assistance for Energy Grant 324 Planning and Institutional Support ADB Solomon 1983 Technical assistance for Power Grant 328 Islands Development Study ADB Vanuatu 1983 Technical assistance for Energy Grant 324 Planning and Institutional Support ADB PNG 1984 Ramu - Port Moresby Grant 468 Transmission Interconnection Study ADB Samoa 1984 Technical assistance for Grant 525 Afiamalu Pump - Assisted Hydropower ADB Samoa 1986 Technical assistance for Grant 398 Improvement of Electric Power Corporation's Financial Management ADB Solomon 1987 Technical assistance for Grant 671 Islands Komarindi Hydropower ADB Vanuatu 1987 Technical assistance for Energy Grant 9 Planning and Institutional Support (Supplementary)

306

ADB Kiribati 1989 Feasibility study of the Power Grant 176 System Expansion in Tarawa ADB PNG 1989 Technical assistance for power Grant 906 system planning study ADB Samoa 1990 Consultancy Services Related to Grant 67 the Western Samoa Emergency Power Rehabilitation Loan ADB PNG 1991 Technical assistance for a Gas Grant 296 Based Power Generation Study ADB Marshall 1993 Technical assistance for Outer Grant 302 Islands Islands Electrification Study ADB Cook 1994 Technical Assistance: Outer Grant 368 Islands Islands Power Development Study ADB Samoa 1994 Technical assistance for Grant 515 institutional support and power development study for EPC ADB PNG 1995 Technical assistance for Grant 751 Hydrocarbon sector policy & strategy study ADB Tonga 1996 Institutional development of the Grant 0 Tonga Electric Power Board (TEPB) & for Rural Electrification ADB Kiribati 1998 Technical Assistance: Grant 1,610 Management & Financial Advisory Services for the Public Utilities Board

307

ADB Region- 1998 Impact Evaluation Study of n.a. wide Assistance to the Power Sector in the Pacific ADB Marshall 1999 Ebeye Health and Infrastructure Loan 1,200 Islands ADB Samoa 1999 Technical Assistance: Grant 196 Institutional Strengthening of EPC ADB PNG 2000 Technical Assistance: Review of Grant 412 Mining and Hydrocarbons Tax Regimes ADB PNG 2001 Technical Assistantance for Gas Grant 862 Pipeline Development ADB Samoa 2001 Power Sector Improvement Loan Project ADB Samoa 2001 Promotion Of Renewable Grant 6,160 Energy, Energy Efficiency and Greenhouse Gas Abatement (PREGA) ADB Fiji 2002 Technical Assistance: Rural Grant 485 Electrification Project ADB Samoa 2002 Technical Assistance: Preparing Grant 364 the Savai'i Renewable Energy Project ADB Regional 2003 Renewable Energy and Energy Grant 711 Efficiency Program (REEP) for the Pacific

308

ADB Federated 2004 Omnibus Infrastructure Loan 13,000 States of Development Project Micronesia ADB PNG 2005 Technical assistance: Preparing Grant 1,120 the PNG Gas Project ADB Nauru 2005 Technical Assistance: Reform of Grant 419 the Nauru Phosphate Corporation ADB Fiji 2006 Technical Assistance: Grant 757 Improving Infrastructure Services ADB Fiji 2006 Renewable Power Sector Grant 703 Development ADB Samoa 2007 Power Sector Expansion Project Loans & 44,100 Grants ADB Samoa 2007 Technical assistance: Grant 1,950 Implementing the Samoa National Energy Policy ADB PNG 2007 Technical Assistance for Power Grant 526 Sector Development Plan ADB Regional 2008 Technical assistance: preparing Grant 248 a response to high prices ADB Regional 2008 Technical assistance: Promoting Grant 1,420 Energy Efficiency in the Pacific ADB Samoa 2008 Technical assistance for Afulilo Grant 1,200 Environmental Enhancement

309

ADB Regional 2009 Technical Assistance: Grant 3,050 Promoting Access to Renewable Energy in the Pacific ADB PNG 2010 Town Electrification Investment Loan 57,300 Program, Tranche 1 ADB Marshall 2010 Improved Energy Supply for Grant 1,760 Islands Poor Households ADB Marshall 2010 Public Sector Program Loan 9,500 Islands ADB Samoa 1971 Technical assistance for Power Grant 345 Supply project ADB Fiji 1972 Power Expansion Project Loan 24,500

ADB Samoa 1973 Power Project Loan 11,290

ADB Samoa 1973 Technical assistance for Power Grant 184 (Project) ADB Samoa 1975 Power Project (Supplementary) Loan 5,670

ADB Samoa 1975 Technical assistance for Power Grant 59 [Project] (Supplementary) ADB PNG 1977 Provincial Mini-hydropower Loan 9,710 Project ADB Fiji 1978 Second Power Project Loan 54,144

ADB Fiji 1979 Fiji Electricity Authority Tariff Grant 210 Study

310

ADB Samoa 1979 Second Power Project Loan 10,500

ADB PNG 1979 Upper Warangoi Hydropower Loan 37,000

ADB Fiji 1981 Third Power Project Loan 38,000

ADB Kiribati 1986 Tarawa Power Loan 1,390

ADB Samoa 1986 Afulilo Hydroelectric Project Loan 10,700

ADB Solomon 1986 Power Expansion Project Loan 8,360 Islands ADB Solomon 1986 Technical assistance for Grant 430 Islands Upgrading of the Accounting and Management Information Systems in the Solomon Islands Electricity Authority (SIEA) ADB PNG 1986 Technical assistance for Divune Grant 298 hydro power ADB PNG 1986 Ramu Grid Reinforcement Loan 39,100

ADB Kiribati 1988 Power Distribution Project Loan 1,700

ADB Cook 1989 Power System Reinforcement in Grant Islands Rarotonga ADB PNG 1989 Divune Hydropower Project Loan 14,800

311

ADB Tonga 1989 Technical assistance for power Grant 176 development ADB Fiji 1990 Technical assistance to the Fiji Grant 267 Electricity Authority for tariff study ADB Solomon 1990 Second power extension project: Loan 7,840 Islands increase of diesel generating capacity ADB Solomon 1990 Technical assistance for Grant 2,170 Islands Komarindi Hydropower ADB Samoa 1990 Emergency (diesel) power Loan 834 rehabilitation projects in Savaii ADB Samoa 1990 Technical assistance for Grant 67 emergency (diesel) power rehabilitation projects in Savaii ADB Samoa 1990 Technical assistance for a power Grant 234 system planning study ADB Tonga 1991 Technical assistance for Grant 584 institutional and financial development of the Tonga Electric Power Board ADB Tonga 1991 Power development project Loan 11,700

ADB Federated 1992 Technical assistance for a power Grant 544 States of sector development project Micronesia ADB Samoa 1993 Afulilo Hydroelectric Power Loan 3,019 (Supp.)

312

ADB Tonga 1994 Technical assistance for second Grant 147 power development study ADB Fiji 1995 Institutional strengthening of the Grant 644 Fiji Electricity Authority ADB Federated 1995 Technical assistance: power Grant 451 States of system improvement and Micronesia institutional strengthening study ADB Tonga 1995 Technical assistance to plan Grant 143 more diesel electricity ADB Marshall 1995 Technical assistance for Ebeye Grant 286 Islands Power Development Study ADB Samoa 1995 Technical assistance to Grant 501 strengthen power sector management ADB Tonga 1997 Second power development Loan 6,800 project ADB Samoa 2001 Strengthening Energy Loss Grant 185 Reduction and Maintenance Management Capacity of the Electric Power Corporation ADB Samoa 2006 Technical assistance: Preparing Grant 811 the Power Sector Expansion Program ADB Fiji 2007 Renewable Power Sector Grant 263 Development (supplementary) ADB PNG 2008 Technical Assistance for Power Grant 1,220 Sector Development

313

ADB Regional 2009 Technical Assistance: Grant 2,900 Establishment of the Pacific Infrastructure Advisory Centre (Power Utility Benchmarking Component) ADB Regional 2009 Technical Assistance: Grant 5,050 Strengthening the Capacity of Pacific Developing Member Countries to Respond to Climate Change ADB &AusAid Multi- 2008 Promoting Energy Efficiency in N.A 11,700 country the Pacific (Phase II) AusAid Vanuatu 2008 Energy for Rural Development N.A 11,600 Program AusAid& Tonga 2008 Tonga Energy Roadmap N.A 9,690 NZMFAT & Implementation World Bank Australia Most 1982 Commonwealth Regional Grant N.A Pacific Renewable Energy Resources Island States Australia Fiji 1984 Mini hydro scheme for Wairiki Grant 17 Catholic Mission Australia Fiji 1989 Hydro Monasava long term Grant 593 review Australia Fiji 1990 Solar lighting for Kiuva Grant 157 Community Hall Australia Forum 1988 Small energy projects for Annual 129 Secretariat renewable energy Grant

314

Australia Tuvalu 1990 Solar lighting for police stations Grant 12 and quarters on outer islands Australia Samoa 1990 Afulilo hydro power project Grant 384

Canada Kiribati 1990 Solar fridges for outer island Grant 57 clinics (Phase I) Canada Kiribati 1991 Solar PV system monitoring Grant 16

Canada Kiribati 1989 Solar fridges for outer island Grant 106 clinics (Phase II) China PNG 2 mini hydro power schemes Loan N.A

China Vanuatu A mini hydro power scheme Loan N.A

China Fiji 1989 Bakuya hydro scheme Loan 1,100

China Fiji 1992 Wainikeu hydro scheme Loan 4,650

China Fiji 1993 Wind Energy Assessment Grant 4

CHOGRM/CFT Fiji, PNG, 1982 Technical assistance for Grant 1,060 C Solomon renewable energy Islands, Tonga, Tuvalu, Vanuatu, W. Samoa

315

EC Fiji 1993 Upgrading of PV lighting Grant 264 systems EC Region- 1994 Renewable sector training Grant 177 wide (under the Lome III Conventio n) EC Vanuatu 2007 Provision of renewable energy Grant 843 to 3 villages in Ambae Island (ACP-EU Energy Facility) EC Vanuatu 2007 Provision of renewable energy Grant 1,230 to 4 villages of North East (ACP-EU Malekula Island Energy Facility) EC Vanuatu 2007 Provision of renewable energy Grant 559 to two villages in Vanua Lava (ACP-EU Island Energy Facility) EC Vanuatu 2007 The answer is blowing in the Grant 581 wind (ACP-EU Energy Facility) EC Tonga 2010 Identifying RE & EE projects in N.A 6,630 Outer Islands EC Regional 2007 Support to Pacific Power N.A 1,730 Association EC Regional 2008 Implementing Regional Energy N.A 13,400 Policy

316

EC Kiribati 2010 Electrification of Outer Island in N.A 5,440 Gilbert Group EC Nauru 2005 2000 pre-payment meters and 40kWp of grid 2,500 connected PV EC Marshall 2005 Outer Island Electrification : 440 households 4,170 Islands and 6 schools through PV EC Marshall 2010 Outer Island Electrification N.A 5,970 Islands using Solar PV EIB Papua New 1986 Yonki Dam Hydroelectrique Loan 33,300 Guinea EIB Samoa 1988 Afulilo Hydro Power Loan 5,670

EIB Solomon 2009 Technical feasibility study for Grant 1,350 Islands the proposed Tina River Hydropower Development project EIB Vanuatu 2009 UNELCO Wind Power: Devil‘s Loan 6,100 Point wind farm (2.75 MWe) EIB Fiji 2006 Fiji Power Loan 33,300

EIB Fiji 1978 FIJI ELECTRICITY Loan 53,200 AUTHORITY EIB Fiji 1980 FEA II Loan 42,400

EIB Fiij 1981 FIJI ELECTRICITY Loan 32,100 AUTHORITY III

317

EIB Papua New 1993 ELCOM Loan 21, 200 Guinea TRANSMISSION/DISTRIBUT ION EIB Samoa 1981 SAUNIATU Loan 8,040

EU Samoa 1987 Afulilo hydro power project Grant 23,300

EU Fiji, PNG, 1984 Support for Renewable Energy Grant N.A. Solomon Technologies (under the Islands, Lome II Tonga, Conventio Tuvalu, n) Vanuatu, W. Samoa Forum Cook 1993 Solar equipment Grant N.A. Secretariat Islands, Federated States of Micronesia, Marshall Islands France Tuvalu 1985 200 PV batteries and controllers Grant N.A

France Cook 1991 Pukapuka solar lighting project Loan 1,990 Islands France Forum 1988 Small energy projects for Grant 258 Secretariat renewable energy France Kiribati 1992 Producing solar controllers Joint N.A Venture

318

GEF Region- 2007 Pacific Islands Greenhouse Gas Grant 5,500 wide Abatement through Renewable Energy Project (PIGGAREP) GEF/UNDP Region- 2003 Pacific Islands Renewable Grant 865 wide Energy Project Germany Fiji 1990 Wood stove project Grant 112

Germany Fiji 1991 Fuel wood project Grant 1,300

Germany Cook 1993 Wood stove projects Grant Project Islands, compone Kiribati, nt - total Solomon cost of Islands, USD$302 Tuvalu, Tonga, Vanuatu, W.Samoa Germany PNG 1993 Hydro power training program Grant Project compone nt - total cost of USD$302 Germany Solomon 1993 Hydro power scheme Grant Project Islands compone nt - total cost of USD$302

319

Germany Vanuatu 1994 A 3 year regional micro hydro Grant Project training & demonstration compone program nt - total cost of USD$302 Global Region- 1997 Pacific Islands Climate Change Grant N.A Environment wide Action Programme (PICCAP) Facility (GEF) IFC &AusAid& Solomon 2008 IFC Advisory Services for Tina N.A 2670 World Bank Islands River IPP Project IUCN Palau 2008 Energy Efficiency Home Loans Grant 506 Programme IUCN Tonga 2008 Solar Rehabilitation Project Grant 209

IUCN Samoa 2009 GHG Abatement through Grant 711 Energy Efficiency in the Land Transport Sector IUCN Tuvalu 2008 Photovoltaic Electricity Grant 810 Network Integration Project IUCN Vanuatu 2009 Renewable energy projects Grant 1020

IUCN Marshall 2009 Efficient and Renewable Public Grant 508 Islands Lighting for Urban Centres Japan Nauru 1970 OTEC demonstration project Technolog N.A y Demonstra tion

320

Japan Region- 1987 Solar PV training program Grant 130 wide Japan Forum 1988 Small energy projects for Annual 129 Secretariat renewable energy grant Japan Kiribati 1989 Master plan for rural solar In-kind 141 electrification assistance Japan Kiribati 1991 Co-aid with UNDP for solar Grant N.A development study Japan Fiji 1993 Technical assistance for hydro Grant N.A power assessment Japan Vanuatu 1993 Sarakata hydro power project Grant 13,300

JICA Palau 2009 Project for Introduction of Clean Grant 5,220 Energy by Solar Electricity Generation System JICA Tonga 2010 Project for Introduction of Clean Grant 6,740 Energy by Solar Home System JICA Marshall 2009 Project for Introduction of Clean Grant 5,770 Islands Energy by Solar Electricity Generation System JICA Federated 2010 Project for Introduction of Clean Grant 6,050 States of Energy by Solar Electricity Micronesia Generation System New Zealand Fiji 1991 Geothermal investigation Grant 86

New Zealand Fiji 1991 Monasavu hydro project Grant 49 (operation review)

321

New Zealand Forum 1988 Small energy projects for Annual 129 Secretariat renewable energy grant New Zealand Kiribati 1989 Solar fridges for outer island Grant 88 clinics (Phase III) Norway Fiji, Tonga, 1980 Wave energy monitoring Grant N.A Vanuatu, W. Samoa NZAid Cook 1994 Electric Power: Cook Islands Grant 1,300 Islands NZAid Niue 2005 Niue Power Grant 1,750

NZAid Niue 1998 Cable Testing: Niue Power Grant 287

NZAid Tokelau 1994 Power Supply: Tokelau Grant 2,420

NZAid Tokelau 2005 Tokelau Power Grant 1,500

NZAid Tonga 1996 Energy Conservation: Tonga Grant 8

NZAid Tonga 2004 Niuas Electrification Project Grant 734

NZAid Tonga 2009 Energy: Village Network Grant 975 Upgrade NZAid Tonga 2009 Energy: Renewable Energy Grant 901 Solar PV Project NZAid Fiji 2003 Hydro Power Fiji Grant 46

322

NZAid Regional 2006 Pacific Energy Ministers Grant 63 Meeting (PEMM) NZAid Tuvalu 2010 Tuvalu Renewable Energy Grant 158

NZAid Samoa 2010 Samoa Renewable Energy Grant 29 Feasibility NZAid Regional 2010 Pacific Power Utilities improved Grant 90 energy efficiency. NZAid Regional 2006 Pacific Energy Ministers Grant 0 Meeting (PEMM) NZAid Regional 2007 Energy Policy Expertise for Grant 101 Sustainable Regional Development NZAid Regional 2002 Risk Mitigation: Power Utility Grant 1,100 Managers REEEP Tonga 2009 Tonga - Improving Grant 1,530 Sustainability through REEEP (TISREEEP) REEEP Solomon 2007 Establish Pacific Micro Energy Service 58 Islands, Companies (PMESCOs) Kiribati REEEP Fiji 2009 Hotel sector energy efficiency in N.A 251 Fiji REEEP Fiji, 2009 Developing a framework for Grant 142 Vanuatu, clean energy microfinance in the Samoa Pacific

323

REEEP Marshall 2009 Energy efficiency policy Grant 232 Islands, instruments in Pacific Island Palau, countries Samoa, Vanuatu REEEP Regional 2010 Sustainable Energy Industry Grant 191 Association of the Pacific Islands (SEIAPI) Secretariat of the Cook c. 1980 Solar lighting systems Grant N.A Pacific Islands, Community Solomon (SPC) Islands, Tuvalu, Vanuatu, Samoa UK Fiji 1992 Energy institution strengthening Expert N.A advice UK Solomon 1983 A small hydro power project N.A N.A Islands UK Vanuatu 1983 Geothermal study N.A N.A

UNDP Samoa Preparatory Phase: Extending Grant N.A Electricity Access to Remaining Households United Nations Regional c. 2004 Strengthening National Policy Grant N.A Development Frameworks Programme

324

United Nations Regional c. 2004 Promoting Rural Energy Grant N.A Development Services Programme United Nations Regional c. 2004 Promoting Clean Energy Grant N.A Development Technologies to Mitigate Programme Climate Change United Nations Regional 2004 Pacific Islands Energy Policies Grant 1,970 Development and Action Planning (PIEPSAP) Programme United Nations Regional 2007 Pacific Islands Greenhouse Gas Grant 5,500 Development Abatement through Renewable Programme Energy Project (PIGGAREP) United Nations Regional 2005 Promotion of Environmentally Grant 28 Development Sustainable Transportation Programme (PESTRAN) in PICs United Nations Regional 2005 Regional Energy Programme for Grant 3,110 Development Poverty Reduction (REP-PoR) Programme United Nations Samoa 2007 Coconut Oil for Power Grant 39 Development Generation (CocoGen) – Phase Programme II United Nations Samoa 2004 Apolima PV Project Grant 35 Development Programme United Nations Samoa 2006 Upolu Wind Resource Grant 35 Development Assessment Project Programme United Nations Tokelau 2003 Grid-connected Photovoltaic Grant 372 Development Electricity Supply on Tokelau Programme

325

United Nations Cook 2006 Rarotonga ‗Hot Spot‘ Wind Grant 27 Development Islands Resource Assessment Project Programme United Nations Fiji 2000 Promoting Sustainability of Grant 937 Development Renewable Energy Programme Technologies and Renwable Services Companies United Nations Fiji 2005 Fiji Bio-Fuel Grant 56 Development Programme United Nations Marshall 2006 Preparatory Assistance Phase Grant 43 Development Islands for bio-fuel Project in the Programme Republic of Marshall Islands United Nations Marshall 2005 Preparatory phase for Actions Grant 28 Development Islands for the Development of Marshall Programme Islands Renewable Energy (ADMIRE) United Nations Palau 2005 Preparatory phase for Grant 28 Development Sustainable Economic Programme Development through Renewable Energy Applications (SEDREA) United Nations Cook 2009 Wind monitoring and resource N.A N.A Development Islands assessment Programme

326

United Nations Region- 1981 The Pacific Regional Energy Grant N.A Development wide Programme including renewable Programme/Pacif energy ic Energy Development Programme United Nations Kiribati 1993 Co-aid with Japan for solar PV Grant N.A Development development study Programme/Pacif ic Energy Development Programme United Nations Kiribati 1992 Assistance to the Solar Energy In kind 37 Fund for Company Technology and Science Development (UNFTSD) USA Kiribati 1984 Funding the Solar Energy Grant Company USA Tuvalu 1984 Solar PV Energy Grant

USA Cook 1993 Biomass energy study Grant 75 Islands USA Fiji 1993 Micro hydro project Grant 146

USA Fiji 1994 Micro hydro project Grant 81

327

World Bank Fiji 1980 Second Power Project Loan 41,000

World Bank Fiji 1978 Monasavu - Wailoa Loan 50,100 Hydroelectric Project World Bank PNG 2008 Second Mining Sector Loan 17,200 Institutional Strengthening TA Project for PNG development World Bank PNG 2005 Rural Energy Fund: Teacher's Grant 1,105 Solar Lighting Project World Bank PNG 2000 Gas Development and Loan 8,860 Utilization Technical Assistance Project World Bank PNG 2000 Mining Sector Institutional Loan 12,700 Strengthening Technical Assistance Project World Bank PNG 1993 The Petroleum Exploration TA Loan 16,600 Project & the Petroleum Exploration and Development TA Project World Bank PNG 1986 Third Power Project - Yonki Loan 56,700 Hydroelectric Project World Bank PNG 1982 Petroleum Exploration Credit 6,780 Technical Assistance Project World Bank PNG 1974 Second Power Project Loan 47,700

World Bank PNG 1971 Upper Ramu Hydroelectric Loan 125,000 Development Project

328

World Bank Regional 2007 Sustainable Energy Finance Loan 9,970 Project World Bank Palau 2007 Palau Oil & Gas Grant 252

World Bank Samoa 1987 Afulilo hydro power project Loan 7,440

World Bank Samoa 1993 Afulilo Hydro power N.A 2,110

World Bank Solomon 2010 Solomon Islands: Mining Sector Grant 900 Islands Technical Assistance - Phase I World Bank Solomon 2008 Solomon Islands Sustainable Grant 4,050 Islands Energy World Bank Tonga 2010 Tonga Energy Development Grant 5,000 Policy Project World Bank Multi- 2008 Energy Supply for Micronesia N.A 700 Group country World Bank Kiribati 2008 Kiribati Grid-Connected Solar N.A 5,140 Group PV Project World Bank Vanuatu 2008 Vanuatu oil and gas supply N.A 368 Group chain study World Bank Multi- 2008 Preparation of Framework for N.A 2,800 Group &AusAid country 'Energizing the Pacific' World Bank Solomon 2008 Tina River Hydro Development N.A 3,900 Group &AusAid Islands Project: Project Development Support and Hydrological Study World Bank Solomon 2008 Tina River Hydro Development N.A 60,700 Group &AusAid Islands Project: Project Implementation

329

World Bank Tonga 2008 Energy Supply for Tonga N.A 233 Group &AusAid World Bank Vanuatu 2008 Vanuatu Utilities Regulatory Grant 1,470 Group &AusAid Agency

*N.A. – Data not available

Sources: Data collected in response to requests for data from donors and from (Yu and Taplin, 1997)

Legend:

Commonwealth Heads of Regional Government Meeting (CHORGM), Commonwealth Fund for Technical Cooperation (CFTC) European Investment Bank (EIB) European Union (EU) South Pacific Commission (SPC), South Pacific Applied Geosciences Commission (SOPAC) United Nations Development Programme (UNDP), United Nations Industrial Development Organisation (UNIDO), United Nations Fund for Technology and Science Development (UNFTSD)

330

Appendix IX - Full List of Energy Aid Projects to the Caribbean Region

Table 8-2: Energy Aid to the Caribbean between 1970 and 2010 (rounded to three significant figures)

Donor Recipient Year Project Name Aid form 2010 Approved $USD (000's) CDB Belize 1977 Rural Electrification Programme Loan 3,470 CDB Dominica 1987 Second Power Project Loan 10,160 CDB St. Kitts & 1991 Power Project Loan Nevis 8,410 CDB Belize 1994 Fourth Power Project Loan 11,000 CDB Trinidad & 1992 TRINTOC Onshore Secondary Oil Loan Tobago Recovery 28,000 CDB Jamaica 1996 Rural Electrification Project Loan 12,000 CDB Belize 1996 Fourth Power Project (Add. Loan) Loan 8,060 CDB Trinidad & 1996 National Gas Company Expansion Loan Tobago Programme 30,000 CDB St. Kitts & 1998 TA to Transition to Autonomous Loan Nevis Electricity Utility 176 CDB Belize 1998 Fourth Power Project Loan 17,800 CDB Dominica 1999 Third Power Project Loan 13,100 CDB St. Kitts & 2001 Nevis Power Project Loan

331

Nevis 10,100 CDB St. Kitts & 2002 Power Project - Nevis (Add. Loan) Loan Nevis 1,940 CDB Belize 2004 Fifth Power Project Loan 10,600 CDB St. Vincent & 2004 Power Project - 3rd Loan to VINLEC Loan the Grenadines 21,000 CDB Belize 2005 Belize Co-generation Energy Limited Loan (Belcogen) Loan 9,210 CDB St. Kitts & 2006 Second Power Project, Nevis Loan Nevis 9,120 CDB OECS 2010 Consultancy Services to Develop Sub TA Grant Regional Energy Efficiency Framework 1,590 Documents CIDA Jamaica 1985 Small Scale hydro, Morant river Loan 101 CREDP Region-wide 2010 Improved quality of life of low-income Grant (ACP- groups within the OECS Region through EU Energy 663 promoting improved governance and Facility) institutional frameworks to support EE - CREDP contribution CREDP Jamaica N.A. Pre-Feasibility Study ‗Assessment of Grant N.A. Project Proposal - Jamaica: Anaerobic Digestion of Sludge and Septage‘ CREDP Barbados N.A. Exhibition ‗Renewables-made in Grant N.A. Germany‘ CREDP Regional 2004 Study tour to Germany within the Grant N.A. framework of ―Renewables 2004‖ in Bonn Germany CREDP St. Lucia 2004 Support of the annual energy awareness Grant N.A.

332

week since 2004 CREDP Regional 2004 CARILEC/ GTZ RE Technology Grant N.A. Seminars: Wind power (Dec 04) CREDP Regional 2005 CARILEC/ GTZ RE Technology Grant N.A. Seminars: CARILEC/ GTZ RE Technology Seminars (March 05) CREDP Regional 2005 CARILEC/ GTZ RE Technology Grant N.A. Seminars: Hydro power (June 05) CREDP Regional 2007 Wind Study Tour to Europe Grant N.A. CREDP CARICOM 2008 1st Caribbean Sustainable Energy Grant N.A. Forum (held in Grenada) CREDP Grenada N.A. Exhibition ‗Renewables-made in Grant N.A. Germany CREDP Guyana 2008 Exhibition ‗Renewables- made in Grant N.A. Germany‘ in 2008 for Energy Awareness Week CREDP St. Kitts & 2008 Teacher's training Seminar in Nevis Grant N.A. Nevis CREDP St. Lucia 2008 Domestic Sector EE project Grant N.A. CREDP St. Vincent 2008 Domestic Sector EE project Grant N.A. CREDP Grenada 2009 Teacher's Training in RE and EE Grant N.A. Workshop CREDP Guyana 2009 Energy Week in 2009 Grant N.A. CREDP Jamaica 2009 Initiation of the first annual Energy Grant N.A. Awareness week in June 2009 CREDP Regional 2009 Seminar on hydrometric networks (held Grant N.A. in St. Vincent & the Grenadines) CREDP CARICOM 2010 2nd Caribbean Sustainable Energy Grant N.A. Forum (held in Jamaica)

333

CREDP Regional 2010 CARILEC / CREDP Dispatch seminar Grant N.A. for utility engineers CREDP St. Lucia 2010 Assistance to "Our Planet" Grant N.A. CREDP Regional 2010 Introduction of PV technologies in the Grant N.A. Curricula of Technology Community Colleges Curricula of Technology Community Colleges in St. Lucia, SVG and Grenada CREDP CARICOM 2010 Energy Awareness Week guide Grant N.A. CREDP OECS 2009 CHENACT contribution by CREDP Grant N.A. CREDP St. Lucia 2010 Estimation of carbon footprint of St. Grant N.A. Lucia National Trust CREDP St. Lucia 2010 Energy Audit of Blue Coral Building Grant N.A. CREDP St. Vincent & 2010 LED Streetlighting - assistance in Grant N.A. the Grenadines identifying suitable equipment CREDP Jamaica 2004 Comments to the new ‗Energy Policy‘ Grant N.A. were submitted to Government (2004) for consideration CREDP Antigua & 2009 Assistance in Energy Policy Grant N.A. Barbuda Formulation CREDP Dominica N.A. Follow up and comments on World Grant N.A. Bank activities in the energy policy sector CREDP Dominica N.A. Facilitation of dialogue between Grant N.A. Government and DOMLEC on implementation of the Sustainable Energy Plan (SEP) CREDP Dominica 2009 Review of new ESA after 2 years in Grant N.A. existence: Report

334

CREDP Grenada N.A. Facilitation of dialogue between Grant N.A. GRENSOL (PV company) and GRENLEC on feed-in policy CREDP Grenada N.A. Cooperation with CSEP in formulating Grant N.A. National Energy Policy and Energy Action plan (2009) CREDP Regional 2007 Comments on Regional Energy Policy Grant N.A. CREDP St. Lucia 2006 Draft RE policy (2010) submitted to Grant N.A. government CREDP Suriname 2009 Establishment of an RE policy draft Grant N.A. CREDP St. Vincent & 2005 Draft RE policy (2008) Grant N.A. the Grenadines CREDP St. Vincent & N.A. National Energy Action Plan: Grant N.A. the Grenadines CSEP/OAS has led in this activity CREDP Dominica 2009 Pre-feasibility study for the Newtown Grant N.A. Hydropower Project for DOMLEC CREDP Dominica 2010 Feasibility Study of the Newtown Grant Hydropower Plant (DOWASCO) 122 CREDP Dominica 2003 Feasibility Study for rehabilitation and Grant N.A. extension of 2 hydropower stations Trafalgar and Padu CREDP Dominica 2007 Assessment of national hydropower Grant N.A. potential CREDP Dominica 2009 Procurement and installation of Grant N.A. hydrometric stations CREDP St. Vincent & 2010 Inspection, Topographical Survey & Grant the Grenadines Stream Flow Gauging for the St. 44 Vincent Electricity Services Limited CREDP Grenada 2009 Assessment of national hydropower Grant N.A. potential

335

CREDP Guyana 2007 Kato Hydropower plant Grant N.A. CREDP Jamaica 2004 Feasibility Study for Greater Laughland Grant N.A. River 2 MW Hydropower Plant CREDP Jamaica 2009 Second opinion for the Greater Grant N.A. Laughland River Hydropower Plant Feasibility Study Review CREDP Regional 2009 Screening of potential for Micro-Hydro Grant N.A. and EE in the water supply sector CREDP St. Lucia 2004 Proposal/ Pre-Feasbility Study for MHP Grant N.A. at the John Compten Dam CREDP St. Lucia 2010 Assessment of national hydropower Grant N.A. potential in St. Lucia CREDP St. Vincent & 2005 Rehabilitation of the South Rivers Grant N.A. the Grenadines Hydropower Project CREDP St. Vincent & 2008 Feasibility Study, Tender Design and Grant N.A. the Grenadines Tender Documents of the South Rivers Stage 2 Hydropower Project CREDP St. Vincent & 2005 Rehabilitation of the Richmond Grant N.A. the Grenadines Hydropower Project CREDP St. Vincent & 2008 Hydrometric station Wallibou Grant N.A. the Grenadines CREDP CARICOM 2008 Strengthening of CARICOM Energy Grant N.A. Unit CREDP St. Lucia 2005 Study on CDM project ‗Ciceron‘ Land Grant N.A. Fill Gas site CREDP St. Lucia 2005 Assistance to SLUSWMA and NIC on Grant N.A. investment in Ciceron Project (08/2005) CREDP CARICOM 2010 Development of a tool for RE Grant N.A. investment CREDP CARICOM 2010 Drafting of RE investment guide Grant N.A.

336

CREDP OECS N.A. Membership of CREDP in the advisory Grant N.A. Panel TAC of the OECS CREDP Barbados 2009 Advisory service for BICO (Ice Factory) Grant N.A. in using PV CREDP Grenada N.A. Assistance of setting up PV test centre at Grant N.A. the St. George's University, Grenada (now: roof of Hobards's building) CREDP Grenada N.A. Support of and cooperation with PV Grant N.A. company GRENSOL in developing the national and regional PV market CREDP Regional 2010 Market survey on Solar Power in Grant N.A. Grenada, Barbados and St. Lucia CREDP St. Lucia 2010 PV system for the Bendict Nunnery Grant N.A. Coubaril CREDP St. Lucia 2009 PV system for SALC College Grant N.A. CREDP St. Lucia 2010 TA for PV project profile for the NIPRO Grant N.A. Car Park CREDP St. Lucia 2008 TA for PV pilot projects on Castries Grant N.A. Market, Pigeon Island and Vieux Fort Secondary School CREDP St. Lucia 2008 Assistance with PV system procurement Grant N.A. for Latille Falls CREDP St. Lucia 2008 PV Backup System for hurricane shelter Grant N.A. in Marchand, Castries, St. Lucia CREDP St. Vincent & 2008 Preparation of a PV installation in Grant N.A. the Grenadines Richmond Park CREDP St. Lucia 2005 Market Study for Solar water Heaters Grant N.A. CREDP Antigua & 2010 Wind power development through Grant N.A. Barbuda facilitation of wind speed measurements

337

CREDP Dominica 2005 Assistance for DOMLEC in site Grant N.A. selection for wind power CREDP Dominica 2005 Assistance to DOMLEC in selection of Grant N.A. wind measurement equipment CREDP Grenada 2009 Assistance of GRENLEC in site Grant N.A. selection for wind park sites CREDP Jamaica N.A. Advice of Petroleum Corporation of Grant N.A. Jamaica (PCJ) in Contract negotiations with Jamaica Public Service Co. about feed-in tariffs CREDP Regional 2006 Foundation of Caribbean Wind Energy Grant N.A. Initiative (CAWEI) with members from CREDP St. Kitts & 2006 Review of wind measurements of the Grant N.A. Nevis eighties CREDP St. Kitts & N.A. Review of Environment Impact Grant N.A. Nevis Assessment for wind park in Nevis CREDP St. Lucia 2005 Assistance to LUCELEC in wind site Grant N.A. identification CREDP St. Lucia 2005 Assistance in initiating wind Grant N.A. measurement programme CREDP Suriname 2010 Wind Speed Measurement in Suriname Grant at Nickerie and Galibi 454 CREDP St. Vincent & N.A. Wind Park St. Vincent Grant N.A. the Grenadines CREDP Trinidad & N.A. Wind power development with Grant N.A. Tobago PetroTrin CREDP Barbados 2010 Cane Industry Restructuring Project – Grant Sustainable Renewable Energy 101 Component CREDP Belize 2010 Hydropower Feasibility Studies of the Grant

338

Central River 242 CREDP Dominica 2010 Stream Flow Gauging at Selected Rivers Grant (5 stations) 22 CREDP Guyana 2010 Grid Stability and Soil Test Studies for Grant the Hope Beach Wind Farm, Guyana 133 CREDP Guyana 2010 Hydropower Feasibility Study of the Grant Chiung River 200 CREDP Jamaica 2010 A Feasibility Study for an Alternative Grant 11 Energy - Biomass Fuelled Cogeneration (CHP) System CREDP Jamaica 2010 Back Rio Grande Hydro Project Review Grant 11 CREDP St. Vincent & 2010 Feasibility Study, Tender Design & Grant the Grenadines Tender Documents for the Hydropower 464 Stations of St. Vincent Electricity Services Ltd. (VINLEC) CREDP CARICOM 2010 Consultant for CRETAF Grant 20 CREDP CREDP - 2003 Overall CREDP Budget for period 2004 Grant Overall - 2007 - GEF Contribution 4,300 Budget - GEF CREDP CREDP - 2003 Overall CREDP Budget for period 2004 Grant Overall - 2007 - GTZ Contribution 2,540 Budget - GTZ CREDP CREDP - 2008 Overall (Indicated) CREDP Budget for Grant Overall Project period 2008 - 2012 - GiZ Contribution 7,820 Volume - GiZ CREDP CREDP - 2008 Overall (Indicated) CREDP Budget for Grant Overall Project period 2008 - 2012 - Austrian 1,040 Volume - Contribution

339

Austrian co- financing EIB Saint Lucia 1981 Feasibility study geothermal potential Loan 482 EIB Barbados 2008 Lamberts East Wind Farm Loan 14,500 EIB Dominica 2010 Environmental line of credit Line of credit 1,330 EIB Saint Kitts and 2010 Environmental line of credit Line of Nevis credit 1,330 EIB Dominica 1987 DOMLEC Central Hydroelectrique Loan 8,410 EIB Barbados 1998 BLPC III Loan 45,000 EIB Barbados 1996 BLPC II (POWER) Loan 35,300 EIB Barbados 1980 Barbados Light and Power Company Loan 18,400 EIB Bahamas 1996 BEC II (POWER) Loan 35,300 EIB Bahamas 1987 BEC - FAMILY ISLANDS Loan 20,200 EIB Belize 1994 BELIZE ELECTRICITY Loan 6,480 EIB Dominica 1999 DOMLEC II POWER PROJECT Loan 14,000 EIB Grenada 1982 GRENADA ELECTRICITY Loan 5,310 EIB Grenada 1996 GRENLEC II Loan 7,060

340

EIB Grenada 2005 GRENLEC III Loan 6,950 EIB Guyana 2001 GUYANA POWER Loan 22,100 EIB Jamaica 1993 JAMAICA POWER Loan 15,900 EIB St. Lucia 1986 LUCELEC Loan 5,870 EIB St. Lucia 1986 LUCELEC Loan 3,920 EIB St. Lucia 1988 LUCELEC II Loan 6,540 EIB St. Lucia 1996 LUCELEC III Loan 14,100 EIB St. Vincent 1984 VINLEC Loan 4,800 EIB St. Vincent 1988 VINLEC II Loan 8,720 EIB St. Vincent 1998 VINLEC III Loan 6,000 EIB St. Vincent 2004 VINLEC IV Loan 11,200 EIB Suriname 1998 STAATSOLIE Loan 6,000 EIB Trinidad & 1996 NATIONAL GAS COMPANY Loan Tobago 79,400 EIB Trinidad & 1985 T&TEC Power Plants Loan Tobago 18,600 EU Dominica 2008 Preparation of a Geothermal-Based Grant (ACP- Cross-Border Electrical Inter- EU Energy 2,230

341

Connection in the Caribbean Facility) EU Barbados, 2009 Frameworks, Policies and Instruments Grant (ACP- Grenada, for mobilising renewable energy in the EU Energy 601 Guyana, Haiti, Caribbean Facility) Jamaica, Saint Kitts and Nevis. EU Haiti 2010 Deploying new opportunities for socio- Grant (ACP- economic development through access EU Energy 1,640 to sustainable energy in the Central Facility) Plateau EU Jamaica 2010 Developing an Energy Services Grant (ACP- Company (ESCO) industry in Jamaica EU Energy 573 Facility) EU Belize 2010 Project to Provide Electrification to Grant (ACP- Marginal and Depressed Rural and Peri- EU Energy 2,100 Urban Communities in Belize from Facility) Renewable Energy Sources Through Grid Extensions EU Haiti (& Dom. 2007 Renewable Energy from Jatropha at the Grant (ACP- Republic) Dominican Republic - Haiti border EU Energy 1,140 Facility) EU Region-wide 2008 Increasing the Sustainability of the Grant (ACP- Energy Sector in the Caribbean through EU Energy 2,090 Improved Governance and Management Facility) EU Region-wide 2010 Improved quality of life of low-income Grant (ACP- groups within the OECS Region through EU Energy 1,990 promoting improved governance and Facility) institutional frameworks to support energy efficiency

342

EU Guyana 2010 Promoting Sustainable Energy Use in Grant (ACP- Hinterland Guyana EU Energy 2,442 Facility) GEF Jamaica 1994 Demand Side Management Grant Demonstration Project 5,590 Germany Jamaica 1991 Small Scale Hydro, Great River Loan 15,700 IDB Barbados 2010 Support for Sustainable Energy Loan Framework for Barbados (SEFB) I 45,000 IDB Barbados 2009 Sustainable Energy Framework for Grant Barbados (Technical Cooperation) 1,020 IDB Barbados 2010 Support to the Sustainable Energy Grant 1,000 Framework for Barbados IDB Barbados 2009 Support Studies for the Upgrade and Grant Expansion of the Natural Gas Network 508 (Technical Cooperation) IDB Barbados 2010 Sustainable Energy Investment Program Loan 10,000 IDB Barbados 1982 Electricity Generation With Wind Grant Turbines (Technical Cooperation) 3,390 IDB Belize 2004 Strengthening of Public Utilities Grant Commission 577 IDB Guyana 2010 Developing Capacities in Implementing Grant REDD+ 735 IDB Guyana 2009 Supporting Guyana's Low Carbon Grant Development Strategy (Technical 457 Cooperation) IDB Guyana 2009 Measurement of Climate Change Grant Impacts and Eco-system Services in 233 Iwokrama (Technical Cooperation)

343

IDB Guyana 2010 Amaila Falls Hydroelectric Project Grant Preparation Studies (Technical 1,210 Cooperation) IDB Guyana 2008 Expanding Bioenergy Opportunities in Grant Guyana (Technical Cooperation) 253 IDB Guyana 2008 Expanding Bioenergy Opportunities in Grant Guyana (Technical Cooperation) 684 IDB Guyana 2009 Climate Change and Biodiversity Grant Mainstreaming through Avoided 152 Deforestation (Technical Cooperation) IDB Guyana 2007 Power Sector Support Program Loan 12,600 IDB Guyana 2005 Power Sector Assessment and Grant Development Strategy (Technical 167 Cooperation) IDB Guyana 2003 Strengthening Electricity Sector Grant Regulation in Support of Private 593 Investment (Technical Cooperation) IDB Guyana 2002 Unserved Areas Electrification Program Loan 33,200 IDB Guyana 2001 Electrification Project for Unserved Loan Areas 308 IDB Guyana 1996 Electricity Sector Program Loan 62,600 IDB Guyana 1996 Execution Electricity Sector Program Grant (Technical Cooperation for Electricity 1,380 Sector Program) IDB Guyana 1996 New Alternatives Sources of Energy Grant (Technical Cooperation) 209 IDB Guyana 1995 Electricity Sector Hybrid Program Grant (Technical Cooperation) 1,070

344

IDB Guyana 1987 Utilization of Bagasse for Electricity Grant Generation 940 IDB Guyana 1985 Guyana Electricity Corporation Loan Rehabilitation 32,600 IDB Guyana 1985 Co's Coop, Hydroelectric Microcentrals Grant 18 IDB Guyana 1984 Loan Request, Electrical System Grant Rehabilitation (Technical Cooperation) 50 IDB Guyana 1983 Br's Cooperative, industrial Charcoal Grant Production (Technical Cooperation) 28 IDB Guyana 1980 Prefeasibility Study: Thermo-Electrical Grant Project 40 IDB Guyana 1980 Feasibility Study, Electrical Energy Grant Generation 1,390 IDB Haiti 2006 Rehabilitation Of The Electricity Loan Distribution System In Port-Au-Prince 19,600 IDB Haiti 2010 Towards a Sustainable Energy Sector Grant Haiti - White Paper (Technical 100 Cooperation) IDB Haiti 2010 Bioenergy Action Plan (Technical Grant Cooperation) 429 IDB Haiti 2010 Bioenergy Action Plan (COFAB Grant component) 150 IDB Haiti 2010 Rehabilitation of the Electricity Loan Distribution System in Port-au-Prince 14,000 IDB Haiti 2010 SECCI: Emergency Program for Solar Grant Generation 1,000 IDB Haiti 2010 GEF Emergency Program for Solar Grant Power Generation and Lighting 500 IDB Haiti 2009 Support to the Design of the HA-L1035 Grant

345

Program (Technical Cooperation) 610 IDB Haiti 2006 Support for Port-au-Prince Electrical Grant Distribution Rehabilitation Program 270 (Technical Cooperation) IDB Haiti 2001 Renewable Alternative Energy Sources Grant (Technical Cooperation) 111 IDB Haiti 1999 Electricity Sector's Modernization Grant Programme (Technical Cooperation) 196 IDB Haiti 1999 Private Participation Electric Sector N.A 393 IDB Haiti 1996 Legal/Regulatory Reform Electric Grant Sector 1,630 IDB Haiti 1995 Emergency Program - Electrical Grant Component (Technical Cooperation) 143 IDB Haiti 1991 Electric Energy Transmission (Technical Grant Cooperation) 48 IDB Haiti 1991 Electric Transmission (Technical Grant Cooperation) 48 IDB Haiti 1990 Project preparation facility: Generation Grant and Transmission Project (Technical 248 Cooperation) IDB Haiti 1988 Ch's Coop, Electrical Energy (Technical Grant Cooperation) 23 IDB Haiti 1984 Study, Factory for Electrical Generation Grant (Technical Cooperation) 2,600 IDB Haiti 1984 Institutional Strength, Oficina Minas y Grant Energia (Technical Cooperation) 3,390 IDB Haiti 1980 Feasibility Study for Hydroelectric Grant Project; la Chapelle (Technical 2,972 Cooperation)

346

IDB Haiti 1980 Pe's Cooperative, Hydroelectrical Grant Centrals (Technical Cooperation) 19 IDB Jamaica 2009 Support to Promote Energy Efficiency, Grant Energy Conservation and Sustainable 603 Energy (Technical Cooperation) IDB Jamaica 2009 Wind and Solar Development Program Grant 762 IDB Jamaica 2009 Energy Efficiency and Conservation Grant Technical Assistance (Technical 356 Cooperation) IDB Jamaica 2004 Establishment of an Energy Efficiency Grant Fund 52 IDB Jamaica 1994 Establishment of Office of Utilities Grant Regulation (Technical Cooperation) 2,140 IDB Jamaica 1994 Private Sector Energy Development Loan Program 84,600 IDB Jamaica 1994 Energy Conservation in Industrial Sector Grant (Technical Cooperation) 221 IDB Jamaica 1990 Rehabilitation of Hydroelectric Power Loan 137,000 IDB Jamaica 1990 Project Preparation Facility: Grant Improvement Electric Services 125 (Technical Cooperation) IDB Jamaica 1986 Br's Coop, Rural Electrification Program Grant 10 IDB Jamaica 1982 Development of Solar Lagoons Project Grant 45 IDB Jamaica 1980 Hydrocarbon & Geological Exploration Loan (a) 62,200 IDB Jamaica 1979 Rural Electrification III Loan

347

27,600 IDB Jamaica 1977 Rural Electrification Programme Loan 8,990 IDB Jamaica 1975 Rural Electrification First Stage Loan 37,300 IDB Jamaica 1973 Feasibility Study for Rural Contingent Electrification (Technical Cooperation) Technical 942 Cooperation IDB Suriname 2009 Support to the Energy Sector: Grant Renewable and Bioenergy (Technical 407 Cooperation) IDB Suriname 2004 Power Sector Assessment and Grant Alternatives for its Modernization 231 (Technical Cooperation) IDB Suriname 1994 Energy Tariff Structure Revision Grant (Technical Cooperation) 7 IDB Suriname 1987 Electric & Diesel Factory in Tambaredjo Contingent (Technical Cooperation) Technical 2,010 Cooperation IDB Suriname 1985 Advisory, Ministry of Natural Resorts Grant 53 IDB Suriname 1982 Research On Wood Gasification Grant 45 IDB Trinidad & 1991 Secondary Recovery of Oil & Refinery Loan Tobago Mod 404,000 IDB Trinidad & 2005 Improving Health, Safety & Grant Tobago Environmental Standards among SMEs 463 in Energy Sector IDB Trinidad & 2005 Standards in the Energy Sector Grant Tobago (Technical Cooperation) 11

348

IDB Trinidad & 1989 Study: Secondary Petroleum Grant Tobago Recuperation (Technical Cooperation) 24 IDB Regional 2010 Support to the Caribbean Sustainable Grant Energy Road Map 400 IDB Regional 2009 Energy Efficiency and Renewable Grant Energy Project for CARILEC 546 IDB Regional 2009 Caribbean Hotel Energy Efficiency Grant Action Program ( Technical 1,020 Cooperation) IDB Regional 2009 Promoting Energy Security for the Grant Americas 244 IDB Regional 2006 Development of the Caribbean Energy Grant Sector 162 IDB Jamaica 1986 Back Rio Grande Hydro Feasibility Loan 169,000 IDB Bahamas 2009 Implementing Sustainable Energy Grant Projects in the Bahamas 1,020 IDB Bahamas 2010 Promotion of Energy Efficient Grant Residential Lighting 500 IDB Bahamas 2009 Promoting Sustainable Energy in the Grant Bahamas 762 IDB Bahamas 2008 Strengthening the Energy Sector in The Grant Bahamas 709 IDB Bahamas 1996 Power Expansion Program II Loan 77,900 IDB Bahamas 1993 Family Islands Electrification Program Loan 48,000 IDB Bahamas 1990 Family Islands Electrification: Project Grant Preparation [Facility] 250 IDB Bahamas 1988 Electric Power Expansion Program Loan

349

201,000 IDB Bahamas 1988 Bahamas Electricity Corporation Grant (Technical Cooperation) - Institutional 302 Strengthening IDB Bahamas 1987 Study of Market: Electrical Expansion Grant 58 IDB Bahamas 1985 Chile's Cooperation to the Bahamas Grant Electricity Cooperation 20 IDB Bahamas 1982 Plan for Electrical Energy System Grant 1,100 IFC Jamaica 1995 Jamaica Energy Partners Old Harbour Loan Diesel Project 30,600 IFC Jamaica 2005 Jamaica Energy Partners Expansion Loan 31,300 IFC Jamaica 2003 Heavy Fuel Oil - Thermal Power Loan Generation 53,300 IFC Haiti 2010 E. Power S.A. Loan 50,000 IFC Jamaica 2010 Jamaica Public Service (JPS) Co. II Loan 30,000 IFC Jamaica 2010 Jamaica Energy Partners 3: West Loan Kingston Power Partners (WKPP) 66 30,000 MW Italy Jamaica 1990 Spanish River Hydro Plant Loan 8,510 OAS Regional 2008 Caribbean Sustainable Energy Program Grant (CSEP) 1,340 OAS Regional 2002 Eastern Caribbean Geothermal Energy Grant Project (Geo-Caraïbes) 9,940 OAS Grenada 2008 Grenada Caribbean Solar Finance Grant 141

350

Program OLADE Jamaica 1983 National Biogas Programme Phase I Grant 547 OLADE Jamaica 1983 National Biogas Programme Phase II Grant 585 OLADE Jamaica 2010 Geothermal Investigations Grant 469 USAID Jamaica 1981 Energy Sector assistance Project (Phase Loan I and II) 15,600 World Jamaica 1978 Second Power Project Loan Bank 66,800 World Jamaica 1982 Third Power Project Loan Bank 69,000 World Jamaica 1987 Power Project (04) Loan Bank 34,500 World Jamaica 1992 Energy Sector Deregulation and Loan Bank Privatization Project 93,200 World Jamaica 1993 Private Sector Development Adjustment Loan Bank Loan Project 113,000 World Jamaica 1995 Generation Recovery and Improvement Loan Bank Project 30,100 World Belize 1994 Second Power Development Project Loan Bank 16,900 World Barbados 1981 Power Project Loan Bank 14,400 World Dominica 1987 Power Project Loan Bank 5,750 World Guyana 2008 Bagasse Cogeneration Project Loan Bank 2,610 World Guyana 1982 Petroleum Exploration Promotion Loan

351

Bank Project 4,520 World Guyana 1980 Technical Assistance for Power Loan Bank Development - Loan 1906-GUA 21,200 World Guyana 1973 Power Project Loan Bank 29,500 World Haiti 2010 Grant for the Emergency Program for Grant Bank Solar Power Generation and Lighting for 500 Haiti as a Consequence of the Earthquake in Port-au-Prince GEF MSP World Haiti 2009 Electricity Loss Reduction Project Grant Bank (Additional Financing) 5,080 World Haiti 2006 Electricity Project Loan Bank 6,490 World Haiti 1989 Fifth Power Project Loan Bank 42,200 World Haiti 1984 Fourth Power Project Loan Bank 46,400 World Haiti 1982 Third Power Project Loan Bank 58,800 World Haiti 1979 Second Power Project Loan Bank 50,000 World Haiti 1976 Power Project Loan Bank 61,300 World Jamaica 1981 Petroleum Exploration Project Loan Bank 9,120 World St. Vincent & 1984 Power Project Loan Bank the Grenadines 10,500

*N.A. Data not available

352

Sources: Data collected in response to requests for data from donors and (Caribbean Energy Information System et al., 2009)

Legend:

Caribbean Development Bank (CDB) Canadian International Development Agency (CIDA) Caribbean Renewable Energy Development Programme (CREDP) European Investment Bank (EIB) European Union (EU) Inter-American Development Bank (IDB) International Finance Corporation (IFC) Organisation of American States (OAS) Latin American Energy Organization (OLADE) US Agency for International Development (USAID)

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Appendix X – Exchange Rate Information

All references to oil prices and disbursements made by donors in this thesis are given in USD 2010 using the conversion rate below in Figure 8-1.

When disbursements were made in currencies other than US dollars, historical conversion rates also from the International Financial Statistics (see Table 8-3) were used to convert to US dollars. Following this, the US consumer price index was utilised to convert the foreign currency to USD 2010.

Figure 8-1: US Consumer Price Index (1970 to 2010)

Source: International Monetary Fund, International Financial Statistics, 2012

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Historical Exchange Rates of donor countries between 1970 and 2010

Table 8-3: Historical Exchange Rates of donor countries between 1970 and 2010

Year Australia Canada China, France Germany Japan New Norway United European P.R.: Zealand Kingdom Union Mainland US$ per US$ per US$ per US$ US$ per US$ US$ per US$ per US$ per US$per A$ C$ Yuan per DM per NZ$ Kroner Pound Euro* Franc Yen 1970 1.114 0.958 0.406 0.181 0.274 0.003 1.119 0.140 2.396 1971 1.136 0.990 0.407 0.181 0.286 0.003 1.142 0.142 2.444 1972 1.192 1.010 0.446 0.198 0.314 0.003 1.195 0.152 2.502 1973 1.421 1.000 0.504 0.225 0.377 0.004 1.361 0.174 2.452 1974 1.438 1.023 0.510 0.208 0.387 0.003 1.400 0.181 2.339 1975 1.310 0.983 0.538 0.233 0.407 0.003 1.216 0.192 2.222 1976 1.225 1.014 0.515 0.209 0.397 0.003 0.996 0.183 1.806 1977 1.109 0.941 0.538 0.204 0.431 0.004 0.971 0.188 1.746 1978 1.145 0.877 0.594 0.222 0.499 0.005 1.038 0.191 1.919 1979 1.118 0.854 0.643 0.235 0.546 0.005 1.023 0.198 2.122 1.371 1980 1.140 0.855 0.667 0.237 0.551 0.004 0.974 0.203 2.326 1.393 1981 1.149 0.834 0.587 0.185 0.444 0.005 0.870 0.175 2.028 1.118 1982 1.017 0.811 0.529 0.153 0.413 0.004 0.752 0.156 1.751 0.980 1983 0.902 0.811 0.506 0.132 0.393 0.004 0.669 0.137 1.517 0.890 1984 0.880 0.772 0.436 0.115 0.353 0.004 0.578 0.123 1.336 0.789 1985 0.701 0.732 0.341 0.112 0.343 0.004 0.498 0.117 1.296 0.763

355

1986 0.671 0.720 0.291 0.145 0.463 0.006 0.524 0.135 1.467 0.984 1987 0.701 0.754 0.269 0.167 0.557 0.007 0.592 0.149 1.639 1.154 1988 0.784 0.813 0.269 0.168 0.571 0.008 0.656 0.154 1.781 1.183 1989 0.793 0.845 0.266 0.157 0.533 0.007 0.598 0.145 1.640 1.102 1990 0.781 0.857 0.209 0.184 0.620 0.007 0.597 0.160 1.785 1.274 1991 0.779 0.873 0.188 0.178 0.605 0.007 0.579 0.155 1.769 1.240 1992 0.735 0.828 0.181 0.189 0.642 0.008 0.538 0.161 1.766 1.295 1993 0.680 0.776 0.174 0.177 0.605 0.009 0.541 0.141 1.502 1.169 1994 0.732 0.732 0.116 0.180 0.618 0.010 0.594 0.142 1.532 1.186 1995 0.741 0.729 0.120 0.201 0.699 0.011 0.656 0.158 1.578 1.294 1996 0.783 0.733 0.120 0.196 0.665 0.009 0.688 0.155 1.562 1.252 1997 0.744 0.722 0.121 0.172 0.577 0.008 0.663 0.142 1.638 1.130 1998 0.629 0.675 0.121 0.170 0.569 0.008 0.537 0.133 1.656 1.122 1999 0.645 0.673 0.121 0.009 0.530 0.128 1.618 1.065 2000 0.582 0.674 0.121 0.009 0.457 0.114 1.516 0.923 2001 0.518 0.646 0.121 0.008 0.421 0.111 1.440 0.895 2002 0.544 0.637 0.121 0.008 0.464 0.126 1.501 0.945 2003 0.652 0.716 0.121 0.009 0.582 0.141 1.634 1.132 2004 0.737 0.770 0.121 0.009 0.664 0.148 1.832 1.244 2005 0.764 0.826 0.122 0.009 0.704 0.155 1.820 1.245 2006 0.753 0.882 0.125 0.009 0.650 0.156 1.843 1.256 2007 0.839 0.935 0.131 0.009 0.736 0.171 2.002 1.371 2008 0.855 0.943 0.144 0.010 0.715 0.180 1.853 1.473 2009 0.791 0.879 0.146 0.011 0.634 0.160 1.564 1.394 2010 0.919 0.971 0.148 0.011 0.722 0.166 1.546 1.326

Source: International Monetary Fund, International Financial Statistics, 2012

*N.B. – the conversions for the European Union are given for European Currency Units (ECU) between 1978 and 1998 and then for the Euro dollar from 1999 to 2010.

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