The Right Honourable Mia Mottley, Prime Minister of Barbados encouraged fellow CARICOM States to actively pursue the policy measures that would transform CARICOM’s energy landscape. Prime Minister Mottley made this call to action while delivering the keynote speech at the joint launch of the Caribbean Centre for Renewable Energy and Energy Efficiency’s (CCREEE’s) Project Preparation Facility and the Caribbean Development Fund’s (CDF’s) Credit Risk Abatement Facility (CRAF). The launch was held virtually on Wednesday, November 25th, under the theme ‘Accelerating Sustainable Energy Solutions: From Ideas to Investments’.
“[Barbados has] come to the recognition that there is going to have to be an interventionist role for the State if we are going to make the progress that we want to make by 2030… If we were simply to reply on the financial return for renewable energy, then we would put these projects on pause. But for us, it is not simply about a financial return. For us, it is about survival and for us it is about a capacity to maintain our countries as countries as we know them… A determination will be made that the economic benefits and the benefits for national security justify our involvement in the areas of renewable energy,” the Prime Minister said.
The Prime Minister stressed that policy inaction bare a weighty cost.
“This is a serious conversation to have because in many instance it is going to require some level of intervention on the part of the State if we are going to see any action that is appreciable over the course of the next few years… There is a cost to smallness and there is a cost to our wanting to survive… That cost will be borne by us all by making the transition to renewable energy,” she said.
The PPF and CRAF projects aim to support investment and development of sustainable energy projects in the Region. The PPF will provide technical assistance, advisory support, and financial matchmaking for regional energy project developers, investors, and financiers. Services include, but are not limited to, business plan refinement, technical validation and technical feasibility, legal advisement, and financier networking. The PPF will reach full operationalisation by April 2021 to include both private and public sector streams.
The CRAF will help ensure sustainable energy investment by supporting local financiers through a credit risk instrument, offering lenders financial guarantees to facilitate additional lending and investment in the energy sector. The project will incentivise lending to small and medium-sized enterprises (SMEs) seeking renewable energy and energy efficiency solutions. This pilot phase of the CRAF launched, for Barbados, Guyana, Suriname, Saint Lucia, and Belize, with an initial capital base of US $10M to underwrite guarantees that will unlock in excess of 100 new loans totaling US$ 26M to SMEs for RE and EE technology investment in the pilot year alone.
Prime Minister Mottley welcomed the launch of the PPF and CRAF projects as they address the clear financial , technical, and technical capacity needs of regional energy project developers.
“Why have we not seen the level of critical progress that we would normally have expected given the excitement, intensity, and passion surrounding these discussions for almost a decade… It comes down to a combination of lack of access to capital, lack of capacity to persuade persons that the projects are viable, and regulatory arbitrage… We have today put before us two of the critical components that have been reflected as obstacles… A lot of the younger and smaller people who want to get into this industry have been confronted with the difficulty of what they’re preparing and how they’re preparing and to that extent, the product being launched here this morning… is welcomed because it will aid in areas where there is a clear need,” she said.
Dr. Gary Jackson, Executive Director of CCREEE highlighted the importance of these projects that make direct investments in the lives, livelihood, and survival of CARICOM citizens.
“People. Policy. Plan. Project. Partnership… People are the core of what we do at CCREEE and at our regional institutions. Our human capital is really what is important to us. For them to survive this pandemic, for them to survive these economic challenges that [are] upon us… we have to find the right mechanism, [the] right platform and [create an] enabling environment to support our people. They are necessary for economic development. We are the future. Our children are the future’s future. It is important we build capacity from within and it is very important that we connect with our brothers and sisters leaving no man behind,” Dr. Jackson said.
That ‘right’ mechanism, Dr. Jackson explained, is the policy accompanied by action.
“Policy is what’s going to help us to give us some direction as the foundation for an appropriate legislative and regulatory construct. We have to use that policy based on our people. It informs [their] lives. It encourages. It transforms. It will be part of the energy transition that we so seek for our survival, but the policy cannot stand alone. The policy would need to have some enabling functions, legislative and regulatory, to give it teeth, to make it an action that can transform the lives of our people,” he said.
While policy and government have crucial roles to play in CARICOM’s energy transformation, Mr. Ronald Soomer, Chief Executive Officer of the CDF impressed upon all those attending the importance of private sector involvement.
“The CDF… recognised the need to address funding gaps and to craft financing solutions to support investments in the sustainable energy space. So, how did we seek to respond to that need? We started from the premise that CARICOM member states in delivering on their climate change response priorities understand and accept that they must engage the private sector, particularly small and medium-sized enterprises. Domestic investment in sustainable energy technologies and practices represent a close positive nexus between the environmental objective of reducing energy emissions, and therefore, mitigating the adverse impact on climate change and the economic pursuit of enhancing business competitiveness by reducing operating costs,” Mr. Soomer said.
The potentially transformative involvement of the private sector, Mr. Soomer explained, was a key consideration in the establishment of the CRAF.
“An under-exploited avenue for increasing ease of access to finance for SMEs is the active encouragement and facilitation of the local financial sector to become a significant player in providing innovative financing options. So, one of the key drivers in the design of CRAF is the need to establish a catalyst of expanded lending by empowering local market players to exploit untapped opportunities,” he said.
Mr. Simon Zellner, Project Leader for the Technical Assistance Programme for Sustainable Energy in the Caribbean (TAPSEC) highlighted the regional transformative potential of the PPF and CRAF.
“For decades, we once looked at energy as a standalone industry tangential to all others. Today, as we distance ourselves even further from this notion, it is important to note just how deep the penetration potential for the PPF and the CRAF are, signalling just how important and monumental this work is today. We know that the issue of energy lies firmly at the centre of our lives, businesses, industries, and economies,” Mr. Zellner said.
Mr. Zellner then reaffirmed TAPSEC’s commitment to transforming CARICOM’s energy landscape.
“It takes robust partnership, technical capacity, strong networks and a well-resourced and equipped eco-system, to turn this potential into power… I pledge the [Deutsche Gesellschaft für Internationale Zusammenarbeit’s (GIZ’s)] continued support to ensure successful implementation and impact of the PPF and CRAF and reaffirm our commitment to all our partners as we work together to secure the Caribbean Community’s energy future,” he said.
The CCREEE and CDF signed a cooperation agreement, combining their efforts to welcome interested project developers and financial institutions to partner with the projects. The Honourable Kerrie Symmonds, Minister of Energy, Small Business and Entrepreneurship, Barbados Ambassador to CARICOM, Mr. David Comissiong, Assistance Secretary General of CARICOM, Mr. Joseph Cox, and CARICOM Energy Unit, Head of the CARICOM Energy Unit, Mr. Devon Gardner also attended the launch.