Already vulnerable to hurricanes, sea-level rise and other environmental disasters, sun-soaked Caribbean nations have some of the highest energy bills in the world, relying heavily on imported fossil fuel and diesel-powered energy plants to keep the lights on.
Now the United States is offering to help.
In a meeting with Caribbean leaders Thursday during the Ninth Summit of the Americas in Los Angeles, Vice President Kamala Harris will announce a series of new initiatives to help Caribbean nations better tackle climate change and make the move to alternative energy sources. The U.S. is committing to, among other things, help countries identify and launch clean energy and climate projects, access financing for climate initiatives and facilitate investments by connecting Caribbean nations with American companies and technologies like climate-smart tools.
“We all know that energy prices have been high and this is a strain on their economies in the wake of the COVID crisis, which was already a strain,” a senior administration official said about the Caribbean region. “And so one of the core pillars of this initiative is to strengthen their energy security and the second is to promote climate adaptation and resilience. Again, these are countries particularly vulnerable to the climate crisis, whether it’s rising sea levels, or mega storms that affect them, even more than many others.”
The new initiatives are being launched as part of the U.S.-Caribbean Partnership to Address the Climate Crisis 2030 or PACC 2030. While the goal is to help Caribbean nations meet their obligation under the Paris Agreement on climate change, the new commitments are also part of President Joe Biden’s larger economic framework and goal during the summit, where he’ s vowed to have the U.S. mobilize private investments, create clean energy jobs and help the region become more resilient.
The U.S.’s Caribbean commitments, the administration official said, came out of a virtual meeting that Harris had on April 12 with leaders of the 15-member Caribbean Community regional bloc known as CARICOM, and the Dominican Republic. During the discussion, leaders raised concerns about their energy and climate crises, as well as the devastating effects of the COVID-19 pandemic on their tourism-dependent economies.
“She heard directly from them on their concerns and priorities, and what she told them is that we intended to respond by launching new initiatives to be responsive to those concerns and priorities,” the official said.
The U.S. declined to put a dollar figure on its package of offerings, saying efforts to work with multilateral development banks to get additional financing to Caribbean nations is “going to be a process.”
Low-rate financing is key, experts say
This is not the first time that the U.S. has sought to address the energy dilemma in the region.
As vice president, Biden in 2015 sought to reduce the Caribbean’s dependence on subsidized oil from financially-struggling Venezuela and the sway of China’s influence in the region as Beijing became the source of funding for major infrastructure projects such as new roads and bridges.
He hosted the first Caribbean Energy Security Summit in Washington, where the U.S. moved to put in place a new institutional framework to help the region take steps toward renewables by setting up meetings with private-sector investors. Despite some initial interest, the enthusiasm waned.
Whether the new initiative will satisfy Caribbean leaders and stimulate the kinds of investments and job creations the U.S. hopes, remains to be seen.
Oil producers, Trinidad and Tobago, Guyana and Suriname, for example, have all said they have no plans on giving up fossil-fuel drilling. Also, before the pandemic devastated their economies, Caribbean leaders stressed that they needed access to concessional financing at below market rates. They argued that they were being excluded from low-interest development dollars because they were viewed as middle-income countries by international financial institutions even though their economies were struggling.
The low-rate financing remains key, regional experts say, in whatever plan or new sources of funding the U.S. is offering. This includes accessing climate and green funds, which regional leaders say need to be more user friendly to help them mitigate against disasters by strengthening infrastructure resilience, which cuts the cost of rebuilding post-disaster.
“What’s the cost and where’s the money’s coming from?” said Anthony Bryan, a leading energy expert and consultant who taught international relations at the Institute of International Relations at the University of the West Indies in Trinidad. “That is the bottom line. Unless that is made very clear, I think the reception is going to be very lukewarm.”
Acknowledging that the middle- and high-income-countries designations have been obstacles for financing projects in the region, the administration official said “we are going to work to promote concessional financing, even to countries that by some standards are considered high or middle income.
“And we’re going to be particularly focused on providing assistance when they are affected by hurricanes or other natural disasters, which doesn’t change the way they’re categorized by these multilateral institutions,” he added. “They can still sometimes be considered high income. But they don’t have access to the financing they need even though their economies have been significantly setback.”
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