Dr. the Right Honourable Keith C. Mitchell
“Building Resilience To Climate Change In Islands Through The Energy Sector:
North–South Cooperation For Sustainable Energy Development in Island States”
National Workshop On Sustainable Energy & Climate Resilience
Radisson Grenada Beach Resort, Grand Anse
St George, Grenada
26–28 August 2015
Grenada, like many other Small Island Developing States (SIDS), is pursuing a new economic strategy, because the old business as usual approach has not worked; and even more so, it has failed to deliver adequate benefits for the population, based on aspirations of employment, education, housing, medical care, proper nutrition and living in a safe and secure environment.
The global economy has grown to almost a trillion United States dollars, per year; however, the most indebted countries per capita are primarily SIDS. A major reason for this has been the result of energy choices and the impacts of natural disasters. Unfortunately, there is no current model that provides guidance as how to sustainably develop small islands by overcoming inherent factors, such as disadvantages of economic scale.
Economic globalization has eroded the preferential economic and development assistance that was once available to SIDS based on its colonial history, where these countries were first and foremost producers of agricultural commodities such as sugar, spices, coffee, cocoa and bananas — all of which have seen better days in terms of relative pricing and production.
The current economy is very heavily dependent on a few products, and dominated by services and tourism, which is now the main generator of foreign exchange.
Agriculture has been negatively impacted by natural disasters over the past two decades, and its contribution to gross domestic product (GDP) is less than six (6) percent. With projections for greater negative impacts resulting from changing climatic conditions associated with increasing concentration of greenhouse gases (GHG) in the atmosphere, Grenada like the majority of SIDS, faces an uncertain economic future.
A major issue facing SIDS and Grenada, in particular, is how the economy will continue to generate the necessary foreign exchange to pay for the import of fuels, food and other key inputs into the economy.
Recent experiences with drought conditions that limited fresh water availability and forced several governments to decide whether to use limited water to extinguish wild fires or allow them to burn in order to save water, is an indication of future challenges and will require different mindsets.
Improving the quality of life of the population requires rethinking the model of development that has so far been pursued by our States; taking into consideration the new climate reality that is projected to have serious consequences for major economic assets, including the world-renowned Grand Anse Beach, the foundation of the island’s tourism.
Critical to this new thinking is the role of the energy sector and how decisions for the provision of energy services can positively impact agricultural production, freshwater resources, waste management and the tourism industry.
Historically, these sectors have operated with limited synergy; each essentially developing and implementing individual policies and strategies.
This approach has to be revisited in order for the country to develop an economy that is less vulnerable to climate change and changes to the marine environment, ranging from sea level rises to increases in ocean temperature and acidity.
Already, this is negatively impacting the fisheries industry, a traditional livelihood for a significant portion of the population.
New thinking is also required for identifying the means for financing the new approaches, given the country’s debt situation — much of which was brought on after the devastation of Hurricane Ivan a decade ago.
If we accept that the dependence on imported fuel, which consumes the major share of foreign exchange earnings, is a long-standing source of vulnerability for the national economy, due not only to the changes in relative prices to our exports, but also the volatility of the global energy market, then we must ask, what should be the energy vision of Grenada.
Given the vast renewable energy resource endowment of the country and the poor efficiency at which we use energy to produce goods and services, what should our goals be for the next 5, 10, 20 years, and how the policy environment needs to change to get us to realize that vision?
What would a national development plan, focused on climate-resilient economic growth look like?
Just as is the case with conventional economic growth, there are really no models to guide SIDS. The multi-lateral organizations with this capability have basically used the models for continental countries, ignoring in the process, the unique characteristics of small island states, including high energy costs, communication challenges and transportation costs. The past proven development model was based on low oil prices, cheap labour and the absence of trade rules as they exist today.
One has to wonder then, had it not been for the PetroCaribe arrangements, what would be the current economic situation of many Caribbean SIDS. The reality however, is that the PetroCaribe lifeline represented borrowing from the future to exist in the present. This has to be corrected in short order.
The current low prices of fuels, resulting from technological advancements in locating new petroleum resources, production methods such as hydraulic fracking and horizontal drilling, coupled with reduced demand, provide the opportunity and space to plan and implement the transformation of the energy sector.
The period of low oil prices which is projected to last for a while, provides an opportunity to develop renewable energy sources and significantly improve efficiency to reduce the need for imports.
Grenada has vast renewable energy resources but needs to open competition in order to integrate the private sector in providing technologies for efficient use and renewable energy development. The question is how to assign scarce resources to technologies that are competitive and can provide additional co-benefits? Grenada should continue to actively and aggressively promote efficiency and green growth.
Energy and water are essential factors for competitiveness in the tourism industry, thus greater attention should be given to developing synergies in policies. How can the agricultural sector address food security and promote gainful employment? What should be the relationship between the agriculture and energy sectors? What kind of agriculture is consistent with maximizing freshwater resources? How can the agriculture sector contribute positively to waste management in order to minimize imports of fertilizer and reduce the environmental damage to the coastal ecosystem? Also critical is the issue of developing our vast ocean resources to provide energy fresh water and food security.
Can Grenada develop a meaningful manufacturing sector to provide employment, which is now not an option because of the high energy prices? How can Grenada, where power cost has been for most of the last two decades, above USD 0.30 per kilowatt-hour (kWh), compete with countries where costs are less than half this price?
Capitalizing on the opportunities afforded by Grenada’s good standing with international financial institutions and debt renegotiation, as well as the support available from climate change agreements and the cheap international prices, resulting from the surplus capital in a USD 1 trillion global economy, can provide valuable financing options to help propel the energy sector transformation.
The task of building a climate resilient economy requires a systematic approach, starting with the development of a methodology that will help not just Grenada, but all islands states. Recognizing this makes the deliberations over the next two-and a-half days towards development of this methodology, a critically important task. If we are successful, a necessary part of the tools necessary for assisting island nations forge a climate resilient economy would have been achieved.
The quality of life of a society is directly proportional to the availability of energy and the efficiency which it is used to generate goods and services.
The methodology therefore, has to start with transformation of the energy sector to realize a new economy based on the vast renewable energy resources endowment of the country, and where the methodology has to help decision-makers develop priority strategies for sustainable energy development, in a manner that maximizes synergy to reduce climate vulnerability and the unpredictability of the international petroleum markets.
The Government and People of Grenada share our partners’ emphasis on the importance of a long-term vision to create an enabling environment and an incentive structure to unlock transformation. There are many good examples over the world that show that increased growth can be achieved without increased emissions.
Through our own efforts, and with this new partnership with SIDS DOCK, the Caribbean Community Climate Change Centre and the Swedish Energy Agency, we are confident that Grenada can achieve this goal.
In closing, I therefore express gratitude to the Government of Sweden and the Swedish Energy Agency for its support of the initiative and for its cooperation with the Government of Grenada and SIDS DOCK.
As a founding member of the 32-member SIDS DOCK organisation, and as one of the first countries to ratify the SIDS DOCK Treaty, I am satisfied with the progress our young organization is making and I salute the leadership of SIDS DOCK in this regard. As one of the three Heads of State and Governments represented on the SIDS DOCK Heads of Council responsible for the development of the organisation, we commend the members who serve on the SIDS DOCK Steering Committee.
The deliberations and decisions from this workshop here will have far-reaching consequences for Grenada and the other SIDS, which are, by and large, in a similar situation of facing an uncertain future due to failed past policies and the onset of climate change impacts.