CUC, OfReg plan major changes for consumers, renewable energy program | Cayman Compass
Seeking to diffuse peak power demands, the Caribbean Utilities Company will make major changes, starting this month, to its renewable energy program ahead of a report about allocating resources during the next 30 years.
The changes, according to CUC and regulators at the Utilities and Competition Office, will include raising the 9 megawatt cap on the Consumer Owned Renewable Energy program, known as CORE, reducing some payments to program subscribers, expanding the size of private solar arrays – called “distributed energy resources” – and allowing them to connect to the national electricity grid without belonging to CORE.
The company says further changes will follow in January when it announces fresh charges for demand billing customers – temporarily limited to large commercial enterprises.
The changes come as CUC meets steadily rising power demands – reaching a record 105.6 megawatts on Aug. 29, according to its third-quarter report earlier this month – and makes increasing investments to meet them. In July 2016, for example, the utility commissioned two new 18.7 MW diesel generators, costing $85 million, designed to last 25 years.
CUC said it will accompany its new “demand billing” scheme, based on a consumers’ highest use of power in any given month, by efforts to diffuse peak demand and control consumption, reducing pressure on both generation and distribution assets.
25 March 2016: The Special Representative of the UN Secretary-General (SRSG) for Sustainable Energy for All (SE4All), Rachel Kyte, highlighted challenges to achieving Sustainable Development Goal (SDG) 7 (Ensure access to affordable, reliable, sustainable and modern energy for all).
Briefing UN Member States and civil society, she also provided an update on the SE4All initiative's plans for supporting implementation of the Goal.
Kyte emphasized that Goal 7 has three “pillars,” addressing energy poverty, technological advancement, and investment in energy efficiency. Stressing the interlinked nature of the Goal, she said the first pillar, addressing energy poverty, is essential to leaving no one behind, noting that the electricity access gap undermines education, productivity and economic growth, while the gap in access to clean cooking fuels is detrimental to health and gender inequality. On technological advancement, Kyte noted the past decade's reductions in the cost and complexity of renewable energy, which makes on-shore wind, solar photo voltaic, and other technologies more competitive with fossil-based energy sources. On energy efficiency, she said greater investment has made it possible to provide basic electricity services using much less power.
Despite this positive progress, Kyte warned that global economic trends have slowed the momentum for electrification, renewables, efficiency and clean cooking. She said the global energy transition is not taking place at a sufficient pace to meet the temperature goal set out in the Paris Agreement on climate change, or the broader development goals expressed in the 2030 Agenda.
Kyte also stressed that the financial needs to achieve SDG 7, which are estimated at over US$1 trillion annually, will need to come from both private and public sectors. She highlighted the importance of small-scale, private investments to develop renewable energy in many African countries.
On the role of the SE4All initiative in supporting the achievement of SDG 7, Kyte said the Forum's 2017 meeting will assess progress and provide substance for the High-level Political Forum on sustainable development (HLPF) and the UN system as a whole in its review of progress towards the SDGs. In the meantime, SE4All is developing a framework for addressing challenges faced by Member States in achieving SDG 7. Member States will have opportunities to provide input on this framework throughout May 2016, Kyte said, and the SE4All Advisory Board will consider the framework at its meeting, on 15-16 June 2016. [Event Webcast] [SE4All Website]
Bonaire (pop. 14,500), a small island off the coast of Venezuela, is famous for its beautiful marine reefs, which are visited by 70,000 tourists every year.
What many of the tourists don't realize is that the majority of the electricity powering their needs comes from renewable energy. Yet for the residents of Bonaire, the switch from fossil-fueled to renewable energy systems has made a world of difference.
Like many Caribbean islands, Bonaire originally relied on diesel fuel to generate electricity for residents, with a peak demand of 11 megawatts (MW). This fuel had to be shipped in from other nations, resulting in high electricity prices for Bonaire residents, along with uncertainty about when and how much prices might increase with changing fuel costs.
In 2004, everything changed when a fire destroyed the existing diesel power plant. Although tragic, the situation provided an opportunity for Bonaire to consider what kind of new electricity system to build. Temporary diesel generators were rented to provide power for the short term. Meanwhile, the government and local utility began working together to create a plan that would allow Bonaire to reach a goal of generating 100 percent of its electricity from renewable sources.
Bonaire's Electricity System Transformation
The result is a transformed electricity system on Bonaire. The island is now home to 12 wind turbines with a total of 11 MW of wind power capacity, which contribute up to 90 percent of the island's electricity at times of peak wind, and 40-45 percent of its annual electricity on average.
Battery storage (6 MWh) is included in order to take advantage of available power in times of excess wind, and provide that stored electricity in times of low wind. The battery also boosts the reliability of the overall system—it is capable of providing 3 MW for over two minutes, allowing time for additional generation to be started when there is a sudden drop in wind.
The Bonaire system also includes 14 MW of diesel generation, five total generators, which provide the necessary power to meet the load when there is not enough wind power available. The generators are equipped to run on both traditional diesel as well as biodiesel. The next steps in the island's energy transformation involve using local algae resources, grown in the large salt flats on the island, to create biofuel, which can then be used in the existing generators. This will allow Bonaire to operate a 100 percent renewable electricity system—with on average 40–45 percent from wind and 55-60 percent from biodiesel.
The new electricity system led to more reliable electricity, more employment opportunities, reduced dependence on oil (and its fluctuating prices), and a reduction in electricity bills. Bonaire residents currently pay $0.22/kWh for electricity, much lower than prices on other nearby Caribbean islands, which are often $0.36/kWh or above.
When oil prices spiked in 2008, while Bonaire was still using temporary diesel generators before making its transition to renewables, electricity prices on the island reached $0.50/kWh. The new electricity system also created jobs for the construction and ongoing operation of the wind farm, and for research and development of algae production capabilities and conversion to biofuel. Additional employment opportunities will be created for continuing algae production and operation of the biodiesel plant.
The success of the updated electricity system on Bonaire provides an important example to other nearby islands of the opportunity to achieve high levels of renewable energy penetration.
Within the Caribbean, there is a growing awareness of the need for a new economic paradigm for inclusive and sustainable development, in order to deliver solutions for the most pressing challenges which are made worse by international economic and environmental crises.
In the backdrop of the limited diversification of the countries’ economies and their dependence on natural resources, green economy offers a viable option to increase competitiveness and resilience of the region’s economies and merge prosperity and growth for all with sustainability.
“I commit my Government to working assiduously with the Social Partnership to ensure that the measures indentified in Barbados’ Green Economy Scoping Study, which can contribute to a more prosperous and environmentally sensitive Barbados, will be implemented expeditiously” said Freundel J. Stuart, Prime Minister of Barbados.
“We see a green economy not only as the area of renewable energy, but we see the green economy as a means of providing new opportunities for our people in St. Kitts,” said Earl Asim Martin, Deputy Prime Minister of St. Kitts and Nevis.
“We are also showing that it is possible to create a better, environmentally sustainable national economy without compromising our citizens’ legitimate aspirations for increased prosperity,” said Bharrat Jagdeo, Former Prime Minister of Guyana
Effective green economy strategies and programmes must address barriers to change that affect the whole Caribbean region. In searching for alternatives to “business-as-usual”, emphasis should be placed on redirecting investments and creating economic incentives that lead to sustainable development and poverty eradication.
UNEP, in cooperation with the CARICOM Secretariat and with financial support of the European Union, is supporting the region through a Caribbean Green Economy Initiative.
The outcomes of project, as well as the experiences and lessons learned during its implementation should offer ideas and opportunities for scaling up green economy transition in other countries and regions especially in island states in the Pacific, Africa and elsewhere.
Please download the project flyer on green economy in the Caribbean here.
Earlier this year, MIT researchers were the latest in a series of analysts to raise alarm about the perceived limitations of solar PV’s continued growth. In short, these analysts propose that variable renewables will depress wholesale prices when they run, thereby limiting their own economic success.
These concerns have garnered coverage in other venues (including Vox, Greentech Media, and The Financial Times), leading observers to suggest that the future prospects for renewables may be dim.
But are these concerns really justified, or do they rely on outdated assumptions about the grid and about electricity markets? We argue that these critiques, assuming a static grid and unchanging market mechanisms, can be used to make any innovation look bad. However, more integrative assessments of a least-cost, clean, and reliable power system of the future will factor in high fractions of variable renewables, along with more-efficient markets (and usage) and new technologies to integrate these resources seamlessly and resiliently.
In this article, we argue that falling wholesale prices is a good problem to have, and that concerns about economic limitations ignore remedies available from supply-side evolution, demand-side resources, and updated market mechanisms. As the world gathers in Paris for COP21, these messages are as important as ever for charting and pursuing a low-carbon clean-energy pathway.
Understanding the “Problems”
There has been increasing concern that variable renewables such as wind and solar may face an upper limit to adoption in the U.S. grid. The argument is that large amounts of variable renewables will create excess supply concentrated at the particular times of day when they produce. The notorious “duck curve” is an example of this—the duck-like shape of a particular, daily demand curve modeled for California’s grid when the production of large amounts of solar photovoltaics (PV) is netted out.
Critics argue that this technical characteristic of variable renewables, specifically PV—a daily generation pattern that is not perfectly matched with load—can have economic consequences for all forms of generators, especially the renewable resources themselves. Large amounts of renewable resources can sell a glut of power when it’s available, offsetting production from higher-marginal-cost resources (like gas-fired power plants). Since power prices are generally set by the resources with the highest marginal cost that clear in the market, additional generation from renewables tends to lower market prices.
This “merit order effect” often decreases revenues for fossil generators. This impact has been particularly dramatic in Europe, where generation from costly-to-run thermal plants during the daily solar peak was formerly very profitable for fossil generation owners. PV has decreased energy prices so much there that the top 10 EU utilities lost half their market capitalization. However, the merit order effect also means that variable renewables themselves may also earn lower profits as their adoption rises. A common conclusion is that variable renewables can play only a modest role in power production, marginalized by declining wholesale value at higher adoption levels.
The Other Half of the Thought Experiment: Three Factors That Can Accelerate Renewable Energy Adoption
Analysts who have put forth these arguments have elaborated only the first half of a microeconomics thought experiment. The problems they hypothesize hinge upon the laws of supply and demand, but omit important aspects of both, drastically overstating the perceived “problems.” Let’s see how.
1) Supply is changing holistically, not incrementally
Many of these thought experiments consider adding just a single supply resource (often solar PV) without considering many of the other supply-side changes happening at the same time. In reality, solar PV, wind, and natural gas are all joining the supply mix in a big way at the same time; the first two are often complementary and the third is dispatchable, so together, they can do a lot to mitigate the “duck curve” often portrayed.
At the same time, retirements of uneconomic assets will provide a countervailing buoyancy to wholesale prices. For example, even though old, dirty plants often have low production costs, they may exit the market anyway due to high costs of compliance upgrades or other fixed costs that erode their profits. The resulting less-abundant supply can cause the marginal supply curve to contract in quantity, leading to higher prices and higher profits for renewables and remaining fossil generators—unless demand drops too, as it’s doing in the industrialized world.
2) Demand is increasingly flexible, not fixed
Analysts arguing that renewables’ variability will limit their growth often assume perfectly efficient wholesale markets, but unchanged retail markets and fixed demand profiles. This incomplete and asymmetrical treatment ignores the emerging capability to harness the demand side of the equation. For example, people like and respond to time-varying pricing programs, and these programs are starting to roll out at scale. The electricity demand of many appliances including electric water heaters and electric vehicles is inherently flexible without disrupting the service provided. Furthermore, new business models (from both utilities and third parties) are driving this convenient flexibility by providing seamless solutions, unobtrusively, conveniently, and without requiring customers to become part-time energy traders.
These factors together increase flexibility of demand, an important low-cost resource, and enable what is the most natural response to changing prices in an efficient market where consumers find ways to use and benefit from cheap electricity from wind and solar. In other words, as renewables reduce energy prices during certain times of day, demand flexibility allows customers to shift demand to those times, which will both reduce energy prices at other (peak) times and raise the price paid to renewables during times when they produce the most.
3) Storage makes renewables dispatchable, not variable
Storage is already a common feature of concentrating solar power (via molten salt), and becoming an increasingly common feature of solar PV. For example, the all-renewable winning bids in the latest Chilean auction for unsubsidized electricity included not just solar power as low as $65/MWh in the daytime, but also nighttime solar power—via thermal or electrical storage—for $97/MWh at night. With storage, variable renewables become dispatchable, and dispatchable renewables do not have nearly the same merit order effect as variable ones. To be sure, our recent demonstration that 13 kinds of benefits of behind-the-meter distributed storage can make batteries cost-effective does not necessarily make them competitive with the many other ways to achieve grid flexibility, but similar reasoning suggests an abundant range of options for averting the problems that narrowly constrained models imply.
Whole-System Thinking Illuminates a Path Towards Least-Cost Outcomes
Analysts arguing that renewables will economically limit their own continuing adoption generally leave out the considerations listed above—and more importantly, these arguments are built on incremental thinking, assuming that today’s grid and markets are fixed and only one thing changes (e.g., PV or wind-energy market share). A more holistic, integrative, and accurate analysis would start with the ultimate objectives (reliable, resilient, and least-cost energy services), and promote a whole-system design to get there promptly.
With this perspective in mind, the characteristics of renewable energy that have caused so much hand-wringing—variable output and near-zero marginal costs of production—simply add to the list of design considerations for a market design that rewards efficient investment. Given supply diversity, demand flexibility, and emerging technologies like storage, variable renewables are unlikely to face any practical limit to growth even under current grid paradigms and market structures.
Nothing Sacred About Existing Markets
But even if renewables do face adoption limits in current markets, there is no reason we have to keep these markets the way they are. Wholesale power markets are largely a product of historical coincidence, formed out of the paradigms of the last century in which thermal power plants competed only with each other. Modern market design that reflects the realities and changing resource mix of the 21st century grid, being pioneered in Germany already, can go a long way towards aligning incentives for least-cost resource mixes. Particularly, incorporating behind-the-meter distributed energy resources and flexible loads into energy markets—as is being done in California and New York—can bring new capabilities and a refined level of control to the grid.
An Integration Challenge?
Evolving supply, flexible demand, storage, and updated markets can remove the limits to increasing renewable energy on the grid. In a later post, we will highlight how these same levers can address the common concerns—and misunderstandings—about “integration costs” of renewable energy. For example, a much-hyped recent paper claims that high-penetration renewables must incur steeply rising integration costs. But that turns out to be an artifact of extremely restrictive assumptions in the models used, combined with an assertion that competitive harm to thermal-plant incumbents is an economic cost of the renewables that beat them.
Renewables Are Here To Stay
The “problems” with renewables often brought up by analysts may be real in isolation, but are overstated when the full range of options is considered. Indeed, these are good problems to have: they’re the natural forces of supply and demand acting to send signals to market participants to diversify resource choice, incentivize demand flexibility, and invest in storage and other emerging technologies. Arguments against wind and solar PV conclude that these resources will need greater subsidies to survive in the “duck curve” era. But instead, we can tap the latent power of supply diversity, demand flexibility, storage, and market design to level the playing field for all resources, rather than clinging to the premises of the 20th century grid. Protecting the old system is far inferior to enabling the new one so that innovation can flourish, entrepreneurs can thrive, and all options can compete fully and fairly. Source
The Caribbean region stands at a crossroads, faced with several critical challenges associated with the generation, distribution, and use of energy. Despite the availability of tremendous domestic renewable energy resources, the region remains disproportionately dependent on imported fossil fuels, which exposes it to volatile oil prices, limits economic development, and degrades local natural resources. This ongoing import dependence also fails to establish a precedent for global action to mitigate the long-term consequences of climate change, which pose a particularly acute threat to small-island states and low-lying coastal nations.
While onerous, these shared challenges are far outweighed by the region’s tremendous potential for sustainable energy solutions. By acting on this potential, the Caribbean can assume a leading role in the global effort to combat climate change while promoting sustainable regional economic and societal development. Representing a geographically, culturally, and economically diverse cross-section of the region, the Caribbean Community (CARICOM) provides the ideal platform to construct the legislative and regulatory frameworks necessary to achieve this transition.
CARICOM represents 15 diverse member states: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. Although these states vary widely, they face many common energy challenges.
CARICOM has already begun to play a crucial role in the regional transition to sustainable energy. Recognizing the need to develop a coordinated regional approach to expedite uptake of renewable energy and energy efficiency solutions in the Caribbean, CARICOM adopted its regional Energy Policy in 2013 after a decade in development. The policy charts a new climate-compatible development path that harnesses domestic renewable energy resources, minimizes environmental damage, and spurs social opportunity, economic growth, and innovation.
To translate these intentions into action, the CARICOM Secretariat commissioned the Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS), designed to build on existing efforts in the region and to provide CARICOM member states with a coherent strategy for transitioning to sustainable energy. In this C-SERMS Baseline Assessment and Report, the Worldwatch Institute provides an analysis of the region’s current energy and energy policy situation, evaluates regional potential for renewable energy and energy efficiency solutions, and recommends regional targets for energy sector transformation in the short, medium, and long terms.
A recent press release from Canadian-owned utility Fortis TCI, contradicting an earlier pronouncement by the Rufus Ewing-led government that the company was considering a change in part from inefficient diesel generation to renewable or green energy, has reopened debate on a number of related issues, including the cost of electricity in the TCI and the relationship between successive TCI governments and Canadian firms.
Fortis TCI headquarters in Providenciales
Fortis Inc. is the largest investor-owned gas and electric distribution utility in Canada. Its regulated utilities account for 90 percent of total assets and serve more than 2.4 million customers across Canada and in New York State and the Caribbean – Belize, Cayman Islands and the TCI.
In 2011, the government of Belize expropriated the approximately 70% ownership interest of Fortis Inc. in Belize Electricity Ltd (BEL) an integrated electric utility and the principal distributor in Belize.
Fortis still owns Belize Electric Company Limited (BECOL), a non-regulated hydroelectric generation business that operates three hydroelectric generating facilities in Belize. There is an ongoing controversy over a secret and possibly unenforceable agreement between the then government of Belize and Fortis over alleged pre-emption rights in relation to national waterways.
In 2013, in opposing a proposed $1.5 billion acquisition of CH Energy Group in New York, a local grassroots group pointed to what they say is Fortis’ poor record in dealing with projects in Belize and British Columbia and citing “misinformation and a lack of trust” on the part of Fortis.
Meanwhile, Fortis TCI has possibly the highest cost of electricity in the western hemisphere and five times higher than those charged by the closest mainland utility Florida Power and Light (FPL). Further, the company returns to its Canadian parent a profit averaging $1,000 per year per household from a customer base numbering only 9,000 consumers, which equates to more than $80 per month per household in pure profit.
Notwithstanding the extraordinarily high profit margins enjoyed by Fortis, the company is permitted to import supplies and equipment duty free and constantly upgrades its distribution system in order to lower its long term costs.
While the internal operating statements of Fortis TCI have yet to be made public, it has long been suspected that the utility uses accelerated depreciation to write off capital expenditures quickly and therefore reduce their publicly reported profits. US accounting practices require that capital equipment and assets be depreciated more closely in line with the life expectancy of the asset, reducing the annual write off and therefore showing a more accurate, and possibly higher net profit.
The latest Fortis policy on renewable energy sources puts a halt to the hope of generating power from wind energy from the prevailing trade winds or from solar panels.
Fortis defended its new position on a reported failure of German green power efforts. However, Germany is a northern European country with far less solar energy available, which in spite of huge labour costs and social benefits is now expected to raise its electricity rates to less than $0.09 per Kwh or just 1/6th the cost of Fortis power.
Fortis purchased the former assets of Provo Power Company (PPC) in 2006, three years after the PNP came to power in a 2003 by-election. At the time of the purchase, then premier Michael Misick denied any knowledge of the buyout saying he had nothing to do with the buyout and could not forecast the fate of the employees. However, the stamp duty on the purchase would have yielded the country upwards of $9 million and was subject to negotiation with the Misick government and undoubtedly Misick himself.
At the time of the buyout, PPC was charging $0.26 per Kwh and now Fortis charges an additional surcharge that almost doubles the old rate to $0.51 per Kwh.
Last year, during the first year of the newly elected Progressive National Party (PNP) government, Fortis purchased the Grand Turk power company, Turks and Caicos Utilities from an American firm.
Following the initial Fortis buyout in 2006, the Misick government, which then included current premier Dr Rufus Ewing as director of medical services, proceeded to enter into a hugely expensive and controversial healthcare contract with another Canadian company, Interhealth Canada.
Interest in the Misick connection with Canada has also been revived by some so far unconfirmed but informed reports that he may be a person of interest so far as the Canadian authorities are concerned.
Speculation that the Canadians may have had a hand in Misick’s travel back to the TCI following his recent extradition from Brazil has led to questions as to whether this was designed to protect or pursue significant political and other figures in Canada.
In fact, Canadian interest in the TCI has been around since 1917, when then Canadian prime minister Robert Borden suggested that Canada annex the islands. In 2004, Nova Scotia’s three parties voted unanimously to let the TCI join their province if they ever became part of Canada.
Similar discussions were held by former premier Misick.
As recently as last year, Canadian MP Peter Goldring wanted to revive the proposal for the TCI to join Canada, following the return of elected self-government in the territory in November 2012.
Goldring has been a consistent advocate of increased cultural and economic ties between the TCI and Canada for more than ten years but the idea was dropped when Britain imposed direct rule in 2009, following a commission of inquiry that uncovered widespread and systemic government corruption in the territory.
Goldring, who has visited the islands several times, said they would fit in nicely with the rest of Canada.
But Canada stands to gain more than simply a vacation destination from such a union, he said: “From my perspective, certainly it goes far behind sun and sand. South Caicos Island, for example, is on a deep water channel. It could be readily developed into a deep-water port, which would give Canada tremendous advantage for trans-shipment throughout the entire region.”
He added the islands would be a strategic location from which to increase engagement with Haiti and Cuba.
Last week reporters at the Wall Street Journal sat down and did some arithmetic.
They looked at how much oil was selling for in the spring of 2014 (over $100 a barrel); looked at what it is selling for today (under $50); and concluded that if prices stay low for the next three years, the global oil industry and the countries it finances will be out $4.4 trillion in revenues. As these oil companies, nationalized and publically traded, will be producing roughly the same amount of oil in the next few years, the $4 trillion will have to come mostly out of profits or capital expenditures.
This is where the problem for the future of the world’s oil supply comes in. The big oil companies, especially those that export much of their production, have been doing quite well in recent years. National oil companies have earned vast profits for their political masters. Publically traded ones have developed a tradition of paying out good dividends which they are loathe to cut.
This leaves mostly capital expenditures on exploring for and producing more oil in coming years to take a dive as part of the $4 trillion revenue hit. Even if oil prices of $50 a barrel or less do not continue for the next three years, this still works out to a revenue drop of $1.5 trillion a year or about three times the planned capital expenditures of some 500 oil companies recently surveyed.
The International Energy Agency just came out with a new forecast saying that while current oil prices have the demand for oil products increasing rapidly, there is still so much over-production that the oil glut is expected to last for another year or more before supply/demand comes back into balance. The return of Iran to unfettered production would not help matters.
In looking at the next five years there are several trends or major issues that are likely to impact the supply and demand for oil. First is the recent price collapse that no longer makes it profitable to start projects to produce new oil, most of which now comes from deepwater, tar sands, or shale oil fields and is far more expensive to produce than “conventional” oil. As a result, investment in new oil production projects has dropped substantially in the last year and is likely to fall further.
On the demand side of the equation China is the biggest unknown. For the last 30 years the Chinese have enjoyed unprecedented economic growth, but recently the “world’s factory” has not been doing as well. Its government has been thrashing around wildly trying to stimulate growth and fend off a collapse in its stock market. Some believe China is a huge economic bubble that is about to collapse taking much of the world with it, and obviously reducing its ever-increasing demand for more oil.
The other 800-pound gorilla looming out there is climate change. Except for the drought in California and the storm that flooded New York a few years back, much of America and China for that matter has not been hurt badly enough by anomalous weather to reach an agreement that stopping climate change is the number one priority of all of us. Reports of “feels like” 159°F coming out the Middle East this summer have little impact on those convinced that climate change is a hoax. Should the effects of climate change worsen in the near future to the point that “do something before life on earth becomes impossible” becomes the majority perception of the issue, consumption of fossil fuels could be severely restricted. Although not widely appreciated, there do seem to be viable alternatives to fossil fuels waiting to be exploited.
The violence in the Middle East has grown worse in recent years. Although oil production in some areas has been restricted by geopolitics and violence, most of the oil continues to be produced. It is useless to talk about the next five years in the Middle East; however, we should keep in mind that there are at least a half dozen confrontations going on in the region that could morph into situations where oil production becomes more restricted.
When we net this all together, what do we have? Conventional wisdom currently says that oil prices are likely to be closer to $50 a barrel than to $100 for the next year or more. Capital spending on new production to offset declining production from existing oilfields is likely to drop still further leaving us in the situation where depletion may exceed the oil coming from new wells or fields. This is the argument that those who believe that we are at or near the all-time peak of world oil production about now are using.
The International Energy Agency says that the demand for the cheaper oil is rising rapidly, that production of shale oil currently is falling and the rest of world’s production is relatively static so we should be seeing oil prices rising again by 2017. This is where the turning point in the history of oil production could occur. In recent history rising prices have led oil producers to increase drilling for new oil production again. However the next time around, as mentioned above, there are new factors that may come into play. Will China be increasing its demand for oil in another two years? Will the Middle East still be exporting as much oil, and producing oil given the turmoil and the need to increase air conditioning? Will the world have decided the time has come to clamp down seriously on carbon emissions?
If global oil production does reach some kind of a peak this year and is lower in 2016, can it recover to reach new highs in the years following? Anything from inadequate investment stemming from persistently low oil prices to a major conflict in the Middle East could keep production from rebounding to new all-time highs. We are living in interesting times and just could see peak oil before we realize it. More
These countries are across the globe in the Caribbean, the Pacific, Atlantic and Indian Oceans, and the Mediterranean and South China Sea.
In addition to common difficulties faced by developing countries, SIDS have an additional series of challenges to cope with that require special assistance from the international community.
These challenges were highlighted in the 1994 Barbados Programme of Action (BPOA) and the Mauritius Strategy of Implementation (MSI) of 2005, both of which stated that the difficulties SIDS face in the pursuit of sustainable development are particularly severe and complex.
Recognition of these issues was reinforced in September of 2014 when Member States of the United Nations officially adopted the Small Island Developing States Accelerated Modalities of Action, known as the SAMOA Pathway.
The challenges that SIDSs face are varied, but all conspire to constrain their development processes.
They typically do not have a wide base of resources available to them, and thus do not benefit from cost advantages that this could potentially generate.
Coupled with small domestic markets, they experience difficulties in profiting from globalisation and trade liberalisation and are cripplingly reliant on external and remote markets with limited opportunities for the private sectors.
The cost of provision of energy, infrastructure, transport and communication are high, and along with high population densities, creates increased pressure on these already limited markets.
These developing countries generally have a heavy reliance on tourism and services; however, as a consequence of their low resilience and location, they are also heavily affected by disasters due to frequent natural hazards.
The unique characteristics and vulnerabilities facing SIDS were first addressed by the international community at the Earth Summit (United Nations (UN) Conference on Environment and Development) in Brazil in 1992.
The SIDS case was the focus of Agenda 21, a non-binding, voluntarily implemented plan of action of the Summit, committed to addressing the problems of sustainable development of SIDS.
This plan involved adopting methods to enable SIDS to function and cope effectively with environmental change, and to mitigate the impacts and reduce the threats posed to their marine and coastal resources.
Following Agenda 21, the Barbados Programme of Action was introduced in 1994, in an effort to provide further aid and support to SIDS. Similarly, its ultimate aim was to improve sustainable development.
It highlighted the challenges of converting Agenda 21 into precise strategies, movements and procedures at the national, regional and international level and listed fifteen areas of priority for specific action.
Five further areas were selected by the UN General Assembly in 1999, recognising their urgency. These five were: climate change, as the rising sea level could render some low-lying SIDS submerged; natural and environmental disasters and climate variability, with an emphasis of improving disaster preparedness and recovery; freshwater resources, preventing water shortages as demand increases; coastal and marine resources, promoting the protection of coastal ecosystems and coral reefs; energy, developing solar and renewable energy in order to lessen dependence on imported oil; and finally tourism, focusing on the management of the growth of the tourism industry and the protection of the environment and cultural integrity.
The 2005 Mauritius Strategy of Implementation further complemented the BPOA.
It gave recognition to the challenges that are unique to SIDS, and proposed further action towards their sustainable development.
The MSI emphasised the location of SIDS in the most vulnerable regions of the world with respect to natural and environmental disasters and their rapidly increasing impact.
It made call for a global early warning system covering threats such as tsunamis, storm surges and cyclones, and stressed that some major adverse effects of climate change are already being observed.
Further, the MSI recognised the importance of international trade for building resilience and sustainable development in SIDS, and established the necessity for international institutions, including financial ones, to pay more specific attention to the structural drawbacks of SIDS.
The MSI went further on matters of trade, stating that “most small island developing states, as a result of their smallness, persistent structural disadvantages and vulnerabilities, face specific difficulties in integrating into the global economy”.
More recently, in September 2014, the Small Island Developing States Accelerated Modalities of Action, also known as the SAMOA Pathway, was adopted. As in the case of the previous adoptions, the strategy recognises the need to support and invest in SIDS so that they can achieve sustainable development. Distinguishing the Samoa Pathway slightly from the BPOA and the MSI is the idea of investing in the education and training of the people of SIDS.
The aim of this idea was to create “resilient societies and economies, with full and productive employment, social protection and decent work for all”, and to provide “full and equal access to quality education at all levels”, the latter which is a vital ingredient for achieving sustainable development.
The promotion of education for sustainable development is especially crucial for SIDS that are under direct threat from climate change, as it will “empower communities to make informed decisions for sustainable living rooted in both science and traditional knowledge”. Finally, the SAMOA Pathway supports efforts “to promote and preserve cultural diversity and intercultural dialogue, which provide a mechanism for social cohesion and, thus, are essential in building blocks for addressing the challenges of social development”.
Many SIDS have recognized the need to embrace sustainability through their own internal processes, however, without external aid from the international community, the required change will not come quickly enough. Following on the adoption of the Samoa Pathway, 2015 is rapidly becoming a watershed year for global processes of importance to SIDS.
Convergence is occurring across a broad spectrum of activities as this year has seen the international community deliberate on the Post 2015 framework for disaster risk reduction which culminated in the adoption of the Sendai Framework, new expected agreements in the post 2015 development agenda with Sustainable Development Goals replacing the Millennium Development Goals. New agreements are also expected on how development is financed and there remains expectation of a new international agreement on climate change.
Given their far reaching impact, these developments are critical, particularly when viewed from the perspective of the small island developing state.
Notwithstanding the global consensus, serious challenges remain for SIDS and for the foreseeable future; they will remain a special case for sustainable development.
However, with a global consensus and an avid commitment to the advancement of sustainable development in these countries, positive change is most certainly on the horizon.
George Nicholson is the Director of Transport and Disaster Risk Reduction and Anastasia Ramjag is the Research Assistant of the Directorate of Transport and Disaster Risk Reduction of the Association of Caribbean States.
Note: the opinions expressed in Caribbean Journal Op-Eds are those of the author and do not necessarily reflect the views of the Caribbean Journal. More
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