New fuel exporters should form renewable energy fund

Last Updated on Tuesday, 15 February 2022, 20:43 by Denis Chabrol

Barbados’ Prime Minister Mia Motty and President Irfaan Ali

Barbados’ Prime Minister, Mia Mottley, on Tuesday proposed that new fossil fuel exporters like Guyana set aside at least 10 percent of their revenues into a fund for renewable energy, an idea that President Irfaan Ali said would require detailed study.

“We believe that we should propose an accord among the new energy exporters to invest more than 10 percent but at least 10 percent of net revenues in renewable energy,” she told the opening of the International Energy Conference being held at the Marriott Hotel.

Asked to respond on whether he thought the idea was good one, President Ali briefly stated that, “we have just heard about the idea so the idea she spoke about is in development stage so these things still have to be assessed. You can’t determine what is workable and what is not. They are just fresh ideas that came out today.”

Guyana, Suriname and Ghana are among the recent fossil fuel exporters who are projected to discover and produce even more in the coming decades.

Strengthening her idea of the need for a special fund to invest in renewable energy technologies, she noted that the G-20 Nations are responsible for 80 percent of global greenhouse gas emissions and earn significantly from oil and gas revenues, she said the mechanism must ensure that ordinary people benefit. “If we can put, therefore, a significant percentage of that revenue- at least 10 to 15 percent- in a fund to finance renewable energy while ensuring that our citizens are also beneficiaries of that renewable energy compact, then I believe we will have advanced the discussions,” he said.

The Barbadian leader, whose nation produces 1,000 barrels of crude per day, justified the need for such a fund, saying that the new oil producers do not have sufficient money to “easily finance our development” in the transition to net zero emissions and the future prospects of such support look dim. “We have not been given the assurances, not even in adaptation funding, that we can get it, ” said the 2021 United Nations-designated Champion of the Earth in the area of environmental policy making.

Barbados also wants the establishment of a Green Investment Bank to work with the Green Climate Fund and other financiers to provide banking solutions that are suitable to Caribbean needs rather than determined by extra-regional risk advisers.

Ms. Mottley said Developed Nations, including former colonisers, have been asking countries to reduce carbon emissions although they had been granted independence without a development compact, stability, access to education, health, housing and other sustainable development goals. In apparent reference to the World Trade Organisation (WTO) scrapping preferential market access for Caribbean bananas and sugar, she said lamented that the global trade body had ruled that there could be no special and deferential treatment for small states. “We then see the destruction of domestic agriculture and manufacturing over the course of the last thirty years since its (WTO) establishment,” the Barbadian leader said. Ms. Mottley also highlighted that the region has lost revenue due to new global financial rules, “to which we are committed”,  to combat money laundering and terrorist financing in the wake of the 2011 terrorist attack on the United States. “The consequences of the regulatory framework for us was to impose significant cost and to reduce further space. The complicated scenarios of development have added to the debt that we carry but the greatest contributors to that death have been the natural disaster crises that we have had to face over and over and over,” she said. The Caribbean islands are prone to annual hurricanes, earthquakes and volcanoes while the southern continental member states of the Caribbean Community (CARICOM) are increasingly being flooded due to heavy rainfall and in some instances extreme high tides.

Also proposed by the Barbadian leader is an international exchange of renewable energy investments that would see listed projects that meet minimum environmental, social, governance standards, local content and local ownership conditions. “A single place for dedicated investors and common minimum standards will ignite investment and growth and provide for our entrepreneurs literally opportunity and diversity and drawing investors and entrepreneurs that hitherto would not have been there,” she said.

Ms. Mottley hoped that other countries would join Barbados in granting sovereign securities with natural disaster clauses that determine what happens before the disaster happens and so reduce the cost of capital. “Regrettably, I suspect that people do not want the cost of capital reduced and hence their stubborn refusal to accept natural disaster clauses as a way of reducing that cost,” said the Barbadian leader who is a lawyer by profession.