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The island, with a population of 12,000 currently imports 4.2 million gallons of diesel fuel annually, at a cost of 12 million dollars, a bill it hopes to cut down significantly. Nevis consumes a maximum of 10 mw of energy annually.
Deputy Premier and Minister of Tourism of Nevis, and Minister of Foreign Affairs of St. Kitts and Nevis Mark Brantley said geothermal energy is something that sets Nevis apart.
“About 10 years ago we discovered that we have geothermal energy here. It has taken a while but we are not at a stage where all the exploration work has been done and we have been assured that geothermal goes live in December of 2017,” Brantley told IPS.
“What that means is that when that plant switches on in December of 2017, fully 100 per cent of Nevis’ electricity will be supplied by renewables. Nowhere else in the world can boast that and so it will make us the greenest place on planet earth. That’s the new tagline – the greenest place on planet earth.”
Nevis is the smaller island of the pair, known as the Federation of St. Kitts and Nevis. It is home to active hot springs and a large geothermal reservoir. Seven volcanic centres have been identified on Nevis and drilling at three sites has indicated that the geothermal reservoir is capable of producing up to 500 mw of constant base load power year round.
Brantley said the shift to geothermal could not have come at a better time.
“We’ve just come out of Paris with COP21; the world is talking about climate change and what we can do. I think it really gives Nevis another string to its bow in terms of things that we can talk about and exciting developments here that would drive traffic to the island as people come and would want to be a part of something that is so natural,” Brantley said.
“First of all, we’ll certainly go completely green. Our emissions, our carbon footprint is reduced to almost zero. Secondly, we have a situation where you have the cost savings are likely to be anywhere from 40 to 50 per cent.
Traditionally we pay anywhere from 40 to 45 US cents per kilowatt hour. Geothermal is being offered at about 17 or 18 cents per kilowatt hour. So just imagine, your operating costs are cut dramatically and how that can attract businesses. We are already having interest from people wanting to do electric scooters so just think Jetsons,” Brantley added.
Brantley referred to the 1960’s American animated sitcom ‘The Jetsons’ where the family resides in Orbit City. All homes and businesses are raised high above the ground on adjustable columns. George Jetson lives with his family in the Skypad Apartments: his wife Jane is a homemaker, their teenage daughter Judy attends Orbit High School, and their early-childhood son Elroy attends Little Dipper School. Housekeeping is seen to by a robot maid, Rosie, which handles chores not otherwise rendered trivial by the home’s numerous push-button Space Age-envisioned conveniences.
“The idea here, if you can imagine a place where visitors come, there are electric cars, electric scooters and everything because we have a cheap source of energy. Not only that, the experts are telling us that we have maybe somewhere north of 150 megawatts of available energy. Nevis only uses 10, so you have enough to export to St. Kitts because they are just two miles away,” Brantley said.
“In fact we’ve already done the interconnectivity studies; but also islands that are within that radius so Antigua is a possibility because they have no prospects for geothermal energy there.
“Anguilla has no prospects there but we also have neighbouring islands like St. Barts, Saba, St. Eustatius who have potential so Nevis can potentially, I think in a year become a net exporter of energy. And as a net exporter of energy we can change the whole economic paradigm in terms of what we rely on here so that we can wean ourselves even off tourism as a main stay and have energy and energy production instead. So I think there are some exciting times ahead for Nevis,” he added.
Dominica recently launched its own geothermal project with plans to construct a small power plant for domestic consumption and a bigger plant of up to 100 mw of electricity for export to the neighbouring French islands of Guadeloupe and Martinique.
A Geothermal Energy Bill is to go before the House of Assembly in the first quarter of this year. Prime Minister Roosevelt Skerrit said the Geothermal Bill shows the commitment by his Government to pursue geothermal energy development.
“We’re hoping in the first quarter of this year to go to parliament to pass the legislation. It had to go through a rigourous review by our partners. That has been concluded. You know we had the challenge with the French consortium. We are engaging new partners but we’re also looking at the possibility of going with a small plant on our own. We’re engaging friendly governments, we’re engaging institutions,” he said.
“As you know we have an offer of a loan from the World Bank and that is still on the table. So the government now has to look at the financing options and decide which way it’s going to go with the geothermal plant. But we believe, notwithstanding the storm, it is important for us to pursue those renewable energy imperatives because based on advice, this would certainly be a major plus for the economy of Dominica.”
In August Tropical Storm Erika tore across Dominica, devastating villages, wrecking bridges and leaving a reconstruction bill worth half the country’s annual GDP.
About 10 inches of rain fell in a few hours, turning rivers on the mountainous island into torrents and hillsides into deadly mudslides. The capital Roseau was engulfed by water, and the island’s main airport was out of action for close to a month and will cost some 15 million dollars to repair. At least 31 people died in the storm.
Credit: Inter Press Service News Agency
PRESS RELEASE – The largest single wind turbine in Barbados has been installed at the U.S. Embassy to Barbados, the Eastern Caribbean, and the Organization of Eastern Caribbean States.
The 20 kilowatt turbine, which is also the largest operating at any U.S. embassy in the world, underscores Embassy Bridgetown’s commitment to clean, renewable energy development throughout the region.
Since the 70-foot-high turbine was installed in Wildey, St. Michael, on December 16, it has produced approximately 63 kilowatt hours of energy daily. On an annual basis, it is expected to produce 56 megawatt hours. The turbine is built to withstand a Category 2 hurricane, and is designed to shut off and turn 90 degrees into the wind when wind speeds reach 59 mph. It is also incredibly quiet, producing only 50 decibels of sound even at its maximum speed of 100 rpm. Construction of the turbine took 72 days.
“Putting up this wind turbine has been an Embassy goal for several years and I’m delighted it has come to fruition,” said Larry Palmer, U.S. Ambassador to Barbados, the Eastern Caribbean, and the Organization of Eastern Caribbean States. “This shows we ‘walk the walk’ as well as we ‘talk the talk’ when it comes to being serious about mitigating climate change and promoting renewable energy.”
The new wind turbine is Embassy Bridgetown’s latest project to further its goals of mitigating the impact of climate change and promoting clean energy through adaptation initiatives and energy partnerships. Other recent projects include adding all-electric vehicles to the Embassy motor pool fleet and replacing chancery lighting with energy-efficient LED lighting.
“These green initiatives can make a real difference to our planet over time,” said Ambassador Palmer. “We intend to lead by example and encourage others to look at similar ways they can secure a cleaner energy future for us all.”
Credit: St. Lucia News Online
Guyana signed a readiness grant agreement with the Green Climate Fund (GCF) at the 21st Conference of the Parties (COP) in Paris on Tuesday, December 08, 2015. The funding will provide USD 300,000 to Guyana to help the country build capacity to access GCF funding for its priority projects in the future.
This project, which was negotiated between the Caribbean Community Climate Change Centre (CCCCC or 5C) and the Ministry for the Environment, Land and Sea of Italy, aims to address several issues affecting CARICOM States under the rubric of Climate Change, inclusive of mitigation, adaptation and vulnerability. The 5Cs is an Accredited Entity (AE) to the Fund, meaning that it can partner with GCF in delivering mitigation and adaptation projects on the ground in the Caribbean.
Executive Director of the 5Cs, Dr. Kenrick Leslie attended the ceremony along with H.E. Raphael Trotman, Minister of Governance of the Department of Natural Resources and Environment, who signed on behalf of Guyana in the presence of H.E. Winston Jordan, the Guyanese Minister of Finance. Ousseynou Nakoulima, Director of Country Programming, signed on behalf of the Fund.
The GCF aims to help CARICOM Member States to adapt to climate change, by lessening their vulnerability to sea level rise and climate variability; identifying and implementing the Intended Nationally Determined Contributions (INDCs); reporting and assessing of the Member States INDCs and the development and dissemination of renewable energy sources and technology.
According to iNews Guyana, “Francesco La Camera, Director General of the Ministry of Environment of Italy, signed a €6 million project to assist CARICOM Member States to mitigate climate variability and change.”
The GCF also seeks to transfer scientific and technical knowledge, experiences and technology, facilitate the exchange of experts, scientists and researchers; enhance the capacities for the implementation of mechanisms under the United Nations Framework Convention on Climate Change (UNFCCC) and its related instruments, and to promote joint ventures between the private sectors of the Parties.
The Fund provides early support for readiness and preparatory activities to enhance country ownership and access through its country readiness programme. A minimum of 50 per cent of readiness support is targeted at Small Island Developing States (SIDS) such as Guyana, Least Developed Countries (LDCs), and African States.
More than 95 countries have so far expressed interest in receiving readiness support from the Fund, and more than 30 such grants have been approved to date.
The estimated timeframe for the project is five years. Minister Trotman thanked the Government and People of Italy for their continued support and friendship shown towards the people of Guyana and the Caribbean.
Credit: iNews Guyana, Green Climate Fund
The Caribbean Community Climate Change Centre held the second in a series of Climate Change Exchange events last Thursday in Belize City. The first was held in Barbados last October. The event, which was held with support from the European Union – Global Climate Change Alliance (EU -GCCA) Programme and the United Kingdom’s Department for International Development (DFID) under the DFID ARIES project, sought to raise awareness and promote dialogue about COP 21 slated to be held in Paris later this year, the United National (UN) Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (AR5), and the range of work done by the Centre across the Caribbean over the last decade.
The widely supported event attracted over 150 guests drawn from the apex of government, the diplomatic corps, the scientific community, civil society, development partners, universities, local and regional media and the general public. It was also live-streamed and broadcast live on four television stations (Krem, Love, Channel 5 and Channel 7) and two radio stations (Krem and Love) in Belize. The event was also covered by the Barbados-based Caribbean Media Corporation and Jamaica’s CVM TV.
An impressive set of international, regional and national experts addressed the audience, including Professor Christopher Fields and Dr Katherine Mach of Stanford University, Mr Carlos Fuller, a veteran Caribbean negotiator, Dr Leonard Nurse, a member of the IPCC’s research and author teams for four global assessment reports and three key project managers.
Peruse the Speakers' Guide to learn more about our speakers.
Why is COP 21 Important?
This key public education event was held as 2015 is shaping up to be a landmark year for global action on Climate Change. The future of the Caribbean depends on a binding and ambitious global agreement at COP 21. A bold agreement that curbs greenhouse gas emissions to limit the global rise in temperature to below 2°C is needed to safeguard our survival, food, critical industries such as tourism, infrastructure and promote renewable energy.
Peruse our informational card "Why is COP 21 Important?" for more context and the region's 11 point negotiating position leading up to COP 21.
Here’s the Agenda to guide you as you peruse the evening’s key presentations (below).
Keynote Address by Professor Christopher Field and Dr. Katharine Mach of Stanford University
Keynote Address by Carlos Fuller, International and Regional Liaison Officer at the CCCCC –
CCCCC's Programme Development and Management Presentation by Dr. Mark Bynoe, Sr Economist and Head of the Programme Development and Management Unit at the CCCCC
EU -GCCA Presentation by Joseph McGann , EU - GCCA Programme Manager at the CCCCC
KfW Presentation by Kenneth Reid, KfW Programme Manager at the CCCCC *Click all hyperlinks to access relevant files/webpages.
5Cs Wins Energy Globe Award for Renewable Energy and Potable Water Project in Bequia, St Vincent and the Grenadines
The Caribbean Community Climate Change Centre (CCCCC) received the 2015 Energy Globe Award for its renewable energy and potable water work in Saint Vincent and the Grenadines. Energy Globe, an internationally recognized trademark for sustainability, is one of the most important environmental prizes today with 177 participating countries. The award, which is made from a cross-section of over 1, 500 entries annually, is given in recognition of outstanding performance in terms of energy efficiency, renewable energy and resource conservation.
The CCCCC won the 2015 Energy Globe National Award for the project “Special Programme for Adaptation to Climate Change”. The project was executed on the island of Bequia in Saint Vincent and the Grenadines and focuses on the production and provision of clean drinking water for more than 1,000 people. This is being done through the acquisition and installation of a reverse osmosis desalination plant. The project is deemed highly sustainable as the water input is inexhaustible sea water and the energy used is solar, a renewable, carbon-free source.
The landmark project was also presented by Energy Globe as part of a global online campaign (www.energyglobe.info) on World Environment Day. The campaign ran under the patronage of UNESCO and in cooperation with UNEP and received significant recognition.
“To be honoured with this award is a great recognition of our work for a better environment and motivates us to continue our endeavours in the future,” – Henrik Personn, Renewable Energy Expert, CCCCC
Since completing this key project, we have applied the lessons learned in Belize and on the Grenadian islands of Petite Martinique and Carriacou. Review the poster below to learn more about the progress we are making in Grenada:
Do you have an excellent project? Submit it for the Energy Globe Award 2016. Review the details on www.energyglobe.info.
Energy Policy Consultant at the Caribbean Development Bank (CDB), Joseph Williams, believes the Caribbean must move faster towards greater renewable energy and energy efficiency projects.
Delivering the feature address at Green Energy Day at the Energy Conference in Port of Spain, Williams said Caribbean countries are not poor in regard to energy. He said in addition to making good economic sense, a green economy paradigm will provide opportunities to reduce carbon emissions.
He called on Trinidad and Tobago to lead the Caribbean into a new age of green energy, changing the way PetroCaribe currently operates. Williams stated that the CDB has opened up many areas of access to assist companies willing to go green.
He stated, “Investing in renewable energy is key. Subsidies have grown over the last few years. CDB is willing to help fund energy efficient projects through things like concessional loans.”
The Policy Consultant outlined a number of areas that still needed to be addressed including the need for policies, a raft of incentives and the lack of capacity in critical areas. He urged all nations to get involved stating, “Renewable energy is not the business of one country, it is the business of all countries.”
Meanwhile, Business Development Manager at Massy Energy, Dr. Dirk Nuber, said the Caribbean must harness more from the sun in the form of solar energy. He went on to say: “Most countries in the Caribbean still depend on fossil fuels. While many countries are good for solar, they are not using it.” He further added that there is great investment in renewable energy and the Caribbean must start adapting to it.
The International Labor Organization (ILO) said on Wednesday that the 9th Meeting of Caribbean Labor Ministers has concluded with a commitment to strengthen social dialogue further both at the national and regional levels.
The ILO also said the meeting in Port-of-Spain, the Trinidad and Tobago capital, ended with renewed impetus to focus on creative solutions to the problem of youth unemployment and the greening of the economy.
The presidents and other representatives of the Caribbean Congress of Labor (CCL) and Caribbean Employers’ Confederation (CEC) were also present, along with representatives from the Caribbean Community (CARICOM), the Association of Caribbean States (ACS), and U.N. Agencies (ECLAC, UNESCO,PAHO/WHO and U.N. RC Office Jamaica), as well as the Caribbean Community Climate Change Centre (CCCCC).
ILO Director-General, Guy Ryder, attended the meeting and held bilateral meetings with chairman of the Caribbean Community (CARICOM), the Prime Minister of Bahamas Perry Christie; and the Governor-General of the Bahamas, Dame Marguerite Pindling.
The ILO said Caribbean Labour Ministers at the Meeting called for the systemic institutionalization of national social dialogue processes and culture, which embrace policy areas.
They agreed to support the capacity of social partners to ensure that their interventions to tripartite forums and consultations will add substantive value to the processes, the ILO said.
Given the impact of climate change on the world of work, the ministers called for long-term policy development, so that countries are sufficiently resilient to meet the related challenges.
The ministers called for closer collaboration between the ILO and CARICOM, particularly on youth employment, technical, vocational education and training (TVET), labor market information systems and environmental sustainability.
The ministers said that those countries not-yet signatory to the regional “Free of Child Labor” initiative, should be provided with information to consider becoming a party to it, according to the ILO.
It said that it officially informed the Ministers of Labor about a new regional project with CEC and CCL, with funding from the European Union (EU), aimed at strengthening the capacity of workers’ and employers’ organizations in the framework of the Economic Partnership Agreement.
Delegates examined the state of youth unemployment in the Caribbean region, together with public and private partners and institutions such as the government of the Republic of China, Canada, Republic Bank of Trinidad and Tobago, and the ACS.
In this session, it was proposed that anticipating skills requirements could contribute to reduce skills mismatches, the ILO said.
It was also suggested that colleges and training institutions work closely with social partners in developing work-based learning opportunities, beyond apprenticeships and internship programs and closer to labor market demand.
The ILO said session highlighted the need for strong corporate social responsibilities to link youth to the world of work.
Regional certification to ensure consistency of qualifications and opportunities for free movement of youth, by developing fair and sound immigration policies, were also discussed.
Ryder emphasized the importance of reducing carbon emissions for sustainable economic growth, generating new jobs and skills.
With sessions led by representatives from CCCCC in Belize, and the ILO Green Jobs Program in Geneva, climate change and its impact on the work place was discussed.
With higher temperatures, rises in sea level, and increased hurricane intensity threatening lives, property and livelihoods throughout the region, the need for increased technical and financial support for the development of renewable energy in the Caribbean was raised, the ILO said.
Ryder said that the Caribbean has strong traditions of tripartite social dialogue, and mentioned the good practices and innovative solutions which the Caribbean countries are able to implement and share.
Credit: Caribbean Life News
Saint Lucia is to join the regional movement, alongside four other Caribbean Community (CARICOM) islands, to identify ways to improve energy efficiency in buildings.
A regional training workshop on Simulation Tools for Energy Efficiency in Caribbean Buildings, commenced today at the National ICT Centre, Bourbon Street, Castries, Saint Lucia.
The workshop, held March 9th-12th 2015, is a major activity of the Global Environment Facility-United Nations Environment Programme (GEF-UNEP) Energy for Sustainable Development in Caribbean Buildings (ESD) Project.
The continued total dependence of the region on importation of petroleum products is no longer an option for our continued growth and development. To help us in this regard, the ESD project was launched in April 2013, and is piloting energy efficiency improvements in the economy of participating member states in CARICOM.
The Caribbean region imports in excess of 170 million barrels of petroleum products, annually, with 30 million barrels used in the electric sector, and since buildings are major consumers of electricity across the region, the project focuses on the buildings sector for improving the efficiency of energy use.
A recent study revealed that ninety one (91) percent of the total electricity sold in Saint Lucia is consumed in buildings and 33 percent of the total commercial energy – that is both electricity and petroleum products – is consumed in buildings.
Participation in the ESD Project is a direct indication of the Government’s commitment to addressing the consumption of energy in buildings as the government moves to make its own buildings more energy efficient and provides incentives for the implementation of energy efficiency measures in the country.
This project is being implemented by the Caribbean Community (CARICOM) Climate Change Centre (5Cs/CCCCC), and involving five pilot countries: Grenada, Antigua and Barbuda, Belize, Saint Lucia, and St. Vincent and the Grenadines.
The project’s objective is to transfer and implement sustainable energy policies, instruments and knowledge in the Caribbean countries through the promotion of energy efficiency applications and renewable energy use within the residential and public building sector. The aim is to achieve a minimum reduction of 20 percent in electricity use through the pilot activities that are to take place during 2014 – 2017.
The Simulation Tools for Energy Efficiency in Caribbean Buildings Training Workshop is an activity that represents a significant investment toward building the country’s capacity to manage the transition to a low carbon economy and to meet our National Sustainable Energy Goals and those of the Caribbean Sustainable Energy Road Map and Strategy (C-SERMS) for implementation of the renewable energy (RE) and energy efficiency (EE) dimensions of the CARICOM Energy Policy. This will also allow for successful implementation of efficient lighting retrofits both in the private and public sectors.
The Training Workshop on Simulation Tools for Energy Efficiency in Caribbean Buildings is designed to sensitize modellers and engineers on the value and opportunities of eQUEST and RETScreen in a building assessment protocol.
This workshop incorporates face-to-face and virtual interaction where participants will receive informed guidance on the use of eQUEST and RETScreen software programs.
Credit: St. Lucia News Online
The Gold Standard Cities Programme is developing ground-breaking solutions that will unlock the finance needed by cities around the globe for low carbon development.
Urbanization and climate change will be defining issues of the 21st century. Half of the world’s population resides in cities and it is expected that by 2015, the world will have over 350 cities with more than one million inhabitants each.
Cities are already feeling the impacts of climate change and they will increasingly be susceptible to rising sea levels, inland flooding, frequent and stronger tropical cyclones, periods of increased heat and the spread of diseases. To mitigate climate change and to adapt to these impacts, it is estimated that by 2050 more than a trillion U.S. dollars in investment will be needed for cities but currently, less than 2% of climate finance is channeled into urban projects due to a lack of reliable monitoring, reporting and verification on project performance and outcomes. Further, the World Bank estimates that of the 500 largest cities in the developing world, only about 4 percent are credit worthy in international financial markets, making it next to impossible to access finance for low carbon development.
The Gold Standard Cities Programme is a ground-breaking results-based finance framework through which cities can develop, audit and verify urban programmes – in order to catalyse and scale up the currently missing investment.
Supported by WWF, initial work used suppressed demand methodologies to determine that slums in Delhi emit 6.1 million tons of CO2 annually which can be reduced to 2.8 million tons by the implementation of renewable energy and energy efficiency technologies.
Establishing this baseline for slum areas was not only cutting edge research but a critical pre-requisite for climate finance to flow. Without a baseline it is impossible to verify emission reductions – the whole premise of results based climate finance. Until now, this has been a key barrier to funding urban low carbon and pro-poor development through climate finance.
The results-based finance framework, developed initially for Delhi, has been designed to be replicated in cities around the world, giving investors confidence that they have a global benchmark with which they can measure urban low carbon and sustainable development outcomes.
Major cities in China, the Middle East and Turkey are in the process of joining The Gold Standard Cities Programme.
For more information about The Gold Standard’s work with sustainable cities, please visit:
Credit: The Gold Standard
The Green Growth Knowledge Platform recently held a conference in Venice that brought the importance of implementing properly designed green fiscal reforms to the attention of academics and policy-makers. The primary objective is environmental protection and climate change control, but also the setting of fairly uniform regulatory and taxation frameworks to avoid competitiveness concerns in those countries adopting more stringent environmental policies. Or to avoid excessive social problems in developing countries, because social impacts of green fiscal reforms are of often as important as the environmental ones.
Green tax reforms, designed to tax activities that result in environmental damage and excessive natural resource use, to redirect public and private investments from fossil fuel based activities to low carbon alternatives, to fuel green economy development, and to provide markets with the right signals for sustainable long-term investments, may indeed raise production costs in countries adopting them, thus reducing firms’ international competitiveness. Or may imply revenue reductions in important sectors of society.
The 3rd Annual Green Growth Knowledge Platform Conference held in Venice, Italy on the 29-30 January 2015 (you can find all papers presented at the conference here) gathered experts and policy-makers from several countries, particularly developing countries, as well as experts from international organizations, who shared knowledge and forged pathways towards better future implementation of green fiscal instruments.
The conference provided both theoretical analyses and best practices of concrete implementations of fiscal instruments designed to control climate change, natural resource excessive exploitation and local pollution. It also provided a useful exchange of views and suggestions between two communities (scientists and economists on the one hand, policy leaders on the other) that hardly interact. Let us summarize some of the main findings.
A variety of instruments, often country specific
Often the full range of fiscal reforms remains unexplored. As suggested by Franks et. al, this is partly due to governments’ preference for a taxation approach, which enables the scarcity rents to be reinvested in infrastructure. Revenue recycling of environmental taxes also facilitates a reduction in distortionary taxes and can be used to support green R&D.
However, despite the benefits of green taxes, other approaches can often facilitate green economic growth. Governments need to capitalize on the full range of fiscal policy options. For example, some governments have implemented feed-in tariffs to kickstart investments in renewable energy from sources such as solar, geothermal and wind. This is achieved by guaranteeing a tariff for a set period of time (up to 20 years in some cases) and thenphasing out this support over time as the share of renewable energy increases and becomes competitive with conventional fuels. This initial support is essential for redirecting capital flows from carbon based energy because, as Vona and Verdolini show, long-term investments have already been placed in existing fossil fuel infrastructure, which implies that changes in energy production will be slow and nearly impossible to achieve without a trigger.
In addition to feed-in tariff options, governments are also developing targeted financial programs that support the purchase of energy efficient appliances. These schemes, while important, require understanding and working with behavioral norms. For instance, Nadia Ameli shows that the application of these programs to households is more effective if the residents are landlords or are from high-income backgrounds.
These more innovative schemes are not confined to the more financially-secure developed countries. Indeed, the Tunisian government used US$24 million of public funds to promote the use of solar water heaters. In Mauritius, one of the pioneers of traditional fiscal reform through environmental taxation, we see the development of a number of green fiscal measures, including an excise duty on petroleum products and a charge on energy inefficient products. These policies have been able to elicit changes in both consumption and production behavior. As a positive side effect, the revenue generated as a result of these fiscal policies is equivalent to 2.6% of the country’s 2013 GDP. This capital can be used to further support green economic growth.
The adoption of green fiscal instruments is not limited to the energy sector. Another crucial area is water. Here fiscal measures can play a critical role in ensuring sustainable water supplies through incentivizing water efficiency, stimulating investment in water supply infrastructure, ensuring affordability of water services and countering the unchecked pollution and abstraction of water sources. In fact, the use of taxing (along with tariffs and transfers) can ensure that the cost of the environmental externalities associated with water use is internalized and that water is therefore appropriately priced. On this note,encouraging news comes from Philippines where a wastewater effluent fee was introduced in Manila in 1997. This fee aimed to counter the extreme degradation of the Laguna de Bay watershed that was being used as a dumping ground by nearby industries. As a consequence of the fee, industries changed their production processes to reduce the volume of effluent that was discharged into the watershed.
There is a growing realization that the transition to a green economy will not be achieved if countries continue to hide the true cost of current consumption patternsby subsidizing fossil fuels. This withdrawal of support has freed up capital that can now be spent in more efficient and beneficial ways. Often these savings can be redirected to fund social development, such as improved health, education and living standards. In Kenya, for instance, as Alice Kaudia convincingly explained, the government improved the country’s electricity network through the funds made available by removing fossil fuel subsidies.
Divesting from fossil fuel sources, particularly in cities and transport-intensive areas, not only encourages movement towards a green economy, but has direct positive impacts on health. This, in turn, means that governments will have to spend less on national health care. So even more public savings can be made. Shifting from these fossil fuel investments is especially important in developing countries. This is because, even though climate finance mechanisms are attempting to make development and climate mitigation compatible, fossil fuel subsidies are so vast that the climate finance given is almost insignificant.
As well as removing environmentally damaging subsidies, government can also encourage renewable energy subsidies in terms of technology innovation, adoption and manufacturing incentives. Though the enacting of these subsidies must be carefully designed because they are starting to be touted for their ability to distort international trade. At the conference, Carolyn Fisher analysed how the EU and US have both tabled complaints against China’s subsidization of solar photovoltaic production on the grounds that this support constitutes illegal aid to the companies.
Moreover, while there is some enthusiasm around the subsidization of clean energy, this may not in fact be the solution people are seeking. This is because some subsidies, especially upstream subsidies, tend to pick technology winners. This prevents the take-up of clean energy technology in the most cost-effective and efficient manner since picking the renewable energy options you want to subsidize withholds the funding other renewable energies that could, with the technological development, deliver energy in a cost-effective way.
Barriers to redirecting investments
The fact that developing green fiscal policies not only weans us off our fossil fuel dependency, but also can ensure savings and social benefits leaves you wondering why these measures have not been enacted with greater enthusiasm. Four main barriers have been highlighted at the conference. First, policymakers feel that they are damaging their economic competitiveness if they enact environmentally related policies when other countries do not do it. Second, green fiscal instruments would perhaps be more readily accepted were they to be introduced as part of a broader fiscal reform. Third, it’s often hard to effectively communicate the economic, social and environmental benefits that these reforms would bring.
A final important drawback is that, as with any reform, there will be winners and losers. One of the roles of government is to guarantee support for the affected groups. This is achievable. Indonesia, for instance, subsidized health care, rice production, village infrastructure and provided scholarships to economically-vulnerable groups to prevent against the worse impacts of inflation due to fossil fuel subsidy reform. As Renner et al. discussed in Venice, in Indonesia, and other places facing similar reforms, such protection schemes are essential since fossil fuel energy subsidies incur higher public spending than health, education and social protection combined, suggesting that the removal of subsidies will catalyze political and economic upset.
Green fiscal reforms need to be carefully designed and implemented in line with strong and sustainable governance to ensure that the reforms are effective and able to be maintained. Their design, especially of tax measures, needs to focus on activities that are inelastic in order to reduce welfare loss. Equally, this must be achieved while minimizing the aggregate deadweight loss for any given revenue or government expenditure.
The way forward
Green fiscal policy clearly has a strong role to play in the transition towards a green economy. Even the limitations it presents are not insurmountable. Governments need, however, to start thinking more creatively, moving beyond using just environmental taxation, in particular in developing countries. See, for instance, Chaturvedi et al. on how India is developing alternative fiscal strategies, including deregulating petrol prices, introducing a coal cess and subsidizing the establishing of common effluent treatment plants.
Even so, more than moving into using a range of environmental fiscal reform methods, we need to stop seeing such reforms in solely an environment sector capacity. The transport sector, for instance, has much to offer in environmental improvements without necessarily terming them as such.
Further, we can explore ways of making such reforms more appealing to the people they will affect. Other approaches need to be used in combination with fiscal reform, such as communication and engagement with the parties concerned as well as improved monitoring. Sirini Withana suggested the use of complementary policies to increase the effectiveness of such reforms. Potential complementary policies might include behavioral change approaches that can incentivize the adoption of energy-efficient and low-carbon energy options.
A session moderated by Elke Weber emphasized the importance of combining behavioral, social and technological changes to stimulate the acceptance of the policy reforms that will lead us towards a low carbon future.
Before all these developments, we must overcome the notion that these decisions will come at a political and economic cost. If anything, this conference has shown that we can no longer use economic disadvantages as a reason for inaction. Solutions are being sought to address this concern and we need to listen to them to effectively start on the path to global green growth.