Written by Emily Hudson
Executive Summary
Varying levels of development and the lack of necessary infrastructure constricts Caribbean nations’ energy policy options. While largely dependent on fossil fuels, some countries in the region have begun to add renewables to their energy portfolios. Recognition of the challenges to Caribbean energy security is crucial if the United States hopes to maintain its influence in the region while countries such as China expand their reach by offering economic and infrastructural support to struggling nations. This article serves as a brief snapshot of energy security in the Caribbean by focusing on Haiti and Jamaica, detailing the U.S.-sponsored Caribbean Energy Security Initiative, and highlighting critical takeaways regarding energy security in the region.
Challenges to Regional Energy Security
Though nations in the region express a desire to engage with renewable energy technologies, their economic structures, policies, competition, and high costs of doing business in the Caribbean discourage investment in the sustainable energy sector. Consequently, the region relies primarily on imported fossil fuels. Petroleum products account for up to 87 percent of the Caribbean’s primary energy consumption, leaving nations vulnerable to internal and external supply shocks. In addition, electricity continues to be expensive in the region, with it costing as much as US$0.40/kwh in some countries. Despite these high prices, the Caribbean’s energy consumption is expected to double by 2030 as growth in energy-intensive industries, namely tourism, agribusiness, and manufacturing, continues. These dynamics necessitate diversification in the Caribbean energy portfolio if the region hopes to experience significant economic growth.
The Caribbean’s Energy Security Spectrum
While the region’s nations share some similarities, they each face their unique challenges in achieving energy security. Though most continue to be dependent on fossil fuels, some have pushed to incorporate renewable energy to diversify their energy supply. Two examples on this spectrum are discussed in this section: Haiti and Jamaica.
Haiti, labeled the Western Hemisphere’s poorest nation, suffers from two major energy-related problems: an ineffective electricity sector and a dependency on charcoal. Haiti lacks a national grid and instead has one primary grid that supports the Port-au-Prince metropolitan area with a series of smaller, isolated power grids responsible for the rest of the country’s electricity needs. Due to this structure, only a quarter of the Haitian population has access to electricity. In addition, the available electricity is often unreliable and costly, hindering investment and development.
The lack of cheap, reliable fuel sources forces many Haitians to rely on biomass. Wood products supply approximately 70 percent of the nation’s annual energy consumption. As a result, the Haitian landscape is heavily deforested as trees are cut down to make firewood and charcoal used to fulfill household fuel needs. The lack of cleaner cooking technologies forces rural-dwelling Haitians to use charcoal for cooking food, which has significant health and environmental consequences.
On the other hand, Jamaica has a history of extensive imported fossil fuel dependency. In 2010, the island nation imported oil for 95 percent of its energy supply. A World Bank Project called the Jamaica Energy Security and Efficiency Enhancement Project strived to reduce Jamaican dependence on imported fossil fuels by stimulating investment, facilitating the transition to cleaner fuel and energy sources, and strengthening regulatory frameworks to enhance efficiency. As a consequence of such efforts, Jamaica’s oil dependency dropped to 71 percent by 2017.
Jamaica’s renewable energy sector has made significant progress. By 2017, renewables accounted for 17 percent of energy generation. Jamaica’s Wigton Wind Farm is the largest wind energy facility in the Caribbean. It accounts for the production of millions of kilowatt-hours of electricity, significantly reducing the nation’s dependence on oil. In addition, USAID launched a three-year $4 million program known as Jamaica Energy Resilience Alliance in 2021, which intends to invest heavily in renewables on the island.
Caribbean Energy Security Initiative (CESI)
The Obama administration launched the Caribbean Energy Security Initiative (CESI) to promote the region’s energy security and economic growth by improving governance, increasing financing options, and strengthening coordination. Greater engagement and collaboration between the public and private sectors will assist in the establishment of a more efficient, sustainable, and diversified energy portfolio across the Caribbean. The United States partners with energy suppliers, governments, and stakeholders to coordinate initiatives, thereby maximizing their impacts while minimizing duplicative efforts. To facilitate this endeavor, in 2019, USAID announced a $25 million loan guarantee (Caribbean Energy Security Initiative Loan Guarantee Agreement) to promote energy investment in the Caribbean by making the U.S. government responsible for loans. Such action gives lenders and borrowers more confidence to make energy investments. In addition, CESI acted as the cornerstone of the U.S.-Caribbean 2020 strategy, which served to promote peace, prosperity, and security within the region.
Key Takeaways
Though numerous multilateral agreements have reduced the Caribbean’s dependency on fossil fuels, considerable work remains. It is also imperative to recognize that each nation has unique goals and challenges. As seen with the cases of Haiti and Jamaica, countries that belong to the same region are often at different stages in the development of their energy sectors. Consequently, a one-size-fits-all solution will not resolve the issue. For this reason, policies should be tailored to fit the needs of each country. If the Caribbean hopes to achieve energy security in the foreseeable future, the region must heavily invest in its native energy sources, particularly renewables, through financial and operational support at the domestic, regional, and international levels.