BY JUSTIN ROBINSON

AS ONE WHO MAKES the trek from deep in St Philip to the University of the West Indies (UWI) five days a week, I am going to be hit hand in the pocket by the Government's decision to reverse the policy of subsidising the price

of petroleum products.

However, with oil prices stuck above US$120 per barrel in the last month and projected to remain there for the foreseeable future, fiscal responsibility would almost certainly have required that the Government review its policy on subsidising petroleum products.

If the price of oil is likely to remain in the U$120 plus range for a while (as most experts suggest), then, households, firms, the Government and other organisations need to be weaned from subsidised prices to embracing energy efficiency. In the meantime, targeted subsidies should be designed for the more vulnerable groups in society.

The new Government has a clear and well articulated energy policy in its manifesto. The Democratic Labour Party's (DLP) manifesto speaks to tax subsidies for installing solar electric systems in homes and businesses. Its speaks to the establishment of a "Smart Energy Fund" to provide low interest loans to households, firms and organisations seeking to install alternative energy solutions.

A combination of these measures and net metering with the Barbados Light & Power has the potential to substantially reduce the oil import bill for electricity, as well as generate new jobs.

The Government also needs to be vigorous in the application of competition policy to prevent abuses in terms of price increases. A recent publication by the United Nations Environment Programme Finance Initiative highlights a number of products launched by retail financial institutions around the world as they seek to confront the energy efficiency challenge. Some include:

Green mortgages: in general, green mortgages, provide retail customers with considerably lower interest rates than market rates for clients who purchase new energy efficient homes and/or invest in retrofits, energy efficient appliances or green power.

Green home equity loans: these are reduced rate home equity loans for homeowners who install renewable energy in their homes.

Green car loans: these loans offer below market rates for the purchase of cars with high fuel efficiency.

Green insurance: the premium is linked to the use and this environmental footprint of the vehicle, and green home insurance, where special rates are provided for energy efficient buildings.