Hit by double whammy

BARBADOS is being hit by a double whammy: the “severe impact” of the global economic crisis and an over-dependence on fossil fuels for energy consumption.
And the situation, warns the Inter-American Development Bank, in Washington, can derail the nation’s future development if the situation were not reversed.
“In addition to the effects of the economic crisis mentioned before, Barbados’ high dependence on fossil fuels risks jeopardising the sustainability of its economic and social development as well as the country’s competitive [edge],” was the way the IDB put it in an internal document prepared to justify the (US) $45 million energy loan agreement signed recently by Chris Sinckler, the new Minister of Finance.
The four-page project profile, a copy of which was made available to the Daily Nation in New York, listed several examples of the fallout from the global crisis to support its contention that the “international economic crisis is having a severe impact in the Caribbean and in particular the Barbados economy”.
For example, it cited the 5.3 per cent economic contraction last year, which it attributed to the 8.7 per cent decline in tourism; a jump in unemployment from 8.6 per cent in June 2008 to more than 10.1 per cent at present; the 8.4 per cent fiscal deficit; and the mountain of foreign and domestic debt estimated at 115 per cent of GDP in 2009.
Turning to the energy sector, the IDB said Barbados’ electricity supply was based entirely on fossil fuel, including 82 per cent heavy fuel oil, 63 per cent came from “low-speed diesel plants; 18 per cent diesel fuel, and 19 per cent steam plants.
While power generation accounted for 50 per cent of the fuels used, transportation consumed 33 per cent.
Barbados produces 1 000 barrels of oil daily but needs 10 000 barrels every day, leaving 9 000 barrels of high-priced oil to be imported, “which represent a significant expenditure and drain on Barbados’ foreign reserves, particularly considering a recent high degree of volatility in international oil markets.”
Hence, the government’s decisions to borrow US$45 million and request technical assistance from the Bank to design a “comprehensive energy policy to promote sustainable energy practices both on the supply side, mainly using renewable energy and on the demand side encouraging energy efficiency”.
Originally, according to the IDB document, the negotiations were for a two-part energy programme: US$30 million in the first phase and US$20 million in the second. However, the loan agreement was for US$45 million for what is called a policy based loan or PBL.
Sources said the Bank plans to provide Barbados with a lump sum payment, instead of in tranches.
The overall project calls for a mix of regulatory, policy and legislative reforms designed to promote sustainable energy.
The bottom line would be an “institutional and policy framework” that would result in significant reduction in the use of imported oil, which would enable the country to switch the savings to social development, such as education; boost competitiveness; increase the use of renewable energy technology such as solar and wind energy; and “maximise energy conservation by “adopting” energy efficiency measures and better use of fossil fuels.
The Bank estimates that a successful programme can result in US$130 million in energy savings over the next 20 years and reduce Barbados’ carbon emissions by more than 7.3 million tons, “concrete environmental benefits over the same period.”
The IDB complained about some aspects of the country’s energy picture.
 For example, it said:
•    The Barbados Light & Power company, the island’s sole electricity supplier, had “limited familiarity” with renewable energy and efficient energy policy, regulations and skills “due to the country’s long experience almost exclusively with fossil fuel generated electricity.
•    Barbados suffered from a shortage of “in country professional and technical capabilities for both energy efficiency and renewable energy.
•    “There are scarce local skills and experience in the evaluation, development, operation, dispatching and financing” of “grid-connected,” meaning electricity distribution.
•    Bajans lacked “sufficient information on ways to use and conserve energy more efficiently.
•    With the exception of the solar water heating industry, the island suffered because of “little familiarity” with renewable energy technologies.