On Monday 4 April 2011, the Pacific region saw the opening of a landmark event, the inaugural regional meeting of ministers for energy, ICT and transport. This meeting, organised and hosted by the Secretariat of the Pacific Community (SPC) in Noumea, New Caledonia, endeavours to bring these three pillars of economic development together in a series week-long meetings in an integrated approach to addressing the challenges of sustainable economic development in the Pacific Island Countries and Territories (PICTs).
The Deputy Director Energy of SPC, Solomone Fifita, presented on world events and their impact on petroleum prices and the PICTs. Providing an overview of how the world is very dependent on carbon-based energy sources, where the fossil fuels will be coming from in the future and what factors influence the price of oil, he concluded that the years of cheap oil are over.And whilstthe price volatility of oil affects everyone in the world, the worst affected countries are those who are heavily reliant on imported fossil fuels. In the Pacific region, close to 100% of electricity is generated from diesel in the majority of countries, with the shining exception of Fiji and Samoa, where hydro power is utilised on a large scale.
Recapping the oil price trends over the last five years and seeing that the 2011 oil price movements are following the 2008 oil crisis trend, the big question was asked of how long will the prices continue to move upward this time and to what level….
It is worrisome for the PICTs as they saw some dramatic changes to their lives in the 2008 crisis. Like many countries in the world, the PICTs economies contracted significantly – in Fiji, imports increased by 25% in 2008 due to higher cost of imported petroleum, in Marshall Islands and Kiribati, inflation rates soared to 18% and Marshall Islands even declared a state of economic emergency. But the real impacts were never quantified and studied – what are the effects on social services, healthcare and infrastructure because of increased spending on imported fuels?
Coupled with some of the most devastating natural disasters in the region, including the wide-spread floods in Queensland (Australia) andearthquake in Christchurch (New Zealand), the Pacific region is in dire situation. Not that these events would be pushing up the price of oil directly, but these events affect the two income sources that the PICTs rely on most – foreign aid and remittances.
Solomone also reflected on the events following the earthquake and tsunami in Japan. Japan is the third largest oil importer in the world, and whilst the suppressed demand pushed the oil price under $100/ barrel, the world is rethinking the future of nuclear power, which of course could put more pressure on demand for oil, and push the price of oil further up.
One positive outcome of all these events comprises the consensus in the Pacific region as well as political directive from the Forum Leaders that energy remains one of the region’s key priorities. Therefore the region is heavily investing into devising options for reducing vulnerability to fluctuating oil prices, including strategies on restraining oil demand through energy efficiency and diversifying fuel sourcesto include renewables.
As a result, countries are taking progressive action on reducing their dependence on fossil fuels, such as:
• the Government of Tonga with its recent 10-year Tonga Energy Roadmap. REEEP assists the Government of Tonga with the implementation of its Renewable Energy Act and with the development of an Energy Efficiency Policy.
• the regional Framework for Action for Energy Secure Pacific (FAESP), coordinated by SPC, maps out the options that the region has available to assist on the common issues, such as data collection, knowledge management and regional programmes. One of these options includes the standards and labelling programme that REEEP and SPC are jointly working on with Samoa, Tonga and Vanuatu. REEEP will extend this programme to other countries as well as to additional products beyond the currently included fridges and freezers.
Assistance to the private sector is often raised but rarely addressed in the region. REEEP will assist in enhancing private sector engagement in renewables in the region through the establishment of the Sustainable Energy Industry Association of the Pacific Islands (SEIAPI) which also involves a certification scheme and development of regional standards.
The region recognises that in order to change the energy sector, a coordinated and systematic approach is needed. REEEP has a long track record of 130 projects assisting countries around the world with related tasks and is proud to be tackling some of the most pressing issues in the region – energy efficiency. Energy efficiency has been identified both by the regional Ministers as well as the FAESP as a key priority for the region yet the majority of funding directed to clean energy projects goes towards renewables. The region struggles to get energy efficiency funding and projects up. This is why REEEP has agreed with our funding partner in the region, AusAID, to invest money into the development of a REEEP Programme on Appliance Market Transformation in the Pacific region to assist the PICs in developing and implementing an appropriate standards & labelling scheme fitting to their specific local needs while using REEEP’s experiences and lessons learnt from around the world and in other small island statesin particular.
The world oil price again hit $100/barrel, but the real price of oil by the time it gets to the islands in the Pacific Ocean is between $150-$200/barrel. No wonder that energy security continues to be at the forefront of discussions at this regional Ministers meeting. In order for countries to move to a more energy secure future in a cost-effective way, energy efficiency has to gain a more prominent place within national planning and more funding needs to flow into energy efficiency programmes, both on supply and demand side. However, key for successful delivery of clean energy projects is timely reaction to regional needs and flexibility of delivery. In the Pacific region, REEEP has been contracting projects based on an actual need of a country and following a rigorous planning/selection process. However, REEEP has also been able to grant amendments and additions to contracted projects based on urgent needs of the country. Acting quickly to changed circumstances and new opportunities gives the countries a sign of hope that the much needed change in the energy systems can be delivered.
À plus tard de la Nouvelle-Calédonie – your REEEP SEAP team