Rising fuel costs mean lost growth for some

Asterio Takesy
Few places have been hard hit by the recent rise in energy costs as the Pacific islands countries (PICs). While the impacts are felt around the world, islands societies are already on a financial razor’s edge—rising fuel costs being more than many can bear.

Making matters worse is that an estimated 90 percent of total electricity generation and the fuel for the entire sea, land and air transport in our region comes directly from fossil fuels. In many of our members, fossil fuels represent a full 100 percent across the board.

It is estimated that for every $10 increase in the price of a barrel of crude oil, national incomes for the Federated States of Micronesia and Kiribati reduce by over 4% and by at least 2% in Tonga, Tuvalu, Palau and the Solomon Islands. Considering the price of oil has increased by approximately $45 a barrel since 2002, this translates into at least five years of lost growth for some islands countries.

Consider also the impact on the balance of trade. It is estimated that fuel imports are now triple the value of merchandise exports in Kiribati, Samoa and Federated States of Micronesia. In the case of Fiji, its combined export earnings in 2006 from three of the country’s major industries, gold, sugar and textiles, only accounted for two-thirds of the country’s total fuel import bill.

All this points to the continuing need for the development of renewable energy resources throughout the Pacific region (and the world). PICs have the highest renewable energy potential per capita in the world.

We are in the midst of the largest ocean on earth with its unlimited wave, tidal and ocean thermal energy. The tropical wind is always blowing and we are along the Pacific “Rim of Fire” with its potential for geothermal power generation. So why hasn’t adoption of renewables happened more quickly?

Like so many things in the Pacific islands, the answer is a lack of resources. SPREP is currently joining forces with UNDP to address these barriers to adoption of renewable energy through the Pacific Islands Greenhouse Gas Abatement through Renewable Energy Project (PIGGAREP).

The programme, funded by the Global Environment Facility (GEF), is the first wide-scale effort to remove these barriers and provide US$5.23 million over a five-year period.

Initially focusing on 11 countries in the region, PIGGAREP is designed to reduce the growth of greenhouse gas emissions resulting from fossil fuel use in Pacific islands countries by removing technical, financial, institutional, market, policy and awareness barriers to widespread and cost-effective adoption of renewable energy technologies. The countries participating are Cook Islands, Fiji, Kiribati, Nauru, Niue, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.

PIGGAREP is another key milestone in the long history of close and strong collaborations between SPREP, UNDP and GEF to address the sustainable development challenges of the region.

I have no doubt that PIGGAREP will be a platform from which to launch various similar partnerships and collaborations on greenhouse gas mitigation and renewable energy for our region.

Through the establishment of commercially-sustainable energy projects in participating countries, the PIGGAREP programme expects to prevent some 2 million tons of CO2 emissions (s1-2 m tons by 2015).

While the contribution of PICs to climate change is barely perceptible on a global scale, this signifies the region is committed to “practising what it preaches.”