Renewable Energy: Ushering in the New Caribbean Economy

Date Published: 
December, 2009
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In 2008, US $120 billion was invested in renewable energy (RE) globally. This represented a fourfold increase in annual investments since 2004. Renewable power generation capacity expanded by 75% between 2004 and 2008; of this capacity, 43% came from developing countries. This remarkable growth rate has been the culmination of specific government policies and the technological innovations they have allowed. Within the current energy paradigm, renewables are not competitive on a strict financial basis, in part because the full economic cost of conventional versus renewable energy-based electricity sources (e.g. environmental and energy security costs) are not incorporated into their market price; governments have used a variety of policies to support RE development, including feed-in-tariffs, tax incentives and renewable portfolio standards. With over US $2 billion in development assistance targeted at RE development in developing countries, now is the time for Caribbean policy makers to examine the potential benefits of RE and design appropriate policy frameworks to foster RE investment. This paper presents a brief outline of the policy regimes available to Caribbean policy makers wishing to usher in a new energy era – compatible with renewable generation technology – and thus attract investment targeted towards environmentally sustainable economic development.