Caribbean countries are feeling the squeeze from this energy crisis—and not just from gas prices

It is a pleasure to be able to address the Atlantic Council. Ladies and gentlemen, good afternoon. Perhaps I should say to you that the theme of the day, the Caribbean at the crossroads of security and development, perhaps I could add to that in the context of a global energy crisis is really a very important and relevant one. And perhaps I should begin by giving you a little bit of context.

For an island like Barbados, we are effectively a net energy importer and approximately 90 percent of all the electrical generation that we are able to do is as a result of the importation of fossil fuels. And the vagaries of the international market, therefore, mean that we are subjected to the what you might call “the slings and arrows of outrageous fortune,” and as there may be crises in the Persian Gulf or even, for argument’s sake, in recent times in the Ukraine, the consequences for our importation bill were astronomical, and again, let me just give you a little bit of context.

On average, we would import petroleum products into Barbados at a cost of $400 million per year, and when the Ukraine war started and there was the disruption of supply, we were at a stage where for a year or two we were spending $1.3 billion in United States currency. And so therefore you get an understanding of the way in which the ability to plan your economy and contain cost of living, etc. can be negatively affected.

So this is not just an energy issue, but it is in fact a very structural barrier to development and we face high and volatile energy costs directly as a result of the circumstances relating to our need to import, and they in turn erode our competitiveness or vital economic engines—from our tourism through to our hospitality, through to our shipping ports, emerging efforts and industry, and digital and financial services, etc.—so that for us, energy security is not a theoretical milestone, but it is in effect, a matter of economic survival.

Let me pause there to make another point abundantly clear. We are not, and I am not certainly making a case for the region to be seen as a charitable case. The reality is that the region of the Caribbean is a high-value, high-return market potentially, and it is characterized by extremely high energy costs, on average from twenty-nine cents to forty cents per kilowatt hour, as compared to an average of fifteen cents per kilowatt hour here in the United States of America.

But equally, we are characterized by very aggressive renewable energy targets and, therefore, for investors that makes us a sure bet because of the fact that we have the accelerated rate of return potentially and equally we are steadfastly committed to ending fossil fuel reliance in the region. Our challenge, therefore, lies in our dependence on the import fuel for generation of 90 percent or so of our electricity needs in Barbados and global volatility is imported directly into our grid through mechanisms, for example, the fuel adjustment clause, which goes through to every electric bill in the country.

Ladies and gentlemen, I think I could characterize the situation for Barbados very succinctly. First of all, it is characterized by energy insecurity. Secondly, price volatility. Thirdly, surging and escalating costs of living and costs of doing business as a result of the price volatility and equally a very aggressive renewable energy ambition which would see us get into net zero by the year 2035.

But there is a solution which we are trying to evolve, and we believe that we have to be mindful, as should all small island developing states, that the International Energy Agency’s climate roadmap envisages a 20 percent residual usage of fossil fuels by the year 2050. And so therefore, where countries like Barbados identify prospectivity with regard to hydrocarbons, the opportunity exists between now and 2050 to exploit and explore those hydrocarbons in the context of being able to finance our way to the renewable energy commitments which we have made. And so, therefore, our challenge is really then a matter of finding the markets. And in countries like the United States of America where there is an apparent rededication to that oil and gas, then we have a potential off-taker.

The context for us is that we must do that refinancing in that way because there is no agreement on what would be or should be the just transition. And so, therefore, the issue for us largely then becomes a matter of ensuring that we are able to utilize decarbonizing technology, prioritize partnerships with companies that are able to demonstrate proven capacity in the use of the decarbonizing technology and management of methane so as to reduce the impact on the climate.

I want to say that in addition to that, the Caribbean island states more broadly reflect that an additional reality is that we are caught in the fiscal cycle that actively penalizes climate vulnerability. You don’t have to look back several decades to see this. In fact, as recently as last year when Hurricane Melissa passed through the region and struck Jamaica last October, the official assessments revealed a sobering structural reality: total damage and losses from Melissa reached a staggering $12.2 billion (with a B) USD, but in Jamaica’s case, it instantaneously wiped out over 56 percent of Jamaica’s annual economic output from that single climatic event.

Multilateral reports now show that despite leveraging highly advanced disaster risk financing mechanisms—including the triggering of catastrophe bonds, parametric insurance payouts and pre-arranged contingent credit lines—the sheer scale of the climate shock has left an unmitigated multibillion dollar funding gap for reconstruction. And it is at this point that the structural argument has to be looked at. When visiting or when analyzing the existing international financial architecture, even when utilized to its absolute maximum capacity, we still see that there are many instances in which developing nations with are left with an untenable multibillion dollar gap from a single ecological shock. It is conclusive proof that individual state readiness is no longer enough, and that the problem at this stage is not the fiscal discipline of individual nations in and of themselves, but rather that the problem is an inadequacy of design of the global financial architecture.

Caribbean nations cannot be expected to navigate the twenty-first century climate volatility using a fragmented system of emergency credit. We need systemic global liquidity, and we need to have it built directly into the international financial fabric.

The bottleneck that we face is not that we do not have enough sunshine or that we do not have enough wind or that we do not have enough waves on the ocean. Rather, the true obstacle is rooted in the architecture of global finance, and without a mechanism to correct this, there is virtually no fiscal space available to fund the capital-intensive projects like grid modernization and utility scale solar deployment and the renewable energy effort as a whole, which must be financed.

This structural reality is really what has driven the Bridgetown Initiative. We are proposing through that initiative to have concrete systemic reforms to the global financial framework to unlock capital equity. At its core, it is an initiative which is designed to alter the rules of international finance so that vulnerable nations can access emergency liquidity during crises and secure affordable long-term capital for development. It therefore moves us from a situation where we are dependent on ad hoc aid and move rather in a direction of architectural reconstruction and institutional equity.

First, we have to require the systemic integration of climate resilient debt clauses into all sovereign loan agreements if we’re going to achieve this. That particular mechanism is fairly straightforward. In the event of a catastrophe or a verifiable natural disaster, debt servicing is automatically paused for two years, and this immediately frees up international liquidity to focus on recovery and on reconstruction, preventing an environmental crisis from becoming an insolvency crisis.

Secondly, we are aiming to bridge the cost-of-capital gap. And in that in doing so, we need multilateral development banks to scale up third-party risk guarantees and also to scale up blended finance structures and foreign exchange hedging mechanisms. And by absorbing macro level risk, we can therefore lower the entry barriers for private capital and allow institutional investors to partner with Caribbean nations on bankable grid infrastructure.

Ladies and gentlemen, we are therefore no longer speaking theoretically about mechanisms in isolation or merely as pilot plans and pilot projects. At COP28, the global community formally acknowledged this reality through the launch of a global declaration on debt for nature swaps. That declaration, in case you do not recall, targeted the double bind of high national debt and also extreme climate vulnerability at one and the same time. And through that milestone declaration, we’ve underscored what we have in the Caribbean been saying and knowing and experiencing as a lived reality for a very long time, and it is simply this: You cannot achieve climate resilience when sovereign balance sheets are being suffocated by historic levels of debt servicing.

Through these mechanisms, high interest sovereign debt is restructured into lower costs and long term credit. The critical policy distinction here and the blueprint we are advancing is that the resulting fiscal savings do not disappear into general expenditure. They are rather legally refinanced and channeled directly into dedicated resilience funds. This capital is then deployed exclusively to finance concrete transition assets, upgrading transmission corridors, reinforcing coastal protection, and investing in utility scale battery storage technology and other technologies required to stabilize or change a national grids.

Ladies and gentlemen, the global energy transition is fundamentally a question of allocation challenge. The capital exists. What is required, however, is institutional modernization in order to direct that capital to the places where it can achieve its greatest structural impact. I want to submit in closing that the Caribbean possesses the regulatory frameworks and the political stability necessary for this transition, and we want to use this opportunity to invite the global energy and financial communities to engage with us and to partner with us, not as passive observers, but rather as active partners in the effort to reengineer the economics of energy resilience. Thank you so much.

Excellencies, distinguished guests, ladies and gentlemen. It’s a true honor for Suriname to be part of this forum, and we thank the Atlantic Council and the Global Energy Forum team for their hospitality and commend the organization for also including the topic regarding the Caribbean region.

Through history, strategic fuels and energy security has been in the center of power, starting with wood where kingdoms regulated forest use to ensure supply for construction, heating, and wars. Then with coal, nations with large coal reserves gained energy security besides economic and military advantages. Coal-rich nations like Britain gained global dominance, and this energy became directly tied to the industrial and military supremacy. The first commercial oil discovery back in 1859 in Pennsylvania marked the birth of the modern petroleum industry, making this new energy cheap, affordable, and accessible. All surpass coal as a strategic fuel, especially for mechanized warfare and automobiles. Energy became a weapon of influence with supply disruptions used to pressure rivals, something that we see nowadays also.

Now, most of you are familiar with the energy trilemma: The three competing priorities every country must balance. Energy security on one side, energy equity—in the form of affordability and access—and environmental sustainability. The challenge is that improving one often undermines another, forcing governments into trade-offs.

Around the turn of this century, less and less countries were willing to sacrifice environment. This was especially headed by Europe, who wanted to transition away from fossil fuels as quickly as possible, by basically replacing dirty fossil fuels with new clean energies like solar, wind, and geothermal energies. This gave relief to small island developing states, the SIDS in the Caribbean, who are directly feeling the effects from climate change and large-scale pollutions in terms of sea level rise, intense and extreme rainfalls, droughts, and severe major storms.

This was supposed to be the moment that further escalations of climate change would halt, and average global temperatures would stay below two degrees Celsius. Funding would become available from predominantly polluters that cause climate change. Investments were now expected into resilient infrastructures, grid systems, protection against high sea levels, extreme storms, and etc.

We are again at another crossroad due to the recent global developments putting pressure again on environmental sustainability. The world is realizing that additional energy for the exponential growth of AI cannot be supplied by renewable energy alone. This has been said throughout this summit. Transition has become addition. On top of that, the recent wars in Ukraine and Middle East have demonstrated how many countries are still vulnerable when it comes to energy security, and most countries have realized that they now should invest in new energy mixes and to secure their own energy.

The low-lying coastal islands in the Caribbean have counted on financial support from major emitters to support adaptation and resilience efforts. Yet the recent geopolitical and economic shifts just described now threaten to cut off that support. Donor countries are turning inwards, prioritizing their own energy security, grid modernization, and domestic investment in renewables. This can lead to a critical time window before investments will return to the Caribbean region again.

In effect, the Caribbean region faces a tightening trilemma: rising climate impacts, shrinking adaptation finance, and a global energy system under pressure, all converging at the moment when resilience is most urgently needed. And then there are all producing countries in the Caribbean region, namely Trinidad, Guyana, and Suriname. And Suriname is that strange country located on the north coast of South America.

Suriname is one of the only three countries in the world where Dutch is the official language, but even more important, Suriname is one of the only three countries in the world that is carbon negative. This is due to the almost 93 percent coverage of pristine rainforests and an equal percentage of mangrove coverage along the coast.

In two years’ time, Suriname will be also one of the three countries in the Caribbean to produce significant amounts of oil, banking on a number of offshore discoveries starting back in 2019. Onshore production will soar from 16,000 barrels of oil per day to 220,000 barrels oil per day by 2028, up to 400,000 or even a half million barrels oil per day in 2031. Gas will reach a production of 150 million cubic feet per day by 2030. This is used for a country with a population of only 600,000 people.

Suriname, Guyana, and Trinidad can and should work out with other Caribbean countries how to resolve this critical time window that was described and how to go about. Collaboration should result in delivering cheap oil and gas to the non-oil producing SIDS countries during this critical time window and pre-financing in technologies for these countries to become energy sufficient. This will not be based on charity, but on strong collaborations and partnerships.

The Caribbean region should work as one where each country can contribute in its own special way. Suriname has taken the position that although we will continue to develop our rich offshore hydrocarbon resources, we will maintain our negative carbon sink and thus continue to contribute to the world in fighting climate change. Not many countries can say this. Maintaining this negative status would require investments, and we will do so by making use of trading our high value carbon credits, our ITMOs, and using the oil and gas revenues.

These revenues will also be used to create a new Suriname and invest in poverty reduction, new education systems, new green industries to develop a diversified economy, and a lean and mean government. We will call this Suriname 3.0, a strong Suriname that can support the region and become energy self-sufficient. In the transition towards the Suriname 3.0, gas will be extremely important since gas can be regarded as a transition fuel and even as a destination fuel, and will be the backbone of the energy mixes for many countries around the world.

This gas can buy Suriname and the region time while developing new clean energies to basically fill in this critical time window. For that reason, there’s heavy focus on gas exploration from the government. Almost 50 percent of the offshore acres of Suriname is still available. It’s still open and we call this the open acreage. Last year, November, Suriname stepped away from the traditional bid rounds and launched an open-door offering in the open acreage where any company can submit a bid over an area with associated work program. Country proposals over that exact area can be submitted where the original submitter has the right of first refusal. With gas, Suriname and the region can become the safe haven of a reliable supplier of energy for the region and even to the world since gas again will be the backbone for many countries in the energy mix.

Looking forward and inwards, the decision will be made this summer which renewables Suriname will invest, looking at solar, wind turbines—but also into hydro turbines since we have a constant east-west Gulf Stream. Geothermal and small module reactors are also of interest, and this is why we need collaborations and partnerships.

Suriname will also look into more out of the box technologies like white hydrogen, sort of so-called geologic hydrogen, and even helium-3 occurrences in our basin… Suriname stands committed in being a carbon negative nation with advanced forests and mangroves, an emerging oil and gas producer with regional significance, a country committed to balancing energy security, equity, and sustainability. This is Suriname’s pledge. This is embedded in the Suriname 3.0 plan, a plan to become a strong, sustainable Suriname that can support the region. Together we can ensure that energy security is not achieved at the expense of environmental sustainability but in harmony with it.

This is Suriname’s invitation to the Caribbean community, the audience sitting in this room, and the world to join us in building a resilient energy future. Thank you.