By YOURI KEMP

Tribune Business

Reporter

ykemp@tribunemedia.net

A Cabinet minister yesterday said current oil price volatility shows The Bahamas must take “aggressive steps” to harness renewable energy as it signed an agreement to access $9m in European Union (EU) grant funding.

Michael Halkitis, minister for economic affairs, speaking at a signing ceremony attended by EU and Inter-American Development Bank (IDB) officials, said ever-diminishing global oil reserves meant it was only a matter of time before per barrel prices hit the $200 mark.

The Bahamas, which is behind target in generating 30 percent of its energy needs by 2030, is also among the world’s most vulnerable countries to climate change impacts. As a result, the minister argued that this nation needs to press forward with reducing its near-100 percent dependence on fossil fuels and making renewable energy the “reality”.

“Today, the EU and the IDB are providing grant funding of approximately $9m to assist in transforming a plan for renewable energy into reality,” Mr Halkitis said. “This support is indeed timely, especially when one considers the current geopolitical circumstances that are impacting fuel prices and, invariably, an increase in the price of goods and services through increased transportation and production costs.

“Stakeholders, including government, must now act by channelling more resources into clean energy and the means to engender a clean environment. In 2021, Prime Minister Phillip Davis participated in the conference of COP 26 in Glasgow, Scotland.

“Among the salient issues discussed at this gathering, and within the umbrella of climate change, was encouraging investment in renewable energy. While The Bahamas is categorised as a small island state, we will address in a structured manner, requirements deemed necessary to reduce our dependence on fossil fuel.”

The $9m grant will supplement an $80m IDB loan already targeted at renewable energy penetration on Abaco and Grand Bahama, the two islands hit by Hurricane Dorian in 2019. That IDB project is already targeting renewable energy capacity in east Grand Bahama.

“Notwithstanding the IDB investment energy loan, the grant funding operation is expected to complement the investment project, as more than 90 percent of the finance allocated for this initiative will be channelled towards renewable energy in New Providence and Family Islands,” Mr Halkitis added.

“Minus any sort of geopolitical disruption, we can expect to see fuel prices go higher and approach $200 [per barrel for oil] in the next 20 to 25 years just because the cheap sources will be depleted, and it becomes more difficult to mine it. That even makes it more important what we’re doing here today, shifting to renewables.

The minister reiterated that there was little The Bahamas can do in the short-term to counter high global oil prices and other inflationary impacts: “In terms of immediate relief, I’ll say again, because the nature of our country is small and we import everything, we will be disproportionately impacted by external events,” Mr Halkitis said.

“There’s not much that we can do, given our economy, given the fact that we’re still emerging from a COVID-19 pandemic that has devastated our economy and a lot of other economies, and has caused a significant run-up in the debt of the Bahamas.

“So we are managing our way out of it, and we are hopeful that the volatility that we’ve seen will normalise in the shorter rather than longer term, and prices will move to a more normal - and historically normalised - level. But I think the lesson is that we have to begin now to take aggressive steps to ensure that we reduce our reliance on fossil fuels that are impacted by things out of our control, and move more to renewables, which we have an abundance of when you talk particularly about solar energy.”

Daniela Carrera-Marquis, the IDB’s Bahamas country representative, said the grant will facilitate the construction of two micro grids in Abaco in a bid to improve the resilience of its electricity infrastructure post-Dorian. The initiative is expected to benefit up to 18,000 residents on the island.

“The grant money has been analysed to support two micro grids in Abaco for electricity generation capacity and also for storage capacity,” she said. “This will allow Abaco to have not only a new source of energy that is renewable, but in a more resilient manner in case so far as new natural disasters were to occur.”

One grid will be located in Marsh Harbour near the government complex and impact up to 17,000 persons. The other will be located in the Cooper’s Town Medical Clinic facility and benefit 1,000 persons. The funds will also be used to boost renewable capacity in New Providence at three locations with a capacity of 407 kilowatts.

Those grids will be located at the University of the Bahamas (UB); C.I. Gibson Senior High School; and Bahamas Customs Headquarters. The UB grid will also serve as a pilot programme, and will provide training and supplementary electricity.