'Resilience is in our DNA'
The eruption of La Soufrière volcano on the Caribbean island of Saint Vincent and the Grenadines has highlighted the need for resilient infrastructure.
And in March, the Caribbean Development Bank (CDB) completed a US$383mn refinancing of its Special Development Fund (SDF) through donor countries and internal resources, according to the coordinator of the banks' renewable energy/energy efficiency unit Joseph Williams. The fund will support several energy and infrastructure projects.
In this interview, Williams talks about resilient infrastructure in times of climate change and natural disasters, investment opportunities, and the future of renewable energy in the region.
BNamericas: How is the CDB responding to the La Soufrière volcano eruption?
Williams: The bank is a first responder in terms of disaster in the Caribbean. We work closely with regional disaster management association CDEMA. We provide funds to do first responses and we respond directly. As a Caribbean bank and a development bank, that’s what we’re about.
BNamericas: Which other sectors do you focus on?
Williams: We were actually doing work in the geothermal [sector] and obviously there's a need for communication because it’s possible people make the link between the eruption and the geothermal work that was being sponsored by CDB. A public-private partnership pursued the development and CDB funded it with a lot of other partners.
BNamericas: Do you agree with the high importance the concept of resilience has attained? How will the CDB advance on this concept?
Williams: I would say resilience is in our DNA. Our current strategic plan, which covers 2020 to 2024, has resilience as a theme. So we have three pillars aligning with the sustained development pillars: We have economic resilience, environmental resilience and social resilience as thematic pillars within that strategic plan.
BNamericas: And how does this impact your projects?
Williams: It’s a critical part. For example, in an infrastructure project in the environmental resilience side, climate resilience falls under that environmental resilience thematic area.
Every infrastructure project as part of the policy is provided what we call a climate resilience screening. So we are not only looking at building the project to meet the needs today but we are ensuring that project is located, designed, operated in a way that takes this resilience into consideration.
BNamericas: Can you talk to us about the recent US$383mn replenishment fund the bank announced in March?
Williams: The bank has I will say three pools of resources. There’s ordinary capital resources which is our main pool of funding that is used to finance an investment projects. That’s where we go to market. Then we have our special development fund, SDF and that’s what we call our concessional resources. These usually go to members as grants from non borrowing members like the UK, Germany, Italy and so on. That was actually the pool of funds that was replenished recently, the concessional pool.
We have a third pool that is called other special funds and this is where any member of the bank or any entity, internationally, who wishes to provide resources to the region could provide resources.
BNamericas: How are your experiences working with the private sector?
Williams: In the new strategic plan there’s an increased focus on how we can engage the private sector and the instruments that we need to have in place. And we have not done as well as we wanted. That is part of what the new strategic plan is seeking to address. And the bank is challenged to look at new instruments, even in the energy sector, how we can step up our support for the private sector.
We consider a PPP approach as very relevant and that’s what we’ve adopted as our own in the Eastern Caribbean. We have a new private sector division, which was engaged in March and leads that effort to increase our footprint in that space.
BNamericas: What is the basic need trust fund?
Williams: We think energy is one of those things that impacts lower strata of society in terms of income levels. The cost of energy for the poor is disproportionate compared to other sections of the population.
The [trust fund] is set aside within the special development fund (SDF) that really tries to reach the very poor. We are even seeking to do some additional energy support for remote villages in Guyana, Belize and other countries bringing solar and other renewable energy systems to them.
BNamericas: How is the bank promoting good governance?
Williams: Governance for me is critical for two reasons. One, governance is about having the right policy and regulatory framework, and the administrative arrangements to support promotion of sustainable energy. So it’s important because you need to have that if you’re going to get the input from the private sector.
It’s important to incentivize the private sector to participate, and to do that you really have to have a proper enabling framework – right incentive, clear policy with targets, right rules of the game, and the procedure in terms of how you go about developing a project. Agencies need to be aligned and responsive, so governance is a critical part to advance sustainable energy in the way that we think it needs to be advanced.
BNamericas: And what remains to be done?
Williams: Unfortunately, we are not there and there is quite a bit of work to be done but we are supporting that [by] providing quite a bit of capacity to governments, to regulators.
BNamericas: A recent World Bankreport highlighted electricity prices and low internet penetration as issues affecting economic growth. Do you agree?
Williams: The whole question of electricity cost as an impediment has been flagged for many years. As a matter of fact, it is part of the rationale for CDB making a foray into this sustainable energy space in 2014 when we started in this sector. It remains a very important issue. We have seen some progress, but by and large significant work needs to be done.
BNamericas: Does the bank have plans in Guyana and Suriname, which are building oil and gas potential? Does this conflict with renewable and energy efficiency plans?
Williams: Guyana and Suriname are two key members of the bank, they are board members. Yes, they have hydrocarbon resources. I think there’s clear commitment from both governments to a sustainable, low-carbon path. We are working with Guyana to develop an integrated resource plan.
In Suriname we’re working with utilities on a renewable energy project, also enabling a framework and infrastructure for the utilities system.
Obviously it’s going to be a big part of the engine for growth for them; certainly for Guyana it’s a major transformative opportunity.
BNamericas: Where are the region’s opportunities?
Williams: We think there will be significant opportunities around battery and storage. Especially with rounding up the promotion around variable renewable energy. We think there’s quite a bit of space there for the bank to sharpen some instruments to help, or some of the countries to help. Because to get the kind of scale intervention around variable renewable energy that strategy is going to be an important part.
We think there are also some opportunities around offshore wind which has a decent price. [The price] declined over the last few years and so we are also looking at that as one of the areas to help the countries. The scale is different so there may be an opportunity for a regional approach or a collaborative approach across countries.
BNamericas: And what about the public sector?
Williams: We think about electric vehicles in the public sector and so we are working with partners to see if we can help countries devise strategies and support investment, particularly in infrastructure.
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