By: Kimberly Ramkhalawan
September 6, 2022
There over ten blue economy concepts within the region and twenty-five national projects within OECS states that require both innovators and financiers if they are to materialize and safeguard islands environmentally.
With this in mind, the Caribbean Climate Smart Accelerator hosted its Investor Forum: Blue Economy in the Caribbean as a means of bridging the gap in financing Blue Economy projects between innovators and financiers.
The CCSA, so far, has partnered states and financiers with seven projects, valued at US$125M for both policy support, and according to Blue Economy Finance Innovation Director at the CCSA, Cheryl Senhouse, financing these projects are all part of leveraging resources, while protecting the environment, stimulating conservation, creating technology and group financing to achieve sustainable outcomes for the region.
Putting into context the value of the blue economy to the region, Dr. Angus Friday, Blue Economy Director at the Waitt Institution explained some of the areas that are currently in place among some islands and other sectors that could be further developed.
While shipping is a big part of the blue economy according to some definitions, it may not always be included in other meanings looking to distinguish itself as something environmentally conscious. Dr. Friday says with new technologies coming into play, shipping industries are now implementing vessels that work for the biosphere rather than against it, such as filtration systems that reduce invasive species or renewable energy that make ships more efficient by reducing greenhouse gas emissions.
Essential and foundational for the establishment of the blue economy in any state, is proper marine spatial planning, which he says is also exportable in the development of nearshore and offshore protected areas.
Other subsectors include coastal resilience which include ecosystems, insurance and financial services that support the economy, digital technology that track the influx of sargassum and provide warnings to the tourism sector.
Painting a picture as to what innovation looks like in the blue economy, and some of the emergent technologies. He says it starts with the brain power of the blue economy, teaching what it is in schools, even through learning how to swim, deep sea dive, and things involving the sea, including marine biology. This he terms as ocean related education is also critical to the economy, which can spawn numerous job opportunities important to providing marine services in the region all exportable.
Medically, the blue economy has numerous ways in which it can be explored. Looking at blue biotech libraries, similar to what is done in Indonesia, where some 90 products are sourced from sponges, and other plants within the sea, with the potential for the pharmaceutical industry to be explored. He says right now treatments for HIV/AIDS are derived from Jamaican sea sponges, enough reasons for more to be done in blue biotech if we are to capture the true value of our biggest resource found in marine spaces.
Dr. Friday went on to explain the extent of how the ocean and wind are inextricably linked, with the sea being 25 percent of the carbon cycle and when it captures too much carbon it becomes acidic, posing a threat to ecosystems, with numerous studies fearing, that if left unchecked, there could be a collapse of entire marine ecosystems. He says oceans can be part of the solution with mitigation through renewable energy, using mangrove and seagrass at a hectare basis which can actually sequester ten times the amount of carbon than a rain forest.
In the Caribbean he sites that the insurance industry stands to benefit through the blue economy as with hurricanes prevalent in the region, if properly tailored products can be offered, but business models around this needs a lot more work where entrepreneurs and core communities become more involved.
And while governments have begun to take a more serious approach in the blue economies by creating specifically tailored portfolios for it within their cabinets, the funding of these projects also take on a private equity approach. This is where he says organisations like the Caribbean Climate Smart Accelerator comes in bridging the gap between governments, innovators and companies that can work toward solution-based initiatives.
However, not all companies and startups are getting access to debt financing as they perhaps lack collateral accessing such loans. Dr. Friday says this is where equity financing works if there is to be a more diversified and innovative region with particular focus on the blue economy, as well as development banks stepping to assist resilient based projects.
Pepukaye Bardouille, Senior Operations Officer, Global Upstream Infrastructure International Finance Corporation (IFC) one of the financiers CCSA is looking to partner with regionally groups, says they offer a wide range of opportunities for access to funding as well as technical expertise willing to guide startups.
She notes the focus has been on the energy transition from greenhouse gases to renewables, and with most island states having a vast resource of water versus its limited landspace, talks have taken the direction of where can solar panels and wind turbines be positioned with a view to developing offshore wind mining, as well as developing the green hydrogen sector.
However, these projects are costly and require much investment upfront, in some cases coming well over US$200M to commence. Structuring this kind of funding between companies also takes into consideration risk financing. An example of one such project is French firm HDF Energy’s Rubis investment into a green hydrogen power plant in Barbados.
She adds returns to the country should be found in how taxes are structured providing opportunities also for ‘investment also in the back-end’
Rick Warner, Chair of Coastal8 says as a resilience-based company which is mandated to take action given the current condition of the planet, says after five years of diligence, both environment resilience, social systems and economic growth are tied in with each other.
While his company is looking at the region and its startups to fund projects that meet the UN’s sustainable development goals that target climate change, it often focuses on 20-year projects.
He says because his company believes there is a systemic approach to its business by taking coastal communities dealing with erosion and loss of land space and turn it around to something positive where it becomes prosperous measured against the employment and GDP standards.
Warner says while siloed approaches have been successful, given the magnitude of what countries are facing with global warming, projects need to be ‘scaled up and sped up’. He adds that the notion of putting aside Small Island developing states for later and focus on bigger countries on the scale is wrong, as the premise requires both receiving equal amounts of attention at the same time and as a priority.
In recent years, the buildup of sargassum seaweed in the region has prompted thinking in ways in can be put to use. One way is biogas fuels, while removing the cadmium and arsenic in sargassum can be figured out, it can be utilized in other ways such as bioplastics, nutraceuticals, and other health care products.
Dr. Friday says there is a need for more coordinated approach in how sargassum is dealt with in the region, and be more intentional about it.
Climate is playing a role in fish stock and there needs to be more buffers through marine protected areas, and food security the Caribbean is not caught out. The common notion of aquaculture and aquafeed are other areas
Sustainable economic development areas and success stories are found in the pacific, often dubbed as the OPEC of the sea, where an agreement was formalized on how much was going to be charged for fishing nations entering, called the ‘vessels day scheme’.
He says more of this needs to be thought of not just in attracting fishing, but tourism as well, where competition for cruises need to be regulated through a similar agreement or treaty where more of the value stays within the region. Other ways in which he says these income flows can be secured is by issuing blue bonds.
According to the CCSA, investment-ready projects within the Blue Economy sector lists tourism, climate Change (mitigation & adaptation), Ridge to Reef impact, Coastal Protection, Waste Management, Maritime Transport, Conservation with a livelihoods and jobs component, fisheries, ocean research and data collection, and ocean driven renewable energy such as offshore wind, solar and wave energy generation.
It adds that projects will be evaluated on stage of readiness, relevance, innovation, scalability, replicability, quality of the methodology, stakeholder support, investment type, committed investment, thoroughness of the business/project plan, as well as, the capacity of the individual/team to carry out the project.
The CCSA says forums like this aim to specifically address issues of climate vulnerability in the region by bringing together project owners and entrepreneurs with financiers, investors, donors and philanthropists, so that investors could learn first-hand about the types of investment-ready projects that are primed to move forward in the region.