December 3, 2024
The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, Tuesday said that climate change poses an acute threat to the Caribbean and that the costs for resilience building in the region is estimated at a staggering US$100 billion over the next two decades.
Addressing the opening of the three-day Caribbean High-Level Forum on managing the energy transition, she said that the green energy transition is one of the most pressing issues for the world and the Caribbean.
She told the ceremony that has brought together government ministers, regional central bank governors, private sector stakeholders, academics, and members of civil society that sea levels are rising, and natural disasters are becoming more frequent and intense as Hurricane Beryl in July reminded the global community.
“A rapid global transition to renewable energy is essential to mitigate some of these climate challenges. Yet, achieving this transition is a complex journey. It requires substantial upfront investments and well-designed incentives, while balancing competing priorities for development and resilience. All at a time of limited fiscal space.”
Georgieva said despite the challenges, she firmly believes the Caribbean region has a tremendous opportunity.
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“The Caribbean economies showed incredible resilience through the (COVID-19) pandemic and its aftermath. Now is the time to seize the opportunity provided by global developments to plan and coordinate a green energy transition that fosters inclusive, sustainable, and resilient growth across the region.
“With its abundant sunshine, strong winds, and geothermal potential, the Caribbean can be a global leader in this transition and an example for the rest of the world.”
Georgieva said the benefits of this shift to green energy are profound and that while Caribbean countries contribute only a fraction of global greenhouse gas emissions, the economic case for a renewable energy future is compelling.
She said currently, many Caribbean economies are highly dependent on costly and volatile oil imports, which widen economic imbalances, expose them to the fluctuations of global commodity markets, and amplify inequality.
“The energy infrastructure is ageing and often inefficient, with high operational costs. This hampers reliability, and also limits the capacity to meet growing energy demand. Transitioning to renewables, the cost of which has steadily declined, would reduce these vulnerabilities and enhance energy security. And that would make your economies more efficient, resilient, and competitive while fostering long-term growth.
“For fossil fuel-producing countries in the region, the path forward will entail careful management of fiscal revenues, labour transitions, and other structural shifts. At the same time, this is an opportunity to diversify into the green energy sectors of the future, such as green petrochemicals and green hydrogen.”
Georgieva said achieving a fair, equitable green energy transition will require well-calibrated policies, particularly given the high level of indebtedness in the region.
She said key steps include further building robust macroeconomic frameworks, prudent fiscal management, mobilising revenue sources to create the fiscal space needed for part of the green investments, and phasing out fossil fuel subsidies.
The IMF managing director said formulating well-designed incentives and strengthened regulatory frameworks is critical, including electricity pricing agreements.