Well positioned to promote and exploit green energy, the Caribbean countries have moved to restructure their energy matrix, hoping to gradually replace fossil fuels with renewable ones. This transition offers numerous opportunities for regional cooperation with Chinese companies, which can bring their strengths to the table, including advanced technology, experience and cost control in generating renewable energy. The multi-billion-dollar China-Latin American Cooperation Fund, officially launched earlier this week, will further promote such cooperation between the two sides.
RENEWABLE SOURCES KEY TO ENERGY SECURITY
Fossil reserves, including coal, oil and gas, are limited and unevenly distributed in the Caribbean. The resulting lack of energy has inevitably led to high prices, which hinder industrial development, undermine industrial competitiveness, and increase the cost of living. What's more, the existing energy supply system is at risk, as most economies in the region are highly dependent on oil imports from struggling Venezuela. In 2005, Venezuela launched its Caribbean energy program, providing oil to Caribbean and Central American countries at bargain prices. All member countries of the Caribbean Community (CARICOM), except for Barbados, Montserrat and Trinidad and Tobago, joined the program. But a shattered economy, battered by low oil prices and political turmoil, is now forcing Venezuela to rethink its generous subsidy program. Should it scrap the policy, Caribbean countries' energy costs will rise sharply, and the effects of high oil and electricity prices will impact their economies. Faced with uncertainty, Caribbean countries need to urgently adjust their energy structure to protect their national energy security.
IDEAL CONDITIONS FOR GREEN ENERGY EXPLOITATION
The Caribbean region is blessed with the ideal conditions for renewable energy exploitation. According to the recent Caribbean Sustainable Energy Roadmap and Strategy published in October 2015, the region's installed electricity generation capacity stands at 5,787.3 MW. Its potential renewable energy capacity, however, is many times that, estimated at 20,953 MW, including solar, wind, hydropower and other types. Renewable energy currently represents only 8 percent, or 485.4 MW, of the region's installed electricity generation capacity, making sustainable energy exploitation very promising, added the report. In addition, the policies needed to promote renewable energy sources have been greatly improved, laying a solid foundation for green energy exploitation. In 2013, CARICOM' s 41st Special Meeting of the Council for Trade and Economic Development was held in Trinidad and Tobago, with ministers reaching a consensus on energy structure adjustment and renewable energy efficiency improvement. Participants at the meeting finalized and approved the CARICOM Energy Policy, a regional energy strategy that sets three target goals for sustainable energy generation: 20 percent by 2017, 28 percent by 2022 and 47 percent by 2027.
CHINA TO BOLSTER CARIBBEAN ENERGY COOPERATION
China and the Caribbean region are highly complementary in energy cooperation. Chinese companies have a distinct advantage in cost control compared with their western counterparts, potentially getting higher returns on investment in Caribbean renewable energy generation projects than in similar projects in China.
The statistics of two renewable energy generating equipment under construction in Jamaica show the estimated cost of a U.S. wind farm is 2.65 dollars/W. By contrast, the cost of that in China reduced to 7.958 RMB/W (about 1.21 dollars/W) as early as 2012, according to the 2013 China Wind Power Construction Results Statistics and Assessment Report.
With that in mind, bilateral energy cooperation should be actively promoted through such mechanisms as the China-Latin American Cooperation Fund, which was officially launched earlier this week, with the first meeting of its board of directors. Endowed with an initial 10 billion U.S. dollars by the Export-Import Bank of China and China's State Administration of Foreign Exchange (SAFE), the fund is set up to invest in energy resources, infrastructure, agriculture, manufacturing, scientific innovation, information technology and in Latin American production capacity cooperation, as well as support cooperation projects between China and regional countries.
Initially, China and the Caribbean should expand common ground, creating strategic mechanisms for bilateral energy cooperation to pave the way for Chinese enterprise to enter the Caribbean energy market. As part of the overall cooperation mechanism represented by the China-Community of Latin American and Caribbean States (CELAC) Forum, China should arrange detailed cooperation in all areas, focusing on specific regional needs.
H Moreover, China should speed up energy sector reforms to strengthen the transformation and upgrading of Chinese energy companies to improve their global competitiveness. Chinese companies, meanwhile, need to intensify their "going out" policy to expand business abroad. Companies that do well in growing their business abroad could receive financial support from the Chinese government for overseas projects that are of strategic importance, reducing the risk of overseas investment.
To promote bilateral cooperation, however, China has to also mind its methods, by highlighting market coupling and social research. Chinese companies investing in energy projects in the Caribbean should be encouraged to cooperate with local partners, especially with the existing electricity producers to reduce the risks involved in foreign operations.