Economist Marla Dukharan is urging the Caribbean to do more to achieve energy sovereignty as the ongoing international oil market crisis gives the region a reminder of its vulnerability.
In her September Monthly Caribbean Economic Report, she called securing energy independence “the ultimate panacea against petropolitical shocks”, while lamenting the Caribbean’s limited progress in achieving it.
Dukharan recommended that the region’s major stakeholders – the utilities, governments, regulators, academia, and consumers, become aligned on “the outcomes we are trying to achieve”.
Consensus needed
This was “lower prices, better reliability, lower exposure to petropolitical shocks, less foreign exchange lost on imported fuel”. There also needed to be a consensus on “the optimal way forward for the best possible outcomes to be realised, based on the data”, she said.
“Furthermore, beyond initial alignment, a solid request for proposals process and active collaboration throughout the project life and across all players, even among competitors, will ensure that the desired outcomes are achieved in the specified timeframe. Simple, but not easy. Challenging, but not impossible.”
With international oil prices back above US$100 a barrel given the war in Iran and continued closure of the Strait of Hormuz, the economist pointed out that “ongoing petropolitical developments suggest that volatility and prices in excess of US$100 per barrel are likely to continue”.
She noted that the Caribbean’s vulnerability to external shocks “stems mainly from our acute openness, dependence on international trade in general, made worse by the nature of that dependence – on imported food and fuel, most importantly”.
“All the stuff our very existence depends on. Establishing and maintaining food and fuel security have been strategic goals across Caribbean nations individually and collectively for half a century. At least. Yet here we are, with very little to show for it,” she said.
“This most recent oil market crisis, like all of those before it, raises so many longstanding and yet unaddressed issues which continue to hold us back and worsen our quality of life here in the Caribbean.
“So like victims, we curse the war, and again we lament the disruption, the volatility, the inflation, the vulnerability. We abuse and overuse these terms again. And again. And again.”
In her view, the renewable energy (RE) transition “is even more urgent now given the July 2025 International Court of Justice ruling on the obligations of states in respect of climate change”.
She reiterated her call for proper planning and alignment of all major stakeholders while cautioning against “running off and slapping solar on everything that doesn’t move”.
“That kind of approach is likely to result in objectives not being met, potentially destabilising the grid, or worse yet, even more solar electricity capacity going unused as currently seen in Barbados and Trinidad and Tobago for example,” Dukharan stated.
She said there were examples that the Caribbean could follow in its quest for energy sovereignty, mentioning Uruguay as one case, explaining that Uruguay “went from ‘crippling reliance on fossil fuel imports to powering 98 per cent of its electricity with domestic renewables”.
Uruguay’s way
“How did Uruguay achieve energy security, in a little over a decade? They built a national consensus – the catalyst for which was the Global Financial Crisis of 2008,” she said.
“They had the data – and they used it. The state did not have the money, so they conducted a competitive bidding process and engaged with private sector players under 20year power purchase agreements to develop the energy sources.”
Dukharan also mentioned success stories closer to home, including Dominica becoming the second Caribbean country after Guadeloupe, to generate power from domestic geothermal sources.
“St Kitts and Nevis are also exploring geothermal sources of energy and is currently receiving/ reviewing bids. This is especially timely as St Kitts and Nevis now has the sixth most expensive electricity in the region on a purchasing-poweradjusted basis, and fourth in nominal terms, as discussed in the index’s second edition,” Dukharan said.
“Beyond energy security, renewable energy can also provide a source of income for countries which produce enough cheap energy for export.
“Bhutan, the world’s first carbon negative country, earns over onequarter of its annual fiscal budget from hydropower exported to India. Likewise, Dominica plans to export surplus electricity to neighbouring islands in the future.”
Dukharan added that Caribbean governments who highlight their lack of financial resources to support the RE transition, “can first look at their building codes and energy efficiency standards – for themselves as the largest economic actor, but also for the nation more broadly”.
“As I published in June, we waste two-thirds of all energy produced globally on inefficiencies like poor insulation. Governments should also look at the electricity and fuel subsidies – US$7 trillion is spent annually on fuel subsidies globally – that many, not all, engage in,” she recommended.
“Above all else, this is a most perverse incentive, supporting the wastage of energy, and energy inefficient behaviour overall.” (SC)
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