caribbean infrastructure: strategies to increase the appeal of the caribbean as an infrastructure...
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CARIBBEAN INFRASTRUCTURE: STRATEGIES TO INCREASE THE APPEAL OF THE CARIBBEAN AS AN INFRASTRUCTURE INVESTMENT DESTINATION
CARIBBEAN INFRASTRUCTURE FINANCE FORUM
Daniel Best Director, Projects DepartmentCaribbean Development Bank December 6, 2016
The IPCC’s Fifth Assessment Report: What’s in it for Small Island Developing States?
Further climate change is inevitable in the coming decades
Climate change is affecting SIDS’ growth and development
Climate change poses an existential threat to some SIDS
Adaptation can reduce the impacts of climate change, but there are limits and risks involved
The IPCC’s Fifth Assessment Report: What’s in it for Small Island Developing States?
Economic cost of adaptation to climate change is high in SIDS relative to the size of their economies
SIDS stand to benefit from further integration of climate adaptation, mitigation and development approaches
Transformation to a low-carbon economy implies new patterns of investment: AN OPPORTUNITY
Volume of lending by Sector
122,895
240,302
98,94010,694
Distribution of loans, secondary mortgage, equity and grants (US $'000) (2010-2014)
EnvironmentalSustainability andDisaster Risk ReductionMulti-sector & Other
Power, Energy, Waterand Sanitation
Agriculture and RuralDevelopment
89425163
85763
11773
Volume of lending under Environmental Sustainability and Disaster Risk Reduction
(US $’000) (2010-2014)
EnvironmentalSustainability
Sea Defence/FloodPrevention/Control
Disaster Preventionand Preparedness
ReconstructionRelief andRehabilitation
CDB funding extends across a wide range of sectors
A significant portion has been allocated to assisting BMCs in
disaster risk reduction, preparedness and rehabilitation
BMC ratification status
GHG reduction targets
Borrowing Member Countries’ nationally determined contributions
Country Transport RE/EE PA/Forestry
Coastal Resilience
Water Agri. Infrastructure FinancialRisk Mgmt.
ANTIGUA & BARBUDA
BARBADOS
BAHAMAS
BELIZE
DOMINICA
GRENADA
GUYANA
JAMAICA
ST. KITTS & NEVIS
ST. LUCIA
ST. VINCENT &THE GRENADINES
SURINAME
TRINIDAD &
To what degree is investment appetite impacted?
• Project preparation support useful and or /necessary
• Technical analytical “Know How” limited within the Region and outside the Region
• Incremental project preparation costs 2% to 14%:
• Credible climate, environment datasets, analytical support
• Updated technical standards, designs, technologies, materials
Project cost increases of 5% to 10%
Critical issue: High Debt
Change in Debt/GDP ratio 2009-2014 and 2014 Debt/GDP Ratio
4.2
3.5 3.3 3.43.1
6.3
5.34.9
4.64.00
4.9
3.2 3
1.3
-0.1
1.50.9
1.62.2
1.4
2011 2012 2013 2014 2015
GDP GROWTHWorld
Emerging Markets and Developing Economies
Latin America and the Caribbean
BMCs
Average growth of 1.5 % over the past 5 years
0
20
40
60
80
100
120
140
Debt to GDP
DEBT-TO-GDP RATIO 2015 Antigua and Barbuda
Bahamas
Barbados
Belize
Dominica
Grenada
Guyana
Haiti
Jamaica
St. Kitts and Nevis
St. Lucia
St. Vincent and theGrenadines
High fiscal deficits and growing debt (domestic)
Vulnerability to Climate Variability & Change
• High incidence due to geography (tropical climate, topography, etc.)
• High impact related, inter alia, to size, openness and insularity
Lifetime of infrastructure
0
10
30 Roads, Bridges, Sea Defences
40 Power Plant
50 Ports
60
70
80 Dams, Reservoirs
90
100
100 +
Adapted From– Economic Aspects of Adaptation ClimateChange: Integrated Assessment Modelling of AdaptationCosts and Benefits, OECD Environment Working PapersNo.6 OECD Publishing, 2010
Factoring Climate Change into the risk profile of infrastructure projects
Explicit CC considerations REQUIRED from the TORs Stage
Address interdependencies within infrastructure networks
Strategic vision and sector planning
Strengthen institutional capacity and cross-agency relationships and partnerships
Sectoral Governance Reform - prioritize overcoming inefficiencies
Accreditation to global climate finance funds
Adaptation FundFEBRUARY 2016
Green Climate FundOCTOBER 2016
Green Climate FundInvestment Criteria
Source: Green Climate Fund
R² = 0.6768
0
100
200
300
400
500
600
700
800
900
0 20,000 40,000 60,000 80,000 100,000 120,000
Vehi
cles
per
100
0 pe
ople
( 20
10)
GDP per capita (2010)
Vehicles per 1000 people, 2010
Infrastructure Investment Need
R² = 0.7516
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
0 10,000 20,000 30,000 40,000 50,000 60,000
kWh
per c
apita
(201
0)
GDP per capita USD (2010)
Electricity consumed (kWh), 2010
Infrastructure Investment Need
Regional infrastructure investment need
All Values are in USD MillionsCountry Electricity Transport Water and Sanitation Total
Haiti 8,584 79 3,552 12,214Jamaica 1,109 1,199 891 3,198The Bahamas 409 640 71 1,121Trinidad and Tobago 165 544 226 935Guyana 353 36 231 621Belize 244 142 110 496Suriname 269 48 146 463Barbados 168 198 66 432St. Lucia 104 284 37 424Cayman Islands 109 173 4 286Antigua and Barbuda 69 81 22 172Grenada 66 59 31 157St. Kitts and Nevis 49 91 15 155Turks and Caicos Islands 51 72 5 128St. Vincent and the Grenadines 66 18 33 116British Virgin Islands 46 61 8 115Dominica 31 55 18 105Anguilla 20 15 1 36Montserrat 7 2 1 10Total 11,919 3,796 5,467 21,183
Regional infrastructure investment need
Regional Infrastructure Investment Need
GCF impact areas
GCF Result Areas
Low-emission energy access
and power generation
Low-emission transport
Buildings, cities,
industries and appliances
Forest and land use
Resilience of vulnerable
populations
Health, food and water security
Infrastructure and built
environment
Ecosystems and ecosystem
services
Renewable Energy
• Cost of imported fuel – still relatively high
• High electricity prices – small scale of operations
• How to reduce GHG emissions –NDCs
• High % govt. spend on electricity –fiscal implications, contributing to indebtedness
• Ignoring Green Economy opportunities
• Little focus on energy efficiency –wasted energy across all sectors
• Regulatory and capacity issues at all levels – technical, financial, legislative, regulatory
ENERGY SECURITY = ECONOMIC SECURITY
COMPETITIVENESS
FOREIGN EXCHANGE SAVINGS
REDUCE GHG EMISSIONS - NDCs
STABLE ENERGY PRICES
“GREEN” JOB CREATION
Model Structure for Geothermal Project(SPV under PPP Arrangement)
Thank You!
Ground-mounted section of CDB’s 150kW Solar PV Plant