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The impact of climate change should be apparent to all.

Less than six months ago, Jamaica was slammed by what is now considered a Category 6 hurricane, which did severe damage to vital infrastructure, houses and commercial enterprises.

The cost of Hurricane Melissa has been placed at US$12.6 billion, more than half of Jamaica’s GDP.

The country was able to secure a comprehensive support package of US$6.7 billion to be disbursed over three years to help with the country’s reconstruction.

Small Caribbean states are not in a financial position that allows their respective governments to bear the entire cost of putting in place sustainable infrastructure. It will require financing from both local and international institutions who can readily envisage a return on their investment.

This was the theme of Sygnus’ Breakfast Forum entitled “ Building Resilience: Mobilising Capital for a Sustainable Caribbean.” The event was held at their One Belemont building in Kingston.

The panel saw Minister of Water, Environment and Climate Change Matthew Samuda, CEO of SunTerra Energy, Emmanuel DaRosa and Sygnus Capital USA’s Head of Climate and Energy Gerado Aguilar speaking on this important matter.

The cost of energy in the Caribbean is too high, and financing will have to be found for projects that can serve both citizens and businesses.

Alternative energy solutions are beginning to gain traction with the Government of Jamaica looking to a 50 per cent renewable energy mix for energy generation by 2030.

Access to capital for enterprises in the Caribbean is arduous, and the terms are onerous. So, how best to mobilise capital and what are the realities here?

Former CEO of JPS, Emmanuel DaRosa questions whether there is a shortage of what he calls “execution” capital or is there a shortage of bankable, derisked executable opportunities at the utility scale.

“There are opportunities in the Caribbean, but where we are lacking are in two fundamental areas. One is developmental capital, and the other is alignment. There is some misalignment between policy and implementation. We need to get better at that. There is also a misalignment between the RFP timelines and execution.

“Then there are the risks. Energy has moderate rates of return, but for capital institutions, it is a great avenue to invest money and get long-term stable returns.

“We really need to align the risk profile with the return. What we really need is developmental capital in the Caribbean to create these changes we need and to create bankable, derisked opportunities,” said the DaRosa, who now heads up SunTerra Energy.

Minister Matthew Samuda was of the view that the country’s top priority in building resilience and achieving sustainability is facing the challenges of climate change. He astutely pointed to countries like Jamaica facing climate risks, geopolitical risks and domestic political risks all colliding at the same time.

He said that Jamaica has turned to an advanced parametric tool that is able to evaluate catastrophe risks in Jamaica, including hurricane winds, storm surges, earthquakes and excessive rainfall.

It was employed to give an idea as to the likely damage both Hurricane Beryl and Hurricane Melissa would cause. This tool can also pinpoint where flood levels are likely to be of concern.

“The Government is determined to utilise best-in-class information. This then goes into the decision-making as to where critical infrastructure is placed. Resilience has become a bit of a buzz word these days but if I were to outline the philosophical approach the Government is taking to achieving better resilience, one of the pillars would be, we are trying to close the science and technology nexus with policy, meaning we are engaging best in class scientific study and best in class technology to ensure that our resilience design indeed meets the challenges we face.

“We are analysing our risk profile and the process by which we do so is anchored in a system called the Jamaica Systemic Risk Assessment Tool, where we engaged the Green Climate Fund (GCF), the University of Oxford and the CCRI.” 

SunTerra Energy boss Emmanuel DaRosa spoke of the opportunities presented in the energy space and where the Caribbean should be looking in this respect.

“In terms of opportunities, the greatest I see is in transition from intermittent renewable energy to base load and actual dispatchable energy. That is the biggest opportunity on the horizon. Solar projects and farms have proved their worth, coming in at some of the lowest costs delivering energy to the grid here in Jamaica and across the Caribbean but you can only go so far with intermittent energy. As far as solar is concerned, that can only deliver the first 15 to 20 per cent. Beyond that, we have to add storage to make it firm and dispatchable.”

What DaRosa is advocating for is that, rather than solar farms, focus on solar power plants.

He continued: “We think of solar farms where when the sun shines they produce full power, which accounts for 50 per cent of their output between 10 a.m and 2 p.m. The rest of the day, there isn’t a lot of energy. It’s very limited what you can do with that low-cost energy but if you have a 50 Megawatt solar plant to the grid with 200 Megawatts of solar behind it with a “ whole heap” of batteries which are practical and economical – it’s not a first of its kind. It’s been done around the world.”

“This allows you to deliver solar power to the grid, 24 hours a day. When you see the RFPs coming in, what is winning are solar projects. Solar has some significant benefits. When you look at the grid in Jamaica and the energy sector across the Caribbean, we have sun, very high energy requirements yet we are burning diesel.”

The Caribbean Community Resilience Fund (CCRF) has been established which is a concrete regional initiative that sees capital directed at the unleashing of opportunities around climate resilience. 

So what role can the CCRF play, and what opportunities are there for investors in the Caribbean?

 Sygnus Capital USA’s Head of Climate and Energy, Geraldo Aguilar is of the view that the combination of science and technology is present in the viability of financing the transition the Caribbean needs.

Aguilar makes a good point, which should be paid more attention to when he said: “ The Caribbean contributes just 1 per cent to CO2 emissions in the world yet it is at the very front of all these impacts. So what science and technology bring to the Caribbean is basically the opportunity. The financial and commercial legal structure should allow capital to flow into the Caribbean. Expertise that has been applied to other countries should be deployed wisely in the Caribbean.

“The Caribbean suffers from many issues. Investors want to come here, but they are aware of these issues, such as fragmented markets, lack of scale and geopolitical risks. The geopolitical risks can spell a lot of trouble, such as migration, changes in rain patterns that bring drought and floods. That is why I would say the Caribbean Community Resilience Investment Fund by Sygnus is an innovation in channelling all that money with the elements of science and technology. The opportunity is to support those with a commercial interest. From a Sygnus standpoint, we want to work with those leaders seeking science and technological solutions applicable to the geopolitical context that we are in.

“We are depending on fossil fuels, but Jamaica contributes only 0.7 per cent in terms of the global emissions factor. Renewable countries are only 0.2 per cent. So you see, Jamaica is three times more polluting, and the Caribbean itself is even more so. Right there is an amazing business opportunity. That is where Sygnus, as part of a fund management exercise, is bringing that innovation to the Caribbean.”