Vanuatu, a Small Island Developing State (SIDS) in the Pacific, is highly vulnerable to Climate Change. Three years ago, Vanuatu was devastated by Typhoon PAM, which destroyed most of the staple crop and fruit production for the season. It took months to recover, rebuild infrastructure and restore food production. Only with massive multilateral and bilateral support was the starving of the population avoided.
Since then Vanuatu has accelerated its efforts to call for urgent climate actions and has signed the Biketawa Plus Declaration in September 2018, describing climate change as the region’s single greatest threat and affirming Vanuatu’s commitment towards the Paris Agreement.
Vanuatu’s Nationally Determined Contributions (NDCs) state that the country will ‘achieve 100% renewable energy in the electricity sub-sector by 2030, contingent upon appropriate financial and technical support’. The interventions to achieve this include stellar targets in the electricity sub-sector, including biomass, solar, wind and geothermal.
On my recent mission to Vanuatu, the draft strategic NDC roadmap to achieve the country’s NDC targets was introduced. The possible solutions outlined in the NDC and discussed with key stakeholders during the consultations generated vivid discussions among public and private sector representatives. Their inputs showed different views on how to achieve green and sustainable growth in the target sector.
Although there is a strong desire to engage in zero-carbon development and strategically promote sustainable energy solutions for the three main grids in the country, there is a critical awareness that the country’s actual contribution towards current global greenhouse gas (GHG) emission levels is negligible, bordering on benign.
This raises the question for the Government at which costs to introduce renewables. Vanuatu’s most vulnerable could potentially be double-victims to climate change: (a) through the impacts it is already having on their home island, and (b) through the financial costs incurred by them and their government by transitioning to renewable energy.
A radical 100 per cent switch to renewables with locally produced coconut oil in Vanuatu’s main grid could be done immediately if it was economically justifiable at the current (low) diesel prices and fluctuating coconut prices. This raises a fundamental question: how can Vanuatu’s private utility companies introduce a sustainable technological solution with significant co-benefits without negatively impacting consumers, especially the poorest consumers and compromising their business sustainability?
In the recent past, coconut oil has replaced a significant share of diesel, but since 2015 diesel prices have dropped, while coconut prices on the global market have increased — making coconut oil no longer competitive with diesel. Under these conditions, the utility company that is mandated by law to generate electricity at the lowest costs cannot switch from fossil fuels to alternative fuels.
The regulator is willing to explore options, but the Government is understandably firm when it comes to higher electricity prices for consumers. There is a clear message that consumers, who must bear one of the highest electricity costs in the Pacific with up to 1.389 US$ cent/kWh cannot take an ever-increasing financial burden.
Other options to increase the share of renewables in the electricity mix of the grids could include the increase of household-level generation of renewables. Although it is certainly financially easier to roll-out this private sector led approach, it will likely have adverse social impacts. This is because larger private consumers with higher electricity costs, who will be the first to install self-sustaining systems, are currently cross-subsidizing the poorest consumers and smaller grids of this island-state. The poorest consumers still constitute most of the connections.
In materializing Vanuatu’s ambitious goal to become climate neutral, key questions should be considered: Who will accept the financial burden and subsidize the negative cost impact of an increasing share of renewables in the grid? Can a private sector actor join forces with the Government to develop a zero-carbon grid? Can Vanuatu expect a Corporate Social Responsibility contribution from the utility company which is a subsidiary of a large European utility corporation? Or can the country expect climate finance from a bilateral donor to be channeled towards these financing gaps since the NDC target is conditional?
Climate finance and subsidization of sustainable utilization of alternative energy sources such as coconut oil will be essential for making a quick switch in a SIDS like Vanuatu. In this case, the switch can be done momently — financial commitments have been made and are being made as we speak. There is a growing global call for zero-carbon actions on the ground — but who will make the first step in Vanuatu’s transformational journey? UNDP is excited to accompany Vanuatu on its way towards a sustainable, zero-carbon development pathway and to support the government access climate finance for a rapid take-up of renewable energies.
About the author
Alexandra Soezer is a Climate Change Technical Advisor with UNDP’s Nationally Determined Contribution (NDC) Support Programme. Follow her on Twitter: @ASoezer