Editorial | Clear case for renewables

As chaotic as its implementation may have been, this newspaper welcomes the ceasefire in the Israel-Iran bombing war, and hopes that it holds.

For while Jamaica and the other members of the Caribbean Community (CARICOM) are thousands of miles from the Middle East, the conflict held grave threats for regional economies, which are mostly net importers of energy.

Higher prices for oil, therefore, would jack up Jamaica’s, and the region’s, energy import bills, fuel inflation and likely weaken prospects for growth. That is a situation Jamaica, already faced with less than robust projections for GDP expansion, would find unwelcome.

Additionally, with the international economy roiled by Donald Trump’s tariffs which caused the International Monetary Fund (IMF) to revise its growth outlook for 2025 downward, from 2.8 per cent to 3.3 per cent, worsened instability in the Middle East would deepen global uncertainty, resulting, probably, in a further lowering of growth targets.

A potential knock-on effect of this scenario would be a decline in global travel, which would hurt tourism, the major industry of most CARICOM countries, including Jamaica, where it accounts for perhaps 10 per cent of GDP.

Jamaica projects that it will host five million visitors this year, grossing US$5.3 billion. Tourism is the island’s largest source of foreign exchange.

ACCELERATE TRANSITION TO ALTERNATIVE ENERGY

Jamaica may not be able to directly shape events in the Middle East, or elsewhere in the global sphere, that threaten its economy, except to add its voice and prestige to calls in international forums for just and rational settlements to contentious issues on the basis of diplomacy.

However, there is much it can do to avoid or mitigate the impact of rising oil prices when events such as the Israel-Iran conflict, and the United States’ bombing of Iran’s nuclear facilities erupt. It can robustly accelerate its transition to alternative energy, such as solar and wind. The island has plenty of the former.

That must be the mission of whoever forms the government after the general election, which is due before the end of the year. The life of the current parliament ends in mid-September.

Already, the current administration has a target of having 50 per cent of the island’s electricity generated from renewables by 2030, which the energy minister, Daryl Vaz, last month told Parliament will be met.

However, many people, including this newspaper, unless they misapprehended previous officials’ statements on the issue, might have assumed that Jamaica was further along in meeting the goal. According to Mr Vaz, 12.5 per cent of the electricity is now generated from renewables.

Indeed, renewables account for less than around nine per cent of Jamaica’s overall energy consumption. The remainder is hydrocarbons, including crude oil, liquefied natural gas (LNG) and refined petroleum products.

In 2023, the last period for which full figures are immediately available, the island consumed more than 21.5 million barrels of petroleum products, slightly more than the previous year. The oil import bill was nearly US$3.9 billion, a more than 47 per cent jump over the previous year.

CONTEXT FOR URGENCY

The point is that even in good times Jamaica pays dearly for imported oil, while also bearing the price of fossil fuel’s contribution to global warming and climate change.

And when times are not so good, as the Israel/US strikes on Iran, supposedly because it was on the cusp of developing nuclear weapons, oil can quickly become even more expensive. For instance, after Israel and Iran started trading missiles, Brent crude jumped seven per cent to over US$74 a barrel, having initially spiked by 13 per cent.

When the Americans bombed Iran last week and there were fears that the Iranians might close the Strait of Hormuz, through which an estimated 20 per cent of the world’s oil passes, analysts raised the prospect of $100 oil. Prices have since fallen back since the ceasefire, but the uncertainty and concerns persist.

That is part of the context for the urgency in Jamaica renewables initiative.

According to the energy minister, 12.5 per cent of the island’s electricity is now from renewables. Another 100 megawatts will come on stream this fiscal year, bringing the amount up to 17 per cent.

The Government, through its power procurement entity, will go to the market this year for another 220 megawatts (10 per cent of projected capacity) to bring renewables up to 27 per cent. But this addition will not come on stream until 2027/28.

Over this same time period, the light and power company, Jamaica Public Service, exercising its first right of refusal in replacing obsolete plants, will add 30 MW (six per cent) of renewables, bringing the total, Vaz said, to 33 per cent.

“Finally, the Generation Procurement Entity (GPE) will go back to market for 300 MW,” he told Parliament. “That will take on stream the additional 23 per cent to round out the 50 per cent target.”

Past timelines have not always been met, and the basis on which power demand projections are made are often not clear. But as the recent events have shown, it is urgent that Jamaica gets these things right and gets on with its energy transition plan.