A new toolkit launched in the margins of the UN Climate Change Conference COP26 aims to unlock clean energy investments for small island nations, many of whom rely heavily on imported fossil fuels for power generation.
Small island developing states (SIDS) made a collective commitment in 2019 to achieve 100 percent renewable energy targets by 2030 and net zero emissions by 2050. However, they lack sufficient funding to achieve this transition, with private and public funders yet to step up investments in the clean energy sector.
The SIDS Clean Energy Toolkit, developed under a joint project by the Commonwealth Secretariat and Sustainable Energy For All (SEforAll), helps countries translate clean energy transition plans into investable business opportunities.
It supports analysis to help tackle hurdles such as the small size of projects and lack of interest from key international investors, the lack of adequate capital in local financial institutions and restrictive legal conditions for foreign investment. It enables users to carry out cost-benefit analyses and build robust business cases for energy investment in their countries.
Launching the toolkit, Commonwealth Secretary-General Patricia Scotland said:
“Of the 38 countries classified by the UN as Small Island Developing States, 25 are Commonwealth countries. Despite significant clean energy resource potential, SIDS have a heavy dependence on imported fossil fuels that result in some of the highest electricity costs in the world, along with significant supply chain challenges that put pressure on already-strained economies.
“This toolkit can assist SIDS develop business cases and strategies to facilitate investment in clean energy projects, particularly in the power sector.”
Clean energy transition
The toolkit is being trialled in Seychelles. Using the toolkit, a country business case has been developed for Seychelles that identifies the scale of investment required to transition to clean energy. It also provides an objective basis for credible strategies to attract and maximise the investment required to achieve its clean energy goals.
Welcoming the opportunity, Minister for Finance, Economic Planning and Trade, Naadir Hassan, said: “I cannot stressed enough that there is an urgent need for us to prepare for the future and unless we invest in developing and exploiting renewable energy sources today, we might face a situation where we become victims of severe energy shortages. The cost of transitioning at that point may be beyond our means. The Call for Action is now.”
The launch event also included a roundtable for investors and financial institutions such as the International Renewable Energy Association (IRENA), the Green Climate Fund (GCF) and Bloomberg New Energy Finance (BNEF), who discussed the business case for investing in clean, affordable reliable electricity in Seychelles.