Pacific island nations want more renewable energy. Climate finance can help

In January, a remote island in the Federated States of Micronesia turned on its lights for the first time since before World War II, bringing power to 500 homes by burning waste from its new coconut processing plant.

In a country where only one in three people have constant access to power, the electrification of Tonoas marked a step towards providing electricity to all Micronesian households by 2027, which means reaching 17% of the country who still do not have one. And by 2024, half of this energy should be renewable.

The move in FSM represents one of many projects being taken across the Pacific to not only shift to more sustainable power generation, but also to remove their reliance on imported fossil fuels. The transition is a difficult and costly task for many Pacific countries due to their physical and economic size, geographic isolation and disparate islands, all of which affect their ability to finance climate action.

Tonoas, in the Chuuk Lagoon, is one of the 607 islands that make up the Federated States of Micronesia. Chad Blair/Civil Beat

Meanwhile, countries face the most acute symptoms of climate change: rising sea levels, intense seasonal weather, agricultural failures, and the loss of fisheries and coral reefs.

But at the heart of countries’ vulnerability is their reliance on imported fossil fuels, according to Zena Grecni of the Pacific Islands Regional Integrated Climate Assessment Programme.

This reliance results in high costs for residents for electricity and transportation due to fluctuating oil prices, she said. But if climate finance were more available, this would not be the case.

“They have such abundant renewable energy resources – solar, wind, hydroelectric, geothermal,” she said. “They have everything.”

Fueling the dialogue on climate change

Pacific states and territories have long recognized the economic and environmental promise of renewable energy. In 2012, nine Pacific countries signed the Barbados Declaration to commit to moving away from fossil fuels.

Federated States of Micronesia President David Panuelo and local dignitaries cut the ribbon for a biomass power plant in Tonoas, Chuuk Lagoon. Courtesy of FSM Government

Countries have since advocated for industrialized nations such as China and the US to deliver on their pledges at UN climate conferences, underscoring the urgency needed to keep global temperature rise to 1.5 degrees. Celsius and achieve carbon neutrality by 2050.

Part of the Pacific’s advocacy at the recent climate conference in Glasgow, COP26, was to ensure that there was assistance to secure the funding needed for the transition to renewable energy.

Although some countries have obtained financing through major financial institutions such as the World Bank and the Asian Development Bank, as well as through foreign aid, their small size and the low returns on investment perceived for investors are still stifling their needs, according to Akuila Tawake of The Pacific. Community, a scientific development and advisory organization.

Tawake, deputy director of the group’s geothermal and energy program, says the traditional climate finance model is suitable for big savings and lower-cost projects.

“That’s why it’s a bit difficult to get grants from these climate finance institutions, because they prefer to have blended finance,” Tawake said. “That’s the biggest challenge.”

To make a promise

Palau President Surangel Whipps Jr. recently signed the Moana Pledge, following the Our Ocean conference in April, pledging to transition his country to 100% renewable energy by 2032.

Administered by Maui-based Mana Pacific, the agreement is described as a commitment, but also acts as a mechanism to give Pacific countries greater access to renewable energy infrastructure, through collective purchasing power and sharing. resources, making countries more attractive to donors.

Mana Pacific CEO Joe Reed says deal levels the playing field, to ensure contractors under pledge deal adhere to 13 principles, such as local job creation and training or recycling.

Palau President Surangel S. Whipps, Our Ocean Conference Palau
Palau President Surangel Whipps, Jr. shares his keynote address at the Our Ocean conference in Palau in April. Jesse Alpert/US Department of State/2022

But at its core, it addresses donor concerns about returns on investment, as well as the price of renewable energy infrastructure.

“And so when we have that large-scale market demand, we can force prices down,” Reed said. “This investment capital will not require such a high return on investment, because the risk of the project is also reduced by the economies of scale.”

Mana Pacific is a business and benefits from the arrangements, although it is a for-profit company, which does not focus on shareholder profits, Reed says.

The model provided by Mana Pacific – tested for the first time last year on Molokai – moves away from the traditional model of climate finance, which is generally done through government aid and international organizations – like the dozens of millions of dollars donated to FSM – then by seeking companies to implement projects.

The signing of Whipps was the first in a long series, according to Reed, with the idea that they collectively attend COP27 in Egypt this year with proof that they can implement projects and use the 100 billion dollars of climate finance pledged by rich countries 13 years ago.

“Honestly, if we could have, we would have had five or six other countries willing to sign behind him,” Reed said. Discussions are underway with Guam, Kiribati, American Samoa, Solomon Islands, Fiji and Vanuatu, according to Reed. “But synchronizing things with Covid has been a bit of a challenge.”

A precarious position

The variability of the Pacific means there is no one-size-fits-all approach. For US Pacific Territories and Freely Associated States, access to funding becomes complicated.

PIRCA’s Grecni says partner states like Palau, FSM, and the Republic of the Marshall Islands can get federal funding, but not access most grants to fund renewable energy and climate action. Meanwhile, the territories cannot access international agreements, such as the UN’s Green Climate Fund, due to their territorial status.

And while there are disaster preparedness grants available from the Federal Emergency Management Agency, they “exclude or marginalize” the Pacific Islands because the grant prerequisites are tailored to all 50 states and not the situation of the nations and territories of the Pacific, she said.

“Covid has really demonstrated the precariousness of the economic situation in the Pacific, which I think only undermines their ability to apply for funding, for climate adaptation and forward-looking action,” Grecni said.

Answer to need

But Pacific countries like the FSM don’t just want renewable energy, they want to expand access to electricity – because 12% of the Pacific still needs electricity, according to the World Bank.

The seventh UN Sustainable Development Goal — “access to affordable, reliable, sustainable and modern energy for all” — must also be achieved in the Pacific. This means that in addition to renewable energy, it must be affordable, reliable and accessible.

According to Tawake of the Pacific Community, communities in outer islands and rural areas in Fiji, FSM and other countries still use unreliable solar or diesel generators, many of which live on around three hours of electricity a day.

Tawake says there is a “huge disparity” between communities across the Pacific.

“Some countries have less than 50% energy access,” Tawake said. “I think these are the countries that need more help.”

But it’s not cheap, according to Ravita Prasad, assistant professor at Fiji National University.

For Fiji, Prasad calculated that it would take between $1.6 billion and $3.2 billion to switch to renewable energy by 2040.

Given the potential cost to Fiji, one of the wealthiest nations in the Pacific, there remains a need to have as much data as possible to inform better investments, says Prasad.

There has, however, been a substantial increase in renewable energy production in the Pacific, Tawake says, indicating a move towards a more climate-friendly and self-sufficient region that is not dependent on imports.

But land transport has expanded across the Pacific over the past 20 years, leaving total fossil fuel imports relatively the same, Tawake says. Then there is also the shipping industry, which Pacific countries want to become carbon neutral.

“In power generation, we are making progress,” Tawake said. “But without doing anything with land and sea transport, we will not achieve carbon neutrality by 2050.”

Coverage of Maui County by Civil Beat is funded in part by grants from the Nuestro Futuro Foundation and the Fred Baldwin Memorial Foundation.

Lynn A. Saleh