by Eulana Weekes
St. Kitts and Nevis (WINN): Climate Change continues to be a growing issue for nations worldwide as the 2022 United Nations Climate Change Conference/COP27 is underway. Countries most impacted are those with negligible emissions that contribute to climate, which includes the Caribbean. The physical effects are most felt during the Hurricane Season from June 1 to November 30, which brings more intense weather systems, heat waves and drought.
However, the effects of climate change on the Caribbean have grown above and beyond the physical aspect. The Eastern Caribbean Central Bank (ECCB) has taken an active role in creating climate-resilient initiatives in countries of the Eastern Caribbean Central Union (ECCU). Ms Kieran St Omer- Project Lead of the ECCB’s Greening of the ECCU Financial System Initiative shared how the Bank is helping the region confront the economic challenges of climate change.
St.Omer said, “One of the things that ECCB is preparing for is to improve investment or attract new investments in renewable energy investments so that we can ensure clean, affordable and reliable energy for all citizens in all member states at all income levels.”
St.Omer explained that there are some challenges that the region is facing as it relates to green financing initiatives and private investments, as the cost of transitioning to sustainable and renewable energy security is high.
“We in the ECCU have the resources, but we have not been using [them], and the cost of the transition is high in terms of financing that transition. We have not been able to tap into sustainable finance markets or investors to come into our region to invest because we do not have the right private [investment] frameworks.”
She added, “So the ECCB, we’re championing the development of green finance frameworks in the ECCU. We’re also looking at integrating climate risk stress testing into assessing the financial sector and into investment decisions by developing solutions for that and tools that the financial entities can use… to top it off, as I mentioned, we are looking to develop renewable energy [investment] solutions.”
According to St.Omer, the green finance initiative allocates capital to projects with positive environmental and ecological impacts, such as waste management, climate adaptation and mitigation.
“When we say we want [to] mainstream and put a framework and solutions to encourage and incentivise investments in green projects, let’s look at it from both angles. The financial institutions provide funds, so we are working with Governments and their related ministries. This initiative, the Green Finance Initiative, is a trilateral initiative where it’s not just the financial system, but we are taking an economy-wide approach because it’s the real sectors that are being impacted. We want to see green loans and when I say green is the use of those proceeds going to green projects.”
Apart from the concerns of climate financing, economies are having to face other exogenous shocks, including the ongoing war in Ukraine, tensions between China and Taiwan, civil unrest and the ongoing drought on the African continent, and political uncertainties globally that could deter the projected economic growth of countries which can ultimately bring on recessions in other countries.
When considering the reactionary trait of countries as it relates to climate change and exogenous shocks, St.Omer believes that the Caribbean is always in recovery mode.
“There are a multitude of economic crises all at once facing us. I believe that we can all attest to the fact that we have been facing recurring natural disasters, that we have been stuck in a recovery loop with high rehabilitation cost and reconstruction needs. What this means is high budget deficits, limited fiscal space and unsustainable debt levels that our Government and our citizens have to grapple with.”
While the challenges facing Caribbean economies have been addressed profusely, most notably during the height of the COVID-19 pandemic, concrete solutions and actionable plans to move countries from reactionary to proactive, from recovery mode to stability are currently concepts waiting for financing.