Green energy may be the fastest-growing source of energy on the planet. Nevertheless, one of the world's most limited natural resources, fossil fuels – oil, coal, and natural gas – continue to dominate global markets, accounting for more than 80 percent of the world's energy needs. The Statistical Review of World Energy from the UK’s Energy Institute indicates that oil and natural gas currently meet 33 percent and 24 percent of our energy requirements respectively, but the continued extraction and use of these limited resources will inevitably lead to diminished availability and depletion over time.
Despite today’s numbers, green energy, also known as sustainable or renewable energy, signifies a pivotal shift in the future of the global energy landscape. Unlike conventional methods, green energy taps into the power of abundant natural resources such as sunlight, wind, rain, tides, waves, biomass, and even the Earth's stored geothermal energy, sources that can replenish themselves within a human lifetime. Sources that are accessible and cause minimal harm to our climate and surroundings… all of which is great news for Earth's precious resources.
The world's heavy reliance on fossil fuels has long been a serious economic concern to the Caribbean, as periods of international upheaval have often caused volatile fluctuations in international oil prices. During the global energy crisis of the 1970s when Arab Petroleum exporting countries declared an embargo on nations that were deemed to be Israeli supporters, within three months of the imposition of the embargo, international oil prices rose by 400 percent from $3 to $12 per barrel. That inflationary spiral was directly passed on to the energy-dependent importers in the Caribbean. As a consequence, islands experienced significant shortages in petroleum products. Similarly, during the Gulf War (1990-1991), the energy market reacted with great sensitivity, again causing regional energy prices to escalate dramatically. And in more recent times, the war in the Ukraine triggered market turmoil and caused panic among Eurozone nations that were highly dependent upon Russian energy products. As a consequence, petroleum product prices and accessibility challenges again afflicted the region's energy-importing economies.
Renewable energy, particularly solar and wind, offers an alternative path towards a new era of energy independence and economic certainty, freeing the region from reliance on the volatile and unpredictable global oil and gas market, while presenting a pathway toward several benefits and changes for the people of the Caribbean. These include:
In a world where the demand for energy continues to grow, the divergent paths of green energy and fossil fuels present critical choices for the future of our planet. Fossil fuels, despite their historical dominance in global markets, are limited resources that come at a great cost to both the environment and economies. The extraction and consumption of oil, coal, and natural gas have fuelled geopolitical tensions, economic volatility, and environmental degradation. In contrast, green energy represents a beacon of hope, signalling a transformative shift towards sustainability and resilience.
The Caribbean, an area susceptible to the fluctuations of the global energy market, stands to gain immensely from embracing renewable energy solutions. The historical vulnerabilities of the region to oil price shocks and geopolitical conflicts underscore the urgency of diversifying energy sources.
The above article was submitted to stimulate discussion ahead of the September edition of the Central Bank of Barbados’ Caribbean Economic Forum. The views expressed do not necessarily reflect those of the Central Bank.