Economic Comission for Latin America and the Caribbean (2016)
This paper was prepared to guide the first session of the training workshop Introduction to Financial Feasibility Assessment of EE and RE Projects in the Caribbean. We explore two potential reasons that might be hindering the adoption of energy efficiency policies in the Caribbean. The first reason is related to the availability of primary infrastructure. Countries with deficits on their primary infrastructure might not consider energy efficiency policies as a priority for a national discussion. The second reason is debt overhang. In this type of scenario, countries might be dissuaded to conduct new investments since earnings/savings from projects would go directly to debt holders. Having a clear understanding of a country’s macro environment and its competing needs is an important preliminary step before promoting energy efficiency projects. Evidence suggests that debt overhang is the most likely reason to explain the lack of adoption of energy efficiency policies. Given this result the Caribbean region could take advantage of international initiatives that mobilize funds to promote climate-sensitive investments.