Rising to the Challenge of Renewable Electrification in the Pacific

By Dr Kate Owens, Senior Lecturer, University of Sydney Law School, Professor Susan Park, Department of Government and International Relations, University of Sydney and Gemma Viney, SEI Doctoral Fellow and PhD Candidate, Department of Government and International Relations, University of Sydney.

Climate change is the greatest threat to Pacific Island Countries (PICs), and renewable electrification can reduce the vulnerability of PICs and increase resilience to a variety of severe climate-related impacts. Renewable electrification can also improve energy access and the energy security of PICs, which are highly reliant on imported fossil fuels and experience low electrification rates in many places.

Accelerating the renewable energy transition and unlocking these powerful co-benefits has become a top policy priority for these states. That much was clear during COP26, at which PICs demonstrated their strong moral desire to decarbonise and to play their part in not just adapting to a changing climate, but in mitigating it. Ambitious energy roadmaps and enhanced nationally determined contributions now target up to 100% renewable energy generation in some PICs to both reduce emissions and promote energy security and resilience.

With these ambitions come complex implementation challenges involving technical, social and financial barriers that are unique to each island context. In September 2021, the Sydney Environment Institute hosted a Practitioner’s Workshop to better understand the specific challenges and opportunities faced by PICs in 2021 as they seize the short window for transitioning away from diesel generation onto low carbon, resilient and equitable energy pathways, and provide energy access to remote and dispersed populations.  From these conversations with scholars and practitioners emerged four key threads.

The Pacific region is one of Australia’s highest foreign policy priorities and Australia is the Pacific’s largest development assistance partner. But the Federal Government’s position on climate change, including its refusal to increase its insufficient 2030 domestic emissions target, is seriously compromising that relationship.

While the new Australian Infrastructure Financing Facility for the Pacific (AIFFP) has the potential to support transformative projects in the Pacific, the facility remains undefined from a public perspective in terms of strategic priorities and how it can be positioned to maximise local benefits for Pacific states. Specific questions remain to be answered in relation to the strategic priorities of the AIFFP for renewable energy development, namely: how the AIFFP can be positioned to maximise local benefits for Pacific states; and how the AIFFP can facilitate links between Australia’s renewable energy sector, including technology innovators, and the Pacific.

Capacity is an endemic issue for all developing countries as they work to build sufficient technical knowledge and staff to maintain and use renewable energy systems. In PICs, capacity issues present at a range of scales: in the lack of government capacity to identify and develop suitable projects, in accessing finance, communicating with utilities and in engaging with local communities.

Strong public institutions will clearly be needed for PICs to manage the transition effectively, ensure public financial stability and attract private sector investment. Strong government leadership and public vision is required, in particular, for the effective coordination that will be needed between key ministries, the private sector, civil society organisations, beneficiaries and potentially development partners. Within these institutions, local public officials are needed who have the capacity to drive and coordinate transition activities and achieve co-benefits for Pacific communities.

An essential part of this process is for PICs to develop independent institutions to regulate tariffs, for example, and reduce unnecessary government intervention. PICs currently have limited planning and regulatory capacity for generation and transmission and these functions often rest with one, state-owned, provider of energy and/or dedicated government department.

Better institutions will also help PICs to absorb the funding and donor support that is available on both a program and project basis, and secure country ownership of these systems and technologies. Much more needs to be done to train local engineers, technicians, community groups, women’s collectives and young people on generation and battery technologies to enable PICs to maintain this infrastructure in an ongoing way. Talanoa, the sharing of stories and sharing of ideas, will be critically important in this context in enabling Pacific Island communities to understand the benefits of larger generating systems and increased energy access.

Public and private actors each have a role to play in the renewable energy transition and accessing financing will facilitate the shift for all players. Renewable energy technology is more accessible and affordable than ever, but PICs grapple with problems of scale and remoteness, limited public infrastructure and the limited financial capacity of energy consumers.

Shepherding large amounts of public and private finance to implement national roadmaps over a very short period will require development partners to engage more closely and effectively with Pacific Island peoples and assist them to effectively use this level of support and attract private investment. Significant amounts of funding are already available for renewable energy programs and projects in the Pacific, but it remains a challenge for PICs to access funding from myriad development lenders (although processes have been streamlined in the Green Climate Fund).

A major unresolved question is the kind of financing facility needed to support the development of the smaller scale projects needed in many PICs, and to address the determinants of energy access problems. In what ways, for example, can public finance contribute through establishing the right incentive structures for attracting investors? How can public agencies and funders help the private sector do what the private sector does best, which is to invest and operate? There is also a fine line between public actors providing the necessary project examples and support while not crowding out private investment.

Alongside finance, strong coordination is needed to effectively sequence the renewable energy planning and development process, so that PICs and investors can access and order the necessary ingredients to establish renewable energy systems and use. We need to gain a much deeper understanding of the roles that different partners can play at different stages to bring renewable energy to fruition, and this will require experimentation with different roles for different actors in different stages of the transition.

These understandings can be used to develop the necessary coordination mechanisms for synchronising local community needs and capabilities, ownership, actors, and decision-making to take advantage of the technologies available. PICs need support to upscale and gain the benefits of economies of scale over vast geographical distances and heterogenous populations that can garner sufficient investment. Connectivity to a regular energy distribution grid in PICs will not always be practicable and small-scale generation and distributed energy resources will also need to be aggregated in many places to meet local demand.

PICs are increasingly collaborating and coordinating their activities, particularly in relation to the regional working groups, which might facilitate the types of investment within the timeframes necessary to provide that expedient climate adaptation and mitigation. Stronger regional partnerships and aggregation will be needed to combat common challenges, develop programmatic financing approaches, support energy reform processes, private sector development and capacity building. Financial cooperation is a significant issue, as is the financing of a regional framework.

Ultimately, the transition to net zero must not leave PICs behind. Pacific nations are ready to transform their energy systems and use to achieve their Nationally Determined Commitments, but the mixed outcomes of COP26 highlight the precarious future of many PICs. Rapid and targeted innovations in governance and process will be critical to propel renewable energy transitions of the scale and pace required and enable Pacific Island peoples to continue to flourish through an inclusive, just and sustainable energy transition.

Read the full report, Unsettling Resources: Renewable Energy in the Pacific, here.

Katherine Owens is a Senior Lecturer at the University of Sydney Law School. Her research combines both social and legal methods to address significant issues of environmental law and governance, including how law and governance should manage climate change, energy transitions, environmental water, environmental finance and the risks of coal seam gas mining. A key focus of her research is how governance frameworks can link effective public institutions, such as independent agencies, with innovative private sector actors and enable these entities to work collaboratively to accomplish environmental objectives.

Katherine’s monograph Environmental Water Markets and Regulation: A Comparative Legal Approach (Routledge/Earthcan 2017) was the first comprehensive examination of the role of law in supporting voluntary water transactions for environmental recovery. Before joining the University of Sydney in 2015, Katherine practised for a number of years in State Government and leading commercial firms in Australia and New Zealand, specialising in environmental and planning law.

Susan Park is a Professor of Global Governance at the University of Sydney. Susan has a long-standing commitment to Global Environmental Politics. Susan has two current research projects. The first looks at the global governance of the shift to renewable energy, particularly ‘gaps’ in governance around the lack of protective norms, and accountability ‘traps’ that emerge when we focus our attention of a few scheme to mitigate harm in global renewable supply chains. The second, examines if and how international grievance mechanisms operate to provide justice for communities harmed by international energy and development projects funded by international development agencies.

Gemma Viney is a Research Assistant on the FASS 2018 Strategic Research Program Project developing the field of Multi Species Justice and is currently completing a PhD in the Department of Government and International relations. Gemma was an Honours Research Fellow with the Sydney Environment Institute in 2017. She has a Bachelors degree in International and Global Studies from the University of Sydney, and a First-class Honours Degree in the Department of Government and International Relations. Gemma Viney is the Research Lead on Anti-Mining Community Movements at the Sydney Environment Institute.