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Draft

BARBADOS N ATIONAL ENERGY


P OLICY

The Ministry of Energy


& the Environment
DRAFT

THE NATIONAL ENERGY POLICY OF BARBADOS

Prepared by: Energy Policy Committee

December 2006

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TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................................................................................... I


ES 1.0 INTRODUCTION .....................................................................................................I
ES 2.0 CURRENT ENERGY CONSUMPTION PATTERNS.....................................................I
ES 3.0 ENERGY AND THE ENVIRONMENT .......................................................................II
ES 4.0 REGIONAL AND INTERNATIONAL ENERGY ISSUES............................................ III
ES 5.0 T HE NATIONAL ENERGY POLICY ...................................................................... III
ES 5.1 Ensuring Security and Stability of Supply ....................................................iv
ES 5.2 Maximising Energy Efficiency.......................................................................iv
ES 5.3 Creating a Competitive Market....................................................................vi
ES 5.4 Achieving Environmental Sustainability................................................... vii
ES 6.0: E NSURING EFFECTIVE AND T IMELY IMPLEMENTATION .................................. VIII
ES 7.0: SUMMARY..................................................................................................... VIII
1.0 INTRODUCTION .....................................................................................................1
1.1 COUNTRY PROFILE ..............................................................................................1
1.2 ENERGY AND THE ECONOMY .................................................................................. 2
1.2.1 Energy Consumption by Sector.......................................................................... 6
1.2.2 Energy Demand Forecast .................................................................................. 7
1.3 ENERGY AND THE ENVIRONMENT ........................................................................... 8
1.3.1 Climate Change and the UNFCCC ................................................................... 8
1.3.2 Ambient Environmental Conditions .................................................................. 9
1.4 ENERGY AND SOCIETY........................................................................................... 10
2.0 REGIONAL AND INTERNATIONAL ENERGY ISSUES ............................ 14
2.1 GLOBAL MARKET FORCES .................................................................................... 14
2.2 REGIONAL INITIATIVES.......................................................................................... 15
3.0 GOALS, PRINCIPLES AND OBJECTIVES OF THE ENERGY POLICY 18
4.0 THE ENERGY POLICY....................................................................................... 21
4.1 POLICY ISSUE # 1 – E NSURING SECURITY AND STABILITY OF SUPPLY ................ 21
4.1.1 Petroleum Product Supply and Market Diversification................................. 21
4.1.2 Renewable Energy............................................................................................ 26

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4.1.3 Electricity Generation Expansion Planning................................................... 30
THE PRESENT SITUATION ................................................................................. 30
4.1.4 Storage capacity and Contingency Planning.................................................. 34
4.2 POLICY ISSUE # 2 – MAXIMISING E NERGY EFFICIENCY ....................................... 36
4.2.1 Fuel Storage and Distribution ......................................................................... 36
4.2.2 Electricity Generation and Distribution. ........................................................ 37
4.2.3 Sectoral Energy Use and Conservation .......................................................... 38
HOME ENERGY EFFICIENCY................................................................................................ 40
HOME ENERGY AUDITS ....................................................................................................... 40
4.2.3.1 Public Sector Energy Conservation Programme.................................... 40
4.2.3.2 Manufacturing .......................................................................................... 43
4.2.3.3 Retail ......................................................................................................... 43
4.2.3.4 Transport................................................................................................... 43
4.2.3.5 Tourism ..................................................................................................... 45
4.2.3.6 Agriculture................................................................................................ 45
4.2.4 Demand Side Management .............................................................................. 45
4.3 POLICY ISSUE # 3: CREATING A COMPETITIVE MARKET ...................................... 47
4.4 POLICY ISSUE # 4: ACHIEVING ENVIRONMENTAL SUSTAINABILITY .................... 51
5.0 ENSURING EFFECTIVE AND TIMELY IMPLEMENTATION ................ 53
5.1 INTRODUCTION ...................................................................................................... 53
5.2 FISCAL POLICY & ECONOMIC INSTRUMENTS ....................................................... 53
5.3 LEGISLATIVE FRAMEWORK ................................................................................... 54
5.4 EDUCATION AND RESEARCH ................................................................................. 54
5.5 INSTITUTIONAL REFORM & CAPACITY BUILDING ................................................ 55
5.6 INVESTMENT AND INDUSTRY PROMOTION............................................................ 55
5.7 TARGETS AND INDICATORS ................................................................................... 56
6.0 SUMMARY OF POLICY INITIATIVES .......................................................... 57
7.0 APPENDIX 1 ........................................................................................................... 64

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LIST OF FIGURES

FIGURE 1.1: RGDP OF THE BARBADOS ECONOMY 1995-2004.............................................................................2

FIGURE 1.2: PER CAPITA ENERGY CONSUMPTION IN BARBADOS (1983-2005) ...................................................3

FIGURE 1.3: PETROLEUM AS A PERCENTAGE OF BARBADOS IMPORT BILL..........................................................4

FIGURE 1.4: ENERGY INTENSITY DATA FOR BARBADOS ......................................................................................5

FIGURE 1.6: ELECTRICITY USAGE BY SECTOR FOR 2004 ......................................................................................7

FIGURE 4.2: COMPARISON OF THE INSTALLED CAPACITY BY P OWER PLANT TYPE FOR 2001 & 2005……….32

LIST OF TABLES

TABLE 1.1: GLOBAL ENERGY CONSUMPTION PER CAPITA....................................................................................3

TABLE 1.2: PETROLEUM CONSUMPTION BY KEY USERS IN 1998.........................................................................6

TABLE 1.3: TRENDS IN MOTOR VEHICLES REGISTRATION ...................................................................................9

TABLE 4.1: BL&P'S EXISTING GENERATING UNITS ............................................................................................31

TABLE 6.1: ACTION P LAN FOR THE NATIONAL ENERGY POLICY .......................................................................57

TABLE 7-1: COMMENTS RECEIVED FROM STAKEHOLDERS ................................................................................64

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EXECUTIVE SUMMARY

ES 1.0 Introduction

Barbados is the most easterly island in the Caribbean archipelago. With a population of
approximately 272,000 people residing in an area of 435 km2 (166 miles2), Barbados is
one of the most densely populated countries in the world. Barbados has limited on-shore
mineral and hydrocarbon resources, which have been efficiently exploited over the last
few decades. Offshore resources have considerable potential, with an offshore license
area of approximately 43,000 km2 (18 532.9 miles2).

Ranked 30 th by the United Nations Human Development Index and with an average
annual per capita income of US$8,500 Barbados may be defined as a middle income
country. The country has transitioned from an agrarian to a service-based economy.
Tourism has become the single largest foreign exchange earner and the sugar cane
industry is undergoing fundamental restructuring to survive in a post preferential markets
environment.

Gross Domestic Product has increased steadily over the last decade and concomitant with
this economic growth, energy consumption has increased, exceeding 1,400 kilograms of
oil equivalent per capita per year in 2004. The spiralling cost of fuel along with
burgeoning demand has dramatically increased the costs of fuel imports, placing
considerable strain on foreign reserves. The inflationary impacts of rising energy costs
have been felt by all sectors of society.

The Government of Barbados wishes to develop and implement a national energy policy
to mitigate the negative impacts of the oil prices and take advantage of national
renewable and non-renewable resources.

ES 2.0 Current Energy Consumption Patterns

Electricity generation (~ 50%) and transport (33%) are by far the two largest consumers
of the fuel imported into the island. The manufacturing sector is a distant third at ~ 5%.

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Of the electricity generated (~ 885 million kilowatt hours in 2005), domestic
consumption was the major user at 34%. The Commercial sector was the second largest
consumer with 23%. Electricity sales by the lone electric utility company, the privately
owned Barbados Light and Power Co. Ltd. (BL&P), increased by 6.4% in 2005 and for
planning purposes the Company has tended to use a projected growth in energy demand
of 4% per year.

ES 3.0 Energy and the Environment

Government’s energy policy has the potential to impact significantly on the physical
environment. As signatories to the United Nations Framework Convention on Climate
Change (UNFCCC), we are morally if not legally obligated to play our small part in
reducing Green House Gas (GHG) emissions, especially as a low-lying, coastal and water
scarce country, we are likely to be impacted the most by climate change and sea-level
rise.

Carbon dioxide emissions account for 94% of the GHGs and fossil fuel (predominantly
fuel oil) combustion for electricity generation accounts for 74% of all CO 2 emitted by the
country, with transport contributing 14%. Therefore, there is a clear environmental driver
to use either a cleaner fossil fuel (e.g. natural gas) and/or to use renewable energy sources
to generate electricity.

Concerns over the environmental health effects of methyl tertiary butyl ether (MTBE)
and the synergy with the sugar cane industry that can be derived from the use as ethanol
as an alternative octane enhancer have driven Government’s policy intention to replace
MTBE with 10% ethanol in gasoline. Similarly, the Government will support the
introduction of ultra low sulphur diesel (ULSD) into the local market and seek to harness
the potential synergies of a local biodiesel industry, as it is understood that biodiesel is a
welcomed additive to ULSD to improve its lubricity.

An air quality study, conducted by the Pan American Health Organisation in 1994,
estimated that vehicular traffic annually contributed 9,302 tonnes of hydrocarbons,
49,680 tonnes of carbon oxides, 2413 tonnes of nitrogen oxides, and 50 tonnes of lead to
the atmosphere. It is the Government’s intention to enact legislation and regulations to
control vehicular and point source (e.g. electricity generating plants) emissions.

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ES 4.0 Regional and International Energy Issues

The price has oil has reached unprecedented levels, exceeding US$75/bbl and predicted
to rise further. Sustained demand from China and India has fuelled this increase.
Geopolitical issues in the Middle East and in Venezuela, hurricanes in the Atlantic,
limited production and refinery capacity have also created upward pressure on world oil
prices. The Government’s policy assumes that energy prices will not decrease
significantly over the next 20 years.

Within the region, Trinidad & Tobago and Venezuela are major oil and gas producers
and both countries have tabled regional energy proposals. Of particular interest to
Barbados is the Trinidadian proposal to construct a trans-Caribbean undersea pipeline to
distribute natural gas to the Eastern Caribbean. The availability of adequate and reliable
amounts of natural gas will facilitate the desired transition from fuel oil to natural gas as
the primary fuel for electricity generation and allow further expansion of natural gas
distribution for domestic consumption. It is anticipated that the transition to natural gas
will provide over Bds$40 million in savings annually.

ES 5.0 The National Energy Policy

The BEP has used at its core, the five (5) principles of sustainable development as stated
in the Barbados Sustainable Development Policy. The following energy policy objectives
have been adapted from these principles:

x The provision of adequate and affordable energy to all sectors of society as a


prerequisite for a decent quality of life.
x Maximising the efficiency of energy use in production, storage, distribution and
end-use.
x Reduced dependence on fossil fuels with more emphasis on renewable energy
technologies as the primary energy sources.
x Use of an integrated mix of regulation and economic and market-oriented
approaches to promote competition within both the petroleum and electricity
sectors and to promote best industrial and environmental practices.
x Promotion of research and development in energy efficiency, oil and gas
exploration and renewable energy technology.

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x Increased exploration for oil and gas resources and usage of found resources in
such a manner as to ensure at least 50% transfer of known reserves of fossil fuels
to the next generation.
x Increased private sector participation in a competitive energy sector.
x The national energy policy will reflect the inputs of the major stakeholders and
will be accessible to all.

ES 5.1 Ensuring Security and Stability of Supply

Security of supply will be enhanced by the following measures:

x Increased exploration for and equitable exploitation of onshore and offshore oil
and gas resources.
x Diversification of the fuel mix with a transition to natural gas as the primary fossil
fuel. It is anticipated that the fuel mix will be 70% natural gas by 2026.
x Reduced dependence on fossil fuels by the promotion of renewable energy

The following renewable energy targets have been set:

x 10% of national energy usage will be from renewable sources by 2012


x 20% of national energy usage will be from renewable sources by 2026

A 10 MW wind farm, a 30 MW cogeneration plant using bagasse as a biofuel, and the


recovery and use of landfill gas are renewable energy projects that will receive
Government’s support over the next 5 years. The use of biodiesel and ethanol in vehicles
will be promoted. The successful Barbados Solar Water Heater Model will be exported
internationally and a Renewable Energy Centre will be established.

ES 5.2 Maximising Energy Efficiency

A new oil terminal and associated infrastructure have increased the efficiency of
petroleum product storage and distribution. The BL&P has a mix of old and new
generating plant with varying thermodynamic efficiencies. By 2005 diesel had replaced
gas turbines as the plant that provided the greatest capacity. The total generating capacity

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had also increased to 239.1 MW. Further improvements in generation efficiency can be
expected as older plant is phased out.

The BL&P’s transmission lines (from the generating stations to the substations and
between substations) have been placed underground. Transmission losses are
approximately 7% which is considered an industry best practice. Distribution lines (from
the substations to the customer) remain aboveground, vulnerable to wind damage, illegal
hook-ups and aesthetically unpleasing. Whilst it is cost prohibitive to bury all of the
existing transmission lines, it will be Government’s intention to mandate the use of
underground distribution lines for new residential and commercial developments where
viable.

Over 20 years ago, the implementation of Demand Side Management had been estimated
to have the potential to reduce energy consumption by 14 – 17%. The Public Sector
utilises approximately 15% of the electricity generated on the island and a Public Sector
Energy Conservation Programme has been developed. The programme will, inter alia,
address energy usage by public vehicles, air conditioning and lighting in government
buildings and mandate energy auditing and reporting. The Barbados Water Authority is
the single largest energy consumer. Therefore, conservation of water is conservation of
energy. The Government’s policy is to aggressively reduce Unaccounted-for-Water and
to determine the feasibility of the BWA utilising alternative energy sources for its
pumping requirements.

An Energy Fund of Bds$10 million has been established to assist the tourism industry to
install energy efficient devices. Energy efficiency labelling standards will be legislated
and the Building Code will be implemented. The Government will compel the use of
materials which keep houses cooler, such as thermal barriers, roof insulation, window tint
and ceramic roof coatings by prohibiting the importation of products that do not meet
energy efficiency standards that will be adopted by Barbados. Home energy audits will be
promoted by the provision of tax incentives.

Diesel vehicles are being encouraged. The government recognises that the private
automobile, whilst highly convenient, is inherently inefficient and a comprehensive
public transport plan will prioritise the improvement of mass transit systems.

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ES 5.3 Creating a Competitive Market

Currently, Barbados’ energy sector is regulated, with central Government exercising


control over the pricing of petroleum products (gasoline, diesel, kerosene, and liquefied
petroleum gas); electricity and natural gas pricing are regulated by the Fair Trading
Commission. The electricity sector is a monopoly with only one company involved in
the generation, distribution and transmission of electricity.

The objective of the Government’s policy is to give the consumer a wider choice of
products and services within the Barbadian energy market.

Barbados’s on-shore oil and gas potential will continue to be exploited by the Barbados
National Oil Company Ltd. Competitive bidding will be used for offshore exploration.
Importation of oil will be de-regulated. However, Government will maintain control of
storage and terminalling. The Government considers that there is the need for an
improved regulatory environment for the distributive sub-sector. Legislation will be
revised to establish, inter alia, new standards for the marketing of products.

With respect to the retail petroleum sub-sector, the Government will allow new entities to
enter this market. This sub-sector will be liberalised on the basis of a new regulatory
environment which will include criteria for the establishment and relocation of gas
stations, including environmental and safety standards.

Government is cognisant of the reality that the petroleum market in Barbados is relatively
small. The market contains few players and therefore there is a strong likelihood that
prices can be influenced by a single player under a deregulated regime. Additionally,
other entrants in the market may be encouraged to join what could be considered as a
quasi cartel. The potential for dominant players to abuse the market is more likely to
occur in small markets such as Barbados. To maintain Government’s regulatory
oversight does not reduce the choice of products and services. It does however, maintain
stability of price and a price policy that is in the interest of the consumer.

The Government has in the past attempted to shield consumers from high oil prices by
adjusting the tax take. The Government recognises that it will be unable to do so when
the price of oil reaches prohibitively high levels. The Government will determine the
optimum level at which the tax take will not be able to be adjusted and will create a new
tax regime that will be revenue neutral.

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Barbados Light and Power Co. Ltd is the only entity that has been granted permission to
sell electricity to the public in accordance with the provisions of the Electric Light and
Power Act. The Government now considers that the changing international energy
environment prescribes the need to end the monopoly of the Barbados Light and Power
Co. in the generation of electricity.

Barbados is well placed to exploit renewable energy technologies. Even where the cost
of production is higher than the cost of fossil fuels, environmental sustainability and
positive externalities through the use of clean energy such as solar and wind power would
be in the public good.

The Government will therefore liberalise the generation of electricity to allow


Independent Power Producers, utilising renewable energy technology, to sell electricity to
the national grid.

ES 5.4 Achieving Environmental Sustainability

The energy policy has been assessed for its potential environmental impacts and the
following mitigation measures have been identified.

x Fuel composition standards - the Government will replace MTBE with ethanol in
gasoline and reduce the sulphur content in diesel to internationally accepted
standards.
x Vehicle emission standards will be legislated.
x Point source emissions of hydrocarbons (e.g. electricity generating stations) will
be regulated.
x Groundwater and coastal zone protection policies will be maintained with respect
to petroleum storage.
x Oil spill contingency planning and response capacity will be improved.
x Viable waste-to-energy projects will be encouraged.

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ES 6.0: Ensuring Effective and Timely Implementation

It is the Government’s intention to ensure that the policy recommendations contained


within this document are implemented effectively in a timely manner. To expedite
implementation, an action plan has been developed.

Institutional capacity will be increased by the strengthening of the Energy Division which
will be responsible, inter alia, for overseeing the implementation of the BEP.

Enabling legislation and secondary regulations will be enacted to:

x Make energy efficiency labelling mandatory for appliances


x Mandate energy audits and reporting for major energy users
x Set standards for fuel quality (e.g. sulphur content)
x Set standards for vehicle emissions
x Set standards for occupational health and safety within the energy sector
x Regulate the exploration for and exploitation of resources (onshore and offshore)
x Prescribe penalties for non-compliance, including environmental damage
x Ensure stakeholder participation
x Create and regulate a “liberalised” and transparent energy market
x Establish the National Energy Authority

A Renewable Energy Centre will be developed, staffed and adequately funded by


December 2009.

ES 7.0: SUMMARY

The goals, principles, objectives and strategies outlined in the National Energy Policy are
part of a vision to transition Barbados into a fully developed country by 2025. Policy
initiatives have been presented to ensure sustainability in the energy sector both
economically and environmentally.

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1.0 INTRODUCTION
The draft Barbados Energy Policy (BEP) was prepared by a committee of representatives
of government agencies. The draft policy document was reviewed at a number of
stakeholder meetings with both public and private sector participation. This final
document incorporates the inputs obtained at these meetings. These comments are shown
in Appendix 1.

1.1 Country Profile


Barbados is the most easterly of the Caribbean islands, approximately 300 miles (483
Km) north east of the coast of Venezuela and approximately 200 miles (322 km) from
Trinidad. Barbados is approximately 166 square miles (431 sq. km) with an estimated
population of 272,000 (United Nations, 2005), making it one of the most densely
populated countries in the western hemisphere. Barbados’ maritime jurisdiction has
recently been confirmed1 to cover approximately 200 nautical square miles, which may
include up to 60,000 sq. km of sub marine shelf.

In 2005, Barbados was ranked 30 th by the United Nations’ Human Development Index,
with an average life expectancy of 76.6 years, and an adult literacy rate of 97%. Despite
its small size, Barbados has a relatively high per capita income of approximately US
$8,500 making it a middle-income developing country.

Since independence from Britain in 1966, successive governments have sought to


diversify the production base of the economy. Given its soil, topography and climate,
sugar, manufactured from sugar cane, has traditionally been the island’s most significant
export product. However, during the 1970s, manufacturing and tourism emerged as
major foreign exchange earners. A stable economic climate has provided an attractive
environment for foreign investment and a vibrant services industry.

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Ruling of the Permanent Court of Arbitration, the Hague, 2006.

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1.2 Energy and the Economy

As is evident from Figure 1.1 (Barbados Statistical Service 2004) Barbados’ economy,
which has become predominantly service-based, has experienced sustained real Gross
Domestic Product (GDP) growth, averaging 2.5% annually, from 1995 – 2004.

6000
GDP ($ Millions)

5000

4000

3000

2000

1000

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year

Figure 1.1: rGDP of the Barbados Economy 1995-2004


Source: Barbados Statistical Service

In conjunction with this economic growth, per capita consumption of energy has steadily
increased over the last two decades, exceeding 1,400 kilograms of oil equivalent per
capita per year (kgoe/ca.year) in 2004 as is shown in Figure 1.2.

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Toe/Population ('000 persons) 1600

1400

1200

1000

800

600

400

200

0
1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005
Year

Figure 1.2: Per capita Energy Consumption in Barbados (1983-2005)


Source: Ministry of Energy 2006
Compared to global energy consumption trends, as illustrated in Table 1.1, Barbados is in
the bracket of middle income countries.

Table 1.1-1.1: Global Energy Consumption per capita


Units: Kilograms of oil equivalent (kgoe) per person per year
Year
1990 2000 2001
World 1633.6 1639.6 1631.3
Region/Classification 1990 2000 2001
Asia (excluding Middle East) 734.3 892.3 890.1
Central America & Caribbean 1232.7 1259.7 1265.4
Europe … 3545.6 3621.3
Middle East & North Africa 1162.6 1513.9 1487.1
North America 7539 8090.5 7928.5
South America 965.4 1120 1088.8
Developed Countries … 4590.1 4600.1
Developing Countries 693.1 832.5 827.9
High Income Countries 4876.2 5447.8 5440.2
Low Income Countries 415.6 478.3 479
Middle Income Countries 952.6 1290 1286.3
Source: International Energy Agency (IEA), 2004. <http://data.iea.org/ieastore/default.asp>

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Rising oil prices and burgeoning per capita consumption have increased the costs of
importation of petroleum as a percentage of the island’s import bill since 1997 (see
Figure 1.3). Data for 2005 and for the first half of 2006 are not available but would
probably indicate a further significant increase in the costs of petroleum imports.

16.00

14.00
Percent of Import Bill

12.00

10.00

8.00

6.00

4.00

2.00

0.00
1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004
Year

Figure 1.3: Petroleum as a Percentage of Barbados Import Bill


Source: Ministry of Energy (2005 Annual Statistical Digest)

Energy Intensity is an internationally recognised index used to describe the amount of


energy that a country uses to produce a unit of GDP. Figure 1.4 describes how Barbados’
energy intensity has varied over the last decade.

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85.00

80.00
Energy Intensity (TOE/GDP)

75.00

70.00

65.00

60.00

55.00

50.00
1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004*
Year

Figure 1.4: Energy Intensity Data for Barbados


Source: Ministry of Energy 2006

It is encouraging to note that the Energy Intensity Index for Barbados has decreased over
the last ten years, implying that Barbados has become more efficient in its conversion of
energy into GDP, even though per capita energy consumption has increased.

By August, 2006 the price of crude oil on the world market had exceeded US$73/barrel.
The retail price in Barbados for a litre of gasoline has increased from BD$1.39 in June,
2002 to BD$2.46 in August, 2006. Over this same period, the electric utility (the
Barbados Light & Power Co. Ltd.) has maintained its tariff rates at US$0.10/kwh.
However, it has progressively changed the fuel adjustment component of the bill which
has increased from US$0.056/kwh in June, 2002 to US$0.105/kwh in August, 2006. The
average domestic electricity bill has increased by over 28% during this four year period.
The cost of electricity which has ranged from US$0.18 to US$0.21/kwh has also
impacted negatively on the competitiveness of the manufacturing and tourism sectors.

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1.2.1 Energy Consumption by Sector

In 1998, which are the latest data available, petroleum usage was divided between the
various sectors as illustrated in Table 1.2. It is noted that the transport sector was
responsible for 33% and electricity generation accounted for ~50% of the fuel imported.

Table 1.2: Petroleum Consumption by Key Users in 1998


Percentage
Consumption of
Users
Petroleum Imports
(%)
Agriculture 0.84
Commercial 1.67
Cement Production 2.84
Government 0.71
Residential 5.09
Electric Utility 49.76
Tourism 0.41
Manufacturing 5.35
Road Transportation 33.03
Sugar Manufacturing 0.11
Other 0.19
Source: Ministry of Energy

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In 2004, sectoral use of electricity was distributed as shown in Figure 1.6.

7%
15%
6%

Hotel
Commercial
Public
23%
Domestic
34% Industrial
Other

15%

Figure 1.6: Electricity Usage by Sector for 2004


Source: Ministry of Energy

Domestic consumption was the major user at 34%. The Commercial sector was the
second largest consumer with 23%. The public sector and the hotel sector both
consumed 15% of the electricity generated in 2004.

1.2.2 Energy Demand Forecast

There are no adequate forecasting models available within the Ministry of Energy and the
Environment to predict energy demand over the next 20 years. Electricity generation
capacity expansion planning has not traditionally been a function conducted by the line
Ministry. It is the Government’s policy that national electricity generation expansion
planning should be the responsibility of central government.

For the purposes of this policy document, the following assumptions have been used:

x Even with the promotion of energy conservation and efficiency, per capita energy
consumption will increase by ~ 4% annually.

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x There will be no significant energy consumer (example aluminium manufacture)
added to the economy over the design period.

1.3 Energy and the Environment

1.3.1 Climate Change and the UNFCCC

Barbados is heavily dependent on the importation and use of fossil fuels for energy and
transportation requirements. As a small island developing state, Barbados is not a major
contributor to global warming and climate change, but is likely to be significantly
impacted if adaptation measures are not implemented. The national Green House Gas
(GHG) inventory for the years 1990, 1994 and 1997 revealed the following:

x CO2 emissions made up 94% - 96% of total GHG emissions, with progressive
increases over the years reported on (1,564.23 Gg (1990), 1913.81 (1994), and
2198.40 Gg. (1997)
x Electricity generation via combustion of fossil fuels accounted for the majority of
the CO 2 emissions (74%) over the 3 years investigated, followed by road
transportation (14%), and all others (9%) – i.e manufacturing/industrial,
commercial/institutional, residential and agricultural sectors.

Abatement options recommended in The Barbados First National Communications


Report under the United Nations Framework Convention on Climate Change (UNFCCC)
include:

x Efforts By the Government – increase the use of renewable energy


x Efforts by The Barbados Light and Power Co. Ltd. to reduce fuel consumption
in electricity production and, where possible, shift towards the use of cleaner
energy sources (e.g. natural gas).
x Emphasis on energy efficiency measures in the industrial, commercial,
institutional and residential sectors
x Reduction of CO2 emissions from the cement industry
x Introduction of Electric Vehicles and Hybrids
x Reducing disposal of organic materials in landfills
x Recovery of landfill gas from the Mangrove Pond Landfill
x Increased support for Research and Development

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1.3.2 Ambient Environmental Conditions

In addition to its impact on climate change on a global scale, energy usage also has the
potential to affect the local environment including outdoor air quality (e.g. vehicle and
stack emissions), drinking water quality (e.g. contamination by petroleum hydrocarbons
or by fuel additives – lead and MTBE), coastal ecosystems (e.g. marine oil spills), site
contamination (e.g. petroleum refinery or petrol stations) and general aesthetics (e.g.
overhead electricity transmission lines). The Government, in its The State of the
Environment Report 2000, had the following observations about the impact of energy on
the local environment:
x “Increases in vehicular traffic, industrial activity and the incidence of Sahara
dust have become the sources of growing concern about the quality of the air and
its possible linkage to certain health problems on the island.”
x Barbados Light and Power was identified as a significant point source of air
pollution. The SOE report cited a 1994 PAHO study that stated BL&P 1992
emissions included 4,590 tons of Sulphur Dioxide, 1,716 tonnes of nitrous oxide,
and 373 tonnes of particulates.
x Vehicular traffic in Barbados has been increasing constantly since the 1960’s, see
Table 1.2. The PAHO (1994) Air Quality Study estimated that vehicular traffic
annually contributed 9,302 tonnes of hydrocarbons, 49,680 tonnes of carbon
oxides, 2413 tonnes of nitrogen oxides, and 50 tonnes of lead to the atmosphere.
Table 1.3: Trends in Motor Vehicles Registration
Other
Buses/Coaches
Year Total Private Cars Lorries/Vans Commercial
Hired/ Taxis
Vehicles
1992 46, 957 38, 257 3, 067 5, 040 593
1995 54, 670 42, 701 3, 551 4, 348 1, 724
1998 68,094 53, 763 3, 630 5, 196 2, 521
2001 71, 756 55, 479 5, 133 6, 502 1, 127
2004 106, 178 86, 240 4, 785 6, 893 2, 641
Source: Ministry of Public Works and Transport 2006

Lead as a fuel additive was phased out in 1999 and replaced by methyl tertiary butyl ether
(MTBE). Closure of the Mobil refinery has removed one of the more significant point

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sources of air pollution associated with the use of fossil fuels. However, the old refinery
site requires remediation to remove hydrocarbon contamination before the site can be put
to other uses.

1.4 Energy and Society

Energy and society

Flying into Barbados during the day or night allows one to readily visualize the
ubiquitous role of energy in this most easterly Caribbean society. By night one is struck
by the flashing lights across the country, from the north to the south, east to west it
becomes apparent that Barbados is an island with near 100% electrical coverage.
Depending on the time of year, along with blinking car lights one is even likely to see
many of the various round-a-bouts brightly lit, not just for safety but also as part of a
yearly celebration of independence and festivity.

By day you would realize that the large sections of unlit areas are not in fact areas of poor
electrical penetration or poverty, but are rural and agricultural lands with selective non
illumination. Along with this you would clearly see the many solar powered water heaters
on the roof tops of over one third of the houses, illustrating the most densely populated
use of solar water heating technology in the western hemisphere; and finally you would
see a state of the art tank farm safeguarding imported gasoline, diesel and the aviation
fuel that will ultimately refuel the plane you are in.

This picture paints a miniature view of the magnitude to which energy is used by the
Barbadian society and its crucial role in Barbadian development. Energy is the fuel that
drives the economy; its impact is reflected in the balance of payments, the retail price
index, inflation, transportation costs, manufacturing, tourism and the household balance
book.

If we look back through the lens of time we can see that energy has a long history in
Barbados and in particular, renewable energy. Examples of its use have their beginnings
with the Arawaks and their use of biofuels in the forms of wood and wood chippings for
heat, cooking, and protection; it is seen in the use of windmills to crush and process
sugarcane into sugar and finally the conversion of radiant solar energy into hot water for
domestic and commercial uses. We can then see that in reality it is not energy that most
people are concerned with, but instead the services it provides.

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When one looks at energy through a social lens four elements can be identified; its
accessibility, affordability, is there any disparity in its distribution, and its safety. Gender
aspects of energy can also be assessed, for example through examination of the impacts
on the workforce and the household.

With respect to accessibility; currently electricity is available throughout the island, with
no inaccessible areas. Additionally there is an extensive natural gas network that supplies
approximately 16,700 customers, 16,100 being residential. Alternately bottled liquefied
petroleum gas (LPG) is used by many households for cooking. An IADB study conducted
in 1996 – 97 deduced that the poverty line for Barbados is US$5503 per capita per
annum, and there are approximately 7000 households which fall within this bracket. It is
within this bracket that there are households which use kerosene as their primary fuel.
Affordability and any disparities can be assessed and evaluated through a survey to
establish current baselines for habits, percentage of income used for energy costs, energy
diversity and awareness. Finally with respect to safety, there are very few accident
fatalities caused by the fuel chain including both primary and secondary energy sources.

The vision of a sustainable energy policy is one that places the community it serves as the
litmus test and focal point of its enfoldment. Thus for it to be successful, the goal must be
clearly defined i.e. the provision of energy and energy services in the most effective,
efficient, environmentally aware and economical means. It has been government’s policy
to provide energy to the consumer at the least possible cost this must now be updated to
include the above mentioned factors.

The energy bills of consumers are highly related to their income, location, education and
age. For those who live in the rural areas there is the concern of increased fuel
consumption for private vehicles, and unreliability of service with public transport. There
are the high initial costs of utilizing renewable energy sources for heating water or for
electrical generation; appliances and home construction will either assist in lowering
lighting and cooling costs or the opposite; and finally water use can be either efficient
providing cost savings for the consumer or conversely wasteful and impacting the costs
for its transmission, and use.

It is government’s policy that by assisting that part of the population with the least ability
to financially help themselves the social benefits of a secure and regular energy supply be
experienced by all. To do this (upon completion of the survey) government will provide
free energy audits for those members of the population who cannot benefit from the

11
$2000 Bds income tax rebate for energy efficient retrofits. It will also mandate that all
government housing be audited and retrofitted for energy consumption and energy
efficiency. The fuel of choice for the poor, kerosene will continue to be subsidized, and
the ministry responsible for social transformation will ensure that energy services are
available for those who desire them.

Gender impacts on every sector within a nation state, and every sector has a gender
component. As primary or secondary wage earners, bearers of children and primary care
givers, in Barbados we have been fortunate to be able to provide the key elements with
respect to energy services such that there is no major disparity between those who have
access to those services and those who don’t. From working in an oil field, to pumping
gas or climbing and servicing electrical systems gender diversity can be seen and its
importance felt.

In many developing countries access to the resources for cooking is limited, and it is
through that, that women are disproportionately impacted by the availability of energy
services. I.e. it is women that predominately do the cooking for households, whether
single parent or otherwise and thus service the burden of finding means and methods to
do so.

This is not the case in Barbados where the availability of energy services such as
electricity, for lighting and “micro business” opportunities, also provide the option for an
additional source of income for women. In many cases this is seen through sewing,
cooking and other home based businesses. Within this context we can see that the
provision of energy services in their myriad ways, public transportation, electricity, and
water are all not only services but social goods, and should be recognized as such. Their
individual and collective impacts, particularly electricity and water, have a major affect
on the stability and productivity of the national economy.

The cost of energy resources makes its impact through the various sectors of the economy
and thus on society as a whole. The transportation, industry, commercial and residential
sectors are all sensitive to energy prices and respond accordingly. It is important that in
assessing the role of energy and society, we must be cognizant of our developmental
goals, and the steps to attaining them. A complex, contemporary and sustainable society
is one where the resources are effectively and efficiently utilized. As a nation we have
made similar errors to those of other developing nations and have not been as efficient in
our energy use. This is especially apparent in our water use, as a water scarce country,
and has led to a culture of waste.

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In the event that Barbados increases substantially its energy resources through the
discovery of a large petroleum product find, the established principles of prudence and
efficiency will still apply. In addition to the environmental and economic considerations,
the possible social impacts of greatly reduced electricity and fuel costs must be soberly
weighed.

It is government’s policy to lead by example with respect to its energy use be it through
transportation, electricity, water or otherwise. This commitment will be realized through
its creation of an energy conservation unit which will advise government on the different
means and methods to enhance its energy use.

The ability for Barbados to continue to improve its telecommunications infrastructure is


also dependant on energy. In a global economy where much of the information is
transmitted electronically, reliable energy services enhance productivity. Although
corporate entities are currently the major beneficiaries, it is government’s policy that
those without the means, i.e. computers etc should also benefit through the provision of
these services at schools and community centres throughout the island.

As consumption patterns change, with increased infrastructure, e.g. highways


demographics shift leading to cultural changes. It has been noticed that with the increase
in 24 service stations there could be a concomitant change in employment patterns and
shopping practices, leading to the decline of the traditional corner shop. Although this
shift would have begun with the advent of the supermarket constant vigilance must be
applied to secure that the general population is not adversely impacted by these changes.
It is with this in mind that government will establish guidelines for the location of service
stations based on a multilevel criterion that takes into consideration the various
consequences, social, environmental or otherwise.

These strategies in addition to the implementation of the complete recommendations


outlined in this policy will enable Barbadians to accrue the full benefits of the energy
value chain, from the well head to the household.

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2.0 REGIONAL AND INTERNATIONAL ENERGY ISSUES

2.1 Global Market Forces

Over the past four or five years, the price of oil, the primary source of energy in the
world, has been rising steadily and has more than doubled, moving from US$30 per
barrel to the unprecedented level of US$75 per barrel, with some industry analysts
predicting that it will reach US$100 per barrel.

The price increases are influenced by a number of factors including:-.

x The increasing world demand generally, but particularly from India and China.
Currently 83 million barrels per day (BPD), and projected to increase to 93
million BPD by 2010.
x Geo-political conditions with unrest in the major oil production regions of the
world, leading to market speculation. Perceived instability in Nigeria and
Venezuela adds to the uncertainty.
x Limited production capacity to handle new production, and evidence of reduction
of supply in major production areas.
x Limited additional refinery capacity with no new refineries built in recent years.
This delicate refining situation is further exasperated by the potential of
hurricanes activity in the Gulf of Mexico.
High oil prices are unlikely to fall in the short or medium term and it is reasonable to
assume that prices averaging between US$60 and US$70 per barrel will be with us
well into the foreseeable future and as earlier indicated, some predict that it will rise
to US$100/bbl.

In spite of its high price, crude oil will continue to be the world’s dominant energy
source well into the 21st century, since there are no other energy sources capable of
replacing it over the next 25 to 30 years.

Oil importing countries with open economies, particularly small developing ones like
Barbados, must therefore devise and implement strategies which seek to minimise the
impact of these high oil prices and chart a path towards the reduction of dependency
on this energy source.

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2.2 Regional Initiatives

The National Energy Policy acknowledges initiatives within:-

x The wider Caribbean region including Venezuela


x CARICOM.
The fossil fuel situation in the region can be characterised as follows:

x A small market with reduced opportunities for economies of scale


x Separation by sea
x The wider area is self sufficient in petroleum as Venezuela is a major producer of
crude oil. The narrower region (excluding Jamaica & Bahamas) is also self-
sufficient.
x There is production within CARICOM in Trinidad, Suriname and Barbados.
Exploration efforts continue in Jamaica, Guyana and Bahamas.
x The Majors (Shell, ESSO & Texaco) have closed all of their refineries in the
Region. Only Petroleos de Venezuela S.A. (PDVSA) and Trinidad remain. Within
CARlCOM, refining capacity exists in Jamaica, Suriname and Trinidad.
x Regional product sources are :
o PDVSA (Curacao)
o Shell (Puerto Rico)
o Petrotrin (Trinidad)
o Hovensa (St. Croix) *Note: CET will apply because it is a non-CARICOM
state
The Government’s policy has been and will continue to be to look to the Region for
product first and only beyond if not available. The Government will participate actively
in all regional initiatives against the backdrop of security of supply, pricing and
environmental issues:

Venezuelan Initiatives

The Petrocaribe proposal was introduced in 2004 as concessionary financing for oil
purchase and developmental loans. There is a history of close co-operation between
Barbados and Venezuela in the upstream petroleum sector under bilateral agreements. Oil

15
production, housing and rural development have benefited from concessionary
Venezuelan loans acquired under the San José Agreement.

Petrocaribe is not offering a price reduction. It offers concessionary funding for product
purchase at market price and makes proposals for savings along the transactional supply
chain. Prior to the existence of Petrocaribe, Government had implemented its own
policies and programmes that were later suggested within the Venezuelan proposal.

Barbados has raised the matter of access to the production of Venezuelan crude
preferably as a CARICOM project and the refining of this crude to obtain product at
affordable prices. So far nothing has happened.

Venezuela has also advised of their interest in a Caribbean natural gas pipeline going all
the way to Cuba.

Trinidad & Tobago’s CARlCOM Proposal

T&T’s proposal was developed to alleviate within the shortest possible time, the adverse
impact of high energy prices on CARICOM member states economies while laying the
basis for a more coordinated and rational development of the energy resources of this
region. The proposal addresses the oil and gas sector only and does not offer better prices
but access to grant funds. Specific components of the proposal are as follows:

1) Petroleum - Acquire crude oil from Venezuela, refine it in Trinidad and make
product available to member states of CARICOM. All transactional arrangements
to be handled through a regionally owned company - CARIPETCO.

2) Natural gas - Make natural gas available to region largely for power generation
by LNG and pipeline. Where not economic, supply of electricity via underwater
power cables.

Guyana

There is an undeveloped plan to supply electricity, generated from an abundance of


hydro, to the region via underwater cable.

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Regional Task Force on Energy

CARICOM has created a Regional Task Force to make recommendations on an


energy policy. The mandate is to specifically address the following matters from a
CARICOM perspective:

x Security of energy supplies


x Energy pricing policy and the impact of relative competitiveness in the
CARICOM Single Market and Economy: and
x Purchasing and Transportation arrangements
The Task Force’s mandate has been widened to include natural gas, renewable
energy, investments in the energy sector, energy efficiency, environmental matters
and a rationalisation of the regional energy sector.

Processing Agreement

Barbados has negotiated a processing agreement with Trinidad and Tobago with the
following policy objectives:

x The refined products are the property of Barbados


x Maximisation of the oil and gas value chain

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3.0 GOALS, PRINCIPLES AND OBJECTIVES OF THE ENERGY POLICY

The primary goal of the national energy policy (BEP) is to contribute towards the
sustainable development of the island.

The policy is consistent with the following five principles of sustainable development,
embedded within the Barbados Sustainable Development Policy2.

1. Principle # 1: Quality o f Life: Quality of Life is recognised as the


overarching goal; the achievement of which requires the provision to all of
sufficient clean water, food, shelter, sanitation, health care, communication,
transportation, education, security, recreation and energy.

2. Principle # 2: Conservation of Resources: It is recognised that all fossil


fuels are non-renewable resources. To achieve sustainability there must be
efficiency in the use of non-renewables to extend their life and ultimately
there must be a switch made to dependence on renewable energy sources.

3. Principle # 3: Economic Efficiency: The use of natural and man-made


resources should be guided by appropriate incentives. All external
environmental and social costs from resource use must be determined and
internalised into cost benefit analyses. Economic instruments can
complement conventional regulation in influencing behaviour including
resource use. Tax rebates on solar water heaters is a successful example. The
principle of economic efficiency also requires an informed society, with
science and technology playing a central role.

4. Principle # 4: Equity: The concept of equity ensures equal access for both
current and future generations to natural and environmental assets, services
and opportunities. When this concept or principle is applied to the energy
sector it implies that non-renewable energy sources should be exploited in
such a manner as to allow at least partial transfer of these assets to future
generations.

2
NCSD, 2004. The Barbados Sustainable Development Policy. Ministry of Housing, Lands and the
Environment, Government of Barbados.

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5. Principle # 5: Participation: All major stakeholders are involved in the
decision making process at all levels. True participation also implies shared
responsibility with Government and Civil Society sharing equitably the
commitments, burdens and benefits of development.

The national energy policy uses the aforementioned principles to inform the following
objectives:

1. The provision of adequate and affordable energy to all sectors of society as a


prerequisite for a decent quality of life.

2. Maximisation of the efficiency of energy use i n production, storage,


distribution and end-use.

3. Reduced dependence on fossil fuels with more emphasis on renewable energy


technologies as the primary energy sources.

4. Use of an integrated mix of regulation, economic and market-oriented


approaches to promote competition within both the petroleum and electricity
sectors and to promote the best industrial and environmental practices.

5. Promotion of research and development in energy efficiency, oil and gas


exploration and renewable energy technology.

6. Increased exploration for oil and gas resources and usage of found resources
in such a manner as to ensure at least 50% transfer of known reserves of fossil
fuels to the next generation.

7. Increased private sector participation in a competitive energy sector.

8. The national energy policy will reflect the inputs of the major stakeholders
and will be accessible to all.

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The strategies to achieve these objectives are detailed, in the following sections, under
the following headings:

x Ensuring security and stability of supply


x Maximising energy efficiency
x Creating a competitive market
x Achieving environmental sustainability
x Ensuring timely and effective implementation

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4.0 THE ENERGY POLICY

The national energy policy can be described as a series of measures to ensure a secure
supply of energy, at competitive prices, with efficient use, in an environmentally
sound manner.

The promotion of the use of renewable energy technology and the development of a low
carbon economy are at the centre of the Government’s energy policy and are key
strategies to ensure sustainability.

4.1 Policy Issue # 1 – Ensuring Security and Stability of Supply

The strategies to ensure a secure supply of energy include:

x Diversification in the types of fuels used and having access to a number of


suppliers
x Increased exploration for and production of our own fossil fuels
x Promotion of renewable energy
x Sound Electricity Generation Expansion Planning

4.1.1 Petroleum Product Supply and Market Diversification


The Barbados National Oil Co. Ltd. (BNOCL) will optimise the supply of the country’s
petroleum product requirements, minimize the incidence of cost across the entire supply
transactional chain and deliver product to the market at the most competitive prices.

The following strategies will be utilised:

x Maximisation of the production of crude oil and natural gas in an attempt to


reach Barbados’ requirements of approximately 8,500 barrels of oil per day
(BOPD), not including aviation fuel. Access to crude oil recognises the fact
that there are significant benefits to be gained from its introduction into
refining at cost of production (Under US$20 per barrel) as against the
international price of US$60+ per barrel.

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x Increased domestic natural gas consumption from the current 15% of the
population to 50% by 2025 and a change in the energy mix so that 25% of
power generation is from natural gas by 2010, increasing to 70% by 2026.

The process of getting petroleum to the consumer can be divided into upstream
(before refining) and downstream (after refining) operations.

UPSTREAM

The strategies to maximize the benefits from the upstream operations are as follows:

a. Exploration and development drilling and the identification and


application of enhanced recovery technologies aimed at the maximisation
of production from existing wells.

b. The exploration, development and production of Barbados’ off shore


potential.

c. The production from proven reserves abroad in association with suitable


partners.

Onshore Production

Given that Barbados is geologically complex, production of crude oil and natural gas
over the years has provided significant challenges. The Government will seek to
maximise onshore production, within the equity principle of only utilising 50% of
proven reserves, by identifying and applying the appropriate technology. In pursuit
of this objective, BNOCL will identify and forge alliances with strategic partners in
production sharing and other arrangements where the risk is substantially carried by
the Partner for a share of the resultant production.

There has been significant drilling activity over the entire island over the past 100
years and some limited success has been achieved notably in the St. Andrew and St.
Thomas areas. The major discoveries however have been in St. Philip, primarily in
the Woodbourne area which has produced in excess of 10 million barrels since the
discovery well was drilled in 1974. The field is therefore maturing and the need to
find a new oil field on-shore Barbados is therefore highly desirable.

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In pursuit of this objective, the Government will seek an able partner to assist in the
drilling of a minimum of three rank exploration wells over the next 3 to 5 years. If a
discovery well is found, the company will develop the new field expeditiously.
Given the nature of the deposits so far discovered in Barbados, it is also likely that
natural gas will be associated with any new crude oil discovery. If this proves to be
the case, the BNOCL will build the necessary infrastructure to ensure delivery of this
product to the National Petroleum Corporation (NPC). However, as with all
exploration wells it is unwise to seek to allocate any reserves to them.

Offshore Drilling

The Offshore Barbados License area covers approximately 45,500 square kilometres.
Conoco acquired the license in May 1996 in order to test a deepwater hydrocarbon
reservoir concept in the Barbados Trough. The well drilled by Conoco/Phillips
indicates quite clearly that there is potential for oil and gas production in Barbados’
territorial waters. With the heightened interest in global exploration, largely
occasioned by the high oil prices, Barbados will move with haste towards awarding
licenses to qualified companies to explore in its waters. Any company granted a
license to explore must contain the following imperatives:

x Preservation of environment
x Use of players that have a record of good environmental stewardship
x Create a partnership between government and the players for: training, sharing of
technology and protection of the environment.
x Prior to drilling and extraction, the company will ensure training is conducted to
place Barbadians in a position to play a major role in the new oil industry.
x In addition, government will:Seek to reduce the impact of oil on the society and
economy.
x Create programmes that train Barbadians for jobs in offshore oil. Be it Samuel
Jackman Prescod Polytechnic or by providing scholarships to study abroad.
x Create a regime to promote public investment into the offshore oil industry as a
means of raising capital.

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Production Abroad

BNOCL, recognizing that the evidence suggests that the potential for large finds on-
shore Barbados is limited, will explore the production of crude oil and natural gas
abroad through association with relevant partners including other national oil
companies.

DOWNSTREAM

The downstream processes comprise of refining, freighting, terminalling and


distribution. The Government’s objective is to operate in these areas on the basis of
least cost.

The Government will seek to ensure that the value along the chain from a crude
product to a refined marketable product accrues to the benefit of Barbados. The
construction of a refinery in Barbados for the local market is not an economically
viable proposition and accordingly all oil owned by Barbados will be refined at a
regional refinery in pursuit of the value chain. However, the issue of a national
refinery will be revisited in the event of a major hydrocarbon discovery offshore.

The products will be freighted in tankers which offer the most competitive rates in the
region and the product will be stored in the terminal owned and operated by the
national oil company

Terminalling

Barbados is one of the few Caribbean countries with its own terminalling facility. The
facility guarantees security of supply, and enables Government to control storage and
distribution costs which can be significant.

In addition, the new facility has effectively removed the trucking of almost two (2)
million barrels a year of volatile products from the roads of Barbados. This is a
positive impact on safety, reliability, and the environment, including the reduction of
the importation of fuel required for and the pollution caused by the vehicles used
previously for such purposes.

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Fuel Diversification

A fundamental strategy to achieve energy security is to ensure that the right mix of fuels
is used. Apparent choices are as follows:

Natural Gas

Natural gas is the fuel of choice in the immediate future. The lower carbon to hydrogen
ratio of the components of natural gas makes it a relatively clean fuel, and global prices
although rising appear to be less volatile than those for crude oil.

Barbados has been given an approximate price of US$1.65/MMBTU (minus the


transportation toll and with some small escalation over the 25 year contract.). The
current prices of Bunker C (fuel oil) and diesel both exceed US$10/MMBTU. In
addition, the efficiency of a natural gas driven plant is higher than that of a plant driven
by fuel oil; i.e. 45-60% versus 34-45%. The combination of lower cost and higher
efficiency would result in considerable savings. The annual savings, if natural gas was
used primarily to produce electricity, has been estimated to be over BDS$40 million.
The Government will implement the following initiatives to support the transition to
natural gas as the primary fossil fuel:

x Minimize the incidence of venting of natural gas to the atmosphere and seek to
make all natural gas available to NPC. Barbados uses its scarce natural gas
resources efficiently. All requirements in excess of the demand of the domestic,
commercial and industrial customers are sold to the BL&P on an interruptible
basis for power generation at their Spring Garden Plant.

x The power generation industry and households will be further encouraged to shift
to natural gas. The promotion of natural gas as a vehicle fuel is also being
pursued.

x The demand for natural gas currently outstrips local supply and accordingly
Government has agreed to the importation of natural gas and is currently
examining the transport options under which natural gas may be imported. The
trans-Caribbean pipeline proposed by Trinidad & Tobago is an attractive option.

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LPG
All LPG in Barbados is currently sourced, freighted, bottled and distributed by the
Majors. The Government is exploring the possibility of delivering the product at a more
competitive price.

COAL
It is recognised that coal is the most abundant fossil fuel globally. It is further recognised
that Clean Coal Technologies are being developed along with ultra clean coals with very
low sulphur content which can be used directly in combined cycle generators. However,
this technology is not sufficiently mature to be considered as part of the fuel mix at this
time. The Government will continue to monitor further developments in clean coal
technology.

NUCLEAR ENERGY
The use of nuclear energy will not be pursued due to high capital costs and the regulatory
and institutional capacity that would be required to ensure safety. The Government will
continue to oppose the transhipment of nuclear waste across the Caribbean Sea.

HYDROGEN
Hydrogen is the ultimate clean fuel and the fuel of the future. It is the Government’s
policy to support research into the use of hydrogen both in the production of electricity
and in transport. However, it is not anticipated that hydrogen will be a significant
component of the energy mix during the design period of this policy.

4.1.2 Renewable Energy

The Government will ensure that adequate financial, technical, legislative and
administrative capacity is provided to achieve the following targets:

x 10% of electricity generation will be from renewable sources by 2012


x 20% of electricity generation will be from renewable sources by 2026

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The use of biodiesel and ethanol and other alternative energy sources will be encouraged
in the transport sector and our success in solar water heating will be exported.

The specific policy initiatives for each renewable energy source/technology are as
follows:

a. Wind Farms
Wind farming is a mature and proven technology. Wind farms planned currently by
BL&P (10 MW) will be ~ 3% of energy capacity. The Government will identify
additional potential wind farm sites, including offshore. The target is to obtain
approximately 20 – 40 MW of generating capacity from wind over the design period.

b. Bio-fuels
A 30 MW co-generation plant as a component of the Cane Industry Restructuring Project
(CIRP) will be constructed by 2010. The feasibility of a second bio-fuel project using
energy crops will be investigated. It is understood that BADMC is considering the use of
gasification technology to improve the thermal efficiencies of the biofuel process.

c. Ethanol
The standard of 10% ethanol in gasoline will be implemented and under the CIRP
approximately 14.7 million litres of ethanol will be produced annually to meet these
requirements. The ethanol content in gasoline will be progressively increased over the 20
year design period, as ethanol feedstock becomes available. It is also recognised that
ethanol can be used in the production of biodiesel. The Government will encourage
further investment in ethanol production.

d. Biodiesel
A 2% biodiesel content in all vehicle diesel fuels will be mandated by 2012. This will be
increased to 10% by 2025. It is noted that currently, approximately 100 million litres of
diesel are consumed annually, it is further noted that approximately 4.5 million litres of
used cooking oil is generated annually. These cooking oils can be converted into
biodiesel. The private sector will be encouraged through appropriate incentives to
develop the biodiesel industry.

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e. Solar waters heaters
The Government will continue to encourage the use of solar water heaters through
appropriate economic instruments. All solar water heaters should be constructed to
provide water from the tank when there is a water outage.

Solar Water Heater Global Programme

The number of solar water heaters produced outside of Barbados is projected to exceed
10,000 per annum by the end of 2007. This amount should increase to 100,000 per
annum within 10 years. The Government will continue to invest in this programme.

The Government will also invest in developing and protecting the intellectual property
rights (documentation legal cost and technical) of the Barbados’ solar water heater
model. This will include the global advertising of this ‘model’ to other developing
countries.

Other applications of solar technology including solar houses, solar drying and solar air-
conditioning will be encouraged.

In addition, the following policy initiatives will be implemented to support the transition
to a renewable energy economy:

x Wind Water Pumping: Wind water pumps were a critical source of irrigation
before they were replaced by diesel pumps. The agriculture investment fund will
be used to finance wind pumps where feasible.

x Wind Turbines-Stand Alone: Stand alone wind turbines will be encouraged to


support rural industrial development in high energy businesses such and cold
storage of vegetables and ice production.

x Wave, Tidal, Ocean Current and Ocean Thermal: The Government will monitor
these technologies and encourage any that reach mass production.

x Capacity Development/Renewable Energy: The Renewable Energy Centre will be


built and staffed by December 2008.

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x Education: An Associate Degree in renewable energy should be developed by the
BCC/Erdiston College in collaboration with UWI. This will be the mandate of
the Ministry of Education & Youth Affairs in collaboration with the Renewable
Energy Centre.

x Renewable Energy Council: A renewable energy council consisting of public and


private sector individuals will be mandated to review renewable energy policy
and programmes.

x Renewable Energy Legislation: Legislation to facilitate the development and


sustainability of renewable energy projects will be enacted.

x Rights to Sell Renewable Energy and Wheeling: The franchise to sell electricity
will be extended to economically viable renewable energy producers. The right to
sell electricity will be extended through the supply of electricity to the grid at the
source of the renewable energy. This electricity can be collected by the end user
at the point along the grid where it is needed (by the producer of the renewable
energy). This facility is called ‘Wheeling’ and has been in place in the USA and
Europe for over 20 years.

x Government Guarantee of Purchase Renewable Energy Electricity: The Barbados


Government will guarantee the purchase of renewable energy electricity up to
10% of total electricity use, if the cost is within an acceptable range.

x Government Investment in Renewable Energy Companies: Government owns


outright or is a major shareholder in all critical Barbados fossil fuel companies.
Government will seek to become a major shareholder in renewable energy
focused companies.

x Public Share ownership in Renewable Energy Companies: Government will


facilitate public share ownership in renewable energy companies that it owns
outright or has a major share ownership.

x Feasibility Studies: The Barbados government will seek to mobilise funding to


pay for research and development geared to leverage investment in renewable
energy.

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x Carbon Tax: The Government will establish a Carbon Tax on green house gas
emitting companies that is related to the global value of the emission traded under
the Kyoto Protocol and other mechanisms.

x Green Power Investment Deductions: Income tax deductions will be extended to


investment in government-sanctioned renewable energy projects.

x Renewable Energy Investment Fund: The Government will encourage and


contribute to a renewable energy investment fund.

x Renewable Energy Department: Establish a Renewable Energy Centre.

4.1.3 Electricity Generation Expansion Planning

The following section outlines the Government’s policy to ensure the reliable and cost-
effective generation of electricity with minimal environmental impact.

The objectives of an electricity generation expansion plan should be as follows:

1. The cost of electricity amongst the domestic, commercial and industrial


sectors of Barbados is affordable.
2. The electrical infrastructure maintains or outpaces the growth demand while at
the same time ensuring that the installed capacity is sufficient to ensure
coverage over the growing peak demand
3. The most appropriate fuel mix is supplied to ensure that the best price is
achieved for all sectors of the Barbadian community

The Present Situation

The Barbados Light & Power Co. Ltd. (BL&P) presently generates electricity using the
least expensive available fuel, over 90% of the fuel used by the company is heavy fuel
oil. A small amount of natural gas (approximately 250 MCF/day) is supplied by the
National Petroleum Corporation (NPC) on an interruptible basis.

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BL&P supplies electricity to the various sectors at rates ranging between US$0.18 to
0.21/kwh. This is a substantial price when compared to the T&T’s (Trinidad & Tobago’s
Electrical Company) price which ranges between US$0.030 to 0.038/kwh. This price has
been attainable over the years mainly because the Trinidadian electric company has
utilized a lower price fuel, namely natural gas which is sold at approximately US$1-
1.25/MMBTU. A lower price fuel will substantially impact local tariff rates since both
fuel oil and diesel are priced around US$9.30/MMBTU and US$10.35/MMBTU
respectively.

Table 4.1: BL&P's existing Generating Units


Maximum
Plant Can be converted
Description Continuous
ID to burn Nat. gas
Rating (MW)
S1 Steam Turbine 20 YES

S2 Steam Turbine 20 YES


Low speed diesel
D10 12 NO
generator
Low speed diesel
D11 12 NO
generator
Low speed diesel
D12 12 NO
generator
Low speed diesel
D13 12 NO
generator
Waste heat
CG01 1.5 NO
turbine
Low speed diesel
D14 29.7 NO
generator
Low speed diesel
D15 29.7 NO
generator
Waste heat
CG02 2.2 NO
turbine
Gas turbine
GT02 13 NO
(Garrison)
Gas turbine
GT03 13 YES
(Seawell)

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Maximum
Plant Can be converted
Description Continuous
ID to burn Nat. gas
Rating (MW)
Gas turbine
GT04 20 YES
(Seawell)
Gas turbine
GT05 20 YES
(Seawell)
Gas turbine
GT06 20 YES
(Seawell)
Total
237.1
capacity
Source: Barbados Light and Power Holdings Ltd. 2006

Table 4.1 illustrates that BL&P has the ability to utilize their existing plant to convert to
the cheaper fuel--natural gas, if it becomes available in the required volumes. The
government of Trinidad and Tobago has reserved 40 MMCF/day to the eastern Caribbean
and a technical team including the Ministry of Energy and Environment is to make a
recommendation to the responsible Minister on the method of transport. NPC has
computed that the local natural gas requirements will range between 22-46 MMSCF/day
over a twenty five year period. BL&P has indicated that the project will only be feasible
if BL&P uses natural gas to power most of its generating plant.

Expected Generation Expansion by 2012

Currently, BL&P has invested approximately BDS $800 million in the electric network.
It has applied for planning permission to install a new 30 megawatt (MW) generation
plant at Trents, St. Lucy. Current energy mix is approximately 90% fuel oil, 2.5% natural
gas and the remainder diesel.

Because of its many economic and environmental benefits, natural gas has become the
fuel of choice for electricity generation. Gas-fired combined-cycle technology is the
overwhelming choice in new generating plants. Combined-cycle plants offer extremely
high efficiency, clean operation, low capital costs and shorter construction lead times.
The efficiency of combined-cycle units is now approaching 60 percent compared with
roughly 34 percent efficiency for traditional boiler units — regardless of the fuel source.

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As shown in Table 4.1, current generating capacity in Barbados is approximately 240
MW. Assuming 4% annual growth in peak electricity demand, Barbados will require
approximately 520 MW of installed capacity by 2026. Within the next 5 years it is
anticipated that approximately 40 MW of electricity will be generated by renewable
energy (30 MW from biofuels, 10 MW from wind), representing 17% of current capacity
or 7% of capacity in 2026.

Within 20 years, it is anticipated that additional renewable energy generating capacity


will be achieved as follows:
x Additional wind farming (on and off-shore): 20 - 40 MW
x Waste-to-Energy (landfill gas recovery) 5 – 10 MW
x Other technologies 10 – 20 MW
x Photovoltaics 0 – 5 MW
x Second Biofuel project (gasification) 20 - 30 MW

This is a total potential renewable energy generating capacity of 95 – 145 MW over the
design period, representing 18 – 28% of the required generating capacity in 2026.

Therefore, an achievable energy mix for electricity generation by 2026 could be as


follows:

Natural gas: 70%


Renewable: 20%
Fuel oil: 10%

Summary

Government is seeking the best energy fuel mix for the generation of electricity and
natural gas is the cheapest and cleanest fuel currently available. However, a portfolio
approach to generation expansion planning dictates that all of our eggs are not placed in
one basket. Therefore, although renewable energy sources will be prioritised, some fuel
oil generating capacity will be maintained.

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4.1.4 Storage capacity and Contingency Planning

The final area that impacts on the security and stability of energy supply is fuel storage
capacity and contingency planning. The Barbados National Oil Terminal Company Ltd.
(BNTCL) is responsible for the implementation of Government’s policy in this area.

Barbados is heavily dependent on the following liquid petroleum products which, with
the exception of LPG, are stored by BNTCL

x Fuel Oil – used extensively in electricity generation and heavy industry.


x Diesel - the public transport sector is heavily dependent on this fuel. There are
also commercial and industrial applications of this product.
x Gasoline – used extensively in the transport sector especially for personal
transport.
x Aviation/Jet Fuel – used exclusively in the air transport sector.
x Domestic Kerosene – used predominantly in low income households.
x Liquid Petroleum Gas (LPG) – this fuel has both domestic and commercial
applications, especially in the tourism sector where it is the fuel of choice for
hotels and restaurants.

With the commissioning of the new BNTCL Terminal and a lease tankage arrangement
with ESSO Holborn, the Government has sought to substantially increase the storage
capacity for these critical products as noted below:

Product Monthly Usage Daily Usage Tank Capacity

Gasoline 66,000 bbls 2170 bbls 36 days


Diesel 55,000 bbls 1800 bbls 39 days
Fuel Oil 125,000 bbls 4100 bbls 34 days
Jet Fuel 92,000 bbls 3025 bbls 23 days

Source: Barbados National Terminal Company Ltd.

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This increased storage capacity has led to a notable increase in the average stock days for
each product and in situations where market prices are low allows for the possible
stockpiling of some products..

Contingency Planning

To mitigate potential risks and to improve the reliability of supply, the Government will
implement the following:

x Expansion of on-island storage facility as required accommodating:


o Less frequent shipments
o Strategic stockpiling with legal reserve limits.
x Enlargement of Marine Berths to accommodate larger ship sizes.
x Re-engineering of terminal infrastructure to accommodate multi grade products
and new products.
x Co-ordination of a fully integrated emergency energy response and disaster
recovery plan with all stakeholders.
x Development of a suitable mechanism to monitor interregional disputes and
events.
x Diversification of supply source points.
x Establishment of spot contracts with reputable product suppliers. Issues pertaining
to the CET will be addressed in the context of contractual spot agreements.
x Continue to work with regional stakeholders on common product specifications.

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4.2 Policy Issue # 2 – Maximising Energy Efficiency

The second major issue addressed in the National Energy Policy is maximising efficiency
in energy use. The following sections describe the strategies to be implemented to
achieve this overall objective.

4.2.1 Fuel Storage and Distribution

Objectives:

x Efficiency in the location of fuel storage.


x Efficiency in the transfer of fuel products by distributors.
x Efficient, socially and environmentally friendly physical distribution network.
x Efficiency along the value chain.

Current Situation:

Barbados currently stores the majority of its fuel products at BNTCL’s terminal at Fairy
Valley. There are however, individual entities, which also store fuel products.

Barbados has a network of gas stations spread throughout the island, placed where the
owners consider them to be most beneficial financially. There is currently an
understanding that no further issuing of approvals for the erection of Gas Stations be
given by the Town Planning Department until a comprehensive study is carried out.

In parallel with the opening of the new terminal facility, all road tankers of gasoline and
diesel were remodelled to facilitate bottom loading in contrast to the top loading facility,
which was at Needhams Point. This has greatly improved the efficiency of the loading of
fuel products for Barbados. Added to that, the network of pipelines utilised by the new
terminal has considerably reduced trafficking of fuel products on the highways of
Barbados.

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Policy Initiatives:

Maximise the use of BNTCL’s Terminal storage capacity by diversifying the type and
quantity of fuel products to be stored on site to achieve greater efficiencies.

4.2.2 Electricity Generation and Distribution.

BL&P currently has electricity generating equipment varying in age from the 1970’s to
less than 1 year old. Thermal efficiencies vary in accordance with the age of the
technology used with the steam turbines at Spring Garden being the least efficient.

In 2001 the total installed capacity was 189.5 MW. By 2005 diesel had replaced gas
turbines as the plant that provided the greatest capacity. The total capacity had also
increased to 239.1 MW.

2001 2005

17%
21%

Steam 36% Steam


44% Diesel Diesel
Gas Turbine Gas Turbine

35%
47%

Figure 4.2: Comparison of the Installed Capacity by Power plant Type for 2001 & 2005

Source: Barbados Light and Power Holdings Ld. 2005 Annual Report

BL&P has a relatively high efficiency in the generation sector as the low speed diesel
generators (e.g. 2 x 30 MW) that have been installed have a thermal efficiency of 44%.
This figure is comparable to combined cycle generators which are bench marks for
thermal efficiency.

37
Transmission and Distribution
Transmission and distribution are already at a high efficiency level, with just 7% losses
being experienced in 2005. Although not necessarily an efficiency issue, there are plans
to bury all transmission lines by 2009.
In distribution however, the fragmented nature of Barbadian neighbourhoods prevents the
burying of distribution lines. It is only in newer neighbourhoods which have been
planned out in their entirety that underground cables may be used. Burial of distribution
lines for new residential and commercial developments will be mandated by the
Government.

Policy Initiative:

Conversion to natural gas combined cycle gas turbines when the proposed pipeline from
T&T comes online.

4.2.3 Sectoral Energy Use and Conservation

Over 20 years ago (1983), a World Bank funded energy conservation study estimated that
the overall energy conservation potential of the country was 14 to 17 per cent of total
energy used.

The major recommendations resulting from this project, which are still relevant, are
summarized below:

x A study of the utilization of natural gas and wind for power generation directly to
Barbados Water Authority (BWA) Pumping stations;
x The implementation of a conservation programme for the BWA by introducing
metering and a system loss reduction programme;
x The training of the staff of the Energy Conservation Unit (ECU) and the
Transport Board in measuring the results of a driver training programme
(DECAT) and in the continuation of that programme;
x Consumer education and utility-provided information services to the consumer

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x Changes in the existing rate structure and the utility regulations, required to
promote energy conservation through sending the correct price signal to the
consumer
x Utility financing of the energy conservation projects.

Some of these recommendations have been already implemented, and a concerted effort
will be made to implement those outstanding recommendations that are still considered
appropriate.

To promote energy efficiency in building design and maintenance, the Government will
implement the Barbados National Building Code for the construction of new and
substantially renovated buildings above a certain size. This code sets out energy
efficiency requirements in respect of mechanical ventilation, air conditioning, lighting,
hot water systems and other services and equipment to be installed.

To encourage energy conservation, Government will introduce legislation in the form of


an Energy Efficiency Act by 2008. This legislation will support and regulate the
introduction of energy efficient appliances and equipment to the market and develop
standards for high using energy devices. In addition, fiscal incentives will be offered to
support this effort.

The Act will:


x Insist upon mandatory energy efficiency standards for itemised imported
products;
x Improve appliance labelling;
x Implement market based programmes which offer consumers and manufacturers
technical support;
x Place increased emphasis upon private and public Research & Development
(R&D) to provide more efficient products.

Advocacy

Effective development of energy policy and programmes is enhanced by the participation


of the major stake holders and the public. The Energy Ministry has had a tradition of one

39
week of focused awareness activities in November that includes radio, television and
newspaper public service announcements, as well as competitions and distribution of
energy tips.

In addition to this a National Energy Conservation Programme will now be implemented.


The Ministry plans the following activities:

x Year-long energy awareness programmes


x Demonstration projects

Home Energy Efficiency

The Government proposes to support the use of materials which keep houses cooler, such
as thermal barriers, roof insulation, window tint and ceramic roof coatings. The use of
home energy efficient systems/components may have to be legislated because reducing
the import duty may only benefit the importer and not the consumer. It may be necessary
to restrict the importation of products that do not meet agreed ene rgy efficiency
standards.

Home Energy Audits

The Government supports home energy audits by the provision of tax incentives.

4.2.3.1 Public Sector Energy Conservation Programme

The Prime Minister in his Economic and Financial Policies in January 2006 stated that
Government must embark on its own Energy Conservation Programme. He further stated
that:

40
‘If a National Energy Conservation Programme is to achieve maximum
effectiveness, the Government will provide leadership. The Government should
therefore embark on its own Energy Conservation Programme’.

This Programme will include:-

Vehicles

In order to reduce government fuel costs and provide leadership in vehicle energy
conservation, Ministries and Departments will do the following:-

(i) Purchase vehicles with engine capacity equal to or under 1600 cc


unless needed to carry out major loads as part of regular
operations.
(ii) Purchase diesel vehicles of engine size below 2500cc where the
carrying of major loads on a regular basis is required.
(iii) Ensure that vehicles are tuned within recommended periods.
(iv) Consider installing legitimate fuel saving devices in all vehicles.
(v) Vehicles over 2000cc should not be purchased for government
offices unless approved by the Minister of Finance.
(vi) Fuel consumption of each government vehicle (or vehicle supplied
with fuel from the government ) should be monitored monthly by
the accounting officer of the Ministry or their representative to
ensure that effective fuel efficiency is practiced.
(vii) Driver education for greater fuel efficiency will be conducted.
(viii) The use of alternative vehicle power sources such as Natural Gas,
Liquefied Petroleum Gas (LPG), Solar, Ethanol and bio diesel to
be considered. Bio diesel will have to be quality assured by BNSI.
(ix) The use of Hybrid Vehicles when available on the market should
be considered.
(x) The regular effective maintenance of air conditioners should be
practised.

41
Air Conditioner Programme

There should be specific programmes related to air conditioners and refrigerators in


government offices. All Ministries will be directed to follow the guidelines below:

(i) Effective numbers and correctly sized ceiling fans should be the
preferred cooling method. In cases where appropriately sized fans
are found to be ineffective, they should be replaced by air
conditioners.
(ii) Where air conditioners are unavoidable there should be energy
efficient systems. All air conditioned rooms should be effectively
sealed against air leakage.
(iii) Air conditioners should be correctly sized according to room area
and environmental conditions.
(iv) Refrigerators should have their door seals checked periodically.

Government Buildings

Existing Government buildings and high energy using institutions should be subject to
periodic energy audits beginning in fiscal year 2006/2007. Any energy efficient retrofits
(modification of building and equipment) that show a 3-year payback (the saving on the
electricity bill is equal to the cost of retrofitting in three (3) years time) will be favourably
considered.

All new government buildings will be made energy efficient. This will be done through
audit of designs and modification of architectural plans.

Government will encourage private sector investment in energy efficient buildings by


choosing them over other buildings to host conferences, meetings or accommodating
Government offices.

Lighting

Lighting in all government buildings should be provided by fluorescent bulbs or more


efficient systems. This will apply to all new government buildings as well as existing
buildings (replaced over 2 year period).

42
Electrical Appliances

Government departments should only purchase the most energy efficient appliances in
order to reduce energy use.

4.2.3.2 Manufacturing

Most manufacturers use diesel and electricity as their primary means of generating
energy. A few use natural gas and fuel oil. The increased use of natural gas and/or
renewable sources of energy such as biodiesel along with commercial energy audits and
retrofits to enhance efficiency is recommended.

4.2.3.3 Retail

The retail sector is powered by electricity supplied from the national grid. The increased
use of renewable sources of energy such as biodiesel along with commercial energy
audits and retrofits to enhance efficiency is the general recommendation for this sector.

4.2.3.4 Transport

The transportation sector as a major user of energy has a significant potential for energy
conservation. In 1994 transport accounted for 48% of the total final energy use of
petroleum based products.

Task (IV) of the energy conservation study sought to establish a driver training
programme for Transport Board drivers. This programme should be extended to all
public service vehicle drivers.

Policy Initiatives

Government will therefore consider the following in the public sector:

i. the speedy implementation of the transport rationalisation study;

43
ii. on-going driver training programmes for all public sector vehicle drivers;

For private vehicles (cars) more emphasis will continue to be placed on smaller more fuel
efficient engines.

A more rigorous inspection system will be put in place for buses, trucks and commercial
vehicles as well as for cars over ten (10) years old. This will encourage fuel efficiency
through improved maintenance.

The Government will maintain a lower level of import duty on vehicles with smaller
engines than on vehicles with larger engine sizes. The fuel efficiency of diesel powered
vehicles ranges between 15-20% greater than that of the equivalent gasoline powered
engines. Efforts will be made to increase the proportion of diesel-powered vehicles.

Octane Enhancement of Fuel: With few exceptions there is no loss of performance in


using the 87 octane fuel for motor cars. The Government will by way of public
education, encourage economy through the use of appropriate fuel grades for motor
vehicles.

Constraints to the use of electric vehicles have been overcome through the use of hybrid
vehicles. A hybrid vehicle integrates a gas engine and an electric motor to provide the
power. Flexi vehicles use gasoline and biofuels, such as ethanol, in various proportions.
In Trinidad and Tobago there are already over 3,500 vehicles utilising Compressed
Natural Gas.

The kilometre per litre performance of hybrid vehicles is approximately twice that of
comparable conventional vehicles. Hybrid vehicles are currently more expensive but
because of their lower operating cost, over their economic useful life, the cost per
kilometre is competitive.

The Government will promote the wider use of hybrid, flexi and natural gas vehicles
through a discriminatory tax regime that favours fuel diversification and fuel efficient
vehicles.

The Government will encourage the further development and use of mass transit systems.

44
4.2.3.5 Tourism

The Tourism Development Act offers concessions for tourism facilities development and
plant refurbishment and more specifically “energy efficient light bulbs and fittings”.

An energy efficiency audit and Retrofit Fund of $10 million dollars has been established
as a revolving loan fund for the tourism industry for the purchase of energy efficient
devices and equipment, including solar systems.

4.2.3.6 Agriculture

Biomass in the form of bagasse has been used in Barbados for centuries. The sugar
industry has generated its own energy supply, and the excess has been sold to the utility
company to be put into the national grid.

As part of its plans to transform the sugar industry into a sugar cane industry, the
Ministry of Agriculture and Rural Development through the Barbados Agricultural
Management Company (BAMC) commissioned a Feasibility Study on a Fuel Cane
Power Generation Project to generate 30 megawatts of energy.

Energy Conservation in agriculture will be promoted through the use of economic


incentives linked to Best Practices.

4.2.4 Demand Side Management

Demand-side management (DSM) refers to the actions taken to influence the consumer, whether
business or household, to change their amount or timing of energy consumption.

Elements of a Demand Side Management Programme will include:

x Public Sector Reform: Adopt exemplary energy efficiency practices within the public
sector.

45
x Energy Conservation Programmes: Continued efforts towards consumer education will be
pursued.

x Energy Rebate Program: Under this initiative consumers could receive a percentage rebate
on their bills if they achieved a reduction in consumption.
x Innovative Peak Load Reduction Projects: effective collaboration between the Barbados
Light and Power Ltd. and various institutions such as the Barbados Water Authority (BWA),
regarding the development of a load management and capacity plan.

x Load levelling : These technologies are used to smooth out the peaks and dips in energy
demand by reducing consumption at peak times ("peak shaving"), increasing it during off-
peak times ("valley filling"), or shifting the load from peak to off-peak periods to maximize
the use of efficient baseload generation and reduce the need for spinning reserves.

x Energy Storage Devices (ESDs): The use of ESDs will be explored. These devices would
be located on the customer's meter and can be used to shift the timing of energy
consumption.

x Load Control: Energy management control systems (EMCSs) can be used to switch
electrical equipment on or off for load levelling purposes. Some EMCSs enable direct off-site
control (by the utility) of user equipment.

46
4.3 Policy Issue # 3: Creating a Competitive Market

Barbados’ energy sector is a regulated sector with central Government exercising control
over the pricing of petroleum products (gasoline, diesel, kerosene, and liquefied
petroleum gas); electricity and natural gas pricing are regulated by the Fair Trading
Commission.

Barbados’ energy sector is comprised of the monopolistic production of crude oil and
natural gas, as well as the importation of kerosene, gasoline, diesel and fuel oil; Liquefied
Petroleum Gas (LPG) is imported by a duopoly. The distributive petroleum sub-sector is
dominated by four companies while the retail sub-sector is comprised of independent
dealers who operate under franchise and licensing arrangements. It must be stated that in
the distributive petroleum sub-sector, there are strong elements of vertical integration as
can be seen where the distributors are involved in the retail of petroleum products.

The electricity sector is a monopoly regulated sector with only one company involved in
the generation, distribution and transmission of electricity.

The effort to develop a competitive market will evidently be informed to the extent to
which such a policy initiative will result in competitive prices to the consumer, and where
consumer bargaining power will improve as new entrants operate in the deregulated
market. The objective of the policy is to give the consumer as wide a choice of products
and services as services, whilst maintaining stability and compatibility with national
development objectives. The result of these broad objectives would be the decreased cost
of living and the contribution in a substantial way to the macro-economic well-being of
the country.

In view of the limited reserves on-shore Barbados and the complexity of the geological
conditions, the Government does not propose to open the production of the on-shore
sector to other entities but will seek to ensure that the national oil company, who operate
exclusively in this sub-sector, enter strategic partnerships with other market players to
exploit Barbados’ on-shore potential.

With respect to Barbados’ off-shore petroleum acreage, the Government will pursue a
policy of competitive bidding with a view to ensuring that this hydro-carbon potential is
fully exploited in the quickest possible time.

47
The Government will deregulate the import petroleum sub-sector to allow any entity the
opportunity to import approved petroleum products. The requisite legislation will be
prepared to give effect to the new regulatory environment for the importation of
petroleum products. However, in the interest of public good, the Government will
maintain regulatory control of the storage to ensure that all petroleum products (gasoline,
diesel, fuel oil, crude oil and kerosene) pass through the approved central terminal facility
on the payment of the requisite throughput fees. The Government considers that there is
the need for an improved regulatory environment for the petroleum distribution sub-
sector and in this regard, the legislation will be revised to establish, inter alia, new
standards for the marketing of products.

With respect to the retail petroleum sub-sector, the Government will use legislation,
policy and administrative instruments to allow new entities to enter this market. This
sub-sector will be liberalised on the basis of a new regulatory environment, which will
include criteria for the establishment and relocation of gas stations, including
environmental and safety standards.

With respect to pricing, the Government currently sets the wholesale and retail prices of
kerosene, diesel and gasoline. Government is cognisant of the reality that the petroleum
market in Barbados is relatively small. The market contains few players and therefore
there is a strong likelihood that prices can be influenced by a single player under a
deregulated regime. Additionally, other entrants in the market may be encouraged to join
what could be considered as a quasi cartel. The potential for dominant players to abuse
the market is more likely to occur in small markets such as Barbados. The Government
will therefore maintain its regulatory oversight in setting prices. To maintain
Government’s regulatory oversight does not reduce the choice of products and services.
It does, however, maintain stability of price and a price policy that is in the interest of the
consumer.

The Government has in the past attempted to shield consumers from high oil prices by
adjusting the tax take. The Government recognises that it will be unable to do so when
the price of oil reaches prohibitively high levels. The Government will determine the
optimum level at which the tax take will not be able to be adjusted and will create a new
tax regime that will be revenue neutral.

The electricity sector in Barbados is vertically integrated with one service provider,
Barbados Light and Power Co. Ltd, who is responsible for generation, transmission and
distribution of electricity.

48
The legislative instruments regulating the electricity sector are:

The Electric Light and Power Act


Utilities Regulation Act

Electricity is generated primarily by the use of fuel oil, diesel and aviation fuel by the use
of steam turbines, diesel low speed generators and gas turbines.

Barbados Light and Power Co. Ltd is the only entity that has been granted permission to
sell electricity to the public in accordance with the provisions of the Electric Light and
Power Act. This legislation does not mandate this company to buy electricity from
independent power producers although the company can do so through negotiated
contracts. The Third Schedule of the Electricity Act gives the Barbados Light and Power
Co. the right to supply electricity for public and private purposes for a period of 42 years
from 1986 although these rights are not exclusive rights.

The Government now considers that the changing international energy environment
prescribes the need to end the monopoly of the Barbados Light and Power Co. in the
generation of electricity. The volatility in the international energy sector and the high
prices of crude oil has caused countries throughout the world to explore and use
renewable forms of energy for electricity generation.

The Government has set a target of 30% of the use of renewable energy by 2012; this
target will only be achieved if renewable energy is used in significant quantities for
power generation.

Many countries throughout the world have competition in the area of generation such as
the United States and Jamaica where independent power producers are allowed to sell to
the grid at wholesale prices. Such a system can encourage efficiency and innovation as
suppliers are forced to make their prices competitive in order to maintain their markets.

Barbados is well placed to exploit renewable energy technologies blessed as the island is
with wind, solar, bio-mass and bio-gas. Even where the cost of production is higher than
the cost of fossil fuels, the fact is that the issue of environmental sustainability and

49
positive externalities through the use of clean energy such as solar and wind power would
be in the public good.

The Government will therefore liberalise the generation of electricity to allow renewable
energy Independent Power Producers (IPPs) to sell electricity to the national grid and will
use administrative, financial and legislative instruments to achieve this objective. These
IPPs could include the following example, individual households with photovoltaic
systems on their roofs selling electrity back into the grid via reverse or net metering. It is
recognised that the strategy to be developed may have to include subsidies for the use of
renewable energy, a mandate to the dominant distributor of electricity to purchase a
stipulated percentage of renewable energy and the establishment of a regulatory
environment guiding the contractual arrangements between independent power producers
and the dominant company.

The Government will through this policy objective seek to have 20% of electricity
generation from renewable energy by 2026.

The Government will also pursue a policy of allowing net metering and reverse metering
which would allow customers to be credited for electricity that they generate on site in
excess of their electrical consumption.

These policy initiatives will be guided by the vision of transitioning Barbados from a
fossil-based fuel economy to an economy in which the dominant sources of energy will
be from natural gas and renewable energy sources.

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4.4 Policy Issue # 4: Achieving Environmental Sustainability

The way a country manages its energy resources and imports can impact significantly
upon the environment. This energy policy has been assessed for its potential
environmental impacts and the following issues have been identified in an initial scoping
exercise.

In 1999, the use of lead as an anti-knocking agent was replaced by MTBE. The energy
industry allows for a maximum of 15% MTBE in gasoline. Barbados’ current operating
policy allows for 2-4% MTBE in gasoline. MTBE is a suspected carcinogen, it is mobile
in soils, and relatively persistent making it a potential health risk to drinking water
quality.

Sulphur is the main chemical constituent in diesel that is subject to control owing to its
potential environmental implications. A maximum sulphur content of 0.5% (5000 ppm)
in diesel is used as the national policy. It is noted that the international trend is for
standards for sulphur content in diesel to be significantly lower than that used by BNTCL
(e.g. < 15 ppm in California in 2006, < 50 ppm in Europe, decreasing to10 ppm in 2009).
Modern diesel engines are very sensitive to sulphur content. The Government’s policy of
increasing the diesel vehicle fleet will not achieve its environmental objectives unless the
sulphur content in the diesel currently imported is significantly reduced.

Emission standards need to be developed for electricity generation plants and for
vehicles.

Petroleum storage sites are potential sources of contamination.

Marine and/or terrestrial oil spills could be extremely detrimental to the environment and
the economy.

The following specific environmental mitigation measures will be implemented by the


Government:

x Phase out the use of MTBE by 2010.


x Lobby for the establishment of regional standards for fuel composition and the
retrofitting of regional refineries to achieve internationally accepted standards for
sulphur content by 2012.

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x Enact enabling legislation and regulations to control vehicular emission standards
by 2009.
x Enact enabling legislation and regulations to control stack emissions resulting
from the combustion of petroleum hydrocarbons standards by 2009.
x Continuously review the National Oil Spill Contingency Plan. The Government
will also support CDERA in response to regional oil spills.
x Development applications must be in compliance with the provisions contained in
the PDP and the relevant conditions of operation that may be attached to the
approval. Particularly as these relate to Special Industry Development, Resource
Extraction, and Wind Energy Development
x Compliance with the provisions of the CZM Plan for developments proposed
within the coastal zone management area.
x Compliance with national policy guidance for operation of petroleum facilities. In
the absence of such this should be in compliance with the recognized industry
standards that seek to guard against deliberate and/or accidental environmental
discharges and pollution.
x Promote the use of clean technologies and sustainable development practices in
order to reduce the negative external consequences of development activity
x Ensure that appropriate development standards are used to build resilience against
the increasing intensity of natural hazards associated with the effects of climate
change, as well as eliminating practices which lead to Global Warming
x Develop programmes to expand the supply of renewable energy.
x Use non-renewables that the least damaging to the environment e.g. natural gas.
x Explore the use of solar power and compressed natural gas in public and private
transport vehicles.
x Expand energy efficiency standards and the labelling of energy using products to
ensure increased energy efficiency
x Promote greater energy conservation
x Reducing fuel consumption in electricity production and diversification of energy
sources.
x Reduction of CO2 emissions from the cement industry
x Recovery of Methane Gas from Mangrove Pond Landfill
x Increased support for Research and Development
x Offshore oil and gas exploration and production should conform to internationally
recognised best practices.

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5.0 ENSURING EFFECTIVE AND TIMELY IMPLEMENTATION

5.1 Introduction

It is the Government’s intention to ensure that the policy recommendations contained


within this document are implemented effectively in a timely manner. The following
constraints to implementation of the BEP have been identified:

x Outdated legislation:
x An uninformed public
x Underdeveloped regional infrastructure
x Inadequate human capacity

5.2 Fiscal Policy & Economic Instruments

The Government’s will use fiscal policy and economic instruments to:

x promote conservation of non-renewable resources


x encourage exploration for further resources
x increase efficiency in energy use
x promote the use of renewable energy
x facilitate research and development of alternative energy sources and technologies
x value environmental and social externalities
x create a competitive energy market
x protect the poor and vulnerable

At times, the above objectives may seem to conflict. For example, a free market
approach would see the costs of rising oil prices fully and immediately passed on to the
consumer, higher fuel and electricity prices would promote conservation but would
impact severely on the poor and disadvantaged and reduce the profitability of the
productive sectors. A balanced and flexible approach will be required with constant
monitoring.

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Policy Initiatives:
x Strengthening of the Energy Division, which, inter alia, will have responsibility
for recommending and reviewing the performance of economic instruments.
x Creation of an Energy Fund by December 2007 (expansion of the fund
announced in the 2006 Budget) which will be used to finance economic
incentives.

5.3 Legislative Framework

Legislation to enable the participation of renewable energy independent power producers


(IPPs) including individual households in a competitive but regulated market will be
essential. Enabling legislation and secondary regulations will also be required to:

x Make energy efficiency labelling mandatory for appliances


x Mandate energy audits and reporting for major energy users
x Set standards for fuel quality (e.g. sulphur content)
x Set standards for vehicle emissions
x Set standards for occupational health and safety within the energy sector
x Regulate the exploration for and exploitation of resources (onshore and offshore)
x Prescribe penalties for non-compliance, including environmental damage
x Ensure stakeholder participation
x Create and regulate a “liberalised” and transparent energy market

Policy Initiative: A National Energy Bill will be drafted by December 2007.

5.4 Education and Research

It is recognised that public education and awareness programmes will be required to


affect behavioural changes towards conservation and energy efficiency. It is further
recognised that exposure to and research into leading edge technology will provide a
competitive advantage.

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Policy Initiative: A Renewable Energy Centre is developed, staffed and adequately
funded by December 2009.

5.5 Institutional Reform & Capacity Building

Currently, responsibility for national energy policy development and implementation is


fragmented between the Energy Division – Ministry of Energy and the Environment,
statutory corporations (BNOC, BNTCL, NPC), the Ministry of Agriculture, a private
utility and the Fair Trading Commission.

Policy Initiative: It is proposed that a strengthened Energy Division will have overall
responsibility for periodic review of the energy policy and monitoring its implementation.
The Energy Division will also have responsibility for overseeing the liberalisation of the
energy sector and in particular for ensuring that the equitable participation of Independent
Power Producers is facilitated. The Energy Division will be responsible for energy
demand forecasting and for producing and periodically updating the National Portfolio
Electricity Generation Expansion Plan.

It is recommended that an Energy Council is formed with participation from the private
sector as a mechanism to allow further analysis as required, of the policy initiatives
recommended in this document.

5.6 Investment and Industry Promotion

The Government of Barbados wishes to encourage further private sector investment in


the energy sector. In particular, investment in offshore oil and gas exploration, in
renewable energy technology, and in energy efficiency will be encouraged by the
provision of economic incentives and ensuring that the necessary legislative and
institutional capacity is provided.

The following projects have been identified, inter alia, as investment opportunities:

x Waste-to-energy (including landfill gas recovery)

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x Wind farming
x Co-Generation
x Fuel cane
x Biodiesel
x Ethanol production
x Ocean Thermal Energy Conversion (OTEC)
x Hydrogen as a fuel source

Investment in regional energy projects that are of national interest will also be
encouraged. Standardisation of regional specifications for petroleum products may be a
prerequisite for a coordinated approach.

5.7 Targets and Indicators

Clear, attainable targets with timelines will be set in the key policy areas. For example,
30% of energy usage will be from renewable sources by 2012. Energy Intensity and per
capita energy consumption will be used as national indicators and will be published in the
Annual Central Bank’s Report.

It is further recommended that the ten (10) largest electricity consumers, including public
sector entities like the Barbados Water Authority, be required to audit their facilities and
report annually on their energy conservation efforts

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6.0 SUMMARY OF POLICY INITIATIVES
The table below contains a summary of all the policy recommendations enclosed in the above policy document.
Table 6.1: Action Plan for the National Energy Policy

No. Policy Initiative Deadline Responsible Agency


1 Reduce GHG emissions:
- Increase the use of cleaner fuels in electricity generation (natural gas) MEE
- Reduce energy demand in industrial, commercial and residential sectors by promoting MEE
increased energy efficient technologies
- Reduce CO2 emissions from cement production
- Increase the use of renewable Energy (e.g. landfill gas, wind farms) MEE
- Replace government vehicular fleet with hybrids and electric vehicles, provide fiscal MEE and MOF
incentives for rental agencies and dealerships to provide electric and hybrid vehicles
- Reduce disposal of organic material at landfills

2 Maximise production of crude oil and natural gas to 8 500 bbls/day while utilizing only 50% of MEE
the reserves
2009-
- Drill at least 3 exploratory wells 2011

3 Increase utilisation of natural gas, 100% utilisation of domestic production


- Increase domestic natural gas consumption to 50% 2025 MEE
- 25% Power generation from natural gas 2010 MEE
- 50% Power generation from natural gas 2025 MEE

4 Renewable Energy (RE)


- 10% of national energy usage from renewable sources 2012 MEE
- 20% of national energy usage from renewable sources 2026 MEE
- 14-22% of generating capacity from renewable sources: 2026 MEE
20-40 MW of generating capacity from wind energy 2026 MEE
5-10 MW waste-to-energy (landfill gas recovery) 2026 MEE

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No. Policy Initiative Deadline Responsible Agency
0-5 MW from photo voltaic energy 2026 MEE
30 MW co-generating plant (CIRP) 2010 MEE and MOA
Possible 30 MW plant gasification 2026 MEE and MOA
10-20 MW from Other Technology 2026 MEE
- E10 standard of 10% ethanol in gasoline MEE
- 14.7 million litres of ethanol produced annually MEE and MOA
- Increase to E85 (85%) ethanol 2026 MEE
- 2% biodiesel in all vehicle diesel fuel 2010 MEE
- 10% biodiesel in all vehicle diesel fuel 2025 MEE
- Solar water heaters should provide water during outages
- Modify electric utility law to allow sale of electricity into grid, a reverse and net metering MEE
study will be conducted
- Provide training in solar dryer development
- Solar air conditioners will be used in government buildings
- Agriculture Investment Fund will fund wind water pumps where feasible
- Rural high energy projects such as cold storage will be encouraged to use stand alone
wind turbines
- Renewable Energy Centre built and staffed Dec, 2008 MEE and Cabinet
- Associate Degree in RE offered by BCC and UWI Ministry of Education
- Offer evening courses in solar, wind, etc at BCC, Erdiston and SJPP MOE
- Create a Renewable Energy Council consisting private and public sector MEE
- Profit guarantees for RE businesses MEE and MOF
- Continue duty waivers on renewable products and have a zero rated VAT on solar
electric systems
- Create tax instrument that allows accelerated depreciation on MEE and MOF
RE and energy efficient equipment
- Enact legislation to facilitate the development and sustainability of RE projects
- Franchise to sell electricity will be extended to economically viable entities, wheeling will
be facilitated
- Government will guarantee the purchase of RE electricity up to 10% of total electricity use

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No. Policy Initiative Deadline Responsible Agency
- Government will guarantee loans of up to $200 million for RE projects
2006-
- Government will invest $50 million in RE focussed companies 2013
- Public share ownership in RE companies owned by government
- Assess which RE services productions should be owned by Natural Ownership
- $300 000 annually allocated to feasibility studies in RE, geared toward leveraging
$5 million yearly investment in RE.
- Levy a Carbon tax on Green house gas emitting companies - used to fund Green projects
- Income tax deductions for investing in RE projects MOF
- A RE Investment fund will be created, contributed to by government and BNOCL.
Private sector involvement would be encouraged
- 2% of all cars will be solar powered 2016 MEE

5 Energy Mix
- 70% Natural Gas; 20% Renewable Energy; 10% Fuel Oil 2026 MEE

6 Contingency Planning MEE


- Expand on-island storage facilities MEE
Less frequent shipments MEE
Creation of legal reserve limits (stockpiling) MEE
- Enlarge marine berths to accommodate larger ships MEE
- Re-engineer terminal facility to handle new and multi-grade products MEE
- Diversify supply point sources MEE
- Develop mechanism to monitor interregional disputes and events MEE
- Co-ordinate an integrated emergency energy response and disaster recovery plan with MEE
all stakeholders
- Develop common regional product specifications with regional stakeholders MEE
- Establish spot contracts with reputable product suppliers. CET issues will be addressed MEE and MOF
in the context of contractual spot agreements
7 Energy Efficiency
- Diversify types and quantity of fuels stored at BNTCL for increased efficiency MEE

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No. Policy Initiative Deadline Responsible Agency
- Initiate a comprehensive study of existing fuel distribution network in order to reduce cost MEE
by utilising dedicated pipelines MEE
- Create an independent advisory body to monitor and evaluate all aspects of the energy MEE
supply chain inclusive of major capital expansion programmes

8 Electricity Generation and Distribution MEE


- Shift electricity generation fuel to mainly natural gas MEE and BL&P
- Government investment in PV cell manufacture in Trinidad MEE and MOF
Structural requirement for building above a certain size to
incorporate PV technology into the structure to facilitate
electricity generation
- End BL&P monopoly on generation of electricity
- Allow companies and individual households to become renewable energy IPPs MEE
- Demand Side Management should be promoted for reducing electricity consumption MEE
Create an Energy Fund from proceeds of an electricity sale surcharge
9 Implement findings of the World Bank energy conservation study MEE

10 Implement National Building Code for building above a certain size MEE and
- Set out energy efficiency requirements (e.g. lighting, air conditioning)

11 Enact the Energy Conservation Act 2008 MEE


- Insist upon mandatory energy efficiency standards for imports 2008 MEE
- Improve appliance labelling 2008 MEE
- Implement market based programmes to assist consumers and 2008 MEE
manufacturers 2008 MEE
- Emphasize R&D in energy efficient products by private and public sector 2008 MEE

12 Implement a National Energy Conservation Programme


- Year long energy awareness programmes and demonstration projects

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No. Policy Initiative Deadline Responsible Agency
13 Legislate the use of energy efficient systems/components for buildings

14 Provide tax incentives for home energy audits

15 Continue Implementation of the Public Sector Conservation Programme 2009

16 Increase use of natural gas and renewable energy sources e.g. biodiesel in manufacturing retail
sectors

17 Institute commercial audits to promote energy efficient retrofits for manufacturing and retail
sectors

18 Increase energy efficiency in the transport sector


- Institute training programmes for public sector drivers
- Promotion of smaller, fuel efficient engines
- Tax concessions for automotive energy saving devices
- Make a very rigorous inspection process for buses, trucks, commercial vehicles
and cars over 10 years old
- Document all vehicle imports by fuel type
- 30% of all vehicle imports should be diesel powered 2016
- Improve fuel grades available in Barbados
- Create a tax regime that favours fuel diversification and fuel efficient vehicles

19 Continue the Tourism Development Act


- Concessions for energy efficient light bulbs and fittings for tourism plants
- Establishment of energy audits and a $10 million retrofit fund

20 Utilize best practices to promote energy conservation in agriculture

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No. Policy Initiative Deadline Responsible Agency
21 Create a Competitive Market
- BNOCL use strategic partnerships with market players to exploit onshore oil MEE and MOF
- Competitive bidding for offshore oil exploration MEE and MOF
- Deregulate petroleum importation, maintaining BNTCL monopoly on storage thus MEE
developing throughput fees for the storage.
- Revise legislation pertaining to standards for marketing of product MEE
- Create Legislation, policy and administrative instruments to liberalise the petroleum MEE and MOF
retail sector
- Allow other entities to enter the petroleum retail sector MEE
- Continue to regulate prices of kerosene, gasoline and diesel MEE
- Create a new tax regime that will allow tax to remain revenue neutral MEE and MOF
- Liberalize Electricity generation MEE

22 Achieve Environmental Sustainability


- Phase out the use of MTBE 2010 MEE
- Establish regional standards for fuel composition MEE
- Retrofit regional refineries to produce internationally accepted standards for sulphur
content in diesel
- Enact legislation controlling stack emissions from fossil fuel burning 2009 MEE
- Gas station survey to determine the implications of operation on the marine
environment
- Review the National Oil Spill Contingency Plan
- Support CDERA in the event of a regional oil spill
- Ensure all applications for development meet the Physical Development Plan
- Ensure all coastal development complies with the CZM Plan
- Make sure all operations comply with national or industry recognized standards

23 Create a National Energy Authority 2008 MEE


- Review and implement energy policy
- Oversee liberalisation of the energy sector
- Create energy demand forecasts and least cost expansion plans

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No. Policy Initiative Deadline Responsible Agency
24 Create an Energy Fund, with at least $20 million to finance economic incentives Dec, 2007 MEE

25 Draft a National Energy Bill Dec, 2007 MEE

26 Promote private sector investment in RE projects MEE and MOF

27 Promote investment in: regional pipeline; regional refinery; regional terminal; regional tanker fleet MEE and MOF

28 Publish energy intensity and per capita energy consumption in the Central Bank Annual report

29 Require the 10 largest electricity users to audit their facilities and report annually on their energy
conservation efforts

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7.0 APPENDIX 1

Table 7-1: Comments Received from Stakeholders


Policy Issue Comments Received
Expansion Planning BL&P
x Governments shouldn’t be involved in micromanagement
of an already well operated private sector company.
x Government does not currently have the capacity and it
would be a waste of time and money for government to
acquire that capacity.
x There of blurring of liability because the obligation to
serve by BL&P is lost during liberalisation.
Even with the Native Sun NRG
promotion of energy x Is that not too high if there is an effective electricity
conservation and saving programme
efficiency, per capita
energy consumption BL&P
will increase by ~ x There is a phenomenon that occurs where if energy
4% annually. efficiency increases then the actual usage will increase as
well
Percentage x Percentage contribution of CO2 from road transport has
contribution of CO2 increased by 14% (1997) and this data should be updated.
from road transport Further questioning whether the data were relevant in
1996
Processing BNOC
Agreement with x A processing agreement is already in existence
Trinidad and Tobago
Security of Supply x A 70% reliance on natural gas for electricity generation
defeats the strategy of securing supply via diversification
(recognising that the turbines can also utilize distillates, but
the price of this would be exorbitant. i.e. security is
maintained but price is affected).

BL&P
x The sunk cost of the pipeline makes less efficient single
cycle turbine more cost effective than combine cycle
turbines

x A strategy must be developed for what will be done if


natural gas is not available in Barbados

x The intention is utilize more than 70% natural gas in the


generation, as this is the most cost effective fuel.
Wind farm installed Note* Renewable energy output is variable; therefore the
capacity of 10 MW capacity that is quoted is a peak value rather than the constant
operational capacity.

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Policy Issue Comments Received
Renewable Energy William Hinds
Targets: x Need for 2 sets of renewable energy targets: One for
overall renewable energy and the second for electricity
generation
x Within the second target, there should be installed power
capacity (MW) and total energy produced (kWh).
x Quantifying renewable energy targets are not needed. A
qualitative desire to use as much s possible
x Overall renewable energy consumption targets would be:
30% by 2012 and
Biofuels BL&P and CIRP
x Plant will produce in total either 24 or 35 MW depending
on the type of cane used over a 9 month period
x Net output to grid would be 15-20 MW
x A 2nd biofuel project is possible not based on expanded
acreage but on gasification to significantly increase
outputs.
Ethanol plant ESSO
x Why are we building a new ethanol plant to produce the
amount that can be obtained from one tanker.
Solar Water heaters BWA
x Solar water heaters must be redesigned to reduce the
amount of water that is wasted before hot water exits the
tap
x Concerns about sediment impacts on quality of water from
solar water tanks
Biodiesels Handel Callender
x In 2003 100 million litres of diesel was consumed
nationally. Assuming similar figures in 2012, 2 %
biodiesel would require 2 million litres of biodiesel. There
are 4.5 million litres of used oil currently, therefore a 50%
recovery efficiency of used oil would make this target
achievable
Expected generation William Hinds
capacity by 2026 x Remove specific reference to OTEC and replace with
‘Other technologies’
x Include 2nd biofuel project at 30 MW

Aquasol
x Photovoltaic figure is too low
Energy efficiency BL&P
x Steam turbines are at Spring Garden and not Seawell
x Overall efficiency is 7% (transmission and distribution)
not just transmission
x Burial is not an efficiency issue but an insurance one.
*However this is only because non-technical losses are not

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Policy Issue Comments Received
an issue in Barbados
William Hinds
x We have a hybrid electrical system of 110 V and 50 hz
does not occur anywhere else.
BL&P
x Answer: retailers importing 50hz appliances which are
readily available worldwide
Manufacturing BL&P
x In early 2000’s several manufacturers switched to self
generation using diesel due to cross subsidies reducing the
price of diesel. This subsidy should be removed as this
may help one sector but may disrupt or impact negatively
on other sectors.
x Similarly, electrical tariff structure where commercial
subsidizes residential consumers is an unnatural state of
affairs and should be removed. i.e. they could provide
cheaper electricity to manufacturers if the subsidies and
tariff structure were removed.
Vehicle Duties BL&P
x Vehicle should taxed based on efficiency of engine rather
than price of vehicle so as to promote hybrid
BWA becoming a BWA
self generator x They cannot pump offpeak due to hydrological
considerations
x If BWA installed standby capacity at the pumping stations
they would not want these assets to sit idly and would be
used to pump continuously
BL&P
x Understand BWA’s point, BL&P wishes to own and
operate the gen. sets.
Demand side BL&P could benefit from energy storage devices as they
management currently have a 70% load factor
Phased liberalisation Sol
of petroleum pricing x Phased approach to regulating price of petroleum products
may not be practical.
x Government should either regulate or allow free market to
govern price

Liberalisation of BL&P
electricity generation x Government has not shown where competition in the
generation sector has resulted in an improved service.
x More in depth analysis is required before government
pursues a policy of introducing competition in the
generation sector that could affect the reliability of supply.
x Things have worked well in the past, so why change
things now.

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Policy Issue Comments Received
FTC
x FTC acts as a proxy for competition currently, however
FTC does not set policy in enforces policy directives from
government, therefore for example does not stipulate
renewable energy targets for BL&P. Therefore this
capacity is currently lacing in government.

BL&P
x Several regional and international examples, e.g. Guyana
and California where deregulation has resulted in less
reliable service and has not necessarily resulted in price
reduction either.
x Policy does not address the liberalising of the transmission
and distribution sectors
x Correction to the policy – where it says ‘a mandate to the
dominant generator of electricity’ should read ‘a mandate
to the dominant distributor of electricity’
Achieving x Maximum sulphur content is not 0.05% but 0.5% (5000
environmental ppm)
sustainability
Ensuring effective Correction to 1st slide
and timely x Change Underdeveloped infrastructure to
implementation ‘Underdeveloped Regional infrastructure’ and add
‘Inadequate human capacity’
Institutional reform x Strengthening the energy division must be kept
and capacity x Policy should be a ‘living document’ therefore an Energy
Building Council should be created as a mechanism for ongoing
consultation.
x Energy Council’s job is to adapt the policy as required
based on in depth analysis and to monitor its
implementation
Targets and x Debate about whether Policy should contain targets and
Indicators figures or should be more generic in nature

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