Although climate change is a formidable threat to all countries around the world, it is more so to developing countries. It erodes their past accomplishments and dampens their economic prospects for the future. Many of these countries are characterized by low rates of per capita income, high population growth, high rates of poverty and unemployment, and economies that are heavily reliant on agriculture and the environment. This predisposes them to increased rates of climate vulnerability.
The United Nations Framework Convention on Climate Change (UNFCCC) has also long recognized that developing countries are most vulnerable to the adverse effects of climate change. Human-induced climate change and extreme weather events like droughts, heat waves, extreme rainfalls, and intense cyclones which have become more intermittent in the last years have become harder to withstand for these countries. As temperatures continue to rise both on land and sea, they have continued to suffer from a myriad of impacts like acute food and water insecurity, loss of biodiversity, human health, and eroded economic wealth. This further plunges them into poverty and reduces their ability to meet the sustainable development goals even though they are the lowest emitters of greenhouse gases.
Among these, small island developing countries (SIDCs) in the South Pacific Ocean are deemed the most vulnerable, as the climate threat is more imminent to them due to their unique geography and environment. Most of their economies are heavily dependent on tourism, and also agricultural activities including fishing. As glaciers and ice sheets continue to melt and sea levels rise, their concern is not only about rising poverty and worsening economic conditions, but also about the daunting possibility of their homes being submerged under the ocean since over 50% of their infrastructure is located within 500 meters from the coast. Some of these islands are also predicted to disappear completely before the end of the 21st century.
Economic analyses conducted in the region have estimated the potential economic impact climate change could have on these island states by constructing scenarios that employ climate projections. All economic modeling frameworks used in these analyses project there will be a net negative impact in all scenarios for the region by 2050. They also project economic losses under all scenarios. In the first scenario of low emissions, the economic loss would be 4.6% of the region’s annual GDP equivalent by 2100. Under the business-as-usual scenario where the world continues with its current emission levels, the loss would be 12.7% of annual GDP equivalent by 2100. The highest emission scenario shows an even larger loss for the region.
Given these threats to their existence and economic prosperity, SIDCs in the South Pacific Ocean have forged innovative ways of adapting to climate change over the years by combining local knowledge and modern technology. They have tried to tackle the observable impacts they are faced with, like rising sea levels and rainfall patterns, through the conservation, restoration, and sustainable management of ecosystems. These efforts have increased the resilience of ecosystems and communities.
As the call is being made on a global level to move away from fossil fuels in favour of more climate-friendly forms of energy, SIDCs have also begun making changes to transition to renewable energy. Even though their emission levels are much lower in comparison to developed countries, their transition contributes to efforts of reducing carbon emissions. Furthermore, since they do not have their own fossil fuel reserves, they are reported to pay some of the highest rates (at least double the global average) for energy (ADB, 2019). Hence, this transition makes economic sense for them by eliminating the costly and inefficient option of relying on imported fossil fuels.
In addition to contributing to alleviating the impact of climate change, transitioning also has further benefits for SIDCs in the Pacific. It helps them better manage and prepare for a disaster as the energy sector is vital in all stages of the disaster risk management cycle. It is also important in people’s everyday activities, including telecommunications, health, and infrastructure.
Many of these SIDCs in the South Pacific, like Fiji, the Federated States of Micronesia, Papua New Guinea, Samoa, Solomon Islands, and Vanuatu, all have a high potential for renewable energy resources like hydropower, and wind and solar energy. The governments of these states have invested in some of these energy sources in past years. Development agencies working in the region have also been promoting energy sector reform, capacity building, and effective governance. In 2018, the Asian Development Bank (ADB) had 14 projects worth $371 million in the pipeline financed through loans and grants to different countries in the region. In the Federated States of Micronesia and Tonga, it financed the installation of solar and wind power infrastructure. In Samoa, it was rebuilding the power infrastructure that had been destroyed by a cyclone. The bank also planned to upscale its energy investment to $1 billion in the coming years.
In 2021 ahead of COP26, SIDCs’ governments had also pledged their commitment to making the transition to renewable and sustainable energy goals by updating their respective nationally determined contributions (NDCs). These contributions are quantified renewable energy targets which were first set ahead of the first round of Paris Agreement climate pledges in 2015 (COP21). Following the first round of meetings, countries that chose to commit were given the opportunity to set higher goals by revising their mitigation and adaptation targets, finance goals, and coming up with concrete implementation plans ahead of COP meetings. Over the years, SIDCs have also submitted higher levels of pledges and contributions. The Marshall Islands, for example, had pledged to reduce its emissions of greenhouse gases (GHG) to 32% below 2010 levels by 2025 and 45% below 2010 levels by 2030 ahead of COP21. Increasing its ambition for COP26, it has set a target of completely relying on renewable energy by 2050.
A recent report by the Intergovernmental Panel for Climate Change (IPCC) published earlier this year, however, states that energy transition requires large investments from the government and the private sector. In the past, although there have been several efforts by these island states to boost their climate resilience, inadequate financial capability has proven to be a significant hurdle because of the economic challenges they have been facing especially in the last few decades. Instead of transitioning, it has kept them on the defense with disaster response. Given their current economic standing and trends, this problem of finance could also be the case in the future.
Another report by The Kleinman Center for Energy Policy at the University of Pennsylvania notes that securing finance required for technology development and production of renewable energy and transitioning is only solving half of the problem. Local leadership, public support, logistics, and management are other critical factors that should be taken into consideration. The report also argues that if local leaders can gain public trust by showing that transitioning is what is best for the state and that the society as a whole can prosper within a zero-carbon energy system, they will gain public support and be able to design strong and innovative public policies that will make it happen.
In the case of SIDCs in the Pacific, despite insufficient capital and weakened economies, governments and the public understand that inaction could be even more damaging than what has already happened. They are aware that decarbonizing their energy supply and ceasing to import fossil fuels will strengthen their economy. It will also ensure that safe and reliable energy is available for all at affordable prices. In this way, an inclusive and just energy transition will also help them better reach their Sustainable Development Goals (SDGs). Hence, these island states who have seen oil spills and rising ocean temperatures threaten the livelihood of their population are ready to embrace renewable energy and sustainable solutions.
Therefore, opening up to investors and other sources of external financing is recommended for access to financial capital. In cases like these where local leaders and communities are open to embracing renewable energy investments, investors and other stakeholders are also more likely to invest in decarbonization efforts. As mentioned above, since SIDCs in the South Pacific are known for their high potential for rich sources of renewable energy, policymakers from The Kleinman Center for Energy Policy believe that they will be able to source sufficient external financing for renewable energy projects. They also believe that these island states will be able to overcome the economic challenges that have thus far prevented them from making the transition, and become powerful leaders and hubs of innovation and experimentation in the energy transition.