The Energy Transition                                                                   

where are the forward-looking Leaders?

Much of the world’s economies today are consumed by digital transformation; and rightly so, the new economy era is the most consequential socioeconomic transition period of our lifetime.  In addition, COVID-19 has provided us with a pause, an inflection point, to shift our strategic thinking and focus towards a better and more resilient economic future.  At the same time, however, we cannot lose sight of the other critical transition taking place in parallel, which is energy transformation, away from fossil fuels to renewable energy production. This shift is also creating transformational geopolitical energy dynamics, and Small Island States (SIS) like Grenada must be cognitive of the shifting power dynamics taking place.  

 

 

“Energy is fundamental to our civilization and to the prosperity of nations. Its production, distribution and utilization are deeply embedded in the fabric of our economies and central to the relations between states.”  Adnan Z. Amin, Director-General of IRENA

 

 

The growing deployment of renewables has been set in motion, which will fundamentally change the global energy power complex going forward.  Canada for example, in its “Build-Back-Better” strategy, is now setting economic policy based on transitioning to a Green-Economy. Prime Minister Justin Trudeau’s government, which has set a goal of making Canada carbon neutral by 2050, launched a national program back in January 2019.    

 

This month NextEra, a clean-power utility, surpassed ExxonMobil to become America’s biggest energy firm.  While the index of American energy companies have declined an average of 47%, ExxonMobil declined 52%. NextEra has jumped by 112%, more than the broad S&P 500 index.  In the past four years, venture-capital (VC) deals have more than doubled, and governments like Norway are using its oil revenues to build a future based on a zero-emissions economy.  Saudi Arabia, while it sells its oil to the world has embarked on an ambitious long-term strategy for a clean energy existence.

 

Bernard Looney, chief executive BP, the British energy giant has created a new slogan for the company, "Beyond Petroleum", as he sets annual capital spending on oil, gas and refining projects to fall from around $13bn in 2019 to an average of $9bn in 2021-25, “as BP ramps up its investments in renewable power.” BP’s ambitious renewable energy objectives are by far, the most aggressive of any “supermajor” energy company.

According to The Economist, President Elect, Joe Biden, wants to spend $2trn to build America’s green economy.  The European Union has earmarked 30% of its $880bn covid-19 recovery plan for climate measures, and the president of the European Commission, Ursula von der Leyen, used her state-of-the-union address recently to confirm that she wants the EU to cut greenhouse-gas emissions by 55% in the next decade.

  

So, where's Grenada’s bold plan?   

 

A comprehensive, holistic, and detailed strategy with actionable items over a stated period is required.  One well-positioned in a business and investment mindset, proactively marketing Grenada to the world.  Therefore, we need a new swell of innovative and forward-looking development ideas.  We can no longer afford to waste precious time going around in circles with the same leadership, void of good development agendas.  We can't let history repeat and become sitting ducks once again, this time, by another foreign renewable energy giant like NextEra, to replace another foreign owned fossil fuel company like Grenlec. Only to charge us the same high rates or more for an energy source that we can harness independently, and for free from the sky.  That would be adding insult to injury and a very unfortunate and unnecessary predicament to fall into again.  However, you can't continue with the same behaviour over and over again and expect a different result.

 

In a recent report by the International Renewable Energy Agency (IRENA), geopolitical dynamics have become a key driver of renewable energy transformation.  Like in the ‘oil age’, who controls the energy holds the power and pulls all the strings.  Now, those nations that cannot grasp the shifting global power-politics environment will become collateral damage.  Due to COVID, the developed world now has more than enough of its own problems to deal with, to concern themselves with SIS like Grenada.  Therefore, we must take the initiative and put ourselves onto the playing field, develop and track down opportunities where ever they exist.  

 

Renewable energy is not only feasible but highly economical from a long-term sustainable and investment perspective.  For SIS renewable energy can underpin growth meaningfully by simply lowering energy production costs.  Therefore, SIS like Grenada must set winning strategies early on in the game and pursue them well, with discipline and intelligence.

 

I ask you to kindly think logically from a business perspective for a moment.  If, for example, we can source energy for free…i.e. the sun, why then would we continue to pay to import dirty fuel oil?  In addition, why would we continue to invest in fossil fuel infrastructure when the world is clearly transitioning to renewable energy?  Why would we not look to develop a renewable energy technology infrastructure, relevant to the changing economic times and new advanced technologies?  Investing is fundamentally an optimistic look towards the future, not a look to the past.  So, why would reasonable people agree to invest counterintuitively in the past when the world is moving rapidly into the future?

 

As logic and common sense go, if you can minimize or eliminate the cost of production (i.e. the main raw resource—getting it out of the ground, refining it, transporting it, etc. …versus the cost of solar energy sourcing…which comes free from the sky).  Why would one not go after the ‘free’ resource first?  The point is, with the removal of the core natural resource from your cost structure, right away, that investment becomes more attractive than the alternative.  In the real business world, lower costs mean higher profits…leaving more money in the pockets of locals.  The main counterargument coming out of the big oil industry and related power companies is that it cost more to produce solar energy. Obviously, based on what you now know about both fossil fuel production versus solar energy production, that claim by the big oil industry is false. 

 

Accordingly, there is no reasonable economic argument, evidence, or otherwise, which exists that would hold any sensible nation back from making an aggressive renewable energy transformation push.  Never mind the moral one—climate change mitigation…benefits of renewables towards keeping Grenada green and clean for generations to come.   

 

As the world confronts the energy shift, what is Grenada doing to mitigate economic disruption and to facilitate a smooth transition?  Is it going to become proactive?  Is the government going to put the interests of its citizens first instead of its own political interests?  What real, ambitious, actionable zero-emissions-economy plans are politicians and policymakers putting forward?

 

   Image: Caribbean Development Bank

In 2019 global investors poured a record $36bn into climate-related technology investments, according to Cleantech Group, a research firm.  Half the money flowed into North America, so, with China encroaching on the sovereignty of nations like Grenada in the region.  You might think that our leaders would be clever and calculative enough to use that opportunity to approach America, in order to counter China’s geopolitical moves.  It would be my guess that the United States would be more than willing to promote the development and economic investment partnerships in Grenada, even if it’s only to counter its adversary, China.  As long as Grenada can get what it wants out of it, we can play superpowers off against each other to our economic and national security benefit.  Other states around the world do it all the time, why can’t our state?

  

Grenadians; the time has come for us to no longer continue to fall victim, we too can become the savvy business aggressors with visionary ideas.

 

Therefore, with all this economic activity taking place in the renewable space around the world, has the Mitchell government ever thought to engage the US, Europe, or Canada, with proactive investment plans and long-term strategies?  Plans that can be put in front of the most sophisticated investment professionals and institutions?  Local investment in skills technology training would certainly help Grenada boost its appeal as a potential high-skilled manufacturing and processing centre.  

 

The Caribbean region as a whole is not a major exporter of commodities, or enough to create wealth in the future to sustain its SIS.  Therefore, with the increasing ‘new economy’ reality, the only practical and realistic way to achieve long-term sustainable growth is through participation in the rising global digital economy.  This is where the real wealth and sustained prosperity is residing!  In the post-covid-19 transformation era, global markets will become increasingly competitive for talent and skill.  This tech-skilled group of people can operate virtually from anywhere in the world.  Green energy transitioning of jobs in component production, engineering, and general tech, for example, is in play now…contributing to changing the future-of-work forever.

 

Governments, both in developed nations and poor nations, need to get involved because the market shift to fossil-fuels won’t necessarily happen efficiently on its own.  Economic change often starts with state-sponsored economic policy initiatives, research and development, and the deployment of technologies towards real actions.

 

 

If we look at the electric vehicle (EV) industry for a brief moment, the average EV has a range of 300 miles or 482 km, with many Tesla models specifically going way over 700km.  To put it into perspective, Grenada is 12 miles (18km) wide and 21 miles (34km) long and covers a land area of 120 sq. miles (440 sq. km).  Safe to say that any EV would have range for days in Grenada.  Therefore, the question becomes: why isn’t an EV-transportation sector being promoted and developed aggressively in SIS?

 

It would seem logical that if a government were to work to attract and facilitate investment in charging stations throughout the country, for example.  Then set a strict development policy that says 90% of new personal vehicles being imported into the country must be EV, you would immediately see how fast a renewable energy industry develops.  All the existing fossil-fuel car dealerships on the island would shift to their brands EV product offerings.  Such moves would create robust new areas of job growth and R&D with increased income growth happening in the sector overall.

 

   Image: Talius Caribbean

 

Vehicle owners would then be motivated to install solar on their homes, for energy independence and EV charging flexibility.  Governments could then work with credible global institutions (with climate change mitigation investment mandates) to arrange sophisticated long-term financing plans for property owners on a mass scale, to install systems on the roofs of residences and businesses.  All this is possible through progressive and economically inclusive led government policy making. Almost overnight you would see a transformation of the island’s economy and a serious reduction in CO² emissions.  In short, effective government policy can greatly impact long-term sustainable economic growth and transform societies, impacting people's lives positively.  

  

Software engineering and development is another industry where proximity to work no longer applies.  Physical location is not important anymore, people and companies can operate virtually from anywhere in the world.  I don’t think it would be too difficult to lure young millennial's to live and work amongst Grenada’s sunshine and beaches.  Young professionals today are increasingly interested in work and lifestyle balance.  Why can't the government create a global recruitment campaign to promote Grenada as an optimal work-lifestyle destination for tech companies and professionals alike?  Those big tech salaries would surely find its way into every aspect of the local economy, and as we know a rising tide lifts all boats.

 

 

Again, achieving this is highly possible, it just comes down to creative thinking and vision, proper application of policy, leadership, and a bit of courage.

 

Technology advancement also requires constant research, Caribbean islands could also present themselves as research centres for tech-based companies.  Drawing brainpower to our shores will boost our own intellectual property growth.  St. Georges University (SGU,) for example, does not have an Industrial Engineering and Data Science technology program, which is the most relevant and demanded post-graduate program today.  Also remember, SGU is a for-profit institution whose private equity owners Atlas Partners out of Toronto, Canada, continue to pump out healthy profits since purchasing the university in August 2014. SGU needs to give back and align itself more to the relevant development priorities of Grenada, through programs that will provide real access and opportunity for regional students.  Creating an environment where tomorrow's leaders can go on to work in the region, developing a strong regional supply of educated and high-tech skilled workers; fostering an entrepreneurial-minded middle-class.  

 

SGU mainly producing foreign doctors for the primary benefit of everywhere else in the world other than Grenada, is not conducive to the bold and sustainable growth agenda Grenada needs right now.  We need to flip the script and demand a better more mutually beneficial deal for Grenada with business organizations like SGU.  Although it is claimed that SGU contributes around 30%+ to Grenada’s GDP, it is not the type of GDP contribution that can grow the middle-class effectively into the new economy.  In fact, keeping things as-is will become a drag on growth into the digital era and this remains inherently in the colonial legacy.  In short, we need a better more progressive, and inclusive arrangement, with clarity towards bold and measurable benefits for the Grenadian people. 

 

A fundamental conscious mindset shift needs to take place in Grenada if it wants to progress and not be left behind.  A strong, tech-savvy, and progressive middle-class is all-important to growing the economy into the transformative 21st-century.  

 

So, instead of running behind the Chinese like hungry stray dogs and swallowing up insurmountable debt that cannot realistically be paid back, (which will also inhibit our ability to engage in investment activity with other entities or investors on a global basis), the government needs instead, to stop borrowing money from China towards building backward projects like Levera.  Where all of the economic data points are telling us that this project cannot be economically viable and that it's nothing more than a Chinese debt-trap.  Levera's lack of efficacy and the clever entrapment financing structure by the Chinese set the project up to fail.  Locking Grenada into China’s calculation of future geopolitical opportunity to seize public assets.  For example, the port in St. George’s for one, would be a prize target, as has been done similarly before in other countries in Africa and right here in the Caribbean.

 

Grenada, therefore, needs a diversified economy for future sustainable growth, tourism alone is not the answer, in fact, tourism is an inherently subservient low performing economic sector, primarily service-oriented with very low paying jobs.  The economic facts say that you simply cannot build a strong middle-class led economy through tourism, particularly now in a post-covid-19 digital world.  Everything has changed, there is no going back to ‘normal’ it’s the new normal that now prevails.

  

We must look at development models like Singapore to guide our future economic aspirations logically and intelligently, and not continue to fall prey to rethreaded and stale ideas politicians and their cronies continue to put forth.  A diversified technology-led economy makes for a more resilient economy, one that can produce high-paying skilled jobs and lure big investment dollars in stride.  This is what the history of economics teaches us…that a strong middle-class is the most proven or optimal path to sustained prosperity, for any nation-state.

 

Therefore, we need to get organized and become proactive, innovative, and aggressive in our approach to engaging legitimate global investors and capital markets development in the region.  We must negotiate proper, transparent, and mutually beneficial growth agendas.  However, we must also first get our house in order, serious investors won’t invest in climates where they believe there is acute corruption.  Particularly with China hovering, there is the added risk of cybersecurity, so, in more ways than one, China could very well severely limit our future development and prosperity.  This is a fundamental political and economic problem that must be solved; burying our heads in the warm grand anse beach sand won’t make it go away!

 

Addressing these problems transparently with concrete policies and measurable actions to follow, will demonstrate and send a clear message to global investors, that Grenada is serious and fully understands the paramount importance of creating an opportunistic, strong and transparent investment environment.   

 

We recognize that this shift will not be without execution risk; however, living in fear and doing nothing is not an existence that anyone really wishes to strive for.  Similar to individual entrepreneur experience, nations must also take well-considered and calculated risks in order to benefit in the long-term.  No one owes us anything nor will anyone give us anything, we must create opportunities ourselves and execute accordingly.  We are smart, competent, proud, and resilient people.  We’ve taken 25 years of this current administration, and all it has given us is a steady downward trajectory on the UN poverty meter, quickly approaching Haiti’s situation.  Complacency and acceptance of the status quo will destroy our society, and the acceptance of acute corruption and incompetence is intrinsically harmful to socioeconomic growth and to our social well-being.  Grenadians have suffered real trauma under the current leadership, and it becomes inherently unhealthy for a society to continually be living under pressure and stress.  Our mental health situation is a direct function of our circumstances and the prevailing environment—we really need to heal and get better as people, before we can become mentally ready to take on the challenging road ahead.

 

We are now living in a knowledge-based economy.  We need leadership that can develop real policy and can drive our economy and civilization forward, during a time of profound change.  We can’t allow ourselves to continually get fooled by the same old stories, from men more interested in holding on to power than in cultivating the nation's prosperity path forward.

 

Autocratic China…could gain clout over the global renewable power system because of its dominance in the manufacturing of renewable energy technologies and components.  “Today Chinese firms produce 72% of the world’s solar modules, 69% of its lithium-ion batteries and 45% of its wind turbines” (The Economist, “The New Energy Order”).  According to the article China also controls much of the refining of minerals critical to clean energy. While the US has been distracted by the Trump reality show over the last four years, China has smartly established its footing towards the future domination of the energy transition in countries like Grenada and the entire Caribbean region in general.  This week’s article in The Economist, points out that any Chinese rapprochement with America due to the election of Biden, should be understood as only cleverly buying time while China races to become stronger.  “China’s rulers are not hiding their worldview, which is based on the idea that only the powerful are treated with respect” the article states.  This is all very consistent with the Chinese plan: the “Belt-and-Road” global initiative; which it seems that Grenada’s leadership has not been enlightened to as yet.  I encourage readers to review the Chinese “Belt-and-Road” global initiative critically for themselves, including all of the relevant associated commentary and evidence on the topic.

 

It's virtually an inevitable outcome that unless intelligent leadership rises up, with real economic countermeasures to China—you can begin to picture a future for Grenada…as a return to the past—a colonial past!  

 

Real leadership is crucial at this critical juncture in time, serious and highly skilled people who know what they are doing must be brought to the forefront.  The vital need to prepare proactively for the new renewable energy age, and its geopolitical landscape shifts, must be given top priority.

 

The shift away from fossil fuels to renewables is accelerating more each day.  Decision-makers, not only in Grenada but throughout the Caribbean Region must begin to anticipate and navigate through this rapidly changing energy landscape.

 

Investors and entrepreneurs are best at commercialising new ideas, but facilitative government policy can play a key and transformative role too. The more economic activity produced, the more likely it is that global capital markets will notice Grenada;  and institutional investors always find their way to good financial opportunities anywhere in the world. Particularly more so nowadays as global pension funds and alike have the mandate to put a meaningful portion of their investment portfolios into climate change mitigation technologies, and projects.  More and more companies and billionaire-backed funds are eyeing up climate-friendly investments in less developed regions around the world.  There are great transformative opportunities and billions of investment dollars to be had in this world today, which could leapfrog Grenada’s economy and bend its prosperity curve steeply upwards.  However, without bold thinking, qualified and skilled people to develop, articulate, and execute a vision, Grenada’s curve will continue to be one of poverty, with a steep downward trajectory.   

 

A final example to share has to do with agriculture.  Improved technologies and methodologies have led to improved efficiency and commercialization over many years.  As world populations continue to increase and land becomes scarcer, the ability of nations like Grenada to achieve food security and grow export markets is becoming increasingly out of reach.  Nevertheless, there still is a path to profit for small island farmers through the coupling of renewable energy capacity like solar, and AI (Artificial Intelligence) technologies.  Small but sophisticated farmers around the world are turning to AI to yield healthier crops, control pests, monitor soil and growing condition, and more.  AI data tools are being utilized intelligently for sales and marketing, finding new global markets, (global direct marketing of organic spices would be a natural one for the ‘spice-isle’) and guiding the entrepreneur farmer to the higher demanded crops and trending products around the world.

 

Of critical importance, AI combined with renewable energy is being used to help farmers control more of the supply chain and enhance profit.  The predictive capabilities of AI can also be utilized to establish relationships and run trade operations with retailers anywhere in the world.  Any motivated small farmer, sitting right here in Grenada, and with a smartphone can use intelligent technologies to their competitive advantage.              

Holistically, the entire Caribbean Region must set broad strategic goals to diversify the economy with digital products and services, bolster food security, increase food product exports through agricultural innovation, expand healthcare services reach through virtual technologies, and attract foreign investment while driving towards a zero-emissions based Green Growth Economy. 

 

 

Nevertheless, we the people, still must become our own policy advocators, encourage transparency, innovation, and entrepreneurship within our society.  We cannot leave it to others as it is our responsibility to take ownership of your own lives, our future.  We the people must pressure the government and use the power of public opinion and the vote to move leaders into action, and this country forward.  Align socioeconomic structures and investment within the energy and digital transition era simultaneously.  Diversify and strengthen international alliances and co-operation to our advantages.  Time to stand up for ourselves and demand more out of our leaders, and ourselves.  Demand strategies, concrete and measurable actions that can lead to a more prosperous future for Grenadians.   

 

Demand leadership that can establish credibility on the global stage…leaders who can promote sustainable economic growth effectively.   For example, Joe Biden's victory is going to expand US climate policy more aggressively, globally, as Mr. Biden has pledged US$2trn in climate-related spending over four years.  Grenada, is right in the US backyard, must get into the climate mitigation mix and present renewable energy business investment strategies and get some of those $US.   Leaders who can strengthen our democratic institutions and the rule of law, while meaningfully improving the livelihoods and overall socioeconomic health of this nation.

 

However, at the end of the day, real effective change comes down to what the people do about it, do we remain passive or do we step up and begin to write their own story?  Because the story is not going to write itself.   

 

 

We must work with sophistication to dismantle old legacy systems of the past. We must engineer our own environment, backbone technology infrastructure to create the winning conditions; awaken to a higher state of consciousness, with honesty, putting applied intelligence ecosystems to work, for our economic benefit.