The COVID-19 pandemic with its raging intermittent and consistent spread has intensified the economic and financial fallout to most economies and particularly to the most vulnerable. Barbados as a jurisdiction, clearly in the second category, has been severely affected. In keeping with its historic policy of fashioning new policies out of adverse circumstances, Barbados has also intensified its return to first principles where some old policies have been refashioned and re-engineered. One such area is in the field of renewable energy.
Historically, the jurisdiction has been in the forefront of the development of renewable energy through the fiscal encouragement given to the solar water industry. Indeed, since 1974, it has provided a range of fiscal incentives for the manufacturing industry as a whole under its Fiscal Incentives Act. The solar water heater industry has been a major beneficiary under this legislation. In 1978, two main manufacturers were declared approved enterprises under the Act. Favourable treatment was also applied to the various products which went into the fabrication of the solar water systems.
The jurisdiction has not only given much support to the industry in respect of fiscal incentives but it also buttressed such incentives with the setting up of a Technical Committee to deal with solar energy generally; as well as with the establishment of a National Standard Code of Practice for Solar Heating Systems for domestic hot water. The comprehensive code also took into account design considerations.
At the second range of fiscal incentives, namely Customs Tariffs and Incentives under the general tariff regime, examination may centre on the various elements used to construct renewable energy systems in general, of which solar water heaters are an integral part. Local companies have been encouraged to manufacture solar water-heating systems in Barbados, since historically the cost of importing construction materials and components of the collector and storage tank has been comparatively less than the cost of importing complete water-heating systems. Any examination of the Tariff Schedules of the Customs Act (Cap. 66 from the original edition of the 1971 Revised Edition of Statutes) will reveal that the major components of solar water heating systems have been subject to duties of 5 per cent, whereas solar water heaters for domestic use, immersion heaters, and electrical instantaneous and storage water heaters have been subject to 35 per cent duty. This difference in tariffs has afforded some critical protection to local manufacturers.
The Income Tax (Amendment) Regulations of 1984 gave important concessions to persons installing solar water heating systems in Barbados. Within the legislation, it was enacted that the cost of the installation of a solar water heating system was deductible from the assessable income of the individual. This benefit proved to be a very useful marketing tool for manufacturers and also of great benefit for middle to upper-level income consumers in a high tax system where deductible benefits have been welcomed features in individual tax planning.
These benefits allowed under the Income Tax Act ceased to exist through the amendment to that Act in 1992. An ambivalent policy approach however surfaced during the closing stages of the last decade of the twentieth century in relation to the continued development of a renewable energy policy built on this favourable and innovative solar water experience. Fortunately, this ambivalence was however partially corrected as the twenty first century dawned and developed; for "renewables" became the popular and governmental new word of action.
The Mixed Policy Thrust
The jurisdiction as a whole has acknowledged the importance of the development of renewable energy through photovoltaics. Renewable and alternative energy are therefore now a growing area of opportunity in Barbados. Plans have been announced for more government regulation as well as efforts to attract more public and private investment in the sector. The market is focused on solar photovoltaics; and interest is increasing in wind, waste, biomass, ocean and wave energy. Electric buses have been introduced to the public transportation fleet. The government has also tabled a proposal for a multi-million-dollar 30 MW multi-source plant and green energy park. Furthermore, legislation has been introduced aimed at the encouragement of purchase by consumers of more electric utility vehicles.
Solar photovoltaics and smaller-scale wind turbines continue to increase in popularity for residential and commercial purposes, particularly in the tourism sector. The Government also continues to explore larger utility-scale wind, solar, ocean and biomass generated energy projects for national electricity consumption and also for purposes of reducing reliance on fossil fuels.
Barbados is also the first in the Caribbean to have successfully completed its United Arab Emirates (UAE) funded renewable energy project. The UAE Government launched a US$50 million Caribbean Renewable Energy Fund in November 2017, and the partnership was an effort to assist the Caribbean Community (CARICOM) Member States to reduce the high cost of energy, which has been identified as a primary barrier to growth. The UAE has facilitated approximately BDS$7 million in grant funding to Project Managers MASDAR for the Barbados Water Authority’s supply and installation of a 420kW ground mounted solar photovoltaic farm, on 1.5 acres of land at the Bowmanston pumping station, and the supply and installation of a 350kW solar photovoltaic carport at the Bridgetown Sewage Treatment Plant.
Although keeping to its stated commitment to the world of photovoltaics, Barbados has sought to keep its offshore drilling explorations geo-physically alive and financially relevant; and to those ends, it has recently sanctioned the merger of two entities engaged in offshore exploration activities on its contiguous Carlisle Bay. Using the change of control provision of the legislation governing the offshore petroleum programme, Government recognised the particular synergies within the merged groups.
In this context, Government announced that its Ministry of Energy and Business (Development) has already completed a number of plans and studies that are necessary to establish the foundation for this country's new energy policy. Amongst those major studies undertaken, during 2021 have been the Integrated Resource Resilient Energy Plan, the Wind Energy Development Study, the Battery Storage Study and Ocean Energy Studies on the Electric Vehicle Pilot Study.
From solar water heaters to photovoltaics while still recognising the not to be neglected offshore oil drilling programme, Barbados slides through four decades of energy policy. From the quick start of a focused policy on solar heaters together with accompanying programmes to the new photovoltaics thrust, it has never neglected its oil exploration ambition. It however behoves policy makers to ensure that the current photovoltaics implementation receives widespread knowledge and acceptance as well as the necessary governmental approvals such that the available national benefits do accrue; and furthermore that such benefits are fairly transferred across the social and economic spectrum.
Sir Trevor Carmichael KC
Sir Trevor Carmichael, KA,LVO,KC. was born in Barbados and educated at Harrison College and the University of the West Indies, Mona, Jamaica. After pursuing post graduate studies in the United States, he was called to the United Kingdom Bar as a member of the Middle Temple in London and the Barbados Bar in December of 1977. He is a member of the International Bar Association, the Inter-American Bar Association and a Committee Member of the Inter-American Bar Foundation as well as an associate member of the Canadian Bar Association. He holds membership in the International Tax Planning Association, the International Fiscal Association and was one of the parties responsible for establishing a Barbados Chapter of the International Fiscal Association of which he is Charter President. He is the Barbados Country Chairman of the International Litigation Committee on Business Law of the International Bar Association and a former Deputy Secretary General of the International Bar Association. He is a Life Fellow of the Institute for Advanced Legal Studies in the United Kingdom, a Life Member of the Commonwealth Magistrates and Judges Association and a member of the International Law Association.