Over two years ago, when Maldives announced their intent of becoming carbon neutral in 10 years, I was left pondering what it meant, what would have to be done and what would it achieve ultimately. Back then the news was met with huge criticisms both nationally and internationally. Two and half years later I find myself justifying and promoting that goal but not as a tool of environmental sustainability but as a tool for self sustaining the Maldivian economy.
I may not be an economic expert, but it’s not rocket science to understand the link between energy use and economy. They are proportional more or less. So I jot down some stats in this regard as my justification.
- Since 2003 in Maldives annual GDP growth is 11% with 2004 tsunami and 2008 economic shocks
- In comparison annual growth in energy demand is 9%.
Seems fair enough, but the problem is here,
- 99% of that energy demand is met fossil fuels and the
- In 2010 price of fossil energy is more than 3X what it was at the start of this century.
- Price of fossil fuel energy has been rising at an annual rate of about 20% with huge volatility between the years.
- Maldives fossil fuel energy expenditure has been rising at roughly 30% annually
And ultimately as the above figures suggests, fossil fuel expenditure is gaining 1.4% every year in its share in the national expenditure. Now for country hard pressed for having expenditure greater than their income, this is bad news. And as a newly graduated Middle income country, there is an exceeding risk of regression back to a Least Developed Country. Not only that, but in long term if it continues the same the collapse of the economy is inevitable. But the solution is obvious, go low carbon. Exploiting energy conservation, energy efficiency and locally available renewable energy opportunities will definitely save a huge portion of the energy bill. Reducing the overall expenditure, and attaining better balance of payment. The new and emerging green industries like energy servicing companies, carbon auditing firms and climate financial institutes can take the economy to new heights.
Hence this new source of income and the reduction of old expenditure, can self sustain this troubled economy. And environmental benefits and carbon reductions looks nothing more than a simple byproduct in comparison to its long term economic gain. And for those who are wondering what the monetary value of all the above stats, in 2010 Maldives energy bill was a little over 245 million dollars against a GDP of 1.448 billion dollars.
