IMF Staff Country Reports

This Selected Issues paper examines the impact of the energy transition (ET) and strategies to achieve it in the Easter Caribbean Currency Union (ECCU). Reducing energy dependence in the ECCU entails improving energy efficiency and shifting from fossil fuels to renewable energy (RE). This ET is expected to affect the transmission of and vulnerability to shocks while at the same time helping to reduce economic imbalances and enhance growth potential. Policymakers need to establish frameworks to maximize the benefits of the ET, while ensuring it is sustainable and equitable. It is recommended that energy security must be central to the ECCU’s ET strategy for resilient economic growth. Additionally, policies for the ET in the ECCU must balance maximizing opportunities with minimizing adverse effects. Well-designed fiscal incentives can help accelerate the ET and attract private investment, but they must be fit for the ECCU. Strengthening energy regulatory frameworks with independent energy regulators is also vital to catalyze private sector investment in the ECCU. In addition, regional cooperation can play a key role in facilitating a successful ET.