Caribbean renewables lag behind as US restricts China role

As the US tightens tax credit rules to curb China's clean energy influence, Caribbean nations are accelerating their own energy transition through new laws, investments, and regional cooperation — but renewables still account for just 12% of the region's electricity mix, far below targets.

The Caribbean is advancing its energy transition through legislative reform, fiscal incentives, and regional cooperation, even as US policy shifts reshape global clean energy supply chains. USAID's Caribbean Energy Initiative targets twelve nations with a planned fund to boost private sector investment in renewable energy and energy efficiency. According to OLACDE's Technical Note No. 12, Caribbean countries are translating climate commitments into concrete legal and financial instruments, including expanded renewable energy sources, resilient electrical infrastructure, and sustainable mobility programmes. However, the share of renewables in the regional electricity matrix reached only 12% in 2022, well short of CARICOM's 28% target. The Dominican Republic eliminated fiscal barriers to hybrid and electric vehicle imports through Law 103-13. Jamaica reduced import taxes on electric vehicles from 30% to 10%. Trinidad and Tobago incorporated Paris Agreement commitments into national legislation and is developing green financing mechanisms including climate bonds and tax exemptions.

The widening gap between Caribbean renewable energy targets and actual deployment poses real risks to energy security and climate resilience across the region. With US tax credit rules now restricting Chinese clean energy components, Caribbean nations may face higher costs or supply chain disruptions for solar panels, batteries, and electric vehicles — the very technologies they need to meet transition goals.

"The share of renewables in the regional electricity matrix reached only 12% in 2022, still below the 28% target projected in CARICOM's Sub-Regional Energy Policy."

— OLACDE Technical Note No. 12

The United States has been steadily tightening its trade and industrial policies to reduce dependence on Chinese clean energy supply chains, and this latest move formalises that effort through the tax code. Under President Trump's new tax law, companies seeking federal clean energy tax credits face restrictions if their projects rely too heavily on equipment manufactured in China.

For Caribbean nations like Guyana, which are navigating their own energy transitions while maintaining trade and investment relationships with both the U.S. and China, these rules carry significant implications. Chinese manufacturers have been dominant suppliers of solar panels, batteries, and other clean energy components globally, often at lower price points that make renewable projects more affordable for developing nations.

The announcement, reported by Reuters and carried by Stabroek News, signals a deepening of the geopolitical competition between the U.S. and China over clean energy dominance — a contest that Caribbean states are increasingly caught in the middle of.

Accelerated regulatory reform is essential: OLACDE recommends accelerating the implementation of more effective regulations, removing administrative barriers, and setting measurable goals to bridge the gap between planned objectives and actual outcomes. A just and sustainable energy transition requires robust legal instruments, economic incentives, and greater international cooperation.

Private sector financing must be unlocked: Meeting ambitious renewable energy goals requires tailored financing mechanisms to meet the private sector's needs and to achieve climate resilience. USAID plans to establish a funding mechanism to encourage private sector investment in small and medium-sized renewable energy and energy efficiency projects across twelve Caribbean nations.

Regional harmonization strengthens energy security: CARICOM is working on harmonizing standards and national regulatory frameworks while promoting electric interconnections that integrate renewable sources and strengthen energy security. The Regional Energy Policy, adopted in 2013, establishes clear objectives to diversify the energy mix and foster energy efficiency.

The Caribbean cannot afford to be a passive bystander in the global clean energy power struggle. As the US moves to restrict Chinese influence in clean energy supply chains, our region — heavily fossil-fuel dependent and acutely climate-vulnerable — risks being caught in the crossfire. The numbers are stark: 12% renewables against a 28% target. That is not a rounding error; it is a policy failure in slow motion.

The region's legislative progress is real — the Dominican Republic, Jamaica, and Trinidad and Tobago deserve credit for concrete reforms. But laws without implementation timelines, financing without scale, and targets without accountability will not keep the lights on or the oceans at bay. Caribbean governments must demand that geopolitical rivalry translates into better deals, more investment, and faster technology transfer — not higher costs and fewer options. CARICOM's role in harmonizing frameworks is vital, but it must move faster. The energy transition will not wait for the Caribbean to get its house in order.