High on the agenda at this week’s Pacific Islands Forum will be the crippling global oil shock that has exposed the fragility of the Pacific’s energy security and dependence on imported diesel.
But, what if the sun-drenched island nations of the Pacific were known not only for their vulnerability to sea level rise or global energy shocks, but as the world’s first fully renewable-powered region?
Imagine replacing expensive diesel generators with solar power plants – shifting from the current reality where volatile oil imports swallow up to a quarter of national budgets to a future powered by clean, abundant,energy provided free from the sun.
Our new report, Counting the Cost of Fossil Fuels in the Pacific, finds that right now, the Pacific stands at a pivotal crossroad. Around 80% of the region’s total energy supply relies on imported oil products, leaving island nations at the mercy of global supply disruptions.
Across the region, households already pay an average of $US0.47 per kilowatt-hour for electricity, which is nearly triple the global average.
Pacific nations spend between 10% and 25% of their total GDP on fossil fuel imports, dwarfing the regional averages spent on education (8%) and healthcare (6%).
The ongoing conflict in the Middle East, and the closure of the Strait of Hormuz, has driven Pacific diesel prices up by 35%. This threatens to add $US375 million to Fiji’s annual fuel bill – exceeding its entire health budget – and drain 5% of Vanuatu’s GDP.
Analysis from Zero Carbon Analytics has found that not only are Pacific island countries heavily exposed to fossil fuel imports and volatility, but they also have not ramped up their imports of clean electric technologies – like solar panels, batteries, electric vehicles – nearly as fast as the global average in recent years.
Pacific nations would benefit from a clean energy shift more than most. Other small island states – including in the Caribbean and the Indian Ocean – have increased their cleantech imports at well above the global rate. This shows that while there are challenges and upfront costs to electrify small island nations, the hurdles are not insurmountable.
Behind the Pacific’s current reliance on oil imports lies an extraordinary economic opportunity. By replacing diesel generation with solar power, battery storage, and grid upgrades, the Pacific can save an estimated $US700 million every year in avoided fuel costs.
That is money that can be redirected straight back into local economies, climate adaptation, and essential public services, like hospitals, schools and infrastructure.
Pacific countries can cut their fuel imports, and save even more, by switching to electric vehicles in urban centres and battery-electric motors for inter-island shipping.
We’re used to talking about renewable energy in the Pacific as a moral issue, but our report’s findings show that the economic case is overwhelming – especially as the cost of solar and batteries continues to decline.
Pacific leaders have set a bold goal to become the world’s first 100% renewable-powered region. But turning abundant sunlight into everyday power will require international support.
As Tuvalu’s Minister for Climate Change, and Environment, Dr Maina Talia, said, “Tuvalu has an ambitious renewable energy target, but we need our international partners to help us get there. The economic case for the Pacific shifting to renewable energy is significant. Every dollar not spent on polluting and expensive diesel is money we can put towards our people’s health and education.”
Shifting to a fully renewable Pacific requires deploying 2.2 gigawatts of new renewable generation and 8,800 megawatt-hours of battery storage across the dispersed islands in the region.
To achieve this, international financial support for the Pacific must scale from the $US216 million provided in 2024 to $US650 million annually. The technology exists, the solar resources are abundant, and the economic payback is swift, the missing ingredient is capital at scale.
With Prime Minister Anthony Albanese attending the Pacific Islands Forum in Palau this week, Australia has a prime opportunity to demonstrate genuine regional leadership. As co-president of the upcoming COP31 UN climate summit, the Albanese can lead by taking three transformative steps:
– Support energy transition finance: Australia must help bridge the regional investment gap by committing direct public grants, encouraging other countries to do the same, and leveraging private capital for Pacific solar plants, battery storage, and grid upgrades. This can help turn the Pacific’s renewable-energy ambition into infrastructure on the ground.
– Fund the Pacific Resilience Facility: The Australian Government should double down and expand its contribution to the Pacific Resilience Facility, a Pacific-led mechanism designed to fund local adaptation and energy projects without saddling small island economies with debt. Substantial financial backing of the PRF would demonstrate Australia’s genuine respect for regional leadership.
– A roadmap away from fossil fuel exports: The Australian Government should align its domestic energy policies with its regional rhetoric by committing to a clear schedule to phase out coal and gas exports. Continuing to expand fossil fuel exports directly undermines the security of our Pacific neighbours.
The Pacific’s transition to 100% renewable energy and clean electric technologies is not just a dream; it is one of the region’s most compelling economic opportunities.
By helping our neighbours break free of diesel dependency, Australia can help Pacific nations turn vision into reality, building a resilient and renewable Blue Pacific.
Dr Wesley Morgan is a research associate with the UNSW Institute for Climate Risk & Response, has written widely on climate change and international relations in the Pacific Islands, and has over a decade’s experience living and working in the Pacific Islands.
