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This paper discusses international aid issues related to energy supply and sustainable development in the Pacific Islands. Certain foreign donors have focused their aid to the region mainly on poverty alleviation, and have failed to support critical sectors, such as the energy sector, which is one of the main driving forces in socio-economic development. As an example, this paper analyses the international aid program of Australia for renewable energy in the Pacific Island region. It is recommended that, in future, foreign aid take up the challenge of promoting recipient countries' capabilities in sustainable development. A key strategy to be adopted by foreign aid should be strengthening recipients' energy sectors, particularly renewable energy systems. It is argued that this approach will assist the long-term socio-economic development and environmental management of the region.