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Gov't. on Diversification Programme to Break Dependence on Oil
Jamaicans are well aware of the devastating effects of the volatile global oil market on the country's economy and way of life.
Whether it is sky-rocketing oil prices, an increasing import bill and concomitant increases in petrol, electricity and basic food items, it is clear that the country can ill-afford to remain dependent on, or held hostage by oil and the stark realities.
"Jamaica relies heavily on, in large measure, up to 90 per cent of fossil fuels and therefore whatever happens in the global market place, especially as it relates to oil, has a tremendous impact on our economy," says Minister of Energy, Clive Mullings, in an interview with JIS News.
Given this situation, the Government is on a programme of diversification to break the country's dependence on oil.
"Now, by virtue of this challenge that we have with this dependence on oil, the answer must clearly be diversification...because if we don't do that, it means that we will be open and we will be vulnerable," the Minister emphasises, while recalling that, "in the 1970s, the entire global economy was brought to its knees when the Organisation of Petroleum Exporting Countries (OPEC), decided to cut back its production."
The Minister notes, however, that history shows that "there was one country in particular that saw this as a signal, that was Brazil, and they remained focused and sought to see how best they could move forward and they utilised sugar cane and ethanol. Now we see the benefits of that and there is a lesson to be learnt from that for us and an economy like Jamaica's."
In this context of diversification, renewable energy sources are becoming more attractive as they will be cost competitive, offer greater energy diversity and by extension, security and provide a cleaner environment. Jamaicans will soon see evidence of this through the Government's ethanol project, which will spearhead the introduction of the E10 ethanol blend in gasoline.
"Our most critical project in terms of timeline and impact will be on November 1 this year, when we will be rolling out the 10 per cent ethanol blend in gasoline," the Minister informs.
"This is significant, because it's going to be a renewable resource, so unlike oil, which is finite, we will be growing our fuel, and it will take pressure off our foreign exchange. At least we will have a displacement of 10 per cent of the cost that will be required in terms of foreign exchange disbursements. It is a cleaner burning fuel and it should be competitive in price," he explains.
Approximately 4.5 million gallons of gasoline are used in Jamaica on an annual basis and as such, the Government is of the view that a 10 per cent substitution will be significant. In addition, the Minister asserts that there is important symbolism and philosophical meaning to the E10 project.
"This [project] is not only significant in terms of its economic impact. It is significant in terms of how it feeds into diversification as a policy and a greater philosophical point is that we will be utilising sugar cane which, as you all know, symbolises slavery. Now we are taking control and utilising that very resource to liberate us and find an answer to a problem that is confronting the world," he says.
The genesis and overall development of this project is indicative of what can be achieved through careful thought, a commitment to solution-based thinking and decisive action. The fact is that the Government's ability to bring the E10 blend on stream is a result of its foresight in divesting its sugar holdings, bringing on board Brazilian company Infinity Bio-Energy, one of the leading producers of ethanol in Brazil.
Through Infinity Bio-Energy's knowledge and expertise of the ethanol industry, the partnership will enable Jamaica to do much more than just provide local fuel for transportation and power generation, it will assist in the development of the bio-fuels sector, which will create employment opportunities for hundreds of Jamaicans, reduce the outflow of foreign exchange to pay for imported fuel and generate additional revenue.
Despite these benefits, there is the concern as to whether or not the use of sugar cane in ethanol production could adversely affect the local sugar industry, as it relates to supplying the local market and by extension, long term food security.
However, Mr. Mullings is allaying such fears by stating that ethanol production will revitalise the local sugar industry and enable Jamaica to supply other countries with ethanol, thereby converting sugar into "Green Gold."
"The good thing about utilising sugar cane is that it is not a zero sum game as if you were utilising corn, because you are getting sugar. We will be producing sugar for the market, so it's not ethanol and nothing else. Ethanol production represents an opportunity to move the sugar cane from just processing for sugar, to an industry seen as a unit of energy," he asserts.
"The sugar industry has racked up a tremendous debt; I believe in the region of $18 billion. We can't sustain that in a marketplace where the preferential arrangements are going and the quotas are coming down, but it (ethanol production) is a tremendous opportunity. We can now export ethanol under the Economic Partnership Agreement (EPA), to Europe and so what would, under other circumstances, be a death-knell for an industry, is an opportunity if we get it right," he continues.
Ethanol production is but one of a number of initiatives that the Government is pursuing, with the aim of providing some degree of energy diversity and security for Jamaica.
"There are other things that we are looking at; we are definitely looking at wind and as such the Wigton Wind Farm (in Manchester) is being expanded," the Minister points out, adding that over the next 12 months an additional nine turbines will be installed.
The Minister further informs that the Government will be overseeing the "charting of wind flows in site specific areas, so that we can achieve the optimum utilisation of wind. So, we are looking at renewable resources, we are looking at hydro, but all of these have to come and fit in the mix of diversification."
To further maximise this resource, the Government will pursue an initiative that will see the generation of two Mega Watts (MW) of electricity, using wind turbines without gearboxes. The project will be located at the Port Authority and if successful, will be replicated across the PetroCaribe member countries.
Another key component to the Government's plan will be solar energy and the Minister believes that this form of energy has incredible economic potential and possibilities.
"On a larger scale in solar, we have a project before the PetroCaribe Board, that is to utilise one of our rapidly growing communities to [establish] a solar farm to produce solar energy," the Minister tells JIS News, adding that it is expected that this community will eventually supply electricity to the national grid.
"But, larger than that, there is a project to build solar panels and if we can get that signed off on and funded by the PetroCaribe Group, then we will provide solar panels and equipment, not just for Jamaica but the region," the Minister says.
Continuing on the theme of diversification, the Minister cites the Petcoke Cogeneration Power Project (PCPP), which aims to produce and utilise petroleum coke (petcoke), a low cost fuel to generate electricity, as further demonstration of the Government's commitment to execute programmes that are responsive to the energy needs of the country.
"It's a very big project; it's going to have tremendous implications and an economic impact for those in the area. We anticipate the employment of at least 2,500 people," the Minister points out.
The project, a proposed 100 to 120 MW cogenerating plant, will be implemented through an upgraded Petrojam Refinery, which will feature a state-of-the-art refining facility. The petcoke produced by Petrojam will be used as fuel in the generation of electricity at the new generating plant that the Jamaica Public Service will develop at its Hunts Bay location.
Additionally, there will be a number of benefits for Jamaica, including a reduction in the potential for power outages, due to generation shortfall; an overall reduction in oil imports and the eventual reduction in fuel costs. Furthermore, the PCCP will enable Jamaica to process sulphur for the chemicals industry and vacuum gas oil for export.
The country is at a seminal moment in its development, where it can choose to either be proactive or reactive. The Government has made the choice of the former and as such, Jamaica's thrust towards energy diversification bodes well for the country's long term energy security.
http://www.jis.gov.jm/MinEnergy/html...NCE_ON_OIL.asp
Jamaicans are well aware of the devastating effects of the volatile global oil market on the country's economy and way of life.
Whether it is sky-rocketing oil prices, an increasing import bill and concomitant increases in petrol, electricity and basic food items, it is clear that the country can ill-afford to remain dependent on, or held hostage by oil and the stark realities.
"Jamaica relies heavily on, in large measure, up to 90 per cent of fossil fuels and therefore whatever happens in the global market place, especially as it relates to oil, has a tremendous impact on our economy," says Minister of Energy, Clive Mullings, in an interview with JIS News.
Given this situation, the Government is on a programme of diversification to break the country's dependence on oil.
"Now, by virtue of this challenge that we have with this dependence on oil, the answer must clearly be diversification...because if we don't do that, it means that we will be open and we will be vulnerable," the Minister emphasises, while recalling that, "in the 1970s, the entire global economy was brought to its knees when the Organisation of Petroleum Exporting Countries (OPEC), decided to cut back its production."
The Minister notes, however, that history shows that "there was one country in particular that saw this as a signal, that was Brazil, and they remained focused and sought to see how best they could move forward and they utilised sugar cane and ethanol. Now we see the benefits of that and there is a lesson to be learnt from that for us and an economy like Jamaica's."
In this context of diversification, renewable energy sources are becoming more attractive as they will be cost competitive, offer greater energy diversity and by extension, security and provide a cleaner environment. Jamaicans will soon see evidence of this through the Government's ethanol project, which will spearhead the introduction of the E10 ethanol blend in gasoline.
"Our most critical project in terms of timeline and impact will be on November 1 this year, when we will be rolling out the 10 per cent ethanol blend in gasoline," the Minister informs.
"This is significant, because it's going to be a renewable resource, so unlike oil, which is finite, we will be growing our fuel, and it will take pressure off our foreign exchange. At least we will have a displacement of 10 per cent of the cost that will be required in terms of foreign exchange disbursements. It is a cleaner burning fuel and it should be competitive in price," he explains.
Approximately 4.5 million gallons of gasoline are used in Jamaica on an annual basis and as such, the Government is of the view that a 10 per cent substitution will be significant. In addition, the Minister asserts that there is important symbolism and philosophical meaning to the E10 project.
"This [project] is not only significant in terms of its economic impact. It is significant in terms of how it feeds into diversification as a policy and a greater philosophical point is that we will be utilising sugar cane which, as you all know, symbolises slavery. Now we are taking control and utilising that very resource to liberate us and find an answer to a problem that is confronting the world," he says.
The genesis and overall development of this project is indicative of what can be achieved through careful thought, a commitment to solution-based thinking and decisive action. The fact is that the Government's ability to bring the E10 blend on stream is a result of its foresight in divesting its sugar holdings, bringing on board Brazilian company Infinity Bio-Energy, one of the leading producers of ethanol in Brazil.
Through Infinity Bio-Energy's knowledge and expertise of the ethanol industry, the partnership will enable Jamaica to do much more than just provide local fuel for transportation and power generation, it will assist in the development of the bio-fuels sector, which will create employment opportunities for hundreds of Jamaicans, reduce the outflow of foreign exchange to pay for imported fuel and generate additional revenue.
Despite these benefits, there is the concern as to whether or not the use of sugar cane in ethanol production could adversely affect the local sugar industry, as it relates to supplying the local market and by extension, long term food security.
However, Mr. Mullings is allaying such fears by stating that ethanol production will revitalise the local sugar industry and enable Jamaica to supply other countries with ethanol, thereby converting sugar into "Green Gold."
"The good thing about utilising sugar cane is that it is not a zero sum game as if you were utilising corn, because you are getting sugar. We will be producing sugar for the market, so it's not ethanol and nothing else. Ethanol production represents an opportunity to move the sugar cane from just processing for sugar, to an industry seen as a unit of energy," he asserts.
"The sugar industry has racked up a tremendous debt; I believe in the region of $18 billion. We can't sustain that in a marketplace where the preferential arrangements are going and the quotas are coming down, but it (ethanol production) is a tremendous opportunity. We can now export ethanol under the Economic Partnership Agreement (EPA), to Europe and so what would, under other circumstances, be a death-knell for an industry, is an opportunity if we get it right," he continues.
Ethanol production is but one of a number of initiatives that the Government is pursuing, with the aim of providing some degree of energy diversity and security for Jamaica.
"There are other things that we are looking at; we are definitely looking at wind and as such the Wigton Wind Farm (in Manchester) is being expanded," the Minister points out, adding that over the next 12 months an additional nine turbines will be installed.
The Minister further informs that the Government will be overseeing the "charting of wind flows in site specific areas, so that we can achieve the optimum utilisation of wind. So, we are looking at renewable resources, we are looking at hydro, but all of these have to come and fit in the mix of diversification."
To further maximise this resource, the Government will pursue an initiative that will see the generation of two Mega Watts (MW) of electricity, using wind turbines without gearboxes. The project will be located at the Port Authority and if successful, will be replicated across the PetroCaribe member countries.
Another key component to the Government's plan will be solar energy and the Minister believes that this form of energy has incredible economic potential and possibilities.
"On a larger scale in solar, we have a project before the PetroCaribe Board, that is to utilise one of our rapidly growing communities to [establish] a solar farm to produce solar energy," the Minister tells JIS News, adding that it is expected that this community will eventually supply electricity to the national grid.
"But, larger than that, there is a project to build solar panels and if we can get that signed off on and funded by the PetroCaribe Group, then we will provide solar panels and equipment, not just for Jamaica but the region," the Minister says.
Continuing on the theme of diversification, the Minister cites the Petcoke Cogeneration Power Project (PCPP), which aims to produce and utilise petroleum coke (petcoke), a low cost fuel to generate electricity, as further demonstration of the Government's commitment to execute programmes that are responsive to the energy needs of the country.
"It's a very big project; it's going to have tremendous implications and an economic impact for those in the area. We anticipate the employment of at least 2,500 people," the Minister points out.
The project, a proposed 100 to 120 MW cogenerating plant, will be implemented through an upgraded Petrojam Refinery, which will feature a state-of-the-art refining facility. The petcoke produced by Petrojam will be used as fuel in the generation of electricity at the new generating plant that the Jamaica Public Service will develop at its Hunts Bay location.
Additionally, there will be a number of benefits for Jamaica, including a reduction in the potential for power outages, due to generation shortfall; an overall reduction in oil imports and the eventual reduction in fuel costs. Furthermore, the PCCP will enable Jamaica to process sulphur for the chemicals industry and vacuum gas oil for export.
The country is at a seminal moment in its development, where it can choose to either be proactive or reactive. The Government has made the choice of the former and as such, Jamaica's thrust towards energy diversification bodes well for the country's long term energy security.
http://www.jis.gov.jm/MinEnergy/html...NCE_ON_OIL.asp