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EDITORIAL - Think Carefully About Energy
Published: Wednesday | January 5, 20110 Comments and 0 Reactions
When P.J. Patterson sought to commit Jamaica to an energy future based on natural gas, it was on the assumption that the country would have a secure supply of LNG from Trinidad and Tobago at a preferential price.
This was on a promise by then prime minister of Trinidad and Tobago, Mr Patrick Manning, who gave the same assurance to Mr Patterson's successor, Mrs Portia Simpson Miller. Unfortunately, Mr Manning, whose government has since been chucked out of office, couldn't fulfil this self-imposed obligation.
First, it took a long time for Port-of-Spain to reach an agreement with the Venezuelans on the sharing of new gas finds in the sea between their countries - a deal that, ironically, was facilitated, in part, by Mr Patterson's back-channelling with Venezuela's Hugo Chávez. The new gas train from those finds is yet to come on stream.
Additionally, Mr Manning couldn't persuade the private producer of LNG to rearrange supply contracts and prioritise delivery to Jamaica. In any event, the Trinidad government's energy bureaucrats were sceptical about the Manning initiative.
If we interpret correctly the attitude of the new Trinidad and Tobago prime minister, Kamla Persad-Bissessar, there is little hope of the LNG initiative being revived during her tenure.
The bottom line, therefore, is that any LNG supply contract Jamaica enters in the foreseeable future will be without concessions and, therefore, at market price.
We make these observations in the context of the Jamaican Government's request for proposal for 480 megawatts of electricity-generating capacity, with natural gas as its fuel, and Prime Minister Bruce Golding's declaration in his New Year's message that the conversion to LNG is proceeding apace. Mr Golding promised that "long-term contractual arrangements, investment commitments and an appropriate regulatory and pricing framework should be in place in early 2011".
We suggest to Mr Golding that while his administration should proceed quickly with an energy programme, it ought not do so in careless haste.
The fact is that energy is potentially the economic game-changer Jamaica so badly needs. It could stimulate the competitiveness of domestic enterprise.
Cheapest option
It is a bald fact that Jamaican production is being stymied by the US$0.29 per kilowatt-hour the country pays for electricity. That rate is multiples of the price in many of our regional competitors.
In that regard, this newspaper believes that any policy on energy must be based on the least cost option - led primarily by the fuel source and technology that deliver power to consumers at the cheapest price, thereby enhancing the competitiveness of the economy to the greatest extent possible.
Globally, at this point, coal-fired power plants, data suggest, are the cheapest. In the United States, for instance, coal plants produce at US$0.04 per kilowatt-hour, or half the price of gas. Only nuclear power is cheaper. In the circumstance, it is hardly surprising that coal generates nearly half the world's power and that its use is rising in the fast-growing economies of Asia, especially China.
Of course, LNG is a cleaner fuel, whose use is also growing.
What Jamaica has to determine is whether the environmental trade-off of LNG is worth the potentially greater competitiveness of its economy with coal. This demands openness with the numbers.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
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EDITORIAL - Think Carefully About Energy
Published: Wednesday | January 5, 20110 Comments and 0 Reactions
When P.J. Patterson sought to commit Jamaica to an energy future based on natural gas, it was on the assumption that the country would have a secure supply of LNG from Trinidad and Tobago at a preferential price.
This was on a promise by then prime minister of Trinidad and Tobago, Mr Patrick Manning, who gave the same assurance to Mr Patterson's successor, Mrs Portia Simpson Miller. Unfortunately, Mr Manning, whose government has since been chucked out of office, couldn't fulfil this self-imposed obligation.
First, it took a long time for Port-of-Spain to reach an agreement with the Venezuelans on the sharing of new gas finds in the sea between their countries - a deal that, ironically, was facilitated, in part, by Mr Patterson's back-channelling with Venezuela's Hugo Chávez. The new gas train from those finds is yet to come on stream.
Additionally, Mr Manning couldn't persuade the private producer of LNG to rearrange supply contracts and prioritise delivery to Jamaica. In any event, the Trinidad government's energy bureaucrats were sceptical about the Manning initiative.
If we interpret correctly the attitude of the new Trinidad and Tobago prime minister, Kamla Persad-Bissessar, there is little hope of the LNG initiative being revived during her tenure.
The bottom line, therefore, is that any LNG supply contract Jamaica enters in the foreseeable future will be without concessions and, therefore, at market price.
We make these observations in the context of the Jamaican Government's request for proposal for 480 megawatts of electricity-generating capacity, with natural gas as its fuel, and Prime Minister Bruce Golding's declaration in his New Year's message that the conversion to LNG is proceeding apace. Mr Golding promised that "long-term contractual arrangements, investment commitments and an appropriate regulatory and pricing framework should be in place in early 2011".
We suggest to Mr Golding that while his administration should proceed quickly with an energy programme, it ought not do so in careless haste.
The fact is that energy is potentially the economic game-changer Jamaica so badly needs. It could stimulate the competitiveness of domestic enterprise.
Cheapest option
It is a bald fact that Jamaican production is being stymied by the US$0.29 per kilowatt-hour the country pays for electricity. That rate is multiples of the price in many of our regional competitors.
In that regard, this newspaper believes that any policy on energy must be based on the least cost option - led primarily by the fuel source and technology that deliver power to consumers at the cheapest price, thereby enhancing the competitiveness of the economy to the greatest extent possible.
Globally, at this point, coal-fired power plants, data suggest, are the cheapest. In the United States, for instance, coal plants produce at US$0.04 per kilowatt-hour, or half the price of gas. Only nuclear power is cheaper. In the circumstance, it is hardly surprising that coal generates nearly half the world's power and that its use is rising in the fast-growing economies of Asia, especially China.
Of course, LNG is a cleaner fuel, whose use is also growing.
What Jamaica has to determine is whether the environmental trade-off of LNG is worth the potentially greater competitiveness of its economy with coal. This demands openness with the numbers.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
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