Energy and Energy-Related Industries
September 19th, 2021
Energy Transition – Exciting Projects and Major Challenges
The huge challenge that we must face up to – is climate change and the energy transition.
INTERVIEW – THE ENERGY CHAMBER OF TRINIDAD AND TOBAGO
The Energy Chamber is unequivocal about the biggest challenge facing the industry. According to President and CEO of the Energy Chamber of Trinidad and Tobago: “The huge challenge for the industry that looms over everything else – that we have to just face up to and very clearly put it centre stage – is climate change and the energy transition as the world moves to decarbonise its energy and petrochemical production. That is the overarching big issue that dwarfs everything else,” Driver stressed.
“In the past year, we’ve seen global capital markets really place great emphasis on trying to understand where their investment dollars are going and wanting to be sure they will not be stranded in oil and gas projects that wouldn’t be able to be produced,” he said.
Nevertheless, the big transition will take decades. Within that, there are still significant opportunities for fossil fuels. We have to deal with both sets of challenges and opportunities simultaneously, Driver said.
Energy transition initiatives
Solar Power: Driver highlighted two significant solar projects now in train. Lightsource, BP and Shell are investing in two major solar energy projects, the largest in the English-speaking Caribbean, which are currently progressing through the approval process and will hopefully begin construction this year, he said. “By next year, they will supply 10% of the country’s electricity demand,” he said. Going forward, we need to replicate that kind of project, he added.
Development of Green Hydrogen. The Energy Chamber is passionate about this initiative. Trinidad has a major internal market for hydrogen produced from natural gas which is currently used by the methanol and ammonia plants on the Pt Lisas Industrial Estate. There is a massive opportunity, via a project in the development stage between NewGen Energy Ltd and Tringen, to create green hydrogen from water through electrolysis and feed that hydrogen into the petrochemical stream, Driver said. There are also opportunities for blue hydrogen. Blue hydrogen is produced from natural gas where, instead of venting the CO2 into the atmosphere, it is captured and sequestered, lowering a company’s carbon intensity and creating a greener petrochemical that can command a premium price.
Biomethanol. Driver also noted a significant waste to biomethanol project that is in the proposal stage and which would see municipal waste converted to biomethanol, generating important environmental benefits and providing a practical solution for dealing with Trinidad and Tobago’s problem of dealing with its ever-growing mountain of municipal waste.
Energy Efficiency. The Chamber is also very involved in discussions surrounding improving energy efficiency and Driver noted that a lot of work was being done by companies to reduce the carbon footprint of their operations by reducing the amount of energy and greenhouse gases, for example, by switching to more efficient engines and using wind power to run offshore platforms. The Energy Chamber championed the Energy Efficiency draft policy which has been submitted to Government. “We were major players in getting that policy written,” Driver noted.
Removing the subsidy on natural gas that goes to Trinidad and Tobago Electricity Commission (T&TEC) is a major challenge the country has to address, Driver said. At present, he noted, industry has to sell cheap natural gas to allow T&TEC to supply cheap electricity rates to the country. “That’s not sustainable. That has to change. But higher electricity rates doesn’t mean your bill has to be higher,” he stressed. Studies that we have done and been involved in show that “the average commercial building in the country or government office could save up to 60% on their electricity bills through simple energy management processes that need no investment dollars or investment dollars that would pay off over a six-month period,” he said. He explained this could involve actions as simple as turning off lights at night, plugging holes in building insulation, and turning off air-conditioning on weekends.
He also noted that better off households were enjoying the highest benefit from the subsidy. While the Energy Chamber believes the country needs to ensure people have access to and could afford basic electricity, the State should not be subsidising the cost of operating pumps to swimming pools and flat screen tvs, he said.
For all the right public health reasons, 2020/2021 was a very difficult environment, and working through that increased everyone’s costs of production, delayed projects and created a difficult operating environment, Driver said.
However, over the medium-term, Driver said “there was great reason to be positive on both the oil and gas side.”
He noted that with prices recovered to a large extent and a number of petrochemical plants back in production, 2022 for Trinidad and Tobago would be generally more positive than 2021. “The positives are that despite delays we did see BHP bring the Ruby field into production ahead of schedule, that’s really an incredible achievement for them.” He also noted that Shell, BP and EOG all had projects that were progressing well and Touchstone’s “exciting” new gas finds onshore “opens up an interesting new source of gas” that could be brought to market very quickly.
Barriers to doing business in T&T
Driver identified the top two barriers to doing business in Trinidad and Tobago as the digital process with respect to interacting with the Government and the country’s confrontational industrial relations system.
He is looking forward to a new IR Act which he believes would “create a much more flexible labour market that balances employer/employee rights” and give individuals rights versus trade union rights. This will allow a company to be flexible and adapt quickly in how it manages its workforce to not miss opportunities, and it will change the focus from job preservation to job creation, he said.
The top issue with regard to attracting new investment into the energy sector is the fiscal terms, he added. The Energy Chamber has submitted a comprehensive proposal for changes to the fiscal regime specific to the energy sector.
Towards an energy efficient Trinidad & Tobago
What is the outlook for a more energy efficient T&T
The outlook is good – not excellent – for a more energy-efficient Trinidad and Tobago. Trinidad and Tobago is somewhat different than most other islands in the Caribbean with respect to energy as follows:
- The country boasts the lowest energy cost in Caribbean and amongst the lowest in the Western Hemisphere @ US$0.06/kWh.
- Trinidad and Tobago buildings have the highest energy use index in the Caribbean at over 260 kWh/m2 yr whereas most islands are under 160 kWh/m2 yr (40% lower)
- Because of its low energy cost, the culture of the people is one of waste with respect to energy – lights, appliances and equipment are left on continuously with little or no regard for the energy consumption and cost.
- There has been an increase in demand from the private and residential sectors to reduce energy costs driven by the current economic situation and also due to the Government’s indication of a pending increase in energy costs.
How can businesses and individuals practise energy conservation?
- A recent Inter-American Development Bank (IDB) study of a public building in Trinidad found a 20% reduction in energy consumption through low cost /no cost initiatives. Plans are being made to expand the pilot in all Ministries which will have a significant impact on energy conservation in public buildings.
- The high energy use index of over 260 kWh/m2 yr that we have seen in the local public and private sector means that there is an opportunity to reduce energy consumption by a minimum of 20%. Residential customers can convert all their lighting to LED, consider solar water heaters, timers to switch off lights and equipment when not in use and prepare to retrofit their old AC system to high efficiency systems.
What can be done to attract businesses into the sector?
- Introduce incentives and disincentives to attract businesses into the Energy Efficient (EE) and Alternative Energy (AE) sectors. The current low cost of energy does not make the economics of using EE and AE technologies very attractive. Removing subsidies will raise the cost of energy and hence increase the demand of these technologies.
- Implement the Energy Services Companies (ESCO) legislation set up in 2010, with necessary modifications along with the tax incentives to attract business into this industry. When the ESCO legislation was passed in 2010, many new businesses entered the industry hoping to obtain returns, but when then legislation was not fully implemented (not one company was certified as an ESCO) many dropped out.
- Pass the law to allow people to use Solar PV systems and tie onto the grid. Disincentives can include raising import duties on incandescent bulbs, electric water heaters and inefficient AC systems to make the EE and AE technologies more competitive.
Article by: Kay Baldeosingh-Arjune