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Global Photo Contest Promotes Climate Change Adaptation

May 13, 2016 Webmaster

The Adaptation Fund – from which Jamaica is benefitting to the tune of $10 million – has launched a global photo competition to promote readiness of the world’s coasts and watersheds for climate change.

The contest was launched on April 22 – recognised internationally as Earth Day – and this year, also when the new climate deal, dubbed the Paris Agreement, opened for signatures.

“The contest is aimed at involving all Adaptation Fund stakeholders, countries and projects, implementing entities, project staff and beneficiaries, executing entities, governments, non-governmental organisations and the general public to raise awareness of climate change issues affecting vital resources around the globe and the importance of developing adaptation solutions,” said a release from the fund.

With half the world’s population living within 60km of the ocean and 75 per cent of all large cities located by the sea, coastal areas are a major source for livelihoods through fishing, natural resources, trade, tourism, boating and recreation.

However, they are under increasing threat from climate change due to sea level rise, storm intensification, flooding, erosion, rising water temperature, species migration and pollution.

“Inland watersheds are equally endangered by climate change-related droughts, floods and extreme rainfall variability, as well as damage to natural protective ecosystems like degraded forests, wetlands, grasslands and river pollution from runoff or contamination,” the release added.

Coastal Zone Management Critical

Coastal-zone management projects that include sea walls, salt barriers and restoration of mangroves offer tremendous benefits in improving sustainability of both the ecosystem and community livelihoods over the long term.

Also beneficial are programmes to enhance urban and rural watershed resources through disaster risk reduction, forest protection, biodiversity conservation, water harvesting, drip-irrigation agriculture and landslide control.

Photos depicting the effects of climate change on coasts and inland watersheds, as well as adaptation actions to address them can be submitted to AFBSEC@adaptation-fund.org by June 3, 2016 with the email heading, ‘AF Photo Contest’.

Complete contest criteria, including relevance to the theme, and the fund’s vision of helping vulnerable communities adapt to climate change, as well as visual impact, originality and informational value, can be found on the fund’s rules page.

Contest winners will be selected by a panel of judges composed of climate change experts with country field expertise, and the winning photos will be displayed at the fund’s Global Climate Readiness Seminar in Washington, DC, July 13-14.

All photo submissions received will be posted by the fund to its Facebook page in an album dedicated to the contest, where anyone can go to like and comment on photos.

The Gleaner

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Paulwell Says Fuel Tax Will Impact Consumers Negatively

May 13, 2016 Webmaster

Former Energy Minister Phillip Paulwell says consumers who have been benefiting from reduced electricity rates from the Jamaica Public Service (JPS) over the last 12 months could see a hike in the cost of energy with the Government’s imposition of new taxes on heavy fuel oil and liquefied natural gas.

The JPS recently concluded work to convert its Bogue Power Plant in Montego Bay, St James, to dual-fuel capability.

United States-based New Fortress Energy is expected to bring liquefied natural gas into the island by August, at which point the newly converted Bogue power plant will begin to use the more environmentally friendly fuel.

Paulwell’s concerns came as he spoke with journalists yesterday at the end of Shaw’s opening contribution to the Budget Debate.

“Currently, the JPS does not pay taxes on heavy fuel oil. Government has now imposed a tax both on liquefied natural gas, which will arrive in August of this year, and on heavy fuel oil, so it means a significant increase in the price of electricity that has been trending down by almost 50 per cent over the last year.”

At the same time, Opposition Leader Portia Simpson Miller is taking the Government to task for “breaking its promise” by imposing new taxes to fund the tax-relief plan.

“All I can say is that they have broken their promise to the Jamaican people – no new tax – but, from all indication of what Minister Shaw said today (yesterday), it is the poor that will suffer,” she said.

Central Manchester MP Peter Bunting argued that the increased taxes would affect everyone, but have a more significant effect on those who earn under $600,000 per annum, and who will have to face increased transport and electricity costs.

He described the tax measures as regressive, noting that persons at the bottom of the society are being burdened to give relief to those earning at a higher level.

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Jamaica Faces Trek To A Green Economy

May 12, 2016 Webmaster

KHAN… what we want is for them to own, as much as possible, what has to be done in each sector

From the “historical momentum in favour of brown industries” – those overly dependent on fossil fuels – to “bias in the political system towards short-run and against long-run perspectives”, the deck appears stacked against Jamaica’s efforts towards a green economy.

These factors, according to the recently published Green Economy Scoping Study, in addition to others, include IMF prescriptions that preclude Government providing tax incentives to encourage greening.

Still, the study – done with United Nations Environment Programme and European Union support – notes that in as much as these factors are barriers, they are also justification for the transformation of the economy into one typified by efficient resource management, a low-carbon footprint, and which is socially inclusive.

And it cites a variety of opportunities that can be pursued across key sectors – agriculture, construction, energy, tourism, and water – from the private sector’s demonstrated leadership in some fields to existing policies and programmes.

Elizabeth Emanuel, one of the study’s authors, said the Vision 2030 Jamaica, for which she is programme director, is one such.

“One of the benefits Jamaica has in advancing to a green economy, compared to other states, is that our own national development plan had the foresight to include the green economy as a pathway to prosperity. That plan speaks to the green economy and what a green economy would look like for Jamaica,” she told The Gleaner.

Possibility Indicators

And there are some good indicators of what’s possible, Emanuel added, noting that there have been, for example, advances in the diversification of the island’s energy mix.

“We also have a society that is more aware, companies that are thinking and talking green, and all of these are creating the demand for a green economy,” she noted.

According to Emanuel, there is no question of the need to pursue the transition – whatever the constraints.

“The green economy is not just about environmental protection, but it is our planet, our people, our economy and how we marry those three to create sustainable solutions that will advance the prosperity of our land of wood and water,” she said.

Eleanor Jones, head of Environmental Solutions Limited, agreed.

“When it comes to what we need, we need to look at our resources management because that is also a part of it … . But you can’t just wave a magic wand. It has to be a structured approach with legislation and incentive … ,” she said.

“We like to talk about the IMF putting in all these strictures, and they have, and you have to watch your budget. But not everything has to cost a lot of money… . We have to encourage our suppliers to retool and encourage our consumers to manage their resources,” Jones added.

Colonel Oral Khan, chief technical director in the Ministry of Economic Growth and Job Creation, said the coming months should see a re-engagement of key actors towards the green economy.

“The various sectors were consulted in the preparation stage. We now need to re-engage with these sectors at the highest levels because there have been a number of changes,” he said.

“What we want is for them to own, as much as possible, what has to be done in each sector. We expect that they will go through the list of recommendations that are there and see which ones are to be done in the short to medium term, so they can embrace those and seek to work them into their respective strategic plans. That is the approach we will take,” he added.

Among the recommendations from the study are:

• Sustainable land management and water management systems for agriculture;

• Enforce the new building code, as well as adopt codes and standards that mandate green construction practices for the construction sector; and

• Promote and incentivise renewable energy use and water use reduction, as well as planning for climate change for the tourism sector.

There is, too, the recommendation to develop more extensive sewage recycling, as well as reduce energy cost and diversify sources for the water and sewerage sector.

pwr.gleaner@gmail.com

The Gleaner

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OUR Selects Bidder For Solar Facility

May 11, 2016 Webmaster

Andrew Wheatley

Jamaicans could be on track to benefit following the successful completion of the most recent electricity-generation procurement process managed by the Office of Utilities Regulation (OUR).

The process saw the selection of Eight Rivers Energy Company Limited (EREC) as the preferred bidder to build, own and operate a 33.1 MW solar photovoltaic power-generation facility at Paradise Park, Westmoreland. The proposed price (all-in tariff) is 8.54 US cents/kWh.

This latest OUR-managed project is the most competitive renewable energy procurement project to date and is in keeping with the trend in the reduction in the price of energy from renewable sources. This bid is significantly cheaper than the tariffs proposed for the projects which were selected from a similar competitive procurement commenced in 2012 and based on wind turbine and solar technologies. The 37MW project has so far met all its deadlines, with the evaluations being completed by the OUR on April 26, 2016 and the highest-ranked bidders being notified of the evaluation results on May 6, 2016.

“The OUR is pleased with the proposed all-in tariff of 8.54 US cents/kWh, which we believe has set the pricing bar for future renewable projects,” said Albert Gordon, director general of the OUR.

Commenting on the project, Minister of Science Energy and Technology Dr Andrew Wheatley noted that the project executed by the OUR “marks the lowest cost ever for solar power in Jamaica, and also advances Government’s major policy objective, namely, the diversification of Jamaica’s energy supply mix to reduce cost and dependence on imported oil”.

The next step in the project requires EREC to finalise the various project agreements. If they fail in this regard, the OUR would move to the bidder(s) next in line.

The Gleaner

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Bogue Power Plant ready to use natural gas

May 11, 2016 Webmaster

The Jamaica Public Service Company Ltd (JPS) has officially concluded work to convert the Bogue Power Plant in Montego Bay, St James, to dual fuel capability.

The plant is now able to use natural gas, as well as automotive diesel fuel, which it has been using since its commissioning in 2004. The work, which started in January of this year, was completed on April 26, on time and within budget, at a cost of US$22.7 million or J$2.7 billion.

The arrival of liquefied natural gas, which is being undertaken by US-based New Fortress Energy, is expected by August of this year, at which point the newly converted Bogue Power Plant will begin to use the more environmentally- friendly fuel. The multimillion-dollar project will add significantly to the country’s energy diversity, fuel security, flexible generation, and production of clean energy.

Senior Vice-President of Generation Joseph Williams notes: “This is just the first phase of a deepening fuel diversification process which is taking place at JPS. We are excited to be a leader of this revolutionary move, which will not only see a more diverse energy landscape, but also possibilities for the commercial and transportation sectors of our country.”

The Bogue Combined Cycle Power Plant produces 120MW of the country’s average daily use of over 600MW of electricity.

The Observer

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Walter Molano | Shifting To A New Normal For Oil

May 6, 2016 Webmaster

Normal is not a homonym, but it could be. It means standardisation, but it also alludes to a range of typical occurrences.

In statistics, a normal distribution is a set of observations that occur around a mean. In common society, normal is an acceptable form of behaviour.

Whatever the case, it means a range of events that centre on an average. The problem with ‘normality’ is that averages move. For example, fashions change. Music styles evolve. Normal dress from a century ago is no longer acceptable.

The same occurs in markets. Shocks force occurrences to morph, leading to corresponding movements in price ranges. A few years ago, pundits began using the notion of ‘new normal’. This meant that the market had shifted to a different range that would now be considered typical. Three years ago, high commodities prices were considered normal. Last year, plunging commodity prices became the new normal.

However, we are again witnessing a movement to a different normality.

Most visible in oil sector

Last year’s massive reduction in commodity capex set the stage for an eventual spike in prices. The situation has been most visible in the oil sector. At the end of 2014, many Wall Street firms began cutting their oil forecasts, calling for a “new normal”.

They cited the slowdown of the Chinese economy and overproduction in the United States and the Middle East for their pessimistic outlook.

However, they seemed to have forgotten the natural depletion aspects of commodities. Oilfields, mines and farms are not eternal. Production decays as the resources are depleted. Oilfields run dry. Mineral deposits are depleted. Nutrients are taken out of the soil. That is why commodity producers constantly need to plough capital into exploring for new mineral deposits and replenishing farms. This makes the sector extremely capital intensive.

Each commodity product has a different decay schedule. Offshore oilfields, for example, have a natural depletion rate of about 20 per cent per year. Meanwhile, some onshore fields have an annual depletion rate of only two per cent. Analysts estimate that the average annual global depletion rate for the oil sector is about 4.5 per cent.

It takes time

The problem is that the oil industry slashed capex by US$380 billion since 2014, reaching half of total sector capital investment in 2016. This means that oil production will decline at some point, with the effect accelerating in the years to come. The typical gestation period for a new oil project is about seven years, from the start of exploration to full production.

It takes time to do the necessary seismic surveys. Most of the new oilfields are in remote areas, which require the construction of facilities for workers. Heavy equipment needs to be deployed. Plus, transportation infrastructure – including roads, pipelines and ports – needs to be put in place in order to bring the products to market.

Oil, as well as most of the other commodity products, cannot be switched on and off. They require a great deal of time and capital to bring them to market.

Unfortunately, the decline is already materialising. The net decline in United States oil production is estimated at about 600,000 barrels per day (bpd) in 2016 and another 400,000 bpd in Latin America.

At the same time, the global economy is growing at a pace of about two per cent y/y. Hence, total demand should rise by about a million bpd. As a result, the two million bpd glut that was estimated at the end of last year will evaporate in 2016. This should bring oil prices to a more neutral equilibrium price of about US$60 per barrel before the end of the year.

However, it also means that oil prices will continue to move higher in 2017 and beyond.

Until we see a meaningful increase in capex, output will continue to decline. Therefore, we can expect prices to overshoot on the upside.

The results of this scenario are a boom for oil-producing countries, such as Venezuela. With annual oil exports of about 640 million barrels, an oil price of about US$50 to US$60 will allow Venezuela to produce annual exports of about US$32 to US$38 billion.

Venezuela and PDVSA’s annual bond debt service is about US$9 billion, giving the country between US$23 billion to US$29 billion to pay for imports. This is more than twice the minimum import levels that are estimated to sustain the economy.

As a result, the government will not need to recur to its supplemental liquid and non-liquid assets, such as international reserves, gold holdings, offshore refineries and PetroCaribe, to meet their external obligations.

Of course, other large oil-producing countries, such as Russia, Mexico, Nigeria and Angola will also benefit from the looming changes in the international oil markets.

Therefore, we are now moving the parameters for a ‘new normal’ that will be much more conducive for the emerging world.

Dr Walter T. Molano is a managing partner and the head of research at BCP Securities LLC.

wmolano@bcpsecurities.com

The Gleaner

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Bogue Plant Conversion To Wrap Up Next Week

May 6, 2016 Webmaster

The JPS power station at Bogue, Montego Bay.

The Jamaica Public Service Company (JPS) said it expects to complete the conversion and upgrade of the Bogue combined-cycle power plant in Montego Bay, St James, within a week.

The US$22-million ($2.5-billion) project kicked off in January and, when completed, it will be able to operate on either liquefied natural gas (LNG) or its current fuel source, automotive diesel oil.

JPS said it will be buying natural gas under a long-term supply agreement from Fortress New Energy and expect to start receiving the product within the next four to six months.

JPS indicated that Bogue would be ready by the end of the second week in May in an email to the Financial Gleaner.

The company said New Fortress “is responsible for all activities associated with delivering the LNG to the port in Montego Bay, storing the LNG in tanks, regasifying the LNG and delivering it by pipeline to our power plant at Bogue”.

The project to convert the Bogue power plant, which is being undertaken by General Electric, kicked off on January 11 this year.

The work involves removal of a gas turbine and heat recovery steam generator from service, which was expected to clear the way for General Electric to start installing equipment.

JPS said the project would add significantly to the country’s energy diversity, fuel security, flexible generation and production of clean energy.

New Fortress Energy began developing its terminal and pipeline at the Montego Freeport at the end of last year, but JPS has no stake in that project.

mcpherse.thompson@gleanerjm.com

The Gleaner

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Holness Optimistic Ja Will Become Gas Hub For Caribbean

May 5, 2016 Webmaster

Holness Ricardo Makyn

Washington, DC:

Prime Minister Andrew Holness is optimistic that Jamaica will become the hub for gas in the Caribbean and promises that his government will be strategic in its efforts to diversify the country’s energy sector.

“Renewables will have to feature in a far greater way in our energy mix. The falling oil prices give us a window of opportunity to bring in new technology, to bring in new investors,” he said yesterday during an interview with Jamaican journalists at the US Caribbean Central American Energy Summit in Washington, DC. The summit was held at the Department of State.

“The emphasis (will be) on diversification in ensuring that we are the hub that will reduce our exposure to volatility,” he said.

Holness, along with other regional leaders, met with United States Vice President Joseph Biden yesterday morning for a Caribbean Heads of Delegation meeting. He said the exchange has given him some insight into how other countries in the region are using alternative energy for their electricity, water, and transportation sectors.

“I think we will have to look more closely at our transportation sector, particularly the JUTC (Jamaican Urban Transit Company), which are fairly heavy users of oil and heavy fuel, to see how best we can get energy efficiency from diversifying their fuel use,” he said.

BURDEN FOR JAMAICA

The prime minister noted that energy has been a burden for Jamaica for many years, but he believes that several initiatives implemented by Biden and US President Barack Obama over the years have contributed to finding solutions to the problem. Obama reinforced his administration’s commitment to assist the region with exploring clean-energy solutions when he launched the Task Force on US Caribbean and Central American Energy Security during his visit to Jamaica in April 2015. Just a few months prior to the launch of the task force, Biden hosted the first US Caribbean Central American Energy Summit.

The US has provided clean-energy finance for countries such as Jamaica through the Overseas Private Investment Corporation and the USAID. The US-owned BMR Energy is also currently building a 34-megawatt greenfield wind farm in St Elizabeth valued at US$90 million.

“What we have said at these seminars is that Jamaica is open for investments in the energy sector,” said Holness.

The prime minister said discussions with Biden went very well as they reviewed progress made in the local energy sector last year and discussed plans for this year. He noted that there are some imperatives that the Jamaican population would have to become aware of such as the strong global movement towards clean energy.

“What is clear is that there is great appreciation for what we have done as it relates to our regulations, making it attractive for investments in the energy sector to come to Jamaica,” he said.

nadine.wilson-harris@gleanerjm.com

The Gleaner

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Turning point for energy security in the Caribbean

May 2, 2016 Webmaster

The wind farm at Wigton, in St Elizabeth

Caribbean countries have quietly started a green revolution and are now leading the way for other small island developing states in the global effort to limit the rise of global temperature to 1.5 degrees Celsius. While challenges remain, five months after the historic climate agreement in Paris, they remain committed to saving energy and investing in renewables.

Some may argue that at a time when oil prices are low, there are incentives to slow this effort down. But, on the contrary, this is the time to take advantage of the savings and move further on their ambitious vision for the future. And that is precisely what they hope to do at this week’s US-Caribbean-Central American Energy Summit, hosted by US Vice-President Joe Biden.

The Caribbean finds itself at a turning point. The road ahead won’t be short: despite a substantial push for clean energy, renewables still contribute less than 10 per cent of electricity production in the Caribbean.

Ever since last year’s first summit, commitments have translated into concrete actions from leaders. They have played a major role in promoting clean energy development, energy efficiency and climate resilience throughout the region. With the support of regional and international institutions, such as Caricon and the World Bank, Caribbean countries have started a transition to clean-energy alternatives.

Solar power continues to expand as technology improves and production costs plummet. Wind energy is also growing as production has become more commercially viable and technology can now better manage the unpredictability of wind and solar resources.

Eastern Caribbean countries are breaking down barriers to all renewables and are even actively exploring geothermal energy as a way to power their country in a reliable, clean and cost-effective manner. Exploratory drilling and preparatory work is happening in Dominica, Grenada, Monserrat, St Lucia, St Kitts and Nevis, and St Vincent and the Grenadines.

It is important that these transitions to renewable energy go hand in hand with efforts to improve efficiency and reduce cost. Caribbean governments know the importance of reducing inefficiencies by modernising electricity distribution companies and grid systems, and through simple measures such as making buildings more energy efficient and using high-efficiency air conditioners and LED light bulbs.

This is particularly crucial in the Caribbean, where many countries spend more than five per cent of their income in oil imports but still cannot fully satisfy demand. The uncertainty around the future for oil prices and of concessional oil financing make it even more important for small Caribbean economies to diversify their sources of energy.

Gains in energy efficiency help the private sector develop and become more competitive. Even with current low oil prices, electricity prices around the region average over US$ 0.25 per kWh – about three to four times more than what is paid in the US or other developed countries.

For small, tourism-dependent islands like Barbados, where air conditioning alone accounts for 48 per cent of hotel electricity consumption, continued gains in energy efficiency will help businesses cut costs and make the hotel industry more competitive.

At a time of global economic slowdown, this is a powerful example of how green energy can strengthen budgets, stimulate economies and unleash sustainable growth.

The private sector can also play an important role in developing the energy sector, through public-private partnerships (PPP). In Dominica and St Lucia, the World Bank is working with the government in helping de-risk power generation investments, develop bankable PPP deals and attract qualified private sector developers. In Jamaica, a 36-megawatt wind farm has received US$63 million in funding from the World Bank’s International Finance Corporation and other donors.

Increasingly, small island states are being confronted with extreme weather events and with the rise in sea level, it makes it more and more important to invest in energy resilience to ensure that infrastructure and systems are robust and well protected when natural disasters occur.

Caricom, together with the World Bank Group, the United States and others, have been working on establishing a regional one-stop shop to provide greater access to information on technical resources, streamline financing, and improve coordination and transparency.

At this year’s summit, leaders have an important opportunity to build on the momentum. Progress on this front holds great promise for the region. By transforming into a model of renewable energy, the Caribbean can show the world how to generate green growth that is sustainable and supportive of the poor and vulnerable.

Jorge Familiar is World Bank Vice-President for Latin America and the Caribbean

The Jamaica Observer

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JPPC Squeezes More Electricity Out Of Fuel, But Losses Worsen

April 27, 2016 Webmaster

Jamaica Private Power Company (JPPC) saw its loss position double in 2015.

Its parent, Kenon Holdings, reported US$2 million ($234 million) net loss for last year compared with US$1 million the year before.

The private power producer, which sells electricity to all-island distributor, Jamaica Public Service Company (JPS), managed to increase its revenue by four per cent from year-earlier levels to US$45 million in 2015.

This was mainly due to the company increasing its electricity generation from 425 gigawatt hours, or 10 per cent of total national grid’s needs, to 445 GWh, of which well over 90 per cent was sold, likely because it has one of the most efficient fossil fuel, or thermal plants in Jamaica.

JPS’ system uses a dispatch application that determines the best combination of operating levels for each plant supplying the grid to ensure that energy is provided at the lowest total cost to the consumer.

Last year, JPPC improved the efficiency at its 60 megawatt plant, lowering the heat rate from 8,306 Btu/kWh in 2014 to 7,989 Btu/kWh in 2015.

In other words, it increased the amount of the energy stored in the heavy fuel oil (HFO) that was converted into electricity from 41 per cent to 43 per cent. That is, it used two percentage points more of the HFO’s energy to make electricity.

This helped the Rockfort, Kingston-based power producer lower its average fuel cost from US$137 per MWh to US$69 per MWh, albeit a dramatic fall in oil prices contributed more to this improvement. Average sales price, therefore, fell from US$182 per MWh (or J$20 a kWh) in 2014 to US$101 per MWh (or J$12 a kWh).

Indeed, the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) improved from US$1 million to US$2 million, but this would not have been enough to cover staff cost, debt servicing and depreciation.

JPPC is the smallest of the power producers that use fossil fuel-based plants. Jamaica Energy Partners and its sister company West Kingston Power Plant, combined, generates about 30 per cent of Jamaica’s electricity requirements. JPS produces over 50 per cent.

Some six per cent of the country’s electrical energy is derived from hydro and wind, with another three to four percentage points expected to come from 78MW of wind and solar scheduled for commissioning by next year.

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