AN INDEPENDENT consultant has suggested that Government rethink aspects of its liquefied natural gas (LNG) project.
Christopher Zacca, head of the steering committee that has been set up to lead the project, told The Gleaner last week that he was not prepared to speak about the issues that have been raised in the report. He, however, said the advice of the consultants is being followed to ensure the project’s success.
The prime minister got that bit right. The concentration of his administration going forward must be on “stimulating growth and creating jobs”.
For the PM’s goal to be sustainably achieved, though, it will demand a competitive economy. In this regard, we feel that energy is the potential game-changer.
That is why this newspaper insists that while it moves quickly on an energy policy, the administration must do so with due care to ensure that whatever is introduced provides power to consumers at the cheapest price. We are not convinced that this has been the case, so far.
WITH THE cost of crude oil shooting above US$90 per barrel and the likelihood of it holding firm well into the middle of June, the implications for Jamaica, with a high dependency on fossil fuel, are dire.
THE POPULAR concept is that coal is a dirty fuel, especially with regard to particulates, sulphur and carbon-dioxide emissions. With natural gas, the level of particulates would be lower than with coal, but in the latter instance, the particulate emissions with modern coal-burning boilers equipped with effective particulate-removal equipment would be substantially lower than are currently being experienced with the oil-burning boilers.
Sulphur emissions with either fuel will be dependent on the source of the fuel. Low-sulphur coal (less than one per cent by weight) is available relatively close to Jamaica, for example, Colombia and Venezuela.
However, even at the current relatively high sulphur emissions, complaints from persons in the areas adjacent to the power stations are rare.
Government departments and institutions accounted for up to $11 billion, or approximately $880 million monthly, in electricity costs last year – nearly 15 per cent of the total amount of electricity consumed annually in Jamaica.
Prime Minister Bruce Golding and Energy and Mining Minister James Robertson, who disclosed this information during a workshop staged last Thursday at the Knutsford Court Hotel in New Kingston, cited government agencies and departments, as well as public schools and hospitals, among the primary consumers.
Oil accounts for nearly 40 per cent of the country’s total import bill.
Golding said Jamaica, which has one of the world’s highest energy-intensive ratings, was also one of the most inefficient users of electricity.
“We use 20,000 BTUs (British thermal units) to produce one US dollar of output of value. The global average is less than quarter of that.
“We waste energy, and Jamaica’s economic future cannot be secured unless we address this problem in a fundamental way,” the prime minister lamented.
Golding said the Government, through the energy and mining ministry, had developed four significant platforms – the national energy, national renewable energy, national energy from waste as well as the energy conservation and efficiency policies – to address the issue.
However, the prime minister acknowledged that Jamaica experienced several challenges to fulfilling some objectives in the national energy policy, which called for increasing the mix of renewable energy sources.
“Right now, we’re somewhere near five per cent, and the policy requires we get up to 10 per cent by 2015 and 20 per cent by 2030. That’s ambitious and particularly challenging,” Golding admitted.
He said the challenges were even more pronounced when analysis examined Scandinavian countries, which were environmentally conscious and advanced in their use of renewable energy sources, albeit paying more for it.
“Renewable energy is not always cheaper energy, but they are prepared to pay more in order to get energy that is clean, green and sustainable. Our consumers can’t be asked to bear that burden, and that’s part of our problem,” Golding said.
Conservation important
The prime minister added that while any search for alternative energy sources also had to be cheaper – in order for them to be viable – conservation was important to sustainable energy management.
Golding accused Jamaicans of being price-insensitive when it came to energy conservation, citing motorists’ refusal to change fuel-consumption patterns during 2008 when oil prices rose as high as US$148 per barrel.
The Government’s 10 per cent GCT charge on the electricity bills of persons consuming more than 200 kilowatt-hours monthly in order to make up revenue shortfall had little effect on consumption patterns.
“The information I have from the JPS (Jamaica Public Service Company – the monopoly electricity provider) is that they haven’t even blinked. They pay the 10 per cent and consume the same amount of electricity,” said Golding.
The Jamaica Public Service (JPS) in its own inimitable way has sent yet another ‘shock wave’ to consumers when it announces that, among others, it will now be adding general consumption tax to reconnection charges. Never mind that the disconnection might have resulted in the first place from their actions – i.e., either the high cost to use their service or massive overbilling.
Electricity supply, like water, is a basic utility without which the quality of life for all individuals will be adversely affected. So, who will speak up against the action of the JPS?
Our first line of defence, the minister of mining and energy, is preoccupied with his personal well-being, and the next line of defence, the Office of Utilities Regulation (OUR), like many of us, are ‘shocked’ into silence. We dare not take to the streets as the residents of Seaview Gardens found out recently. So what are we to do? We need to examine carefully the role and functions of the OUR.
The OUR was established by an act of Parliament in 1995 to regulate the operations of utilities companies. According to the official website of the OUR, its role as an independent regulator is often misunderstood, particularly by its largest stakeholder group, consumers, who are of the general belief that it seems to side with the utilities providers.
The OUR’s mandate is not that of a consumer advocacy group and, as such, will only intervene in grievances if the affected utility consumer writes to them after getting no satisfaction from the utility company who, in their opinion, did them a disservice. If the overbilling by the JPS is not classified as grievances then what is? This overbilling for which many consumers are unable to pay will now have GCT added for the sure disconnection that will follow. All this while the OUR sits and do nothing when, in fact, it can. Even though it does not see itself as consumer advocacy group, it has a number of divisions, such as the Consumer and Public Affairs.
Advisory group
This division deals with consumer affairs, communication and information. It is in this division that the works of an independent advisory group is facilitated. The name of this group is Consumer Advisory Committee on Utilities. If the OUR wants to intervene on behalf of its consumers/stakeholders, then it can do so directly or indirectly, or however it thinks fit. Not to do so will only make consumers question their relevance in face of this frontal assault on our pockets by the JPS.
And I must admit that the JPS, over the years, has lost a lot of revenue through electricity theft, but we must not forget that a percentage of that ‘lost revenue’ was recovered from us legitimate customers on the approval of no less than the OUR, which now stands impotent.
I am, etc.,
HOWARD D. HAMILTON
THE Development Bank of Jamaica (DBJ) has dismissed reports that there have been no takers for the loans for renewable energy projects for the micro, small and medium-sized enterprise (MSME) sector.
However, it has admitted that clients have experienced challenges in taking up the loans, which are disbursed through approved financial institutions (AFI), such as commercial banks, merchant banks, credit unions and micro finance institutions and the National People’s Co-operative Bank.
Some $84 million in loans has been disbursed with another $40 million approved to eight clients under the programme since 2008, general manager of the DBJ’s AFI relationship division, Yvonne Lewars disclosed on November 10.
“There has been take up of the funds, but not as fast as we would like,” Lewars told Environment Watch.
The DBJ’s managing director Milverton Reynolds, stating that renewable energy was of “strategic importance” to the organisation, said the DBJ recently negotiated a grant of US$591,000 or approximately $51 million from the Inter-American Development Bank (IDB) dedicated to energy usage.
The grant would be used for three things, namely:
* to implement a study to determine the demand for energy in Jamaica;
* to support the training and certification of energy auditors in partnership with the University of Technology; and
* to launch a public education programme about the importance of renewable energy.
Describing the cost of energy as “too onerous and burdensome” for businesses in Jamaica, Reynolds said this ought not to be a huge problem because the island has “endless sunshine and wind”.
He was speaking at the opening of the Scientific Research Council’s 23rd science and technology conference and exposition at the Jamaica Pegasus Hotel in Kingston on November 9.
However, responding to complaints that the loan approval process was too complex, Lewars explained that before an alternative energy loan is disbursed, an energy audit must be carried out. This involves assessing the energy usage of an entity or business and determining how much can be saved by making adjustments, such as changing bulbs, properly sealing windows, and improved ventilation to areas, even before a loan for alternative energy is disbursed.
Lewars said in an effort to improve the approval process, the DBJ had developed models for various sectors in order to reduce the need for MSMEs to pay for audits. Models had been done for poultry businesses and manufacturing, among other sectors.
“It’s a very specialist area. We are training our staff on the various alternative energy sources that can be used, but before we use alternatives, what can we do with the existing business to reduce cost? For example, a simple water heater in a hairdressing business can greatly reduce the energy supply chain,” she said.
In the meantime, the DBJ said it was developing better relationships with AFIs and meeting with business persons to make the applications more acceptable.
Former energy minister Clive Mullings has been among persons calling for the DBJ to disburse alternative energy loans itself, instead of wholesaling them though AFIs.
The loans provide up to $15 million or 90 per cent financing to clients at 9.75 per cent interest.
(CNN) — The midterm elections made it clear that Americans want a government that works for the people.
The 112th Congress will be faced with a choice: Work with the president and the people to deliver results, or pursue an obstruction agenda that will leave individuals and businesses with an even less sustainable economy and future than they face today.
If Congress chooses the collaboration path, members can tackle one issue that will enhance our national security, create jobs and help stabilize the climate –an issue with bipartisan roots that touches every corner of this nation: clean energy.
Our nation’s energy challenges are pressing and immediate. Unlike countries in Asia and Europe, the United States has neglected to join the global clean energy marketplace. We have no long-term clean energy plan, and so we have few domestic clean energy technologies or industries. While the world surges ahead, we risk being left behind, dependent on yesterday’s energy solutions to solve today’s energy challenges.
We know what steps to take. We must reduce our dependence on oil. The transportation sector alone is 95 percent dependent on oil. American taxpayers spend from $500 million to $1 billion a day on foreign oil, 39 percent of which is imported from “dangerous or unstable” nations, according to a Truman National Security Project report.
We must redouble our efforts to pass national clean energy and efficiency standards to meet our energy needs using homegrown, low-carbon sources. In turn, these actions will lower costs to consumers, create jobs, and spur an export market for innovative energy technologies.
We must use public dollars and the government’s credit enhancement power wisely, to leverage private capital for clean energy research, development, production, transmission, storage and deployment.
We must confront climate change, which jeopardizes our economic prosperity by leaving us acutely vulnerable to increased water shortages, widespread drought and floods, and food insecurity.
We can solve these problems. If the United States adopts a progressive energy strategy that combines market creation, financing for new industries and technologies, and infrastructure development, we can end our dependence on dirty fossil fuels, protect public health, and provide a solid foundation for economic growth and prosperity.
Even without comprehensive climate and clean energy legislation, the next Congress can take concrete steps to strengthen the U.S. market for clean energy, providing critical stability and certainty for investors, business, and consumers. These polices have all previously been introduced in the House or Senate, with bipartisan and business support. None will contribute significantly to the federal deficit.
Congress can:
— Spur clean energy innovation, manufacturing, deployment, and export through an ambitious renewable electricity standard, extensions of the successful Treasury grant program (1603) and Section 48c manufacturing tax credit, and by establishing a Clean Energy Deployment Administration (CEDA, or “Green Bank“) to leverage private sector investment for the deployment of clean energy.
— Encourage home and business owners to invest in energy efficiency and boost employment in the beleaguered construction sector by passing HOME STAR and Building Star. Those programs would reward consumers for installing energy-efficient equipment.
— Increase the $75 million liability cap for offshore oil damages, and pass other measures to enhance the accountability of oil exploration companies and give these companies an incentive to conduct their operations more safely.
The United States can and must also act on the international stage to limit the consequences of climate change and enhance our national security. Congress can show a commitment to the U.S. goal of reducing greenhouse gas emissions, take concrete steps to reverse widespread deforestation that contributes 18 percent of these emissions globally, and provide short-term financing to allow the poorest countries in the world to adapt to the impacts of climate change.
This is not a partisan agenda. The midterm elections reaffirmed that the clean energy agenda is a positive political agenda. In California, voters overwhelmingly supported the nation’s only cap-and-trade policy even in the face of a well-financed attack led by a coalition of out-of-state fossil fuel industries. In defeating Proposition 23, California voters across the political spectrum forcefully chose new technologies and new jobs over a retreat to last century’s polluted air and fossil fuel dependence — showing broad bipartisan support for the most comprehensive emissions reduction measures the country has ever seen.
Co-chairman of the “No on 23” campaign, former Secretary of State George Shultz said it best: “Those who wish to repeal our state’s clean energy laws through postponement to some fictitious future are running up the white flag of surrender to a polluted environment.”
In Michigan, voters elected Gov. Rick Snyder, who campaigned as a “good green Republican” who believes that “Michigan needs to be a leader in the innovative movement toward alternative and cleaner energy.”
The clean energy economy is here for the long term. This Congress must decide if America will lead it.
The opinions expressed in this commentary are solely those of the writers.
Don Wehby, Guest Writer
Bill Clinton last week reinvigorated the public discourse on the use of renewable energy in Jamaica. Solar energy, of which Jamaica is in abundant supply, is particularly important if we are to diversify away from imported sources of energy and become energy self-sufficient.
While much has been said about solar electricity over the past few years, actual usage has been slow to spread because of the large initial investment required and the scarce availability of financial incentives.
It currently costs somewhere between J$2 million to J$3 million to fully equip a three-bedroom house with solar-generated power. This puts solar systems out of the reach of the majo-rity of Jamaican homeowners.
4kW job in Kingston. Jamaica
Although the upfront expenditure is burdensome, solar panels have a lifespan of 25 years or more and a minimum battery life of seven years. They are built to withstand 125-mile-per-hour winds and will start losing power after about three days of overcast conditions.
The payback period for solar investments is typically 6-8 years and can be sooner, depending on rising fuel costs, taxes on electricity (currently 10 per cent GCT in Jamaica) and foreign-exchange movements.
Despite these benefits, there are few incentives to invest in solar technology in Jamaica.
Currently, solar systems – including panels, batteries and inverters – are exempt from GCT and import duties.
The National Housing Trust (NHT) also offers low-interest “solar panel loans” of up to J$1.5 million for individual applicants and J$3 million for co-applicants. The interest rate ranges from 1 per cent to 7 per cent, depending on your weekly income, with a repayment period of 15 years.
The NHT also offers a solar water heater loan of up to J$250,000 at 3 per cent for 5 years. These loan options should be more aggressively marketed so that more Jamaicans are aware of their existence.
On the commercial side, the National Export-Import Bank of Jamaica has implemented a special credit line for manufacturers and agro-processors to establish alternative- energy systems at relatively low interest rates.
While these incentives are commendable, they are not enough to fuel a solar energy revolution in Jamaica. In fact, Barbados is the leader in the Caribbean in terms of structuring incentives to drive renewable energy adoption.
Homeowners receive significant income tax deductions for investing in systems and equipment that make their homes more energy-efficient and/or generate electricity from renewable sources.
Along similar lines, I recommend that the following provisions be added to Jamaica’s income tax code to encourage solar energy adoption among both commercial and residential property owners:
An individual owner of residential property who spends, inter alia, on energy saving or water-saving devices be entitled to a maximum deduction from yearly taxable income of up to J$1,000,000.
Up to J$250,000 can be deducted for expenditure related to a home energy audit and the purchase of any conservation materials or systems recommended in that audit. A home energy audit is defined as an evaluation by an authorised energy auditor of the energy consumption in a household to determine ways in which energy can be conserved.
Up to J$750,000 can be deducted for expenditure on the purchase or installation of ‘environmentally preferred products’. ‘Environmentally preferred products’ means pro-ducts that cause significantly less harm to human health or to the environment than alternative pro-ducts that serve the same purpose; or products, the consumption of which contributes significantly to the preservation of the environment.
A tax policy for commercial enterprises should also be implemented based on the following guidelines:
Up to 30 per cent of the capital cost of investing in renewable energy technologies can be deducted from profit before tax, with a maximum claim of J$20 million; and
Accelerated depreciation on qualifying environmentally preferred assets – for example, depreciation of up to 50 per cent of the asset in one year.
These tax incentives will drive adoption of solar technology at both the residential and commercial levels, helping to move Jamaica towards becoming self-sufficient in energy.
NET METERING HAS A ROLE
Finally, we need to reach a consensus with the domestic power company on the issue of net metering.
Net metering allows an electricity customer’s meter to run backwards if the electricity he or she generates is greater than that consumed, effectively banking the electricity until it is needed by the customer.
This provides the customer with full retail value for all the electricity produced and is used in more than 30 states in the US and widely throughout Europe.
Under Jamaica’s proposed net billing policy, an additional meter will have to be installed at the customer’s expense, and a much lower ‘avoided cost’ value is placed on surplus electricity despite it being generated in a more environmentally sustainable way. This is a financial disincentive.
Net metering will make the payback period on deploying solar technology shorter and is a matter of priority if we are truly serious about energy self-sufficiency.
At approximately J$25 per kWh of electricity, Jamaica’s energy costs are among the most expensive in the world – with adverse effects on our standard of living and productive capacity.
Let us use the reinvigorated public discussion to effect real change in how we incentivise renewable energy use.
Don Wehby is group COO of GraceKennedy Limited.
don.wehby@gkco.com
