Fuel of the future?

Dwight Bellanfante, Gleaner Writer

ENERGY EXPERTS in the United States of America (US) are hitching that country's energy future to natural gas, the base fuel of liquid natural gas (LNG) that is currently at the centre of a raging debate in Jamaica whither its benefits as a cheaper and better alternative to oil.

In a recent article in the prestigious Time magazine, deputy director of the Energy and National Security Program at Washington's Center for Strategic and International Studies, David Pumphrey, noted that "natural gas has the potential to play a much bigger role". He believes gas could reach 35 per cent of America's energy pie in the foreseeable future.

However, this kind of change won't happen without the support of new federal and state legislation to give power generators, car companies and industrial users a big reason to rethink their business models, noted the Time article.

Pumphrey, and others in the know, suggest that gas is possibly the quickest path to achieving a future in which the US is no longer held hostage by foreign-oil, and carbon emissions are sharply curtailed. They posit that natural gas will eventually become the dominant fuel of the 21st century.

Pumphrey would no doubt find a kindred spirit in James Robertson, Jamaica's mining and energy minister, who is approaching the need for converting to LNG with missionary zeal. He estimates that Jamaica year-to-date loses some US$1.2 billion because the country does not have a cheaper, more efficient energy source, a situation that would change with the entry of LNG, replete with the latest technologies.

"If Jamaica is to grow and develop, we need to solve the energy problem. High energy costs are driving up the cost of doing business and restricting investment. We have to get serious about our future now," said Robertson.

With natural gas being cheap and in ready supply globally, there is much to recommend such a conversion, especially in the area of electricity generation, which is where Robertson's plan is focused.

According to Time, "A big advantage for the US is that 98 per cent of the natural gas it consumes comes from North America, including deep pockets of shale gas found in a corridor running from North Dakota to Georgia. That means natural gas should remain available, abundant and cheap for at least the next 100 years. At the same time, carbon emissions from naturalgas are about half that of competing hydrocarbons such as coal and petroleum.

"Yet natural gas accounts for just 24 per cent of the total energy consumption in the US, versus about 23 per cent for coal and 37 per cent for petroleum. Some experts think that needs to change.

Take electric power, for example. Electricity from the grid, used to light homes and power the country's information technology infrastructure, among other functions, consumes the lion's share of energy - 40 per cent of the total, according to the US Energy Information Administration. Most of that juice is squeezed from coal and nuclear power, but legislation could alter the mix.

"The biggest growth area for natural gas, if a price is put on carbon emissions, is almost certainly electricity generation," says Ernest Moniz, director of the Massachusetts Institute of Technology Energy Initiative in Cambridge, Massachusetts.

In Jamaica's case, dependence on oil is around 90 per cent, in a country that does not produce the commodity.

In explaining why he could not force regulatory entities like the Office of Utilities Regulation (OUR) to reduce increases granted to the Jamaica Public Service Company Limited (JPS), the country's sole energy generator, Robertson said recently in an interview that while he fully appreciated the concerns of consumers and the business sector, the Government was seriously committed to LNG and energy diversification to break Jamaica's dependence on expensive imported oil with its volatile cost factor and negative environmental fallout over time.

Robertson added that any such interference by his ministry would go against the terms of the JPS's 2001 licence and also serve to discourage investment in new generating technology and capacity by the light and power company.

"The Office of Utilities Regulation is an independent body, its head is appointed by the governor general. I cannot interfere, as this would go against the terms of the OUR and have severe consequences for our future energy prospects by discouraging investment in new energy sources such as LNG, which is currently poised for major developments that will lead to cheaper and more sustainable energy generation. We're talking about the future of Jamaica, not short-term expediency," said Robertson in an interview.

The JPS had applied for a 4.81 per cent increase in non-fuel costs of electricity, but the OUR granted the company a 4.79 per cent increase. For residential customers, that means an overall increase of just under two per cent on electricity bills, while businesses will see rate increases ranging from just over one per cent to almost three per cent. The increases took effect on June 18 this year.

However, the JPS and Robertson noted that the 1.9 per cent inflation-based rate adjustment will be blunted by decreases in fuel charges and the current revaluation of the Jamaican dollar.

The energy ministry is working on a diversification strategy where approximately 90 per cent of the existing base load of Jamaica's electric power grid will be switched to LNG from heavy-fuel oil and automotive-diesel oil.

Robertson notes that with LNG being the cheapest fuel now available, that fuel source has to be used to offset the cost of oil and provide an alternative for the island's base load.

"Renewables don't bring down your base load cost," Robertson argued, adding that sources such as hydroelectricity and wind were, at least in the short to medium term, expensive to produce and inconsistent.

He also pointed to the fact that LNG supplies were plentiful and cheap, with vast reserves being discovered regularly, which should encourage price stability over the long term, unlike oil.