T&T does not have a competitive advantage in producing renewable energy.
Hence, the economic prospects for 2070 are grim because the country has not established competitive industries based on renewables and has not prepared its human resource base to be successful in the net-zero world.
Additionally, the per capita GDP in 2070 may be at best $22,000 as many jobs would also be lost.
Further, the country will be impacted significantly by international climate change policies, warned Professor of Practice Andrew Jupiter, University of the West Indies St Augustine and Dr Pedro van Meurs and Van Meurs Energy (VME) in a detailed research paper titled, “Suggested Energy Transition Policy for Trinidad and Tobago, The Next 50 Years,” which was released on June 30, 2021.
They advised that it is crucial therefore, that an optimal policy is defined and implemented to lead T&T through the energy transition over the next four decades as the well-being and wealth of the next generation depend on the success of this policy.
And yet, so far such a policy has not been developed, although T&T has committed to its contribution under the Paris Agreement, while the Government has various established strategies and plans regarding oil and gas, renewable energy and power generation.
According to the paper renewable methane, green hydrogen, green ammonia, green methanol, green fertilisers, green synthetic fuels, and DAC projects will therefore, be produced in the countries that are most aggressive and successful in attracting the large-scale private investments required for energy transition.
But what if successive governments in T&T do not implement an aggressive energy transition policy?
What if the country sleep-walks toward 2050 in the mistaken belief that somehow oil and gas production will continue to support cheap electricity, substantial government budgets and large exports of LNG, ammonia, methanol, and fertilisers?
Jupiter and Van Meurs said the country will therefore, wake up in 2050 to discover that (as an example) the methanol and cement industries will have to close for lack of natural gas and that electricity production must initiate a massive conversion to renewables at significant costs at a time as the country can no longer afford it.
T&T will so find out that the USA will import green ammonia and fertilisers from Puerto Rico because the USA protected this industry with CBAM levies against ammonia and fertiliser imports from T&T and therefore, the ammonia and fertiliser industries in T&T will be closed in 2040.
Also, if policies are not implemented this country will also discover that the Dominican Republic has cornered the Caribbean green hydrogen market, Barbados will be the hub for hydrogen supplies for large distance aircraft and that large DAC projects have been implemented in Peru, Texas, Scotland, Iceland, Oman and Malaysia, but not in T&T.
Further, it will also wake up to discover that Colombia is the main exporter of synthetic jet fuels in the region based on the excellent solar potential of La Guajira and the GDP per capita of T&T is down to $18,000,
“It is expected that after COP26 various nations will intensify their efforts to achieve net-zero carbon conditions by 2050 or 2060.
“T&T is a major exporter of LNG, ammonia, methanol and fertilisers. The economy will therefore be severely negatively affected by these worldwide policies,” the paper said.
The 2021 UN Climate Change Conference, also known as COP26, is the 26th United Nations Climate Change conference.
It is scheduled to be held in Glasgow from October 31 to November 12, 2021 under the presidency of the UK.
Jupiter and Van Meurs said their paper is meant to be an initial contribution to a discussion, adding that they have prepared it at their own initiative and have not financed or sponsored by any party.
They said the reason for the paper is to celebrate 50 years of their services in the petroleum industry with a look at the next 50 years.
In referencing the international framework the paper noted that a wide variety of entities and companies have made forecasts of possible scenarios of the world energy developments for the next 20 or 30 years, citing that estimates of the International Energy Agency (IEA) were used.
“They published recently a remarkable report called ‘Net-Zero by 2050- A Roadmap for the Global Energy Sector” (the Roadmap).
“This report describes a scenario how the world can reach a condition of net-zero carbon emissions by 2050. Net-zero means that whatever emissions would still take place in 2050 would be offset by carbon capture and storage (CCS) or other methods,” the paper explained.
It said this scenario is radically different from the usual IEA Stated Policies Scenario (STEPS), which is the forecast based on the current policies of the various countries.
Under STEPS, the world emitted 34 gigatonnes of CO2 in 2020 and this will slightly grow to 36 gigatonnes by 2050.
Based on this scenario the global temperature rise will be 2.7 degrees Celsius by 2100.
The paper also referenced that under the STEPS scenario oil demand will increase from 98 million barrels per day (“mb/d”) in 2019 to about 104 mb/d in 2030 and thereafter stabilise at this level.
Gas demand will increase from 137.7 trillion cubic feet (“Tcf”) per year in 2020 to 201 Tcf by 2050.
Total CO2 emissions will not increase strongly because at the same time coal demand will decline significantly and renewable energy will become a major contributor to satisfying energy demand.
Also, under the Roadmap, the oil demand will decline to about 24 mb/d, but about two/thirds of this will be for non-energy use.
Gas demand will decline to about 60 Tcf, but about three/quarters of this will be subject to CCS.
The remaining emissions will be offset by other means, such as the generation of electricity based on biomass with CCS, the paper noted.
Key to any energy transition strategy is the restructuring of the power sector, Jupiter and Van Meurs recommended.
They noted that T&TEC oversees coordination and distribution of electricity and power is produced by Independent Power Producers (IPPs) with separate plants of various sizes.
The total installed capacity is 2608 MW. However, actual peak power use is only about 1400 MW.
Total electricity consumption is 10,300 GWh (10.3 billion kWh).
Essentially 100 per cent of the population has access to electricity, Jupiter and Van Meurs explained, adding that the growth of the electricity demand can be expected to be modest.
Even a growth of 35 per cent in GDP over the next 30 years would require less growth of electricity demand, probably about 20 per cent, the paper said.
However, the introduction of electric vehicles (EVs) would result in a significant increase in electricity use, Jupiter and Van Meurs said.
In total, they noted, the peak power requirements in 2050 can be predicted to be below the capacity already installed.
Therefore, new capacity will not be required, other than for possible replacement of plants that need to be abandoned for operational purposes.
The paper added that the tariffs for electricity vary depending on the type of customer.
Rates, it noted, were established in 2009 and have not been adjusted since.
Based on current US$ exchange rates, the residential tariff per kWh is determined based on the level of consumption about every 60 days.
It is $ 0.039 for the first 400 kWh, $ 0.048 per kWh for the next 600 kWh and over this level $ 0.056.
The commercial rate is $ 0.062 for any amount. These tariffs are in addition to certain fixed charges.
The industrial tariffs are based on a combination of capacity charges and usage charges for a variety of industrial users depending on size.
“T&T has so far been following the policies of most other oil and/or gas exporting countries of subsidising energy prices to their populations.
“This is indeed a rather effective policy of sharing the petroleum wealth with the population,” Jupiter and Van Meurs said.
However, they said the problem with these policies is that they result in wasteful energy use.
They added it will not be possible to economically develop the renewable resources of T&T for electricity generation against a gas price of about $ 1/MMBtu, even assuming inefficient power plants.
“Renewables would primarily compete against the cost of fuel and other operating costs of already operating plants, because no new installed capacity is required,” the paper explained.
And without significant change in current policies, the introduction of renewable energy is uneconomic in this framework, it added.
“The long-term consequences of not developing the renewable resources could be disastrous, since the current gas-based electrical generation capacity will become useless when natural gas production becomes insufficient, and the country would not have prepared for the eventual largescale change-over to renewables,” Jupiter and Van Meurs added.