JavaScript is disabled in your web browser or browser is too old to support JavaScript. Today almost all web pages contain JavaScript, a scripting programming language that runs on visitor's web browser. It makes web pages functional for specific purposes and if disabled for some reason, the content or the functionality of the web page can be limited or unavailable.

Tuesday, March 18, 2025

Please get on with economic transformation

by

Curtis Williams
1391 days ago
20210527

The In­ter­na­tion­al En­er­gy Agency (IEA) last week re­leased its re­port, ti­tled Net Ze­ro by 2050—A Roadmap for the Glob­al En­er­gy Sec­tor.

It is a for­ward-look­ing re­port on how the or­gan­i­sa­tion sees the world get­ting to its stat­ed goal of net ze­ro-emis­sion by the mid­dle of the cen­tu­ry, as has been com­mit­ted to by most coun­tries, in­clud­ing T&T, in the Paris Ac­cord.

While the IEA ac­knowl­edged that there were many path­ways to net ze­ro, and so far coun­tries have en­gaged in more rhetoric than ac­tion, it charts a way for­ward that its au­thors feel is the best course for the world to move to a sus­tain­able en­er­gy fu­ture.

Per­haps the most im­por­tant find­ing in terms of the medi­um- to long-term im­pact on the T&T econ­o­my, is the sug­ges­tion that there ought not to be any com­mit­ments from coun­tries and com­pa­nies to new oil and gas—yes gas as well—projects, oth­er than those al­ready sanc­tioned in 2021.

The re­port read: “Be­yond projects al­ready com­mit­ted as of 2021, there are no new oil and gas fields ap­proved for de­vel­op­ment in our path­way, and no new coal mines or mine ex­ten­sions are re­quired. The un­wa­ver­ing pol­i­cy fo­cus on cli­mate change in the net-ze­ro path­way re­sults in a sharp de­cline in fos­sil fu­el de­mand, mean­ing that the fo­cus for oil and gas pro­duc­ers switch­es en­tire­ly to out­put—and emis­sions re­duc­tions—from the op­er­a­tion of ex­ist­ing as­sets.

Un­abat­ed coal de­mand de­clines by 90% to just 1.0% of to­tal en­er­gy use in 2050. Gas de­mand de­clines by 55% to 1,750 bil­lion cu­bic me­tres and oil de­clines by 75% to 24 mil­lion bar­rels per day (mb/d), from around 90 mb/d in 2020.”

If this sce­nario is not fright­en­ing to the T&T Gov­ern­ment and or­di­nary cit­i­zens, then we are liv­ing in bliss­ful ig­no­rance.

As a coun­try, we need to in­sist that our Gov­ern­ment de­vel­ops and ex­e­cutes an al­ter­na­tive de­vel­op­ment agen­da that takes in­to ac­count the re­al­i­ty that the writ­ing is on the wall for fos­sil fu­els and that we have to build an econ­o­my that is sus­tain­able and can be pros­per­ous, even if we do not get a cent from oil and gas.

These are chal­leng­ing things to con­sid­er and much more dif­fi­cult than the usu­al pletho­ra of per­son­al at­tacks when views are at vari­ance with cer­tain nar­ra­tives. It ac­tu­al­ly re­quires hard work and lead­er­ship.

Al­ready, nat­ur­al gas prices are sig­nif­i­cant­ly low­er than when T&T en­tered the LNG busi­ness a mere 22 years ago. The sim­ple rea­son for this is sup­ply and de­mand.

While there has been grow­ing de­mand for nat­ur­al gas, the pace at which gas has been dis­cov­ered and brought to mar­ket glob­al­ly has low­ered the av­er­age prices sig­nif­i­cant­ly.

Think of how T&T was dur­ing the ear­ly 2000s when glob­al LNG prices were high. We had mas­sive con­struc­tion hap­pen­ing, the wa­ter­front projects and Gov­ern­ment Cam­pus Plaza were be­ing built, One Wood­brook Place, in­ter­changes, NA­PA/SAPA be­ing built, GATE ful­ly fund­ed, promis­es of new hos­pi­tals to be built, forex was not an is­sue; in fact, there was sig­nif­i­cant growth in of­fi­cial re­serves and mon­ey be­ing placed in the Her­itage and Sta­bil­i­sa­tion Fund.

The econ­o­my was over-heat­ing and when we look back and com­pare it to to­day, T&T was like the land of milk and hon­ey.

A lot of that wealth was gen­er­at­ed by mon­ey from the en­er­gy sec­tor, par­tic­u­lar­ly LNG ex­port and strong crude prices. The growth of LNG out of Aus­tralia, Shale gas in the US, huge gas dis­cov­er­ies in Africa and even the growth of en­er­gy de­mand in Chi­na and In­dia can­not ac­com­mo­date the in­crease in pro­duc­tion.

Con­sid­er what will hap­pen to prices when de­mand falls sig­nif­i­cant­ly and what you must see is the high-cost pro­duc­ers will be run out of the mar­ket first and those that stay will have to con­tend with much small­er mar­gins and re­turns. T&T is not a low-cost pro­duc­er of nat­ur­al gas.

The re­port sug­gests that in the net-ze­ro path­way, glob­al en­er­gy de­mand in 2050 is around 8.0% small­er than to­day, but it serves an econ­o­my more than twice as big and a pop­u­la­tion with two bil­lion more peo­ple.

The IEA re­port posit­ed that there will be more ef­fi­cient use of en­er­gy, re­source ef­fi­cien­cy and be­hav­iour­al changes com­bined to off­set in­creas­es in de­mand for en­er­gy ser­vices as the world econ­o­my grows and ac­cess to en­er­gy is ex­tend­ed to all.

In­stead of fos­sil fu­els, the re­port not­ed, the en­er­gy sec­tor is based large­ly on re­new­able en­er­gy. Two thirds of the to­tal en­er­gy sup­ply in 2050 is from wind, so­lar, bioen­er­gy, ge­ot­her­mal and hy­dro en­er­gy.

So­lar be­comes the largest source, ac­count­ing for one fifth of en­er­gy sup­plies. So­lar PV ca­pac­i­ty in­creas­es 20 fold be­tween now and 2050, and wind pow­er 11 fold.

The IEA not­ed that net-ze­ro means a huge de­cline in the use of fos­sil fu­els. They fall from al­most four fifths of the to­tal en­er­gy sup­ply to­day to slight­ly over one fifth by 2050.

Fos­sil fu­els that re­main in 2050 are used in goods where the car­bon is em­bod­ied in the prod­uct, such as plas­tics.

Elec­tric­i­ty ac­counts for al­most 50% of to­tal en­er­gy con­sump­tion in 2050. It plays a key role across all sec­tors—from trans­port and build­ings to in­dus­try—and is es­sen­tial to pro­duce low-emis­sion fu­els such as hy­dro­gen. To achieve this, to­tal elec­tric­i­ty gen­er­a­tion in­creas­es over two and a half times be­tween to­day and 2050.

These are not just aca­d­e­m­ic find­ings but sce­nar­ios and de­ci­sions that are be­ing played out to­day.

Al­ready, BP PLC, the par­ent com­pa­ny of bpTT, has said that it in­tends to sell off some of its fos­sil fu­el as­sets and to in­vest in be­com­ing an in­te­grat­ed en­er­gy com­pa­ny led by re­new­ables.

While there has been no state­ment on its T&T as­set, it is not in­con­ceiv­able that the com­pa­ny could ex­it this coun­try and the dis­lo­ca­tion it will cause will not be too pret­ty.

For years, bpTT has had lim­it­ed ex­plo­ration go­ing, just enough to main­tain its pro­duc­tion. With the mas­sive cuts in BP PLC’s in­ter­na­tion­al ex­plo­ration bud­get, it is dif­fi­cult to imag­ine how this will not neg­a­tive­ly im­pact the com­pa­ny here, in­clud­ing its pro­duc­tion of hy­dro­car­bons.

Will BP, for ex­am­ple, be in­ter­est­ed in in­vest­ing in small­er fields, as we have in T&T, when its po­si­tion is on­ly high-val­ue fos­sil fu­el tar­gets and main­ly re­new­ables?

When we spend time as a coun­try ar­gu­ing about what event led to the spike of the COVID-19 virus, it is a good dis­trac­tion from be­ing forced to think and ar­tic­u­late a strat­e­gy to emerge from the lock­downs.

It is a smoke-screen, an at­tempt al­most to keep the so­ci­ety stoned so we hide the fact that a year lat­er, we are al­most im­pris­oned in a coun­try whose of­fi­cial bor­ders re­main closed while its un­of­fi­cial bor­ders are avail­able for who­ev­er can get here on the first pirogue.

The world’s largest oil and gas com­pa­ny, Exxon Mo­bil, is hav­ing a ma­jor board fight as funds that in­vest in the com­pa­ny are de­mand­ing changes at the board lev­el to re­flect a new fo­cus on cli­mate change and tran­si­tion to re­new­ables.

Cal­i­for­nia has just agreed with the US gov­ern­ment to have ma­jor wind farms off­shore. As the CEO of BP said, we can­not fight grav­i­ty.

There­fore, hold­ing on with our fin­ger­nails to oil and gas prices will get us nowhere. We need to sim­ply get on with it. Get on with the work of eco­nom­ic trans­for­ma­tion, get on with the work of fight­ing the pan­dem­ic, get on with the work of find­ing vac­cines.

Be­cause at the end of the day, no one will care who built the hos­pi­tals if qual­i­ty health­care is not avail­able.

No one will care if it means the stu­dents who are set to write SEA live in a coun­try that nev­er heed­ed the warn­ing signs and found it­self ill-pre­pared when change comes knock­ing.

Cur­tis Williams is con­flict­ed why who built a hos­pi­tal is so im­por­tant in a time of na­tion­al cri­sis with hun­dreds dead and an econ­o­my breached?


Related articles

Sponsored

Weather

PORT OF SPAIN WEATHER

Sponsored