Zia Mian, Contributor

Recently, I attended the 16th Middle East Petroleum and Gas Conference (MPGC) in Doha, Qatar. One significant presentation at the conference that caught my interest was made by Dr Marianne Kah, chief economist, ConocoPhillips (COP), of the United States of America (USA). Her presentation was titled 'The Energy Landscape in the Carbon Constrained World.' One slide in her presentation compared the global energy demand projections to 2030 under two scenarios that had been developed by the International Energy Agency (IEA). The IEA acts as the energy adviser to 27 mostly industrialised countries in their effort to ensure reliable, affordable and clean energy for their citizens.

Under the business as usual (BAU) scenario, IEA projects that the fossil fuels would account for about 80 per cent of the global energy supply mix in 2030. The volumes of oil, coal and natural gas would significantly increase from their current levels.

After taking into account the global concerns for greenhouses gases (GHGs) emissions, the IEA considers that the BAU scenario is not sustainable. The IEA has, therefore, developed an alternate "Stabilisation Case" scenario under which the global CO_² emissions would have to be capped at 450 parts per million (PPM). Under this alternate the global energy consumption in 2030 is projected to decline from 17.9 billion tonnes of oil equivalent (btoe) under BAU scenario to 14 btoe with the share of fossil fuels declining to 66 per cent of the energy supply mix (IEA: 2007 World Energy Outlook). This would have to be achieved by efficiency improvement, conservation and the development of renewable sources.

Major contributor

The power generation is considered as one of the major contributor to the GHGs. At present power generation accounts for about 25 per cent of GHGs emissions. Under the BAU case, in 2030 it is projected to account for about 38 per cent of the global emissions (source: IFC and EIA).

In order to achieve the "Stabilisation Case", the global community would be obliged to introduce a carbon tax. Table 1 compares the electricity generation costs with and without a US$50/tonne of CO2 emissions tax (every US$10/tonne CO2 tax adds one cent/kWh to the cost of electricity generated from coal fired plants).

Dr Kah uses the electricity generation from wind power as the base. The comparative shows that the electricity generation based on natural gas as fuel would remain an economic choice for the smaller countries until the capital cost of nuclear power plants comes down. The projections are that the capital cost of small pebble-bed nuclear plants might become comparable to the wind-power plants. The nuclear plants will always remain highly efficient as compared to wind plants.

Kah postulates that in order to shift dispatch from existing coal to natural gas based power generation plants, the COwould have to be priced. She estimates that at the natural gas price of US$ 5.50 million Btu, the price would amount to US$26 tonne of CO. At natural gas priced at US$7 million Btu the price would be US$ 48 tonne of CO_². When the natural gas is priced at US$ 10 million Btu, the price would have to increase to US$91 tonne of CO_². Similar postulating by agencies such as the World Bank, IFC, IMF, United Nations and OECD countries are likely to lead to global limitations that must impact the energy policy framework of the smaller economies. The UN Climate Change Conference in Bali in 2007 included the first multilateral agreement on developing country responsibility for curbing the growth of GHGs emissions.

Improve energy efficiency

As shown in previous articles, at present Jamaica's per capita CO_² emissions are about four tonnes per annum. In order to reduce these high-emission levels, Jamaica would have to focus on improving its energy efficiency levels, reducing system losses and reversing the trends in the economy's energy intensity.

There is a growing likelihood of mandatory carbon regulations and stringent carbon emissions target in the industrialised countries. As Jamaica is a small economy, the global decisions and trends regarding the future direction of energy supply mix must have a profound impact on her future power generation expansion strategy. It is within this context that Jamaica should carefully formulate its power generation expansion plan and the selection of fuels and technologies. Let us not forget that there is a serious cost for reducing the CO emissions from high carbon content fuels such as coal. Clean coal technology is not cheap.

Zia Mian, a retired senior World Bank official, is an international consultant on information technology and energy. Send your comments to mian_zia@hotmail.com.