New UN report warns against gas-to-energy type projects

Oct 24, 2022 News

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– says expansion of renewable energy best option

Kaieteur News – A new United Nations Report has warned against the consequences of the exploitation of natural, but rather urged countries to invest in renewable energy options.

The Report comes at a time when Guyana is pursuing a very ambitious and costly gas-to-energy project.  The United Nations Environment Programme (UNEP) will virtually launch the Report, ‘Is natural gas a good investment for Latin America and the Caribbean (LAC)’ on Tuesday.

The UNEP is the world’s leading environmental authority. It provides leadership and encourages joint work in caring for the environment, inspiring, informing and empowering nations and peoples to improve their quality of life without compromising that of future generations.

According to information from the organisation, in the context of some LAC countries investing heavily in natural gas, the UNEP’s report data suggests that an expansion of renewable energy in the power sector would be a far better choice in terms of economic savings, job creation, and greenhouse gas emission reductions.

The new Report also reveals the consequences of the increase in the exploitation of natural gas in the LAC region. Kaieteur News understands that the Report finds that an expansion of renewable energy sources instead of continuing a fossil fuel path, even with what has been promoted as ‘clean’ natural gas, would be by far the best choice for the region in terms of costs, jobs, and greenhouse gas emission reductions, and therefore to meet the goals of the ‘Paris Agreement on Climate Change.’

“The report finds that investing in renewable energy largely outweighs economic, social and climate benefits of natural gas for energy generation. The findings give reason to reconsider the argumentation some sectors have expressed in favor of natural gas as a transition technology” the UNEP stated. Moreover, there will be a panel discussion where energy specialists, private sector representatives, and Government officials will participate. The discussion is aimed at contributing to the regional debate and provides critical information to decision-makers, amid the economic, climate and debt crises in the region.

The Irfaan Ali Government has been pilloried for moving ahead with the gas-to-energy project despite no new feasibility study.  This newspaper reported last week  Opposition MP, David Patterson lamenting  that critical issues are yet to be addressed for the US$2 billion gas-to-energy (GTE) project being developed by Government and its partner, US oil major, ExxonMobil. Back in 2018, the Inter-American Development Bank (IDB) had partnered with the State to conduct a feasibility study of the planned natural gas pipeline. The primary objective of the study, which was executed by Energy Narrative for US$70,000—an international entity that provides strategic market analyses and advice was to determine the overall feasibility of transporting natural gas from offshore Guyana, building a Natural Gas Liquids (NGL) separation plant and a Liquefied Petroleum Gas (LPG) production plant to market the liquids from the natural gas stream, as well as building a new electricity generation station to use the remaining dry natural gas.

Notably, a table was used in that report that was sourced from ExxonMobil in which the oil company said the pipeline would cost US$478 million. Four years later, Exxon estimates that the structure could cost Guyana US$1.3 billion. On the other hand, Vice President Bharrat Jagdeo explained that the Government is currently doing estimates for the Natural Gas Liquids (NGL) Plant and the power plant to generate some 300 megawatts of electricity for the country. These two facilities, he said, can cost Guyana an additional US$700 million.

Given this hefty increase in the project cost, stakeholders have been calling for an updated feasibility study to prove the project’s viability. However, Patterson, the former Minister of Public Infrastructure explained that when the People’s Progressive Party (PPP) Government took office in August 2020, it began streamlining the project for Wales, West Bank Demerara in the absence of any new study. According to him, “they released five of the studies which I myself commissioned as Minister of Public Infrastructure when the energy sector was under my remit and all we did was pre-feasibility studies to see if it’s possible.”

In the absence of new studies for the massive undertaking, Patterson believes the project would merely serve as a “ponzi scheme”. He argued that the Government is yet to explain how the electricity from the power plant would be transmitted to Region Four – the energy capital. He pointed out, “The last time that they did a submarine cable you know what happened-but there’s no comment and there’s nothing at all on that – so it’s just a “ponzi scheme” as I always say to enrich people because there are so many other components of it yet to be discussed.”

To join the virtual launch of the UNEP’s report on natural gas investment in Latin America and the Caribbean and for the panel discussion see link: https://www.youtube.com/watch?v=JColWd1rCqw

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