The Gas-to-Energy Project is a Misguided Endeavor

Apr 14, 2024 Features / Columnists, Peeping Tom

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Kaieteur News – The gas-to- energy Project, involving a gas-to- shore project and then converting the gas to electricity – threatens to become an albatross around the necks of the Guyanese people. Its exorbitant cost, questionable environmental impact, and viable alternative solutions raise serious doubts about its feasibility and desirability.

If it has not done so already, the government needs to make public a feasibility study that is specific to this project. While there may have been assessments comparing various energy sources, what is needed is a feasibility study specific to this project.

The gas-to-energy project has an estimated cost of US$1.75 billion.  Despite the government’s assertions of its benefits, including reducing electricity tariffs by half and ensuring energy security, the project is mired in controversy.

First and foremost, the staggering cost of the project cannot be overlooked. At a time when every dollar should be allocated judiciously to address pressing social and economic needs, committing such a vast sum to a single energy project raises concerns.  The opportunity cost of this massive investment is glaring, especially when considering alternative, more cost-effective solutions.

One such alternative is solar power. The same amount of generation capacity could be achieved without the government having to spend a cent in building out the energy infrastructure. Countries such as India and China are now low-cost producers of solar energy and the development cost can be outsourced to independent power producers. The role of government would be to buy energy from these producers at less than what it will cost the government to generate energy from natural gas.

With the rapidly declining costs of solar technology, harnessing the abundant sunlight in Guyana could have provided a sustainable and affordable energy solution. At a rate as low as 4 US cents per kilowatt-hour, solar power presents a compelling case for consideration, especially when compared to the hefty investment required for the Gas-to-Shore project.

India is now positioning itself to become a low-cost supplier of solar power. It is estimated that by 2030, the cost of solar power in India will be around 0.025 cents per kilowatt hour. India is now the second cheapest supplier of solar energy behind China. In fact, China also is capable of producing solar power at less than US three cents per kilowatt hour.

In Chile, a country that has temperate climate, a Spanish company, Solarpack Corporation Technologica, had entered into a contract to supply solar power at less than three cents per kilowatt hour, and there is no subsidy provided by the Chilean government. One project in Dubai is boasting that will reduce the cost of solar power to under US 2 cents.

Secondly, the assertion that natural gas will significantly reduce emissions is dubious at best. Proponents of the project, including Vice President Jagdeo, tout its environmental benefits by claiming a 50% reduction in emissions. However, the reality paints a different picture. Natural gas may be cleaner than heavy oils, but its overall impact on emissions is not as substantial as advertised. In fact, studies indicate that natural gas is only approximately 30% cleaner than heavy oils.

The projected generation capacity of 300MW from the Gas-to-Shore project raises concerns about its net effect on emissions. The sheer scale of the generation will mean that Guyana, which is now using an estimated 180MW peak, will result in an increase in emissions compared to the current status quo.

Guyana wants to be seen as a global leader on climate security. As such, Guyana cannot afford to take steps backward in its efforts to mitigate climate change and protect the environment.

Third, the massive injection of capital costs associated with the gas-to-energy project presents significant financial risks for Guyana. Given the uncertainty surrounding global energy markets, relying heavily on natural gas infrastructure could prove to be a costly gamble in the long run. The potential for stranded assets and sunk costs looms large. This can jeopardize the country’s fiscal stability. No wonder the Exim Bank of the United States is being cautious about this project.

In light of these concerns, Guyana should reassess its energy strategy and prioritize sustainable, cost-effective solutions. Embracing renewable energy sources such as solar power not only aligns with global efforts to combat climate change but also offers tangible economic benefits. By diversifying its energy portfolio and investing in clean, renewable technologies, Guyana can secure its energy future while reducing its carbon footprint.

The time to rethink the Gas-to-Shore project is now, before it becomes an irreversible burden on the nation’s economy and environment. But to tell the government to do so, much less to convince them to do so, is an exercise in futility.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Alternative, environmental, Impact, Misguided Endeavor, project

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