A BRIEF (END-OF-DECADE) ENERGY ROUNDUP

1.  What century are we in, again? 

Here’s an amazing fact: over the past 10 years, the retail price of electricity across the OECS has roughly doubled.  And over the same period, most of the energy-sector leaders of the affected countries have done exactly nothing about the fundamental problem.  

This makes the chances quite good that, unless things change drastically and soon, pretty much the same thing will happen again – with one important difference.

What is the fundamental problem?  The problem is that we in the OECS depend on imported fossil fuels for almost all of our energy supply – and there are two things we can say for sure about fossil fuels.  Over the long run, (a) their prices will go up and (b) at current rates of extraction, they’re eventually going to run out.  So guess what will happen to economies that don’t break their dependence on the stuff before those two trends collide?  Ok, in the long run, we’ll all be dead (as British economist John Maynard Keynes is said to have observed), but this isn’t about us.  It’s about the legacy of failure we will leave to future generations if we continue along the present path of business as usual.

Business as usual has been encouraged by the failure of our leaders to see beyond the useful Petrocaribe scheme initiated by Venezuela.  Petrocaribe should have been taken as a short-term expedient to give cash-strapped governments some breathing space to start reducing our dependence on fossil fuels, but it appears to have given some of us the impression that oil can still be had cheaply – with the net effect of increasing our dependence on oil (not to mention our debt) since the scheme was launched.

Think of a serious medical case, accompanied by intense pain.  The attending doctor will prescribe the appropriate painkillers to provide short-term relief, but will also proceed to treat the underlying illness, to ensure a good longer-term outcome.  

It’s that second part that’s not happening in our energy sector and, if this continues, business as usual is pretty quickly going to turn into economic disaster when – and this is the important difference – a future oil price crisis is accompanied by an actual supply shortage of the stuff, worldwide.  At that point, small individual islands in the OECS are not likely to be at the top of the global supply chain.  In short, we won’t be able to get enough oil, even if we can get a low-interest loan to pay for it.

There are a few bright spots: Nevis and Dominica have shown the necessary vision and leadership to actually treat the fundamental problem and are forging ahead with geothermal and wind power projects, some of which are already generating green energy for their citizens.  The other governments are at various stages of either making actual plans to move forward, talking about moving, or simply carrying on with business as usual.

So, let’s summarize.  The OECS energy sector is ending the first decade of the new century, still largely stuck in the old one.  If this continues, our economic development plans and programmes are ultimately useless: it won’t matter how many hotel rooms, airports, highways and mobile phones per thousand people we can boast, because without a secure, reliable and affordable supply of energy, none of these things will matter.  Ten years into the new century, the OECS is staring disaster in the face if our energy sector leaders don’t start following the example of the real leaders – the ones who are looking at the next 50 years, and taking their people towards a truly sustainable energy and economic future.

2. The Electric Vehicles are coming!

On Nov 17^th the Chevy Volt (a gasoline-electric hybrid) was named “Car of The Year” by not one, but two of the most prestigious auto magazines in the US.  Less than 2 weeks later, the European car folks named the all-electric Nissan Leaf as Europe’s 2010 “Car of the Year”.  

The electric car is going mainstream.  Pretty soon, it will be just as easy to buy a hybrid or an all-electric as it is to buy a gas or diesel vehicle now.  What will happen in the Caribbean?

More than half of all fuel imported to the OECS goes into the transport sector.  Three-quarters of that energy is actually wasted, due to the inherent inefficiencies of burning liquid fuels in gasoline and diesel engines.  So, just imagine the huge economic and environmental benefit if we could replace that gasoline and diesel with electricity generated from steam that comes from a hole in the ground?

Pretty soon, that’s going to be happening on Nevis.  Their geothermal power plant, scheduled to be producing power by 2012, will make Nevis the first viable electric vehicle location in the Caribbean.  So ten years from now, when the rest of the Caribbean is yet again struggling with crippling fuel prices (this time quite probably accompanied by actual fuel shortages), some Nevisians will be happily driving around, getting the equivalent of 100 miles per gallon of fuel, without importing a single gallon of fuel to do so.

3.  A home-grown Social Energy Innovation enters the Global Stage

In July 2010, GE, one of the world’s largest companies, launched their Ecomagination Challenge, a global competition to find and fund the world’s best ideas to power the 21^st century smart grid, backed by a US$200 million venture capital fund.

The contest attracted over 3,800 ideas, submitted from more than 150 countries.  One of the submissions was Welectricity, an innovative social network for energy efficiency conceived in and launched from St Vincent & the Grenadines.  And, as the post below reports, Welectricity received an Ecomagination award for consumer innovation, winning the “Best Idea for the Millennial” prize.  Read more here, and have a productive and green 2011!

WHAT'S IT COSTING NOW, BP?

On April 20th 2010 an explosion shook the Deepwater Horizon, a semi-submersible offshore oil rig working 50 miles off the coast of Louisiana in the Gulf of Mexico.  The rig caught fire, eleven workers died in the mishap and the rig, owned and operated by Transocean Ltd on behalf of British oil giant BP, sank two days later – on Earth Day.

NASA image of the Gulf on May 24, 2010. From http://www.nasa.gov
 
Since then, crude oil - the stuff that powers the world - has been gushing out of a broken well 5,000 feet below sea level and today, 47 days later (and World Environment Day), the disaster is officially the largest oil spill in US history.
 
It turns out that BP was operating the well without a remote control shut-off switch used by some oil companies as a last resort protection against underwater spills.  Use of the device, called an acoustic trigger, is mandatory in other major oil-producing countries such as Brazil and Norway.
 
Arguably, the device could have prevented the gusher that, by some estimates, may already have pumped up to 4.5 million barrels of crude into the Gulf of Mexico.  Marshes, wetlands and beaches in Louisiana have already been fouled by the oil, Florida’s coast is threatened and Cuba, 300 miles to the southeast of the spill, watches apprehensively.  Giant plumes of oil are reported to be floating ominously below the surface of the gulf, slowly dispersing their contamination.  The environmental and economic damage to the region is expected to be catastrophic.
 
So, why was BP not using the remote shutoff device?  Apparently because its use was not mandated by US regulators.  And, of course, stuff like that costs money.  BP, a profit-motivated private company, wants to cut costs, and their operation didn’t include the $500,000 one-off cost of an acoustic trigger.  Never mind that in 2006 BP’s profits piled up at a rate of over 60 million dollars a day.
 
The first time something like this, on a far smaller scale, happened in the US (off the California coast in 1969), it helped give birth to the US Environmental Protection Agency.  Will the 2010 BP oil spill be the wake-up call for energy in the 21st century?
 
After the leaking well is plugged (which may take several more weeks), a fundamental reckoning is needed.  Apart from the obvious regulatory issues raised by BP’s reported culture of risk-taking and the fact that they have been repeatedly allowed to get away with such an approach, this disaster needs to bring into focus the real, but uncounted costs of our addiction to oil.
 
The externalities and subsidies that are not priced into oil must now be counted.  These costs must be assigned, via a carbon price (which will also cover other dirty fuels such as coal), to the cost of consuming a barrel of oil.  This will facilitate our transition to alternative energy sources – a transition that must, and will, inevitably happen, but which needs to happen sooner rather than later, because the tipping point has been passed.
 
Our thirst for oil is sending us into further, deeper, more uncharted and riskier reaches, with dire consequences for our planet.  Elizabeth Kolbert, writing in The New Yorker notes that 

“While the point of “peak oil” may or may not have been reached, what Michael Klare, a professor at Hampshire College, has dubbed the Age of Tough Oil has clearly begun. This year, the United States’ largest single source of imported oil is expected to be the Canadian tar sands. Oil from the tar sands comes in what is essentially a solid form: it has to be either strip-mined, a process that leaves behind a devastated landscape, or melted out of the earth using vast quantities of natural gas.”

Indeed, BP’s well was being drilled at what are now admitted to be “unprecedented” depths, where mishaps would clearly be more difficult to prevent in the first place and deal with after the fact, as is now being horrifyingly demonstrated.
 
And New York Times blogger Andrew Revkin put the matter into its perverse context yesterday,  when he noted that the amount of oil estimated by BP to be contained in the deposit now leaking into the Gulf was only enough for “five days and change worth” of US demand for oil.