$150-m energy fund next month
THE Government will next month launch a $150-million energy conservation fund from which firms and substantial energy users can borrow for energy-saving retrofitting projects, Government sources said yesterday.
Phillip Paulwell, the energy minister, confirmed that he will announce the fund during his contribution to the budget debate, which opens on April 17, but declined to say how much money will be allocated to the revolving scheme.
However, other sources had earlier told the Observer that the fund, for which Paulwell this week received final approval from the Cabinet, will be “in excess of $100 million and more like $150 million”.
Initial financing will come from profitable public sector energy companies such as the Petrojam oil refinery, the Petroleum Corporation of Jamaica (PCJ), and the retail petroleum marketing company, PETCOM.
“One of the problems that we face is that every time there is a crisis in terms of the oil situation — whether it is a price increase or scarcity — there is this preoccupation with conservation,” Paulwell told the Observer in an interview.
However, such programmes have never been sustained.
“We now have to devise a programme that is sustainable and not just topical when we have a crisis,” the minister said. “The energy fund will allow individuals and businesses to acquire and implement their own conservation strategies and equipment so that ordinary people can be a part of the long-term and immediate conservation efforts.”
Jamaica imports over 90 per cent of its energy needs in the form of petroleum products and has been on and off conservation binges since the first oil shock in 1974 when Organisation of Petroleum Exporting Countries (OPEC) jacked up oil prices during the Arab/Israeli war.
The sporadic efforts at energy savings notwithstanding, the island has made only marginal gains in improving energy efficiency rated on the basis of oil consumption to economic output. Some of the world’s major economies have almost doubled energy efficiency since the 1970s.
Robert Pickersgill, the former energy minister, outlined plans for a return to a robust conversation programme towards the end of the 1990s, but didn’t get the project off the ground.
Paulwell’s strong revival of the idea is coming at an uncertain period on the international oil markets, with the Anglo/American war on Iraq, the strikes that almost crippled the Venezuelan industry and pre-election unrest in Nigeria that have hurt that country’s supplies.
Through the energy fund, similar to others established in countries such as Nigeria and Mexico, Paulwell hopes Jamaica aims to achieve savings through efficiency of no less than two per cent per year for the next 20 years.
In the process Jamaica also hopes to slice into its domestic oil bill, now running at over US$600 million — an expenditure that swings with the fortunes of the market, often with painful impact on the island’s fragile economy.
Domestic oil consumption has run at over 17 million barrels a year, while the bauxite/alumina industry utilises nearly another nine million barrels a year.
Specifically, the fund will help to finance, among other things:
* solar water heaters for hotels, households, and public buildings;
* implement retrofits on an easy payment plan through performance contracting;
* meet the costs of energy efficiency audits, retrofits, upgrades and new instalments;
* provide compact fluorescent lamps at more attractive prices;
* assist with small renewable energy projects; and
* help with net metering projects.
The fund will be under a director of energy conservation, a new position being established in Paulwell’s ministry, for which he is now headhunting.
“We’re looking for someone with the kind of stature who will enable the encouragement of greater participation and compliance — someone who can command the respect across the board,” Paulwell said.
The Government, the minister stressed, has to be at the forefront of the conservation effort.
“We must ensure that the Government leads the conservation effort by example,” he said.
This means that the Government has to implement measures to reduce its own energy bill significantly.
“The Government now spends $2.4 billion (a year) on just electric power,” Paulwell said. “We must reduce that. Real sustainable conservation will have to entail a strategic plan with long-term objectives, and someone mandated to see that plan through.”
The energy-saving programme is to be backed up, Paulwell stressed, by efforts in developing alternative sources of energy.
Among these, he said, were projects such as the Wigton Wind Farm where 23 wind turbines will provide between seven mega watts and 20 mega watts of electricity, saving between 36,056 and 103,017 barrels of imported oil.
In addition to wind power, the Government is actively exploring other renewable sources of energy such as hydro power, solar power and cogeneration, and hopes to achieve a 12 per cent shift away from fossil fuels by 2020.