Say no to coal

Delroy Warmington, Contributor

If Jamaican governments had seriously considered a prudent energy policy, it is very unlikely we would find ourselves in the position we are.

Yes, Jamaica must consider all options for its long-term energy policy, whether coal, oil, LNG, solar, wind or biomass. The least appealing of all these is coal.

Yet learned men such as Phillip Paulwell, Carlton Davis and Winston Hay are advocating that Jamaica build coal plants. Their rationale is that it's cheaper. With this type of reasoning, every time Mr Paulwell is going to Spanish Town, he would be riding a bicycle. Yes, it is cheaper, but a lot more dangerous.

It is most difficult to chisel a coherent and convincing argument that coal is a serious option. Let's look at the facts. According to Bloomberg New Energy Finance, the cost of producing one megawatt-hour of gas electricity is about US$62.37/hour. With coal, it's US$95.1/hour. This is 50 per cent more. These figures are arrived at when one considers the cost of constructing these plants. Remember that it costs approximately three times as much to construct a coal plant.

Moreover, the price of LNG has declined substantially over the last four years. It is now US$2.50/BTU, coming down from US$14/BTU in 2008, more than an 80 per cent decline. With the avalanche of supply coming on board over the next five years, the price of LNG will most likely be trading below US$3/BTU for a long time to come, making it most attractive. The pricing delta is overwhelming in LNG's favour.

With the announced merger between Glencore and Xstrata, there will be pronounced concentration of coal suppliers. They will control 30 per cent of the world's supply. We anticipate more mergers and alliances throughout the mining industry, which will increase the likelihood of elevated coal prices for a long time to come.

Health Hazards

We hear the argument for clean coal. There is no such thing as clean coal. This is an oxymoron. It is quite clear that any proposal to build coal plants in Jamaica can only be seen as both arbitrary and capricious.

Has the Ministry of Health been consulted? I am supremely confident that it would be rational and oppose the introduction of coal. The health of the public must be paramount.

A coal plant would significantly increase the cases of asthma, chronic bronchitis, premature mortality, birth defect, emphysema, heart disease, and cancer.

When one consider the hazardous nature of the by-product of coal plants, it cannot be deemed appropriate for Jamaica. The sulphur dioxide, nitrogen, and arsenic would be detrimental.

Where would the authorities dispose the toxic waste? Have they considered the impact of mercury on the water supply? Do they realise that burning coal produces 67 different air toxins? What about the ecological destruction?

Tell us, Mr Davis and Mr Paulwell, where do you plan to put this plant - in Toll Gate or Cherry Gardens?

Running ahead backwards

Proposing a coal plant in Jamaica in this era is like running up the down escalator. Everyone is going in the opposite direction. Globally, no new coal plant has been built since 2008. As a matter of fact, coal plants are being phased out. CMS Energy cancelled its planned US$2-billion coal plant because it was not financially feasible, given the cost and trend of natural gas price. Even with the newest pollution-control technology, it was not expedient.

Both New Zealand and Canada are phasing out their coal plants. Xcel Energy, Progress, Dominion and the TVA are all cancelling or phasing out theirs. If coal was such an attractive source of energy, why are these forward-thinking utilities getting rid of coal plants?

In the near future, the United States could become energy self-sufficient. It will be producing an abundance of natural gas. Export terminals are being built in Louisiana to take advantage of this excess natural gas.

Whatever metric you use to evaluate Jamaica's energy needs, LNG proves to be the most compelling. Can you imagine the positive impact this will have on the economy, especially the manufacturing sector?

A coal plant would only retard the development of the country. Let's say no to coal.

Delroy Warmington is a fund manager. Email feedback to columns@gleanerjm.com.