LNG tankers could become a more common sight in the Caribbean.

By Saya Kitasei and Cristina Adkins

As oil prices continue to rise, consumers all over the world are feeling the squeeze. Although Americans may be hurting at the pump and reviving debates about energy security, the U.S. economy’s vulnerability to oil price volatility is small relative to the island nations of the Caribbean, which use oil to generate most of their electricity in addition to fueling their vehicles. In response to recent oil price shocks, some islands are discussing a shift from oil to natural gas to generate electricity (and even to fill up their cars). Since the end of 2008, natural gas prices have stayed very low while oil prices rose steeply, leading many policy-makers in the Caribbean to argue that natural gas is a good bet for their islands’ economic and energy security.

As ReVolt has reported, Worldwatch is currently working with three Caribbean countries, the Dominican Republic, Jamaica, and Haiti, to study the potential for development pathways based around domestic renewable energy and energy efficiency resources.  Should it remain significantly cheaper than oil, natural gas could provide an important additional piece to reducing these islands’ expenditures on energy imports, even though gas, too, would have to be imported, most likely in the form of liquefied natural gas (LNG).

Natural gas availability and price may have constrained Caribbean investment in natural gas power plants in the past, but these two factors may present decreasing obstacles in the future. Increasing LNG consumption in the Caribbean would most likely be supplied by imports from Trinidad and Tobago, the only significant oil and gas producer in the Caribbean. In 2009, Trinidad and Tobago produced 149,769 barrels of oil per day and 1,434 billion cubic feet (Bcf) of natural gas in 2009. It is the 11th largest natural gas exporter in the world as well as the largest exporter of liquefied natural gas (LNG) to the United States.  However, as U.S. domestic production of natural gas, especially from unconventional shale resources, continues to increase, U.S. demand for gas imports is declining, leaving prices low and Trinidad and Tobago searching for new markets amongst their neighbors.

Some Caribbean islands have already started increasing natural gas consumption. Puerto Rico began importing LNG in 2000 to fuel a 540-megawatt (MW) combined cycle power plant, while the Andres LNG regasification terminalin the Dominican Republic feeds that nation’s 304 MW gas-fired combined cycle power plant.  The president of AES Dominicana, the company that operates this plant, claims that using this electricity produced from natural gas rather than oil has saved the country US $800 million since 2003.

Although Jamaica does not currently have an LNG importing facility, its government has been interested in building one for some time. Last week, Jamaican Energy Minister James Robertson stated, “Natural gas is the quickest implementable alternative to oil…Jamaica has already reached an advanced stage in the development of an LNG project, LNG facilities, and modern power plants to utilize gas can be constructed within 30 months.”Robertson has been an avid proponent of LNG, stating that LNG could decrease the island’s energy costs by 30 percent in three years alone. Jamaica has already discussed plans to construct an LNG port terminal, gas pipeline network and regasification plant as of early 2011.

However, how would shifting from oil to natural gas affect carbon emissions?  Worldwatch research has concluded that natural gas could, if produced sustainably, facilitate the penetration of renewable electricity and reduce power sector carbon emissions in coal-dependent parts of the U.S. and Europe. LNG provides Caribbean countries an option cleaner than burning petroleum but not as clean as zero-carbon renewable resources such as wind and solar power. Moreover, renewable resources offer more security against price volatility of fossil fuels, including both oil and natural gas. As domestic resources, renewable energy and energy efficiency have a vital role to play in creating a sustainable way forward for the power sectors of Caribbean islands – including the three we are studying. If anticipated new supplies of low-cost natural gas provide cost and carbon savings over the petroleum-dominated status quo, while supporting the penetration of wind and solar energy, LNG could be an additional part of a winning energy strategy for the Caribbean.

Supported by the International Climate Initiative of the German Government, Worldwatch currently works on Sustainable Energy Roadmaps for the Dominican Republic, Haiti, and Jamaica.

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Caribbean, Dominican Republic, electricity, energy efficiency, Jamaica, LNG, natural gas, oil, renewable energy, Trinidad and Tobago