Energy Now June 2021

Opinion | Mark Loquan

The regional stake in methane mitigation

Opinion | Tamara Bujhawan

Transition risk amidst increasing climate ambition

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A publication of the Energy Chamber of Trinidad and Tobago Issue 37 June 2021 • Free Copy Conference Edition

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Minister Young: focus on bringing oil and gas resources to market at the earliest opportunity Page 3

Upstream spending, cut by $285 billion in two years, will struggle to recover to pre-pandemic levels The toll of the COVID-19 pandemic on upstream investments in the first two years of the downturn is estimated at a whopping $285 billion, and although spending will slowly start to rise from 2022, it will not reach pre-crisis levels in the coming period, according to a Rystad Energy report.

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SBM provides updates on FPSOs for Guyana US supermajor Exxon intends to produce crude from deepwater Guyana onto floating production storage and offloading vessels (FPSOs). Exxon has had extraordinary success in Guyana with almost 20 discoveries since May 2015.

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Leading the energy transition

Onshore drilling activity at the Cascadura Deep wellsite by Touchstone Exploration.

MINISTER YOUNG: FOCUS ON BRINGING OIL AND GAS RESOURCES TO MARKET AT THE EARLIEST OPPORTUNITY SHELL PAID ALMOST TT$600M IN TAXES TO TT GOVT IN 2020

TOUCHSTONE TO SPUD ROYSTON-1 IN JUNE THE UAE SUPPORTS $50M CLEAN ENERGY PROJECT IN DOMINICA NEWS

OPINION

EFFICIENCY

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ENERGY DATA page 19

Page 03 Page 04 Page 06 Page 08

RENEWABLES page 22

With the covid crisis receding in many major economies as vaccination campaigns take hold, there has been a renewed focus on climate change and reducing carbon emissions. This has been given additional impetus by the recent International Energy Agency report into what is needed from oil and gas companies to get to net zero emissions, the recent Dutch court decision on Shell’s emission reduction targets and the shareholder battle at Exxon.

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| May 2021

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Minister Young: focus on bringing oil and gas resources to market at the earliest opportunity (continued)

IN his first formal presentation to the annual Trinidad & Tobago Energy Conference, newly appointed Minister of Energy, the Honourable Stuart Young, told the energy industry that his focus was on bringing oil and gas resources to market as quickly as possible. Earlier in the day Prime Minister Keith Rowley said that the Government recognised given the energy transition was firmly underway, oil would probably have a shorter shelflife than natural gas. In line with this observation, Minister Young indicated that the Government was working with a horizon of 2028 to maximise oil production.

Minister Young said that his immediate focus would be to engage with all of the upstream companies to get all unsanctioned upstream projects possible, approved within the shortest time frame. He reported that he was working closely with Shell on the terms and conditions of the Production Sharing Contract for the Manatee

field, which holds significant reserves estimated at 1.8 trillion cubic feet of natural gas, and that he hoped he would be able to make an announcement soon. Later in the conference, Touchstone CEO, Paul Baay provided confirmation of Minister Young’s approach, when he thanked him for clearing some of the barriers that were holding back the small, but fast-to-deliver, onshore Coho gas field.

With respect to oil production, the Minister told delegates that the Ministry had initiated dialogue with Heritage Petroleum and that the company has mapped out an action plan aimed at optimising exploration and development of its acreage on both on and offshore.

Minister Young reaffirmed that he “will personally continue to work with and drive Heritage and other oil producers to ensure that we maximise oil production with a horizon of 2028”.

He clearly signaled the Government’s support

for a strategy that emphasised partnership to bring capital for investment to Heritage’s acreage and stated that the government will welcome any expressions of interest from other operators interested in exploration and production. He explained that approaches from small and nimble operators would be especially welcomed.

This was a message reiterated by Heritage CEO, Arlene Chow, speaking on a panel later in the day, on encouraging investment upstream.

In addition to removing barriers to get unsanctioned projects over the approval hurdle, Minister Young recognised that the country also needed to stimulate exploration and the development of prospective resources on both unlicensed and licensed acreage. He promised that the Ministry would be embarking on a deepwater, onshore and shallow water bid round within the next year. At the same time, the Minister clarified that the government’s clear expectation

is that acreage not scheduled for exploration or development, with a definitive workplan, must be returned to the State for reallocation.

Minister Young acknowledged that he needed to review fiscal terms before embarking on the next bid rounds and asked that the Energy Chamber provide the Ministry with their views on the issues.

The Energy Chamber has already established a Fiscal Reform Task Force that has been meeting and reviewing the fiscal terms and during the Conference, Chair of the Task Force, Peter Inglefield outlined the major issues that the industry has identified and their major recommendations

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Urgent need for changes to Trinidad & Tobago’s fiscal regime ON the first day of the Trinidad & Tobago Energy Conference 2021, Peter Inglefield, Chair of the Energy Chamber’s Task Force on Fiscal Reform outlined the need for changes to Trinidad & Tobago’s fiscal regime, if the industry is to be able to attract investment in the future, especially in the context of the global energy transition.

The Energy Chamber’s Task Force, comprising senior representatives of major operating companies and experienced and knowledgeable industry professional advisers, has been meeting regularly for the past six months to review the fiscal regime and to make recommendations for changes.

The Task Force has advocated for the adoption of a fiscal regime that recognises that we are a mature oil and gas province and that most further reserves will be in smaller and more challenging reservoirs.

A country with less attractive geological prospects needs to have more attractive fiscal terms if it is to attract scarce upstream investment dollars, especially in an environment when global capital markets are increasingly concerned about the long-term future of the hydrocarbon industry.

The fiscal regime needs to be responsive to the specific economics of specific fields or exploration prospects if energy companies are going to allocate capital for upstream exploration or development activities. Top-line taxes, such as Supplemental Petroleum Tax (SPT), and royalties can be especially difficult for the economics of potential investments or exploration programmes, as these taxes must be paid irrespective of profitability.

Investors also need assurances that the fiscal regime will be stable over the life of a project and that there are no anomalies in the regime that add specific additional risks.

Taking these general concepts into account, the Fiscal Reform Task Force made some preliminary recommendations at the T&T Energy Conference 2021: 1) When it was originally introduced, SPT was designed as a windfall tax to be paid at high oil prices which at the time, was determined to be US$50 per barrel. However, the trigger at which it becomes due has not been adjusted over time to take into account inflation, until it was changed this

year for small onshore producers and increased to US$75. However, the US$50 trigger price remains for marine crude oil producers, and this makes it very difficult to secure any investment in increased production in that sector. The Task Force has recommended that this should change to US$75 for all crude oil producers and that the SPT should be calculated against the incremental income, not all the revenue.

2) For gas producers, the current flat rate of royalty at 12.5% for all fields makes it difficult to economically produce from small, marginal or technically challenging fields. This therefore acts as a disincentive for exploration activity, as investors risk having a non-commercial project even if they find gas. The Task Force has recommended that instead of a flat rate royalty, there should be a variable royalty rate that takes into account field size and complexity and hence encourages investment.

3) The current capital allowance rules allow the write down for tangible and intangible capital expenditure on a straight line over five years. To

enhance project economics for new exploration and development projects, the Task Force has recommended that and accelerated write down should be allowed over a three (3) year period or by the re-introduction of an Initial Allowance.

In addition to these three major preliminary recommendations, the Task Force made a number of other recommendations, all aimed at encouraging investment into oil and gas production and reducing risk and uncertainty for both the companies and the Government.

The next step will be for the Task Force to engage in detailed discussions around the recommendations with the Ministry of Energy and Ministry of Finance. The Task Force Chairman reminded conference delegates that oil and gas left in the ground produces no revenue for the government or people.

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Challenger Energy Group (Formerly BPC) commences drilling of Saffron-2 well onshore Trinidad Staff Writer | Energy Chamber CHALLENGER Energy Group has announced the successful commencement of drilling at the Saffron-2 well onshore in Trinidad.

According to the company, a successful Saffron-2 well could produce between 200 to 300 bopd.

The Saffron-2 appraisal well is a follow up to the successful Saffron-1 exploration well drilled in March 2020 that resulted in discoveries in both the Middle Cruse and Lower Cruse reservoirs.

Significant lessons were learnt during the drilling of Saffron-1 to inform the drill plan for Saffron-2.

Saffron-2 is a low cost onshore well with a budget, inclusive of production completion, of approximately US$3 million, and is expected to take between 25 to 30 days to complete.

Eytan Uliel, Chief Executive Officer designate, said, "Following completion of mandatory inspection and reporting processes in Trinidad, we can now advise that drilling of the Saffron-2 appraisal well has commenced, with the well having spud on 24 May (UK time, late 23 May local time). The well will be drilled over the next 25 to 30 days, to a total depth of approximately 4,500 feet.”

According to Uliel, “The objectives of the Saffron-2 well are twofold.”

“Firstly, to produce oil and generate cash flow in its own right, with a P 50 projected production rate of 200-300 bopd and, more importantly, to inform the appropriate development plan for the Saffron field as a whole. Based on the Saffron-1 well discovery and subsequent studies, we believe Saffron is a field capable of growing to production in the range of 1,000 - 1,500 bopd by the end of 2021, and which could ultimately achieve production rates of up to 4,000 bopd in a full field development scenario,” he said.

Shell paid almost TT$600m in taxes to TT govt in 2020 Staff Writer | Energy Chamber ENERGY giant Royal Dutch Shell has released their report on Payments to Governments for the year 2020. This report provides a consolidated overview of the payments to governments made

by Royal Dutch Shell plc and its subsidiary undertakings.

According to the report, the company in total paid US$ 88,574,210 (to the Trinidad and Tobago government in 2020). This is a significant decline from 2019 when the company paid, TT$1.2b (US$189m) in taxes to the T&T government.

Block 6b generated the most revenue to the government which alone earned 57,558,887

Drilling rig on site at Saffron-2 well He added that, “This is an exciting start for Challenger Energy Group, as we take the first step in our longer-term strategy of developing our existing portfolio to increase the Company's

The breakdown of the payments in 2020 are as follows: Payments USD Production Entitlement

62,884,045

Taxes 13,904,002 Royalties 2,284,658

production and cash flow. I look forward to updating shareholders with results once the well has been completed."

Project Production

Entitlement

Block 6B

Ministry of Energy

74,783,685

Total 88,574,210 or almost 65% of the total payments to the government. The block contains the Shell Dolphin facility.

T&T received the 2nd largest payment in South America in 2020, the largest being Brazil.

Globally however, the country which received the largest payment was the government of Nigeria

2,653,448 57,558,887 16,902,273

1,796,955

8,806,572

BG International Limited – T&T Branch 2,653,030

2,653,030

Entity level payments

13,790,525

Total

713,613

Total 88,574,210

Board of Inland Revenue

Fees

55,874,429 1,684,458

Central Block 13,904,002 2,284,658 North Coast Marine Area 1 (NCMA1)

Payments USD

Taxes Royalties

Block 5C, 5D and 6D 2,653,448

Fees 9,501,505

Trinidad and Tobago Breakdown

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7,009,616

Total 88,574,210

Source: Report on Payments to Governments 2020

which earned $3,243,223,518 in 2020.

Shell has been in Trinidad & Tobago for over 100 years and has played a major role in the development of the country’s oil and gas industry and continues to be a significant part of the energy landscape. At present, the company is the 2nd largest natural gas producer in T&T, producing

over 500mmscf/d and is a major shareholder in Atlantic, the liquefied natural gas facility in Pt Fortin, Trinidad.

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Touchstone to spud Royston-1 in June Staff Writer | Energy Chamber RECENTLY, Touchstone Exploration released their operational review in Trinidad which includes an update on several of the companies activities in T&T. According to the review, the company has indicated that the Royston-1 well will be spud in the 2nd week of June 2021, despite current COVID-19 restrictions.

Paul Baay, President and CEO, Touchstone said, “I remain confident that we will spud Royston-1 in June despite recent construction delays due to COVID-19 emergency health measures. The drilling of Royston-1 will complete the first phase of our exploration programme at Ortoire. The second phase is expected to include the Steelhead and Guabine prospects targeting the Herrera and Karamat Formations, as well as our Cretaceous prospect at Kraken. The phase two exploration programme is anticipated to be performed in parallel with development programmes at our confirmed Ortoire discoveries. Our future capital projects are anticipated to commence following the start of production from Coho and Cascadura, as these discoveries are expected to provide the funding for our future development and exploration programmes".

Touchstone is currently waiting on availability of the necessary soil stabilisation materials to complete construction of the Royston-1 access road and surface location. Access to these materials is dependent on their suppliers being able to comply with the current COVID-19 restrictions.

The company has stated that the drilling rig is in the final stages of pre-spud preparation and will be available to move immediately upon the completion of the access road. All drilling personnel are on the ground in Trinidad and have cleared the required quarantine protocols, the company added.

Independent of the drilling of Royston-1, Touchstone is currently in the process of acquiring 2D seismic data with 149 shot holes drilled to date out of a total of 370. Weather has been favorable thus far, and is targeting to shoot and record data commencing the second week of June 2021.

This data will provide information on possible development drilling at Royston, along with optimising the location for the future Kraken well to test the Cretaceous Formation.

With regard to the other Touchstone projects in T&T: Coho Touchstone indicated that the Coho facility construction at the Coho-1 well is nearly completed and they expect to commence testing in the next three to four weeks. The Company is currently awaiting final direction from the National Gas Company of Trinidad and Tobago regarding the preferred delivery point for Coho gas volumes.

Once this has been provided, the Company will begin pipeline construction which is anticipated to take 60 days, subject to weather conditions.

Touchstone indicated that the Coho facility construction at the Coho1 well is nearly completed and we expect to commence testing in the next three to four weeks.

I remain confident that we will spud Royston-1 in June despite recent construction delays due to COVID-19 emergency health measures.

The drilling of Royston-1 will complete the first phase of our exploration programme at Ortoire.

– President and CEO of Touchstone Chinook The company stated that the testing of the Herrera zones at Chinook-1 has been completed, and the Company will move up-hole to test the Lower Cruse Formation which indicated gas while drilling. The Cruse Formation appears to be aerially extensive with hydrocarbons having been observed and produced throughout the Ortoire block and the surrounding area. Gas shows were encountered at the nearby Cascadura project while drilling, and the Company looks forward to testing the commercial potential of these sands. In the Herrera zones, test three of the Chinook-1 well was put to pump and, after seven days, showed very limited to no new-fluid inflow with only load fluid and minimal oil being recovered. The well was shut-in for a buildup period at which time the well experienced a substantial surge of reservoir fluid and solids from the formation. This inflow appears to have encapsulated the downhole assembly in sand, and following several attempts, we believe the pump to be unretrievable. This zone will be abandoned as we now focus on the shallow Cruse completion. The Company has identified two additional locations significantly updip from the original Chinook well to evaluate the economics of the Chinook structure in the Herrera Formation. Given the limited inflow observed during testing and the skin damage reflected by the Cascadura Deep-1 testing, the Company is confident that the Herrera section of the Chinook-1 well was damaged while drilling.

We are evaluating alternative drilling designs to limit possible reservoir damage in any future wells at Chinook.

Cascadura Deep-1 Testing The pressure recorders were recovered from the Cascadura Deep-1 well on May 17, 2021, and provided 44 days of data that included initial completion pressure, isochronal flow and shutin buildup data. During the buildup period, the Company observed bottomhole pressures returning to pre-test levels, with a final shut-in pressure of approximately 4,746 psi (Cascadura1ST1 test one (lower): 4,762 psi, test two (upper): 4,715 psi). The buildup data suggested that the formation was damaged to some extent during drilling, with an estimated skin of between +4 and +7 (Cascadura-1ST1 test one (lower): +0.1, test two (upper): -1.1). Based on flowback observations, the Company believes that the well will continue to clean up once on production. No boundaries were observed during testing, with a radius of investigation of over 1,500 feet, confirming previous results observed at Cascadura-1ST1.

Gas analysis at Cascadura Deep-1 displayed a methane content of 93.7 percent (Coho 98.6 percent, Cascadura-1ST1 test one (lower) 93.3 percent) while NGL analysis indicated 57 degree API condensate (Cascadura-1ST1: 53 degree API

Paul Baay, President and CEO, Touchstone Exploration

condensate). No hydrogen sulfide was observed in any samples, and no produced water was recorded during testing.

James Shipka, Chief Operating Officer, Touchstone said, “The data gathered from Cascadura Deep-1 reinforced our interpretation of the Cascadura structure and is extremely encouraging for the production potential of the well. This test completed 199 feet of a total of 1,007 feet of reservoir observed in the overthrust Herrera section, and there remains nearly 560 feet of high-quality sand above the existing zone in the Sheet Three section for future development.

Given the nature of the Herrera sands, the existing completion should efficiently drain the gas and associated liquids trapped in Sheet Four.

Flowback testing suggested that the formation had been damaged during drilling, and the buildup data quantified the magnitude of the damage.

We believe that the well will clean up during production and that no stimulation is required at this time. We are now focused on bringing both Cascadura wells onto production as well as completing our comprehensive field development plan to efficiently exploit the potential of the Cascadura structure”.

The data gathered from Cascadura Deep-1 reinforced our interpretation of the Cascadura structure and is extremely encouraging for the production potential of the well.

– James Shipka Learn more and have your say online: fb.com/ttenergychamber · #energynow

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Upstream spending, cut by $285 billion in two years, will struggle to recover to pre-pandemic levels Staff Writer | Energy Chamber THE toll of the COVID-19 pandemic on upstream investments in the first two years of the downturn is estimated at a whopping $285 billion, and although spending will slowly start to rise from 2022, it will not reach pre-crisis levels in the coming period, according to a Rystad Energy report. The shale sector has been the most affected, with conventional exploration and investments in mature assets suffering the least thus far.

In February 2020, before COVID-19 started impacting the global energy system, Rystad Energy estimated global upstream investments for the year would end up at around $530 billion, almost at the same level as in 2019. Rystad’s forecast at the time suggested 2021 investments would remain in line with the previous year’s level.

However, as the pandemic triggered a collapse in oil prices during the early part of the second quarter last year, E&P companies slashed investment budgets to protect cash

Drilling rigs off the coast of Chaguaramas

flow. This spending trend was not reversed in 2021, when prices rose. Compared to pre-pandemic estimates for 2020 and 2021, Rystad observed that spending fell by around $145 billion last year and will end up losing $140 billion by the end of this year. This implies COVID-19 removed 27% of planned investments.

Upstream spending was limited to $382 billion in 2020 and is forecast to marginally grow to $390 billion this year.

Rystad Energy expects the effect of the pandemic to be a lasting one as — even though spending will start growing from 2022 ­— it will not return to the pre-pandemic level of $530 billion. Growth will be limited and investments will only inch up annually, rising to just over $480 billion in 2025, when this report’s forecast ends.

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First public electric vehicle charging station opened – signals start of transportation revolution for Jamaica Staff Writer | Energy Chamber JAMAICA Public Service Company Limited (JPS) the Jamaican power utility, has commissioned the first public electric vehicle charging station on the island. The move signals the anticipated change in the tide of vehicle usage from the traditional internal combustion engine, to electric vehicles (EVs). The EV Charging Station, dubbed the JPS Charge ‘N Go, is located at the Boots Gas Station in Drax Hall, St. Ann, and features chargers with different specifications to cater to three different

vehicle requirements.

According to a release from JPS, the Minister of Science, Energy and Technology, Hon. Daryl Vaz, quoted the Global EV Outlook 2021, pointing out that “Despite the pandemic, electric vehicle registrations have increased by 41% at the end of 2020. In the first quarter of 2021, global electric car sales have soared by almost 140% when compared to the same period in 2020.”

This world trend was also acknowledged by the JPS President & CEO, who outlined some of the significant opportunities that the industry

could bring to Jamaica. “The new electric mobility ecosystem is about all of Jamaica,” he said. “It’s about building new skill sets and providing new job opportunities for people to work in an emerging industry. With this electric mobility ecosystem, we want to create internship opportunities for students; training opportunities for technicians and mechanics to service EVs… This ecosystem is also about creating innovative financing opportunities for persons who want to pursue new ventures in the EV industry.”

By year end, five more EV charging stations

will be in place, in both cities (Kingston and Montego Bay), as well as other urban centres.

Unlike the traditional internal combustion engine, the electrical vehicle has very little under the hood, and maintenance consists mostly of tyre and wiper blade changes a few times per year, if so often. Electric vehicles are also environmentally friendly, as they emit little or no carbon emissions.

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The UAE supports $50M clean energy project in Dominica Staff Writer | Energy Chamber THE government of Dominica and the United Arab Emirates Caribbean Renewable Energy Fund (UAE-CREF) have declared a new deal for a hurricane-resistant clean energy project.

The project, worth $50 million, will support the development of a 5megawatt/2.5megawatt hours battery storage system which will help strengthen the island’s clean energy initiatives.

The officials stated that the new clean energy system would stabilise the electricity grid in Dominica and also deliver reserve power.

Additionally, it would also control the frequency

in extreme weather conditions like the hurricane season.

The Dominican Prime Minister, Dr Roosevelt Skerrit, expressed gratitude to the United Arab Emirates (UAE) government for their important contribution to the country’s development.

Prime Minister Roosevelt Skerrit stated that the hurricane-resistant clean energy project would provide clean, renewable energy to Dominica and achieve the UN’s Sustainable Development goals.

He stated that the 5MW battery storage system would move Dominica’s transition from fossil fuel to renewable sources of energy in the electricity sector.

The Prime Minister stated that Dominica looks forward to their partnership with the United Arab Emirates in sustainable development and other sectors of mutual interest. He stated that the country would appreciate working with the UAE on bilateral and multilateral issues.

The UAE-Caribbean Renewable Energy Fund was started in 2017 at Abu Dhabi Sustainability Week as a partnership between the UAE Ministry of Foreign Affairs and International Cooperation (MoFAIC), Masdar and ADFD, the UAE’s leading financial organisation creating national and global development programmes.

Sultan Al Shamsi, Assistant Minister of Foreign

Affairs, stated that UAE had been committed to supporting global harmony and success by supporting other countries’ development. This latest action under the UAE-Caribbean Renewable Energy Fund allows the country to continue that purpose.

Chief Executive Officer of Masdar-Mohamed Jameel Al Ramahi, stated, “This project will help the stabilisation of Dominica’s electricity grid and allow it to achieve its environment and climate resilience aims”.

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SBM provides updates on FPSOs for Guyana Staff Writer | Energy Chamber US SUPERMAJOR Exxon intends to produce crude from deepwater Guyana onto floating production storage and offloading vessels (FPSOs). Exxon has had extraordinary success in Guyana with almost 20 discoveries since May 2015. The company began production in December 2019 from the Liza Phase 1 development using the SBM Liza Destiny FPSO. After its latest discovery Uaru 2 in April 2021, Exxon has indicated that Guyana has the potential to support up to 10 FPSOs since their estimated recoverable resource of approximately 9 billion oil equivalent barrels is set to increase.

Thus far, Exxon has commissioned 3 FPSOs through SBM. At present, SBM already has one FPSO in operation, the Liza Destiny.

The Liza Destiny was developed by SBM Offshore and is designed to produce up to 120,000 barrels of oil per day, with storage capacity of up to 1.6 million barrels.

According to SBM’s operational review, further work is being done on elements of the flash gas compression system which is expected to be delivered during the month of July

2021. Additionally, plans initiated in 2020 are progressing to install a redesigned third stage flash gas compression system at the end of this year. SBM Offshore is continuing to work closely with the client and with the equipment manufacturer in order to expedite resolution of the situation.

The second FPSO commissioned is the FPSO Liza Unity. According to SBM, following the completion of the topside lifting campaign during Q1 2021, work is further progressing on integration and commissioning stages. The project continues to target first oil in 2022 in line with client planning.

The third FPSO that SBM is building is the FPSO Prosperity. The topsides fabrication started in the yards in Singapore. The project is progressing according to schedule with a planned completion in 2024. To further develop local capabilities, Guyanese companies were awarded contracts and started the fabrication of FPSO components in Guyana. In addition, Guyanese engineers have been hired and integrated into the project execution team.

The Prosperity FPSO will utilise a design that largely replicates the design of the Liza Unity FPSO. As such, the design is based on SBM

Liza Destiny en route to Guyana Offshore’s industry leading Fast4Ward® programme that incorporates the Company’s new build, multipurpose hull combined with several standardised topsides modules. The FPSO will be designed to produce

220,000 barrels of oil per day, will have an associated gas treatment capacity of 400 million cubic feet per day and water injection capacity of 250,000 barrels per day. The FPSO will be spread moored in water depth of about

1,900 metres and will be able to store around 2 million barrels of crude oil.

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Maersk Developer

Maersk drilling secures one-well contract extension with Total in Suriname Staff Writer | Energy Chamber TOTAL E&P Suriname, Suriname Branch, has exercised an option to add the drilling of one additional appraisal well in Suriname’s Block 58 to the work scope of the semi-submersible rig Mærsk Developer. The contract extension has an estimated duration of 100

days, with work expected to commence by the end of May 2021 in direct continuation of the rig’s previously agreed work scope. The contract value of the extension is approximately USD 20m, including integrated services that will be provided.

Mærsk Developer is a DSS-21 column-stabilised dynamically positioned semi-submersible rig, able to operate in water depths up

to 10,000 ft. It was delivered in 2009 and is currently operating for Total Offshore Suriname.

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Suriname Shallow Offshore (SHO) Bid Round closes with 10 bids Staff Writer | Energy Chamber IN 2020, Suriname had significant oil discoveries by Apache and its partners in the deepwaters offshore, and in 2021 interest in the country’s offshore potential is still strong.

Given the success the country has had in the deepwater in December 2020, Suriname launched a near shore bid round beginning in November 2020.

The Staatsolie Hydrocarbon Institute announced at the time that it will offer up eight new blocks in the currently unlicensed and underexplored Shallow Offshore (SHO) acreage of Suriname via a round of competitive bidding.

Staatsolie has confirmed that this bid round was closed on 30th April 2021 and that it has received a total of ten (10) bids for three (3) of the eight (8) blocks which were on offer.

Previously, Staatsolie reported that the eight blocks covered 13, 524 km2 of the western part of the SHO acreage, offshore Suriname. The acreage spanned from the coast, to the edge of the shelf, within the prolific SurinameGuyana basin that has seen a number of significant discoveries.

Staatsolie indicated that the acreage lies directly in the migration pathway up-dip from proven and highly productive cretaceous ACT areas. This is known to extend into Suriname as recently proven by Apache’s Maka-1 discovery.

The company has not yet identified which companies submitted bids nor from which three blocks they had received bids.

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| May 2021

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Leading the energy transition Dax Driver Energy Chamber CEO @dax_driver

W

The Stena Carron, one of the drill ships in Exxon’s fleet in Guyana, being serviced in T&T’s waters

Integrate regional energy services markets I

NTEGRATION of the Caribbean energy services markets could help to make businesses more competitive and reduce costs for project development and hence, eventual prices to consumers. This should be a focus for CARICOM in the implementation of the Single Market and Economy.

Except for Trinidad & Tobago and Suriname, the Caribbean region has very high electricity prices, with electricity mainly being generated from expensive imported fuel oil or diesel power stations. Many governments and businesses in the region argue that these high electricity prices negatively effect the competitiveness of their businesses and make it difficult to compete with other countries.

Most regional governments are looking to renewable energy sources and to imports of natural gas as a means to reduce electricity pricing. Jamaica, in particular, has been successful in switching from fuel oil and diesel generation to wind, solar and imported LNG for its electricity generation.

They have also made investments in battery storage to help deal with the intermittency of the renewable sources of electricity generation.

There has been a lot of emphasis at CARICOM on helping governments get the right national policy and legal environment to make this switch to renewables and to natural gas. International lending agencies have also provided a lot of technical advice and expertise to help get the right national policy framework.

There has been a lot less emphasis on making sure that energy services are able to be traded freely across CARICOM countries. The Energy Chamber of Trinidad & Tobago believes that this is a major missed opportunity and focus in this area will help to make energy services more competitive and reduce costs and increase efficiency.

There needs to be a focus on really empowering the free movement of people, and in particular skilled energy sector workers. Workers in this sector often have skills developed

on the job or through vocation qualifications and may not have the typical academic certification anticipated by a “skills certificate” regime.

The energy industry in Trinidad & Tobago has placed a lot of emphasis on developing vocation qualifications for workers in the sector based on their actual hands-on competency.

Getting these national competency qualifications recognised as Caribbean Vocation Qualifications and accepted for CARICOM skills certification would help facilitate the free movement of skilled workers, create new job opportunities for CARICOM citizens and enable better project execution.

There also need to be regulatory changes to allow the free movement of equipment around the region. Service companies often face huge swathes of red tape in moving equipment across borders in the region. Given the small size of economies in the region and the fact that there are limited projects in any given country, it makes good sense to allow pieces of equipment, such as specialised cranes or drilling support equipment, to be able to move freely between countries. Barriers to moving equipment increase costs for project development and make it much harder to plan and execute developments, in both the traditional hydrocarbon sectors and newer renewable sectors. Access to cranes, for example, is a major barrier for wind turbine erection.

Beyond these project-related services, there is the obvious opportunity that exists with the integration of electricity grids. This will be crucial to the effective development of geothermal projects, which have high initial capital costs and require a reasonable sized electricity market to generate the returns needed to attract the necessary investment.

Integration of energy services markets should be a key objective for CARICOM. The Energy Chamber has advocated for this shift at the regional level and we will continue to highlight this opportunity in all our regional engagements.

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ITH the covid crisis receding in many major economies as vaccination campaigns take hold, there has been a renewed focus on climate change and reducing carbon emissions. This has been given additional impetus by the recent International Energy Agency report into what is needed from oil and gas companies to get to net zero emissions, the recent Dutch court decision on Shell’s emission reduction targets and the shareholder battle at Exxon. While energy companies are shifting strategy to reduce emissions, car companies are moving fast towards electrification and many are making announcements that they will soon cease production of new internal combustion engine cars. The energy transition and decarbonisation are very much on the global agenda and change is increasingly being driven not just by government regulation, but by the demands of investors in the major capital markets.

Where does all this leave the Caribbean, one of the most fossil fuel dependent regions in the world and with at least three economies (Trinidad & Tobago, Suriname and Guyana) still looking to hydrocarbons as a major driver for economic growth?

This year's annual Trinidad & Tobago Energy Conference will address the theme of “leading the Caribbean’s energy transition”.

We deliberately chose the word “lead” in the theme because we want all our stakeholders, from governments, to company executives, to employees, to journalists and University students, to think about how they can lead this change, rather than just reacting when change is forced upon them. The energy transition is going to happen globally no matter what we do here in the Caribbean, but we have control over our destiny by deciding how it will unfold here in the region.

The energy transition has different implications for different countries in the region and for different sectors. For the fossil fuel importing countries, the development of new renewable technology coupled with the availability of lower carbon intensity fuels (especially LNG), presents a major opportunity.

Jamaica has led the way in CARICOM, by switching out its power generation from fuel oil and diesel to a combination of imported LNG, solar and wind. I am delighted that we are going to have a keynote speech at the conference from Prime Minister Holness and this will be followed later in the agenda by a presentation from Caribbean Marubeni on the role of natural gas in the Jamaican power sector.

For the small islands of the Eastern Caribbean, renewable sources of energy provide a significant opportunity, but also come with significant challenges especially due to intermittency of solar and wind. This means that integrated resource planning is essential, and that storage is a major issue – an area where

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hydrogen as a fuel source could provide a major opportunity. There is also a significant potential in geothermal in many of these islands, which can provide very stable baseload electricity but requires significant capital and expertise to develop. This is one of the areas where there are some obvious transferable skills from the oil industry, especially with drilling.

For Guyana, with its brand-new oil industry and Suriname, looking to expand rapidly, the energy transition presents an interesting challenge. Will they be able to leverage the massive inflow of new revenue that will come from the oil industry to build sustainable infrastructure that can deliver cleaner energy to their population for the long-term? They both have abundant natural resources and huge potential for hydropower, which needs large capital investments, but then can provide a usually reliable and clean energy supply for many decades (though climate change can play a complicating role, if rainfall patterns change).

For Trinidad & Tobago, with its mature oil and gas industry and well-developed petrochemical sector, the challenge is how to take advantage of the continued demand for natural gas and petrochemicals, like methanol and ammonia, in international markets.

Increasingly, however, international buyers are going to demand lower carbon intensity LNG and petrochemicals and carbon taxes on imported products in markets like the EU will make it difficult for higher carbon intensity fuels to compete. Trinidad & Tobago has a significant opportunity to create lower carbon intensity products, through improved energy efficiency in the production cycle, using renewable power to generate hydrogen and using carbon capture technology to sequester CO2 in mature oilfields.

These are all areas where we can indeed lead in the energy transition, with the right policy and investment frameworks in place and a commitment to get it done. The annual Trinidad & Tobago Energy Conference is an excellent opportunity to take stock of where we are on this journey and to chart a way forward for an ever-changing energy industry.

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Disclaimer: Except for the editorial on this page, all opinions are those of the authors or interviewees and do not necessarily reflect the views of the Energy Chamber.

12

opinion

| May 2021 energy.tt • @ttenergychamber

The regional stake in methane mitigation Mark Loquan | NGC President

E

ARLIER this year, The National Gas Company of Trinidad and Tobago Limited (NGC) was welcomed into the Oil and Gas Methane Partnership (OGMP) — a voluntary association of governments, international organisations, NGOs and energy stakeholders working together to reduce methane emissions. Launched in 2014 and led by the United Nations Environment Programme (UNEP), the OGMP currently has 62 members who collectively account for around 30% of global oil and gas production.

NGC’s decision to join the OGMP was driven by several factors. For one, membership will allow us to help shape the global offensive against methane and address one of the biggest challenges of our time.

Secondly, the accountability that comes with member disclosures around emissions will drive improvement (we will want to do better), as will the opportunity to learn from other members who are working towards the same goals (we will learn to do better).

That said, for us at NGC, one of the most important benefits of membership is having a seat at the table, and adding a Caribbean voice to discussions around how best to approach methane mitigation. Regional representation in the methane conversation is crucial, as our Caribbean community has a lot to gain — and disproportionately more to lose — in this fight.

The environmental stake For the Small Island Developing States (SIDS) of the Caribbean, climate change is a grave threat.

We are already experiencing more volatile weather patterns, with more unpredictable rainfall cycles, more severe hurricanes and harsher dry spells.

These changes may however pale in comparison to what could befall us if global warming continues unchecked.

A 2010 UNDP study cited projections that sealevel rise by the end of the 21st century could be between one and two metres. It went on to state that “the Caribbean is projected to experience greater sea-level rise than most areas of the world due to its location closer to the equator and related gravitational and geophysical factors.”1 The implications of this for our small islands and their coastal communities, infrastructure and livelihoods are unthinkable. Inundation due to rising sea levels means shipping ports and airports will disappear under water; communities will be flooded; agricultural land submerged; groundwater compromised by saltwater intrusion. Regional tourism could all but disappear with our beaches; fishing and farming will languish and suffer.

There is nothing new in this narrative, except perhaps for the sense of urgency we feel as this scenario looms large on the horizon. Our actions do not just need to be swift — they need to have 1 https://www.uncclearn.org/wp-content/uploads/ library/undp88.pdf

maximum impact in minimum time.

Decarbonisation of pollutant sectors such as transportation and manufacturing can be costly and involve market and cultural adjustments with protracted gestation periods. This means time and money that the region can scant afford. Even more critically, the lion’s share of emissions reduction needs to occur in places outside the region and beyond our control.

This is where participation in platforms such as the OGMP can make a big difference. According to the Environmental Defense Fund (EDF), at least 25% of today’s global warming is driven by methane from human actions.2 This means that any action we take to reduce atmospheric methane levels can have an appreciable impact in the climate fight.

Not only does the OGMP help raise awareness around methane mitigation, but its mechanism of knowledge-sharing will help members improve the effectiveness of their mitigation strategies.

Collaboration will strengthen individual efforts and amplify their results. Moreover, with a company like NGC involved in discussions, the specific vulnerabilities of the Caribbean can be kept top of mind, and can be used to lobby for greater action by more profligate emitters.

The economic stake Focusing attention on methane has another clear benefit. Unlike some decarbonisation technologies, strategies for reducing methane could have zero net costs up to a certain point. According to the OGMP, in just one year, the global energy sector wasted US$19 billion of natural gas due to methane leaks.3 The value of that wasted gas could likely have covered the cost of plugging leaks or replacing faulty equipment.

If more energy companies were to invest in asset integrity management and leak detection tools — as NGC has done with its new infrared camera and satellite surveillance of its network ­— reducing methane emissions could be a win-win undertaking.

There would be less greenhouse gas (GHG) output, and costs would be offset by having more natural gas product conserved in the pipeline. ttps://www.edf.org/climate/methane-crucialopportunity-climate-fight 3 http://ogmpartnership.com/ 2

Any action we take to reduce atmospheric methane levels can have an appreciable impact in the climate fight.

Conservation of gas resources is an important takeaway for the decarbonising Caribbean for another reason. Although many countries in the region are implementing renewable energy strategies, oil continues to dominate the energy mix. Natural gas will be a critical transitional fuel over the next few decades as countries seek to displace oil with cleaner options.

NGC is already exploring options for small-scale LNG in the region to help expedite decarbonisation efforts. However, with maturing basins in Trinidad and Tobago’s offshore acreage, gas production is becoming more expensive. The more molecules that can be conserved through methane leak detection, the more gas there will be available to supply regional LNG markets at competitive prices.

NGC’s commitment A few years ago, the only Caribbean territory whose methane output would have been significant enough to warrant attention may have been Trinidad and Tobago, given the expanse of our energy industry. However, as Guyana and Suriname grow into notable energy players, regional GHG output will likely rise. Of the methane released by the global energy sector, around 40% comes from oil production4, so we must take early and prehttps://www.worldoil.com/news/2021/1/18/ methane-emissions-fell-in-2020-on-lower-oil-andgas-production#:~:text=Oil%20production%20is%20 4

emptive steps to minimise the methane output and overall carbon footprint of these new energy industries.

Raising awareness through dialogue is the first step.

At NGC, we therefore see our role in the OGMP as twofold. Firstly, we can serve as a spokesperson for the region, increasing visibility of and attention to the Caribbean’s needs and concerns. Secondly, we can be a conduit for critical insights from across global industry, which can be of benefit to regional governments and stakeholders looking to reduce their methane emissions.

It is expected that participation in this Partnership will strengthen the Company’s capacity to treat decisively with methane, through collaboration and exchange with major multinational oil and gas players who have also signed on with NGC as NOJV partners.

These are responsibilities we willingly embrace and commit to fulfilling, but of course, there is strength in numbers. We therefore urge others to join the conversation — our collective future is at stake.

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responsible%20for,accounting%20for%20the%20 remaining%2060%25.&text=Fixing%20methane%20 leaks%20would%20be,be%20sold%20as%20 natural%20gas.

opinion

| May 2021

13

energy.tt • @ttenergychamber

Renewable workforce Human capital strategy aligned to the 5IR Professor Sterling Frost | Contributor

“T

he future belongs to generalists” according to Harvard lecturer Vikram Mansharamani. The future of work has been a prolific topic since the advent of the 4th Industrial Revolution (4IR), which speaks to re-skilling and upskilling of employees toward more specialist technology driven and creative roles.

The emerging 5IR sits atop the global technological acceleration and human-system integration of the 4IR. However, the 5IR reverses the trend of dehumanising innovation. A greater emphasis will be placed on humanity, increasing labour productivity, and mass customisation of products and services. Figure 1 gives a snapshot of the IR overtime.

As the 5IR emerges globally, Trinidad & Tobago (T&T) is now transitioning out of the 3IR to the 4IR (albeit there are overlaps in all the revolutions). The need to accelerate this transition is driven by increasing volatility in global energy markets, rapid emergence of new business models spurred on by the pandemic and structural issues in the local labour market. In response to this environment, the National Development Strategy (NDS) – Vision 2030 has identified Putting People First: Nurturing our Greatest Asset as its number one theme; with initiatives for aligning skills, culture and entrepreneurship to T&T’s socio-economic needs.

This article will dimension some of the issues surrounding this NDS theme, synthesise some of the emerging propositions about the future of work, while exploring the relevance of fostering more “generalists” in T&T’s workforce.

Local Context Structural Issues in local job market and education system The NDS seeks to address distortions in the labour market, which could have been shaped by decades of oil and gas dependency. Via the energy sector, 2-3% of the workforce contribute to 36%-40% of GDP, indicating the need for productivity improvement in the remaining workforce. Historically, Governments of T&T (GOTT) have also been the largest employer funding a public sector that continues to work on institutional strengthening and reform.

These structural issues contribute to T&T’s low Pay and Productivity and Cooperation in labour-employee relations rankings in the World Economic Forum 2019 Global Competitiveness Index (WEF 2019 GCI).

Billions have been invested in subsidising tertiary education over the last decade with sub-optimal returns. A 2018 survey (Newsday, “Dusty Degrees”) found that 53% (local university graduates) were either underemployed or unemployed. Other structural

Figure 1 - Industrial Revolutions - Adapted from the 5th Element Group & AllAboutLean.com

issues include an ageing population and significantly lower labour force participation rate for females (58.3%) compared to males (79.5%). While T&T is classified as high income, this gender disparity is a feature of lower income countries.

Our Competencies Structural issues contribute to gaps in competencies.

A single competency encapsulates Knowledge, Skills and Abilities, and Other traits (KSAOs). These KSAOs interact to give rise to the behaviours needed for organisational effectiveness. Knowledge and Skills are a direct result of schooling and training, whereas Abilities are more dependent on underlying traits such as cognitive or physical abilities. Other traits include values and work ethic, gaps of which have been identified in the NDS. Knowledge should not pose a challenge with a 99.6% literacy rate and a 77.3% internet usage. With respect to the WEF Skills of Future workforce (Critical Thinking in Teaching & Pupil-to-Teacher ratio) T&T ranks 98th; with current Skills - Digital skills among active population ranking at 92nd and Skill set of graduates at 67th (one of the lowest amongst developing countries) see Figure 2.

Global Context Main Trends and patterns emerging The 4IR, with its use of Artificial Intelligence and the Internet of Things, will continue to transform developing states even in the wake of the 5IR. Therefore, some of the major 4IR patterns will continue to replace the 3IR in T&T, setting the foundation for the 5IR. T&T should continue to see: 1. A reduction in the demand for jobs including machine operators, quality inspectors, secretaries, accounting/bookkeeping clerks, tellers and customer service clerks.

2. An increase in the demand for other jobs including Big Data and Data Scientist roles; Process Automation and Robotics Specialists, Organisational Development, Culture, Training and Development Specialists and Sales and Marketing professionals.

Figure 2 - WEF 2019 GCI: “to what extent do graduating students from university possess the skills needed by businesses?”

3.

4.

Additionally, if T&T is to join the global economic shift, one can expect to see the following patterns: • 4IR / 5IR accelerated by COVID-19

Corporations report numerous adaptations including the acceleration of the digitalisation and automation of work processes, upskilling and reskilling, ongoing organisational transformations and reassignment or reduction of workers.

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A reduction in the need for certain skills including memory, manual dexterity and visual and auditory abilities.

An increase in the need for other skills including innovative, analytical and critical thinking, as well as, complex problem solving and empathy.

•

Increased interactions between humans and machines Moving toward the mass customisation of the 5IR, unlike the 4IR, humans will not be replaced by machines but will work alongside them. Humans will collaborate with machines providing ingenuity and empathy with machines providing large scale computing abilities and rich information. The shift will be from tedious tasks so that human experience and creativity are optimised.

Human Experience (HX) replaces Employee and Customer Experience.

There will be added dimensions to how businesses view people. Concern for customer and employee physical and mental health will transcend the traditional boundaries of the workplace and will become an integral part of corporate values. There will be greater purpose and alignment of values for all stakeholders.

Hybrid Work Remote work and virtual meetings will become a stable part of the work environment, and will be combined with any necessary but flexible onsite arrangements. The rationalising of physical spaces will be disrupted and aligned to HX values e.g., saving employees’ stressful commutes and providing energising and inspiring workspaces.

Emphasis on Performance and not hours worked Hybrid workspaces and the nature of work itself will replace employee monitoring with the need for more trust and results-based management.

Increasing use of data, goal setting, KPIs and targets as well as, leveraging the values of trust, transparency and mutual agreement, will alleviate the need for monitoring employee activity.

•

Resource Optimisation, Freelancing and new opportunities Results orientation and hybrid work will also comove with the changing nature of employment.

As companies seek to optimise the use of space and man hours, the idea of employing certain competencies as needed, when needed, will give way to more contract work. This will lend to individuals combining and selling their skillsets in novel ways for shorter periods of time.

Lifelong and permanent jobs will decrease as both business needs and employee competencies continue to evolve in the 5IR.

Implications and Recommendations for T&T Based on where the workforce is currently positioned, T&T may not be able to leap-frog into the future without collateral damage. T&T needs to innovate incremental changes through knowing ourselves and finding realistic and ethical levers that the 5IR has to offer.

The NDS has highlighted the need for a shift in culture, as well as becoming more evidenced based.

This article recommends that the NDS be further elaborated through the following policies.

1. Competency Frameworks and measures should be developed at a national, industry and corporate level in alignment with the 5IR. 2. The education system and expenditure should be aligned to the NDS, economic gaps and the 5IR, starting from early childhood education all the way to post graduate work.

3. Laws and regulations around labour markets should be calibrated toward a much more flexible workforce.

4. The trends of the 4IR and 5IR should be leveraged towards elevating the most vulnerable in society including but not limited to the disadvantaged youth, women and micro and small business entrepreneurs that have been hit the hardest by the Pandemic.

Workforce Sustainability The aforementioned policy framework must result in the meeting of immediate, as well as future needs of the economy. In this vein, a labour market with more “generalists” could help create the sustainability as they are equipped with several tools and competencies that they can draw upon in an evolving environment.

As such, success in the 5IR requires the education system to focus more on learning agility as opposed to domain specific knowledge. The NDS identifies this necessary adjustment as “citizens who are more independent and critical thinkers, creative, innovative and entrepreneurial”.

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14

opinion

| May 2021 energy.tt • @ttenergychamber

Economic modelling: Article 6 potential in 2050 Dirk Forrister | IETA CEO & President

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ERHAPS 2020 gave us the ultimate reality check about the difficulty of planning for the future. COVID-19 disrupted everyone’s plans for the year – and likely for next year as well.

Mega disruptions like this seem to come more frequently.

September 11th. The global financial crisis. COVID-19. With each, it feels like someone has hit an enormous “reset” button in the sky, changing the way we do business in fundamental ways.

In response, some people just want to throw their hands up and say, what the heck? Why bother with setting a future plan when it can get blown off course by a mega-event in what seems like the blink of an eye?

Economic modelling: Article 6 potential in 2050 For the past two years, International Emissions Trading Association (IETA) has worked with economic modellers at the University of Maryland and the Pacific Northwest National Laboratory to explore the future of carbon markets in the coming decades. The economic modelling illustrates how policy design choices will impact future market performance.

The most dramatic results were for long-term impacts on the 2050 net-zero goals or end of century temperature objectives enshrined in the Paris Agreement. But the modellers were reluctant to start with these numbers, due to concerns that many would dismiss them as impossibly far away in time. We agreed to focus first on 2030. But we got reactions that a 2030 look was too short sighted.

Since so many countries and companies are taking 2050 goals seriously, we saw that the information on possible longterm trends was important to share. To model the future to 2050, modellers needed to virtually strengthen NDCs to be on a “better than 2°C” pathway – which means they need to extend to 2100.

Take a look at how that future is depicted in the two charts below. The case on the left shows current ambition, where a trading system can bring 2050 prices from a wide range of $0 to $111 down to an average global price of $59, assuming that natural climate solutions are available. The case on the right shows an enhanced ambition case, where all regions would have stronger NDCs in line with “better than 2°C”. The prices strengthen and converge. But a trading market would still offer significant value, as prices converge into a fairer global price through a functional Article 6 – as shown in the heavy red line shows.

The simple message in both scenarios: if Article 6 is allowed

to work efficiently, it could lower costs and make targets more affordable.

Even if these models are only partly right, the direction of travel should be crystal clear: a world with a well-functioning Article 6 would protect the climate more effectively than a world of isolated action.

The models show that a “better than 2°C” world would mean the market would need to rise to a much grander scale. They show a size of over $800 billion per year by 2050 – where all regions of the world participate and receive benefits, either of attracting new investment for sellers or cost savings for buyers.

Numbers this big may seem crazy. But they simply reflect the amount of action, investment and cooperation required for the targets – and the need to enable trading to deliver a net-zero future.

Looking to Glasgow To any businessperson, the cooperative “Article 6” case should sell itself. Why would any political leader want to opt for a dysfunctional model that wastes money and makes targets less likely to achieve? Granted, the modelling assumes that trading is founded on strong accounting rules and quality standards. But observing the Article 6 negotiating sessions over recent years, one wonders whether some climate negotiators are serious about solving the climate crisis – or whether they’ve lost the plot entirely? COP26 in Glasgow will tell the tale on whether Article 6 can get moving and grow to its full potential.

The fundamental facts come into clear view with the Article 6 modelling exercise. In Christiana’s formulation, it’s clear which future most businesses would want: one built on cooperation, integrity and quality. The work we’ve done together illustrates the future that WE would choose. It could help blaze the trail for governments to follow as Glasgow approaches – and as more and more governments and businesses commit to net-zero targets.

This year’s report looks at the pledges made so far by governments and some of IETA’s members, and the pathways to delivering on 2050 vision – from natural climate solutions to technological innovations, and how carbon pricing can drive these forward. While 2050 may seem far off, the decisions and choices we make now will determine the future. It’s on us to make the right choices.

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Electricity tower

opinion

| May 2021

15

energy.tt • @ttenergychamber

Electric vehicle charging at UTT Energy Campus

Would green hydrogen be the natural development of Latin America and Caribbean renewables endowment?

Inter-American Development Bank | Contributor

I

T is estimated that the cheapest green hydrogen (H2) production in 2030 would come from Latin American countries. Latest data on hydrogen levelised costs shows: 1) a decrease of 13% in the 2030 green H2 forecast, compared to the previous outlook; 2) by 2030, green hydrogen should be cheaper than blue hydrogen in many markets and it will be competitive with natural gas by 2050, without considering carbon price; and 3) the costs of the most attractive green hydrogen projects will be almost three times cheaper than in some hydrogen importing markets, such as South Korean and Japan. Green hydrogen will be cheaper than blue and grey hydrogen in some of the key importing markets.

Why does it matter for Latin America and the Caribbean?

First, we will discuss the meaning of the hydrogen levelised cost update. In chapter 9 of the book “From Structure to Services”, we discussed the underestimation of the adoption of renewables in forecasts during the last two decades. The costs of renewables decreased much faster than it was previously expected and, as consequence, the adoption has been much quicker than anticipated. It can be seen because of many effects. Challenges associated with predicting the development of innovative technologies is one of them. Most of the models are somehow based on historical data.

In the context of innovation, we do not know exactly how it will happen, but we know that it will not follow the behaviour of historical data. It is at the coeur of the innovation definition. Looking at the evolution of the green hydrogen cost forecast, it seems that will follow the same tendency as what we observed in renewables. Green hydrogen will be adopted quicker than predicted. It makes sense as renewable energy represents around (or more than) 60% of its total cost.

Second, let us discuss how quickly green hydrogen will be competitive. Nowadays, green hydrogen is more expensive than grey and blue and, as consequence,

they are strongly dependent on policy incentives.

These incentives usually aim to accelerate the energy transition, enabling early adoption of technology in order to internalise the value chain earlier and aggregate value. These strategic choices, however, tend to be costly. Cost and benefits should be carefully analysed by policymakers as part of their informed decision-making process.

The region competitiveness for green hydrogen If green hydrogen will be competitive with other forms of hydrogen by 2030 and with natural gas by 2050, policymakers should decide their strategies with a relatively short time horizon. They should start their strategy as quickly as possible, especially when considering sizable infrastructure investment decisions, both in hydrogens as well as other competitive markets, such as natural gas.

Third, Latin American and Caribbean (LAC)’s position in this context. Renewable’s endowment in Latin America is well known for being not one of the most cost-effective, but also one of the most promising.

This is not just because of the extent of available wind and sun, but is due to their combination and stability.

The rich endowment can be analysed in some specific places or countries, but also as a regional value.

According to BNEF estimates, the most cost-effective green hydrogen projects in the world are in Latin America. Likewise, even if there is uncertainty about what will be the main technology for hydrogen shipping, in most cases, distance will probably have a small impact on the total cost of this potential international trade. In other words, many LAC countries have a real comparative advantage in the green hydrogen industry.

This comparative advantage should be considered when analysing the cost and benefit for policy strategies, designs and incentives.

Now, what is some of the key challenges and opportunities for policy design?

Hydrogen economies have some similarities with natural gas: the transportation costs, the expense of long distance, the diversity of use, and the lack of

captive demand.

If we think about how the natural gas international market developed (pipelines and LNG), it was basically based on long-term contracts with two characteristics: take or pay clauses with netback price. It was a way to share the risk (volume and price) and guarantee that the natural gas was competitive in throughout the major markets.

Similarly, for the green hydrogen market to flourish, it will be also necessary to have long-term contracts and risk-sharing clauses.

However, we will not be able to use the same logic.

The substitute’s netback price (if not considered CO2 costs) in most markets is not enough to pay for green hydrogen, at least nowadays. Green hydrogen, for now, just makes economic sense if it is compared with other technologies with net zero emission, which is not reflect in prices yet. For that, some kind of CO2 or green hydrogen/ammonia certification and pricing needs to be developed.

What could we learn from the development of other technologies?

When thinking about national policies, especially for renewables, we can benefit from some lessons learned from solar and wind. In both cases, in addition to all the policies associated with the supply-side Research and Development subsidies, the key to massify the use of the technology was the demand-side policy. First, in the format of Feed-In tariffs (FIT)[2], which can be thought of as a kind of take or pay arrangement with a pre-established price. The government assures to buy whatever volume, by a determined price (this policy can better or worse designed). After that, in some countries, people start to use another demand-side policy: namely auctions. The incentives are not that different of FeedIn mechanism. The key difference is that the price of the long-term contract is defined through competitive bids. However, in both cases, a policy strategy take place through the electricity system, in which the risk somehow is allocated through captive electricity consumers. The question is: could the same logic of renewables policy design be applied for hydrogen?

To some extent, yes. But not completely. Many green hydrogen projects to be economically efficient and scalable should be associated with diverse hydrogen uses. In another sector, there is no captive consumers and most of them have access to very competitive markets, such as fuels for transportation, ammonia, iron and steel. Besides, electricity market captivity may be changing in the next decades because of the increasing use of distributed energy. As consequence, it is important on one hand to look at how the electricity policies can play a role, such as auctions, area that the region has long and successful experience. On the other hand, it is important also to identify the complementary industries that may benefit. Green certifications can be a non-intrusive incentive that can be interesting, especially for companies that have already announced net zero emissions targets, which is expected to become more common as we approach the middle of the century.

To discuss all these opportunities and more that IDB invited specialists from the private and public sector, from financing, consulting, and research institutions to debate in several roundtables how to benefit from the future of hydrogen in LAC. At the Bank, we know that for an innovative industry in the embryonic stage such as green hydrogen to flourish, two key elements are essential: coordination between the main stakeholders involved (public and private sector, academia, international organisations, etc.), as well as the creation/dissemination of relevant information and knowledge. At the Bank, we will continue to be committed to that agenda.

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16

opinion

| May 2021 energy.tt • @ttenergychamber

On the importance of registering the Venezuelan migrants in TT Dr Roger Hosein | Contributor

T

HIS note elaborates on the importance of registering all Venezuelans in TT. It builds on the existing data from the Central Statistical Office (CSO) and the Central Bank of Trinidad and Tobago (CBTT) as well as the Data Tracking Matrix (DTM) 2020 of the Institute of Migration. In this DTM 2020, a total of 950 Venezuelan migrants were sampled. The study used a snowball sampling approach given that a well-defined sampling frame does not exist. This sampling process was preceded by 26 baseline interviews with key stakeholders to inform the preliminary migrant profile and to facilitate the creation of a Venezuelan database.

This note is of the opinion that it is critical that the government of Trinidad and Tobago (TT) register all the immigrants in TT from Venezuela to facilitate their labour market integration. The integration of the Venezuelans into the labour market of the TT economy is essential for a number of reasons. Firstly, workers who are part of the formal labour market are not only qualified for being paid the minimum wage but benefit from other kinds of protection, under the law, including protection from exploitation and abuse. As the Table 1 shows, 54% of the workers in the informal sector and 36% of workers in the formal sector indicated in the DTM 2020 that they were underpaid.

With registration, even if the migrant worker remains in the informal sector, it gives them a greater degree of leeway and they would likely be less afraid to go to the police or other authority to complain , if they were underpaid, discriminated or abused in the workplace. The DTM 2020 noted that 47% of the respondents were aware of someone from the migrant community that worked and did not receive the agreed upon payment, with 62% of these incidents occurring in the construction sector.

Secondly, registering all the migrant workers increases the possibility of some of these workers working in the formal non-energy export sector where output per worker is significantly greater than in every other sphere of the non-energy economy. From a constrained optimisation perspective of scarce resource use, this makes sense especially if the sector has spare capacity. As the Table 2 shows, output per worker in the NT sector is lower than in the non-energy export sector and the import substituting sector. Specifically, observe that labour productivity in the non-energy export sector is about 9.8 times that of the import substituting sector and about 15.5 times that of the NT sector.

By way of a simple simulation, note that in 2014 the manufacturing sector of TT had a capacity utilisation rate of 70%, as compared to 65.4% in 2019. Furthermore in 2010, the manufacturing sector employed 52,000 workers as compared to 44,000 in 2019. Is it possible that policy makers could register all the Venezuelan workers and implement a system to make better use of their skills, via a work permit arrangement? Indeed by way of a simple exercise, let us assume that the state supports the strategic aim of the TT Manufacturing Association (TTMA) to “double the value of non-energy manufacturing exports from TT$3.3b to TT$7.0b by the end of 2025” and let us for simplicity assume there is an associated increase in demand for labour in this sector from 44,800 (this is the employment level in the manufacturing sector for 2019) to 89,600 assuming a commensurate doubling of employment. This would require that 75% of the registered Venezuelan immigrants (assuming a stock of immigrants of 60,000) are employed in the non-energy export sector. Let us in turn assume that the employment in the import substituting sector (MS) remains 9% i.e., as found in the DTM 2019 (as the state tries to preserve foreign exchange) and thus only 16% go to the non-tradable (NT) sector. The result of this proposed simulation is compared to the expected outcomes in the economy by 2025 assuming the distribution of labour illustrated by the DTM 2019 held i.e., 87% of the immigrants work in the NT sector, 9% in the MS sector and 4% in the NEX sector. With the proposed reshuffling of

the workers in favour of the non-energy export sector, there would be a significant increase in output from the NEX sector and a fall in output from the NT sector. The simulation in which more workers go to the NEX sector obviously yields the best result and the overall GDP by this experiment would be 131.1% higher than if the distribution of the immigrant labour remained as found in the DTM 2019.

Building on the work of Behar (2018) for Columbia, workers with less than primary school education have no choice in many cases but to work in the informal sector. This is a feature of a skills biased technologicalchange economy. It is possible that some workers with secondary school education that are in the informal sector would have high levels of productivity but cannot enter the formal sector for structural reasons. There may even be some workers with tertiary education in the informal sector because of some particular net advantage. Table 4 provides comparative educational data for the Venezuelan immigrants in T&T with similar educational data for the T&T labour market.

Interestingly, the CBTT does not provide data on the number of people in the labour force with technical vocation training whilst the DTM 2019 does. For comparability of the data, the tech voc responses in the DTM 2019 were added to secondary school responses).

Certainly, at the lower levels of education we have a diminished labour force so that the immigrants help to fill this gap. But in terms of tertiary level education and as the table above shows, the Venezuelans, based on the DTM 2020 data, are educated, even more than T&T nationals in terms of tertiary education. Working with data from a non-probability-based snowball sampling procedure leaves one exposed to a wide range of errors.

But if the data in DTM 2020 is assumed to be credible then the state should hastily register the Venezuelans as they offer not only a demographic dividend but also a significant boost to our stock of human capital, once adequate bridging steps can be made.

Conclusion The TT economy is in a precarious position and since 2008 it has not really grown. Indeed by 2020 the economy was 16% smaller than in 2008 although the country had produced over 4.7bn barrels of oil and gas equivalent. In moving forward and to help restart the economic growth process what will be required is all hands-on deck. The Venezuelan immigrants are here, and they help to augment the labour force of the TT economy that has been operating with four key attributes: it is declining, it is ageing, it is at full employment and the labour force participation rate is falling. In this setting, this little note recommends registering all of the Venezuelan immigrants on the shores of the TT. This registration exercise can help from a national security perspective to determine who are the immigrants in our country and with understanding the magnitude of the capital dilution that is taking place on account of the increased labour force. Integrating the Venezuelan immigrants into the labour market by registering them is central to ensuring that the Venezuelans are not underpaid, overworked and abused. It also increases the probability that they can work in the non-energy export sector where labour productivity is highest.

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Table 1: Basic Data on workers underpaid from the DTM 2020.

Proportion of % of

Venezuelan underpaid

immigrant Venezuelan

workers immigrant

employed in the workers in

informal the informal

Sector % sector

% of underpaid Venezuelan immigrant workers in the formal sector

DTM 2018

90

DTM 2019

60

30

25

DTM 2020

46

54

36

Source: IOM’s Data Tracking Matrix (various years) Table 2: Basic employment and labour productivity data for the listed sectors, 1999, 2008 and 2019

Import Substituting

1999 2008 2019

40346 23400 21940

0.083 0.040 0.037

Non-tradable

0.105 0.782 0.086 0.842 0.075 0.869

LABOUR PRODUCTIVITY TT$, 2000=100 Import Substituting Non-energy exports

1999 2008 2019

Non-tradable

51196 382416 50500 494400 44287 515108

EMPLOYMENT SHARES Import Substituting Non-energy exports

1999 2008 2019

EMPLOYMENT Non-energy exports

18601.6 21854.7 15682.9

Non-tradable

68597.2 78312.9 151023.8 96444.4 154514.4 99404.4

Source: CSSP data and own calculations Table 3: Expected changes in T&T GDP by sector, TT$mn.

GDP in 2025 if the distribution of labour was as found in the DTM 2019

GDP in 2025 if a work permit system was used to support the TTMA’s intent of doubling their output

9% MS

4% NEX

49.6

538.4

9% MS

49.6

87% Non-tradable Total TT$mn

4122.9

4710.9

75% NEX 16% Non-tradable

10094.7

758.2

10902.5

Source: Own calculations based on data in the IOM’s data tracking matrices and GDP data from the CBTT Table 4: Comparing the Education profile of the Venezuelan Immigrants with that of T&T nationals.

Venezuelans TT nationals

No schooling Primary Secondary and Tech Vocation University

1.3 0.3 8.8 16.8 55.5 61.5 34.4 21.4

Source: IOM’s Data Tracking Matrix and data from the CBTT’s Handbook of Key Economic and Financial Statistics

efficiency

| May 2021

17

energy.tt • @ttenergychamber

Transition risk amidst increasing climate ambition

Tamara Bujhawan | Contributor

I

N 2015, most countries around the world submitted emission reduction commitments as part of their Nationally Determined Contributions (NDCs) under the Paris Agreement. In the Agreement, countries decided to adopt a process wherein every five (5) years updated NDCs built upon more ambitious climate action would be submitted. This was deemed necessary since the initial NDCs fell well short of meeting the long-term goal to limit global temperature rise to 1.5°C. Although some countries have already submitted updated NDCs, the majority is expected to do so ahead of COP26 in Glasgow scheduled for November 2021.

Within this context, countries have been increasing their climate ambition. According to Climate Watch’s net-zero tracker, 59 countries representing 54% of global greenhouse gas (GHG) emissions have indicated a net-zero commitment. In May 2020, the International Energy Agency (IEA) published its first-ever detailed blueprint for reaching net-zero emissions by 2050, which is supposedly compatible with the 1.5°C limit. To reach the net-zero pathway, however, the IEA posits that beyond projects that have already been committed as of 2021, there should be no approval for the development of new oil and gas fields. The report highlights a declining fossil fuel era and instead calls for an energy efficient and largely renewable future, backed by nuclear, carbon capture and hydrogen.

The report highlighted a huge gap that exists between ambition and reality. Under policies firmly in place, the world is headed for 2.7°C of warming.

Even if countries meet their net-zero targets in full, temperatures would rise 2.1°C. The legal ramifications of the ambition-reality gap were recently felt in Germany. In 2019, the German government passed a climate law that included a provision for cutting GHG emissions by 55%, from levels in 1990, by 2030. This provision was challenged as being insufficient on the basis that, by not treating climate action seriously

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The effects of climate change in Icacos, Trinidad enough, it was denying basic rights to citizens of the future. The Federal Constitutional Court ruled that for justice to be done, intermediate targets should be set, the details of which should be submitted by the end of 2022.

On the surface, net-zero commitments and climate rulings in international jurisdictions do not appear to impact operations in Trinidad and Tobago, after all we do have our own climate commitments.

This does not quite hold true. As countries increase their climate ambition, they in turn would seek out climate friendly and low-carbon products and services from international trading partners.

There are two types of risks associated with climate change: physical and transition. Physical risks are the most visible and pertain to extreme weather events, rising sea levels, droughts, and flooding. Transition risks, on the other hand, are concerned with the loss of license to operate, carbon pricing, regulatory changes, societal change, and the political will to move to a 1.5°C pathway or to get to net-zero. It can affect access to markets where market risk is increasingly seen through shifts in supply and demand for certain commodities, products, and services. At the private sector level, commodities produced locally, especially those that are homogeneous in nature, are exposed to transition risk if they do not meet the criteria of the buyer, particularly those that are seeking to decarbonise their supply chains.

The European Green Deal was adopted in December 2019 and includes the goal of enshrining the long-term objective of climate neutrality by 2050 in legislation, and increasing the EU’s climate ambition, in particular reducing GHG emissions by 50-55% from 1990 levels, by 2030. This is premised on the position that should a difference in level of ambition worldwide persist, even as the EU increases its own climate ambition, then a border carbon adjustment (BCA) would be applied to Emission Intensive, Trade Exposed Industries (EITE). This mechanism would ensure that the price of imports reflect more accurately their carbon content – essentially a tax on the imports of carbon intensive products.

Some examples of the EITE industries are those that are well-established in Trinidad and Tobago, include: • manufacture of fertilisers and nitrogen compounds; • manufacture of industrial gases; and • manufacture of refined petroleum products.

This measure would need to be compliant with World Trade Organization rules and other international obligations of the EU, but it demonstrates how increasing climate ambition in some countries can potentially impact local operations.

Emission intensive entities in Trinidad and

Tobago are also exposed to transition risk through the disclosure of climate related risk. Financiers, investors, and banks are increasingly including climate and emissions criteria in their investment decisions and in some instances, have started reporting and even placing caps on “financed emissions”. This raises the threshold for accessing certain types of finance in the international marketplace.

Furthermore, there is a growing movement to divest from fossil fuels. There are morality and social justice arguments associated with the movement, but most impactful are the economic and financial arguments. As the global net-zero transition progresses, it is expected that fossil fuel assets would face devaluations.

Nevertheless, there are opportunities for local operators setting emission reduction goals and seeking to decarbonise their operations and processes. Adopting low-carbon technology can enable access to new markets. It can also be seen as a competitive advantage, where the commodity or product emphasises the reduced or avoided emissions.

Furthermore, emission reductions or avoided emissions, beyond business as usual, can be sold to crediting schemes, thus defraying some of the capital expenditure associated with the adoption of the lowcarbon technology. Cooperative action under Article 6 of the Paris Agreement seeks to offer an opportunity to significantly lower the costs associated with increasing climate ambition by engaging the private sector and expanding access to finance, technology, and expertise into new areas. Beyond Article 6, voluntary carbon markets present another avenue for monetising emission reductions.

It is clear that transition risk is increasing. The question is whether local operators get pushed out of the market or rise to the challenge and pursue opportunities to decarbonise and gain a competitive advantage.

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18

efficiency

| May 2021 energy.tt • @ttenergychamber

Who is moving to my side of the cheese?

Gary Clyne | Contributor THE US owns over 24% of the global GDP. On a per capita basis, the US GDP is six times larger than China and is by far the largest market in the Western Hemisphere for the import of goods and services.

The US energy sector was put on notice last month when shareholders of ExxonMobil and Chevron adopted climate-change initiatives that both firms opposed during general meetings. Also last week, Shell is now legally responsible for its contribution to climate change. A judgement by The Hague set a precedent that oil and gas companies are bound to the Paris Agreement, not just countries. A climate win trifecta!

So, what do these climate-friendly leaning actions mean for Trinidad? A big GDP bump, if state owned entities (SOE) get behind local private sector companies and deploy the Trinidad carbon market contribution under the Paris Agreement, to help fund clean-tech solutions at home and abroad.

There are two types of climate business growth strategies to choose from using our carbon market: organic and non-organic: 1. Non-organic strategies imply a local Trinidad firm working with an established SOE. Together they pursue an UN Climate Change compliant renewable energy or low emission capital improvement business projects at home.

2. Organic strategies mean that a SOE partnered with a local Trinidad firm expands into new markets abroad to develop UN Climate Change compliant renewable energy or low emission capital improvement projects.

The above two types of strategies are considered vertical (non-Organic) and horizontal (Organic) by nature. Used together these two strategies will create a significant spike in the Trinidad economy. These strategies will create jobs, contribute to Trinidad's energy independence, and increase export of goods and services opportunities.

Fifty years ago, China, Taiwan, and South Korea — not to mention Botswana, Chile, India, Mauritius, and Singapore — were mired in poverty, lacking functional economies, technical resources, and access to capital for improvement. Now, these countries (not Japan, the United States, nor Switzerland) because they seized an opportune moment, have become the fastest-growing economies on the planet. Trinidad’s moment is now and the basic SOE bureaucratic tasks required to make the horizontal and vertical strategies a reality, can be accomplished relatively quickly and inexpensively using its carbon market.

In a world of diminishing returns, Trinidad and Tobago will gain the most from the renewable technology and low emission infrastructure market space. For low emission infrastructure, the returns are high, and there is no shortage of investors willing to fund projects or lend money to governments. Banks will line up to lend Trinidad developers the money for energy sector new lower emitting assets and renewables due to project equity created by the carbon market. The World Bank, established after World War II with the express aim of providing loans and grants to countries for reconstruction and development, lends billions of US dollars a year to developing countries.

Oil and gas Supermajors (BP, Chevron, Eni, ExxonMobil, Royal Dutch Shell, TotalEnergies, and ConocoPhillips) have recently embraced the global energy transition. This is not a good thing for existing players in the low emission and renewables industry.

The Supermajors’ massive balance sheets and project management experience will allow for scale up of new energy systems, but have many conflicts of and vested interests in the project results. They can distort nascent markets and create trade barriers for UN Climate Change compliant competition. They will displace existing developers and push returns down to unsustainable levels. Supermajors will target renewables and low emission development through merger and acquisition in advanced countries – not

organically—to hinder the global energy transition through politically engineered border trade walls.

The Paris Agreement market plan is designed to make sure that regulations on a price on carbon pollution is applied fairly among all trading partners and countries. A level playing field, ensures competitiveness and protects the global shared environment. Supermajor global control of climate resilient projects will support countries with climate regulations and carbon markets over those without regulations and markets.

A border tax, which is officially not a tax at all but a "border adjustment" has so far garnered little attention outside specialist circles. That is about to change. The "border adjustment" will be a levy to make sure that imports of poorer countries are subject to increased cost. As the price on carbon pollution soars, so do urgent calls by Supermajors and their affiliates for a border tax.

US oil and gas lobbyists argue that it is necessary to cover in-country low emission development and research and development costs that poorer nations avoid due to non-regulation. This move risks disadvantaging not only Trinidad’s existing production and exports, but starving us of investment funds for decarbonisation.

Supermajors will not have to worry about border carbon tax constraints and will be able to find investment and procure low-interest advance country government guarantees and loans for new technologies and project development using tax credits and other bankable incentives outside of the UN Climate Change boundaries. The battle in the US and Europe over whether to impose a “border adjustment’ is political.

The Supermajors will prevail. Therefore, I think that Trinidad should seek a Paris Agreement compliant contract with the US now. A contract much like the one Switzerland has with Peru. Experts agree that this kind of proposed contract will generate project equity through the sale of carbon offsets to US carbon markets like the transactions contemplated in figure one.

With its reentry into the Paris Agreement, the US is ripe for this type of relationship with Trinidad, its SOEs and experienced contractors. The US has plans for USD100 billion to upgrade electric grids, USD300

Figure 1 So, they will eventually become renewable energy companies. Under the Paris Agreement the supermajors are emitters and customers for UN Climate Change compliant carbon market offset sales, NOT necessarily partners-in-progress. Trinidad should seriously consider the political position that Supermajors have taken on border taxes in the US and Europe. They are either with Trinidad on climate marketspace development or they are not.

No matter how sharp the knife or how thin you cut the cheese, each piece will still have two sides. The Supermajors have moved to the climate market side

billion to boost manufacturing and supply chain capacity, USD16 billion to clean up oil and gas wells and mines, USD174 billion to invest in electric vehicles and related infrastructure, USD46 billion in procuring clean energy manufacturing, and investment in carbon capture to help decarbonize power plants, cement and steel manufacturing. A lot of potential horizontal and vertical space for carbon exchanges utilising the Trinidad carbon market.

Finally, with SOE support and participation, a contract that will monetise Trinidad’s sky-high per capita emissions with the country having the largest GDP in the world is possible. Local company vertical growth strategies will go deep into the current Trinidad market, increasing the demand for local business products and its adoption. SOE and their local partners horizontal growth strategies will expand products and services to new markets and new geographies.

From Houston to the Hague, the Supermajors have fought climate concerned shareholders in meetings and in courtrooms to force oil and gas on the world, all the while denying their central role in the climate crisis.

The time to start retreating from the fossil fuel business is no longer in the future, but now. These companies are facing pressure for change from regulators, investors, and now the courts. Trinidad should begin discussions concerning its role in a global climate marketspace with every Supermajor it has a production share contract with immediately. A share of a trillion US dollar a year market is at stake.

Supermajors must achieve net-zero by 2050.

Petrochemical facility in Pt Lisas, Trinidad

of the cheese. After more than a hundred years of partnership, the Supermajors should support Trinidad playing on both sides of the climate cheese as well. Exempt us from your home country border tax and provide Trinidad a pathway for an UN Climate Change Article 6 Agreement with the United States. Not a big ask.

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Jan-2021 Feb-2021 Mar-2021

Feb-2021

Mar-2021

Nov-2020

Oct-2020

Sep-2020

Aug-2020

Jan-2021

600 500 400 300 200 100 0 Dec-2020

Production of Methanol (000's Tonnes)

Dec-2020

Nov-2020

Oct-2020

Sep-2020

Aug-2020

Jul-2020

Jun-2020

Depth Drilled (ft)

Jul-2020

Jun-2020

Liquefied Natural Gas Production (cu m) May-2020

Apr-2020

Mar-2020

Mar-2021

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Jan-2021

Dec-2020

Nov-2020

Oct-2020

Sep-2020

Aug-2020

Jul-2020

Jun-2020

May-2020

Apr-2020

Mar-2020

Feb-2020

Crude Oil Production Daily Average (000s Barrels)

May-2020

Apr-2020

Mar-2020

3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 Feb-2020

Jan-2020

Mar-2021

Feb-2021

Jan-2021

Dec-2020

Nov-2020

Oct-2020

Sep-2020

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energy.tt • @ttenergychamber

Feb-2020

45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Jan-2020

Mar-2021

Feb-2021

Jan-2021

Dec-2020

Nov-2020

Oct-2020

Sep-2020

Aug-2020

Jul-2020

Jun-2020

May-2020

Apr-2020

Mar-2020

Feb-2020

Jan-2020

62 60 58 56 54 52 50 48 46

Jan-2020

Mar-2021

Feb-2021

Jan-2021

Dec-2020

Nov-2020

Oct-2020

Sep-2020

Aug-2020

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Jun-2020

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| May 2021

energy update

19

Monthly Review

Natural Gas Production (mmcf/d)

4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0

Number of Rig Days

140 120 100 80 60 40 20 0

Mar-2021

energy update

Feb-2021

Jan-2021

Dec-2020

Nov-2020

Oct-2020

Sep-2020

Aug-2020

Jul-2020

Jun-2020

Production of Ammonia (000's Tonnes)

May-2020

Apr-2020

Mar-2020

Feb-2020

600 500 400 300 200 100 0 Jan-2020

Mar-2021

Feb-2021

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20 | May 2021

energy.tt • @ttenergychamber

Monthly Review

Production of Urea (000's Tonnes)

70 60 50 40 30 20 10 0

21

| May 2021

efficiency

energy.tt • @ttenergychamber

IDB, IDB Invest launch the Green Bond Transparency Platform Staff Writer | Energy Chamber THE Inter-American Development Bank (IDB) and IDB Invest recently launched the Green Bond Transparency Platform (GBTP) , an innovative digital tool that brings greater transparency to the green bond market in Latin America and the Caribbean.

GBTP supports the harmonisation and standardisation of green bond reporting, boosting investors’ confidence that the proceeds from bond issuances are being spent on green projects whose impact are adequately measured. Users can learn about the proceeds, impacts, and methodologies for each green bond in the region and can filter data to access environmental performance using different criteria. Blockchain (DLT) technology facilitates secure data reporting in the GBTP. The online digital tool supports IDB efforts to scale up the green bond market in the region and helps national and municipal governments, financial institutions, and companies to access the financing they need to tackle climate change and make environmentally sustainable investments.

Worldwide, the green bond market reached a record issuance of $1.1 trillion by 2020. Latin America and Caribbean represent 2% of this market with large upward potential. Since 2016, the IDB Group has

significantly helped the region’s green capital market by supporting more than 30 percent of the issuances by volume.

“Greater transparency is key for boosting investor confidence that Latin America and the Caribbean is making sound green investments and, thus, make them feel comfortable in increasing their investments in the region,” said Juan Antonio Ketterer, Division Chief of the Connectivity, Market and Finance Division at the IDB. “GBTP is the first tool which makes information accessible and comparable to everyone interested in participating in the region’s market, free-of-charge,” added Ketterer.

In that regard, Sean Kidney, the CEO of Climate Bonds Initiative (CBI), a partner organisation, mentioned that the “GBTP contributes to the dissemination of best practices within the green bond market, at this important time when governments and other institutions focus on the green transition.

It will greatly support the standardisation and harmonisation of green bond disclosure, especially around post-issuance reporting — this is valuable to a range of stakeholders, including investors”.

The GBTP, which seeks to be taxonomy and methodology neutral, has been tested in collaboration with more than 40 key market

actors, including standard setters, issuers, external reviewers, underwriting banks, investors, and funds, such as KfW’s Latin American Green Bond Fund.

The IDB provides free technical support for issuers and external reviewers interested in utilising the GBTP features.

This innovative tool is a user-friendly public good that offers unrestricted data access to all users, thanks to technical assistance resources provided by the German Ministry of Environment International Climate Initiative (IKI) and resources by the Swiss State Secretariat for Economic Affairs (SECO).

The GBTP team has been working with data platform innovators such as the Luxembourg Stock Exchange’s LGX DataHub, the Nasdaq Sustainable Bond Network (NSBN), Environmental Finance, and as part of ICMA’s impact reporting technical working groups with a view to facilitate cross-platform data sharing and harmonised nomenclatures.

In that regard, Julie Becker, CEO of LuxSE and Founder of LGX, mentioned that “through our collaboration, IDB and LuxSE have contributed to avoiding market fragmentation and making sustainability data comparable at an international level. We will continue to work jointly on harmonisation of sustainability data to facilitate transparency with green bond issuers in Latin

America and the Caribbean”.

In addition, the Head of the NSBN, AnnCharlotte Eliasson, said that “in order to expand the Nasdaq Sustainable Bond Network into a global platform for increasing transparency on the sustainable bond market, collaboration with strong local partners such as the IDB is crucial. Through our partnership, we are able to provide high-quality data to benefit the public good through the GBTP, while also providing the Nasdaq Sustainable Bond Network with coverage of the expanding Latin American sustainable bond market”.

Finally, Claudia Arce, the director of Latin America and the Caribbean of KFW Group, a platform partner, highlighted that the GBTP “is a great initiative to enhance transparency, comparability and accessibility of Green Finance data to investors. It has been a rewarding experience to support its inception. We will use the platform and we encourage all our partners in the region to do this as well”.

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Pigeon Point, Tobago

Yara, JERA plan to collaborate on clean ammonia to decarbonise power production in Japan Staff Writer | Energy Chamber YARA International ASA, a leading global ammonia player and JERA Co., Inc, Japan’s largest power generation company, have signed a Memorandum of Understanding to collaborate on the production, delivery and supply chain development for blue and green ammonia, to enable zero-emission thermal power generation in Japan.

Japan recently announced plans to introduce ammonia into the fuel mix for thermal power generation, as part of its measures to cut CO2 emissions and reach carbon neutrality by 2050. As part of its Green Growth Strategy, the government targets ammonia imports of 3 million tonnes by 2030.

“This ground-breaking collaboration aims to decarbonise JERA’s power production and provide Yara with a footprint in the strategically important Japanese market. Building blue and green ammonia

value chains is critical to enabling the hydrogen economy, and collaborating with a key player like JERA marks a milestone in leveraging Yara’s global capabilities,” says Svein Tore Holsether, President and Chief Executive Officer of Yara.

JERA Corporate Vice President Yukio Kani says: “We are pleased to conclude this MOU with Yara, a leading global ammonia producer, which shares our aspiration to develop a clean ammonia value chain.

We believe that this cross-sector collaboration will not only expand business opportunities for both companies but also accelerate the transition to a decarbonised society.”

Ammonia does not emit carbon dioxide during combustion and is seen as an effective future energy source. Blue ammonia is derived from a carbon capture and storage process (CCS), while green ammonia is produced carbon free by using hydrogen sourced from renewable energy as feedstock. The

term clean ammonia comprises both blue and green ammonia.

Under the MoU, Yara and JERA are targeting collaboration in the following areas: • Supply and development of new ammonia demand in Japan including power generation purpose; • Sequestration of already captured CO2 (CCS) at Yara’s ammonia plant in Pilbara, Australia, enabling the production and supply of blue ammonia to JERA; • New clean (blue and green) ammonia project development; and • Optimisation of ammonia logistics to Japan.

JERA is the largest power generation company in Japan, producing about 30% of Japan's electricity.

The Tokyo-based company is committed to establishing green fuel supply chains to achieve

zero CO2 emissions from its operations in Japan and overseas by 2050.

Yara is a world leader in ammonia, with long experience and leading positions within global ammonia production, logistics and trade. The Oslobased company produces roughly 8.5 million tonnes of ammonia annually. Yara employs a fleet of 11 ammonia carriers, including 5 fully owned ships, and owns 18 marine ammonia terminals with 580 kt of storage capacity – enabling it to produce and deliver ammonia across the globe. Yara recently established a new Clean Ammonia unit to capture growth opportunities in emission-free fuel for shipping and power, carbon-free fertiliser and ammonia for industrial applications.

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22

renewables

| May 2021 energy.tt • @ttenergychamber

Digitalisation will drive solar success, finds new DNV report Staff Writer | Energy Chamber DNV released the first part of the “More than the sun: A solar report series,” a group of comprehensive reports about the outlook for solar energy and how digitalisation will boost the value of electricity generated by PV plants and drive the success of solar PV for the next 30 years.

“Solar PV investors and operators can use the ‘More than the sun’ series as a roadmap for their revenue future,” said Richard S. Barnes, DNV’s Executive Vice President and Region Manager, Energy Systems North America. “The report series will enable project owners to identify areas where digitalisation can help their solar PV projects move to rising levels of efficiency and profitability in a dynamic market, accelerating decarbonisation of the energy industry.”

By 2050, solar power will produce a third of electric energy, as projected in DNV’s 2020 Energy Transition Outlook. This remarkable growth will be due in part to continued decline in PV technology costs and favourable levelised cost of electricity (LCOE) rates. Still, solar investors and operators face challenges to revenues in the future, as markets place lower value on the power produced by this variable renewable and substantial increases in solar generation result in price cannibalisation. These trends will accelerate in the next decade.

“Digitalisation across PV assets and processes will not only lower costs but also raise the overall value of solar generation in the market,” said report author Dana Olson, DNV’s Global Solar Segment Leader. “It will provide the necessary insights and integration that solar projects will need to

operate lucratively in an increasingly competitive environment.”

On the capital expenditure level, advanced analytics and machine learning will lower construction, development, and asset deployment costs, especially regarding such systems as modules, trackers, and inverters. On the operational side, digital tools will streamline and continuously improve how power is generated and delivered.

Automated inspection, vegetation management, and the processing of thermal imaging will inform preventative and predictive maintenance programmes, further optimising and lowering the cost of operations and maintenance activities.

As digitalisation helps integrate energy storage and communicate instantaneously with the grid about supply, demand, and power support services,

electricity can be dispatched beyond sunset, and solar PV generators will be able to command higher prices in auctions and purchased power agreements.

The series highlights not only the areas in the solar PV plant where digitalisation offers the greatest benefit, but also the ways it can help modernise markets. In addition, readers will find case studies of two of the largest and most advanced solar and hybrid PV plants in the world—Noor Abu Dhabi in the United Arab Emirates and Gemini Solar Project in Nevada, in the U.S.

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World adds record new renewable energy capacity in 2020 Staff Writer | Energy Chamber DESPITE the COVID-19 pandemic, more than 260GW of renewable energy capacity was added globally in 2020, beating previous records by almost 50%.

Global renewable energy capacity additions in 2020 beat earlier estimates and all previous records despite the economic slowdown that resulted from the COVID-19 pandemic. According to data released recently by the International Renewable Energy Agency (IRENA) the world added more than 260 gigawatts (GW) of renewable energy capacity last year, exceeding expansion in 2019 by close to 50 per cent.

IRENA’s annual Renewable Capacity Statistics 2021 shows that renewable energy’s share of all new generating capacity rose considerably for the second year in a row. More than 80 per cent of all new electricity capacity added last year was renewable, with solar and wind accounting for 91 per cent of new renewables.

Renewables’ rising share of the total is partly attributable to net decommissioning of fossil fuel power generation in Europe, North America and for the first time across Eurasia (Armenia, Azerbaijan, Georgia, Russian Federation and Turkey). Total fossil fuel additions fell to 60 GW in 2020 from 64

GW the previous year, highlighting a continued downward trend of fossil fuel expansion.

“These numbers tell a remarkable story of resilience and hope. Despite the challenges and the uncertainty of 2020, renewable energy emerged as a source of undeniable optimism for a better, more equitable, resilient, clean and just future,” said IRENA Director-General Francesco La Camera.

“The great reset offered a moment of reflection and chance to align our trajectory with the path to inclusive prosperity, and there are signs we are grasping it.

“Despite the difficult period, as we predicted, 2020 marks the start of the decade of renewables,” continued Mr. La Camera. “Costs are falling, clean tech markets are growing and never before have the benefits of the energy transition been so clear.

This trend is unstoppable, but as the review of our World Energy Transitions Outlook highlights, there is a huge amount to be done. Our 1.5 degree outlook shows significant planned energy investments must be redirected to support the transition if we are to achieve 2050 goals. In this critical decade of action, the international community must look to this trend as a source of inspiration to go further,” he concluded.

The 10.3 percent rise in installed capacity represents expansion that beats long-term trends of more modest growth year on year. At the end of 2020,

global renewable generation capacity amounted to 2 799 GW with hydropower still accounting for the largest share (1211 GW) although solar and wind are catching up fast. The two variable sources of renewables dominated capacity expansion in 2020 with 127 GW and 111 GW of new installations for solar and wind, respectively.

China and the United States of America were the two outstanding growth markets from 2020. China, already the world’s largest market for renewables added 136 GW last year with the bulk coming from 72 GW of wind and 49 GW of solar. The United States of America installed 29 GW of renewables last year, nearly 80 percent more than in 2019, including 15 GW of solar and around 14 GW of wind. Africa continued to expand steadily with an increase of 2.6 GW, slightly more than in 2019, while Oceania remained the fastest growing region (+18.4%), although its share of global capacity is small and almost all expansion occurred in Australia.

Highlights by technology: Hydropower: Growth in hydro recovered in 2020, with the commissioning of several large projects delayed in 2019. China added 12 GW of capacity, followed by Turkey with 2.5 GW. Wind energy: Wind expansion almost doubled in 2020 compared to 2019 (111 GW compared to 58 GW last year). China added 72 GW of new capacity,

followed by the United States of America (14 GW).

Ten other countries increased wind capacity by more than 1 GW in 2020. Offshore wind increased to reach around 5% of total wind capacity in 2020.

Solar energy: Total solar capacity has now reached about the same level as wind capacity thanks largely to expansion in Asia (78 GW) in 2020. Major capacity increases in China (49 GW) and Vietnam (11 GW). Japan also added over 5 GW and India and the Republic of Korea both expanded solar capacity by more than 4 GW. The United States of America added 15 GW. Bioenergy: Net capacity expansion fell by half in 2020 (2.5 GW compared to 6.4 GW in 2019).

Bioenergy capacity in China expanded by over 2 GW. Europe the only other region with significant expansion in 2020, adding 1.2 GW of bioenergy capacity, a similar to 2019.

Geothermal energy: Very little capacity added in 2020. Turkey increased capacity by 99 MW and small expansions occurred in New Zealand, the United States of America and Italy.

Off-grid electricity: Off-grid capacity grew by 365 MW in 2020 (2%) to reach 10.6 GW. Solar expanded by 250 MW to reach 4.3 GW and hydro remained almost unchanged at about 1.8 GW.

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24

news

| December 2020 energy.tt • @ttenergychamber