The Energy Question Episode 34 – Dr. Ulric Trotz, Deputy Director & Science Adviser, CCCCC

 

David Blackmon [00:00:10] Hello, welcome to the Energy question with David Blackmon. I’m your host, David Blackmon, and my very special guest today is Dr.Ulric Trotz, a former science advisor to the Caribbean Community Climate Change Center.

David Blackmon [00:00:22] He has written a white paper recently that deals with the intersection of energy development and the environment in Guyana, where a consortium led, of course, by ExxonMobil, along with Cenac and one other company whose name I’m sure my gosh, I’m not going to remember right now, which is terrible, has been developing a major oil resource in the offshore of Guyana. And Dr. Trotz, Welcome so much to the podcast.

Ulric Trotz [00:00:53] Thank you for having me.

David Blackmon [00:00:54] Before we get into the Q&A, related to the White Paper, talk about your role in developing this and why you thought it was, the Time Is Right and this was an important project to take on that.

Ulric Trotz [00:01:08] For the last two decades, more or less, I have been very much involved in the Caribbean region, building our capacity to respond to the climate change threats that we are faced over the years. Basically, we started to understand the need as a result of the when you look at Paris Agreement, the need for countries basically to phase out the use of fossil fuels for the Caribbean itself.

Ulric Trotz [00:01:40] You know, we are very we contribute minimally to the global greenhouse gas budget. So for us, that was not a priority. Our priority is how to protect ourselves from the existential threats of climate change.

Ulric Trotz [00:01:57] But our energy, the architecture of the energy sector in the Caribbean region basically demands that we change to renewables simply because we are one of the most energy-intensive regions in the world.

Ulric Trotz [00:02:11] As a result, we are uncompetitive in our service industries or manufacturing industries, etc. So apart from climate change considerations, it’s imperative that we switch to renewables, We phase out fossil fuels, all in keeping with the demands of the Paris Agreement on Climate Change Convention.

David Blackmon [00:02:34] So in your White paper, as I read it, you proposed that the country Guyana’s new status as I mean, it’s going to become really one of the ten or 12 biggest oil-producing countries in the world in the next half-decade. Given the way, the Stabroek project is advancing.

David Blackmon [00:02:55] Your white paper poses, I think the proposition that this newfound status and the wealth that’s going to be derived from the oil and natural gas out there can actually help the country achieve these long-standing goals of moving to renewables and reaching a net zero carbon status in the decades to come. Do I have that right?

Ulric Trotz [00:03:17] Yes, absolutely correct.

David Blackmon [00:03:19] So you know, I know that one thing the country is working on has to do with the natural gas, the associated natural gas production, just as an example here, in cooperation with the consortium led by Exxon, they’re embarked on a project to convert a coal-fired major coal-fired power plant that’s been a big provider of electricity on the island. To use that natural gas in order to reduce carbon emissions. Is the plan eventually, in your view, to then convert in later years the natural gas plant that to replace it with renewables?

Ulric Trotz [00:04:00] A couple of clarifications there, David, it is in the Caribbean but it’s not an island it’s yeah it’s the northern shores of so the America the other thing is that we don’t our energy now is not produced from coal. We are never a coal producer we use heavy fuel oil.

David Blackmon [00:04:27] Oh that’s right it’s Fuel Oil. Right? Yes.

Ulric Trotz [00:04:29]  Yes, there is then there is a conversion in anticipation of moving to renewables. Part of the conversion includes changing the HFO facility that we have to a state where they can use either HFO or Natural gas, and that is temporary.

Ulric Trotz [00:04:58] The focus is that natural gas, which globally has been accepted as one of the most feasible options for countries during the transition. We are going to use that. But at the same time, they are investing heavily in our hydro potential and also solar and wind energy, and also biomass-using renewables. So natural gas is temporary. It will be phased out as we phase in the renewables over a period of time. That’s the general sort of idea about this transition.

David Blackmon [00:05:45] My wife and I, it’s interesting to us, we have. We like to take cruises on these big ships in the Caribbean, and we visited the islands, you know, most of the islands in the Caribbean by now. And it’s always fascinating to me that it appears to me anyway, that fuel oil is really been kind of the power generation fuel of choice in that region for many years now. Right. I mean, that’s been kind of the prevailing method for decades since, I guess, the big oil discoveries in the Caribbean area were offshore Trinidad and Tobago decades ago, as I write.

Ulric Trotz [00:06:26] As Trinidad and Tobago and to the south, of course, there’s there is Venezuela.

David Blackmon [00:06:32] Right? Yes, of course. Yes. So so it’s interesting to me, at another point in your paper, you talk about the low carbon status of the production of oil from Stabroek and how that’s going to make as the transition continues over the next several decades, it’s going to mean that Guyana’s oil production is going to become more sustainable from an emissions standpoint, I guess, or than oil produced in other parts of the world. So I guess the expectation is Guyana’s oil production may be among the last oil production that is ultimately phased out.

Ulric Trotz [00:07:10] Well, that’s I think the whole its first deposits itself is what is referred to as sweet oil means that it’s really clean. And the method of getting it to the market using these recently developed what they call FBA sources where they’re floating the production is inside, the storage is inside and they’re offloading to get it to the market is right on site so that the carbon emissions basically that normally would accrue from transportation, etc. are significantly lower than what is traditionally being experienced. So apart from that, it’s coming in well, Rystad Energy says at about $28 per barrel in production. So it’s going to be competitive. And you know.

David Blackmon [00:08:15] Very well.

Ulric Trotz [00:08:16] What has happened is that there’s a realization that as all countries transition to net zero, there will be a market for fossil fuels. And I think that is the rationalization basically for production. And as you can see in Guyana, they are ramping up production because the horizon, of when fossil fuel will be required, is not far off. We are talking about net zero by 2050. And so there is a limited time span for when that market will be available.

David Blackmon [00:08:57] So so one of the reasons I guess, the revenue stream from this oil is shaping up to become so important for Guyana and its climate goals is the fact that as you mentioned in your paper, there was a proposed $100 billion capitalization of the Green Climate Fund by 2020 that was made over a decade ago that never really came about. And that has, I guess, served to deny funds to developing nations to engage in these kinds of transition efforts. Talk about that and the reasons why it was first proposed and the reasons why it never really came to fruition. Well.

Ulric Trotz [00:09:35] On the Climate Change negotiations, global negotiations, we in developing countries have always argued that the reason why we have a problem now with climate is basically as a result of the pattern of development globally since the Industrial Revolution, which is fossil fuel base,.

Ulric Trotz [00:09:58] Our inputs into the global greenhouse gas budget are minimal compared to the developed countries. And one of the arguments that we’ve had under the umbrella of the convention is basically saying, well, look, although we weren’t responsible due to our geographical setting, our poverty, and a whole set of other factors, we are exceedingly vulnerable to the impacts of climate change of the of this issue.

Ulric Trotz [00:10:30] And we tried to make the case that as poor developing countries, we need some sort of consideration from the developed countries who really have been you can see you can point a finger since your development that has put us in this boat to provide the resources so that apart from the energy issue about going to net zero.

Ulric Trotz [00:10:58] We have to build resilience, We have to build resilience in our water systems, our health systems, our coastal infrastructure, etc. to the existential threats that we are already experiencing from climate change. That has been a difficult battle over the years.

Ulric Trotz [00:11:19] The Green Climate Fund was supposed to be capitalized at the level of 100 billion USD per year, but recently, as you’ve seen figures really saying that to address this issue we need about a global about 4 trillion USD per year to address climate resilience issues.

Ulric Trotz [00:11:40] We don’t have those resources and this has been one of the problems that we face. It is not that we don’t know what steps we have to take to build resilience. It’s just that we don’t have the resources. Amsterdam, for instance, the Dutch course is basically below sea level, like the coasts in Guyana, which is my country incidentally.

Ulric Trotz [00:12:06] But Amsterdam, they have the financial resources to put in place a flood risk system, basically for a one-and-a-thousand-year flood event. We know that we don’t have the resources to deal with yearly flooding events and deal with the impacts. So you see, the basis of this is access to the financial resources to allow us to move to net zero and to build climate resilience.

Ulric Trotz [00:12:39] And just one very quick point about this moving to net zero really might be would have been the easier way for us simply because the investments in transforming renewables from fossil fuels to renewables, that’s an investment.

Ulric Trotz [00:12:57] The internal rate of return on investments in that type of transformation is very, very favorable. So you can get an investment in that transformation. However, if I am going to look at my sea defense, etc., that is a public good and basically, it falls on the shoulders of poor countries to find the resources for that type of protection.

David Blackmon [00:13:24] So I am a voracious viewer and sometimes even follow it online these cop conferences and the WEF conference in January. And along the same lines, it often seems to me that these global gatherings seem to devolve into leaders in the Western world, seeming to lecture leaders in developing nations about what they should be doing to address climate change without also recognizing the need for these resources.

David Blackmon [00:14:00]  Do you feel like that the way these global conferences, and the debates are conducted has an impact in terms of creating resentment among leaders in the developing world about how all of this is being conducted?

Ulric Trotz [00:14:15] Well, I wouldn’t say resentment. They are a bit tetchy. Those are conferences. But the issue the real issue is that it’s not about the developed countries telling us what to do is about telling the developed countries what they ought to do, and the developed countries basically telling us why they can’t do it.

Ulric Trotz [00:14:42] And this is the issue I think we are all agreed I think we are all agreed in the science that we need to phase out fossil fuels, but we also need to draw attention to our vulnerability to a world where the climate is changing and it’s going to even get worse.

Ulric Trotz [00:15:02] So we are talking about protection so that we could survive the worst impacts of climate change. And this is why, you know, resources are basically has been the big stumbling block in this negotiation.

David Blackmon [00:15:19] Yeah. And to that topic, we saw particularly at the WEF conference in January, a response from Europe to the big raft of new incentives and subsidies that the United States put into effect. And they and the Inflation Reduction Act, the IRA.

David Blackmon [00:15:39] And the concern in Europe that is going to cause investments that may have gone to Europe to suddenly flood into the United States to take advantage of these incentives, is there.

David Blackmon [00:15:50] I wonder if there is a similar dynamic happening in Guyana and that part of that region of the world as well. Is there great concern among the governments in that part of the world that those incentives in the United States could serve to diminish what otherwise would be investments taking place in the region?

Ulric Trotz [00:16:10] Well, not not in the region. I could understand the tension between Europe and the U.S. because there they are. They have the climate for investments, etc.. Our issue is looking at the flow of investments into the Caribbean.

Ulric Trotz [00:16:33] And this is why the degree island situation offers us in Guyana and certainly with some political decisions, a possibility for the wider Caribbean in that now with the resources that accrue to the oil and gas discoveries in Guyana.

Ulric Trotz [00:16:55] We have an opportunity to utilize those resources to build the sort of climate resilience that we’ve been looking for and also to change our energy system from one based on fossil fuels to one in renewables and also to, you know, adopt the appropriate energy efficiency measures.

David Blackmon [00:17:20] So one of the advertised benefits, of course, that proponents of oil all development offshore Guyana have talked about is the potential for job creation among the population in the country. I wonder if you are seeing those benefits start to accrue there among the population there, just in terms of, you know, the creation of jobs that everyone has been expecting to happen.

Ulric Trotz [00:17:48] It has a potential. There are a couple of bottlenecks the first bottleneck basically, is that Guyana is a country. It’s in the 3000 square miles. Its population, however, is about 750,000. So immediately there is a capacity issue the opportunity is there.

Ulric Trotz [00:18:12] But in terms of the human capacity, the technical capacity to fill some of the jobs, the opportunities that present themselves. So it is necessary for Guyana basically ad interim invest very heavily in building up that local technical capacity so that more of their population can be involved in the whole oil and gas scenario.

Ulric Trotz [00:18:39] The other issue, of course, is one of governance at the moment there is some tension between the opposition and the government and they are you know, if you look at the press, there are concerns about the availability of opportunities to everyone in Guyana, regardless of race, regardless of their political sort of affiliation.

Ulric Trotz [00:19:10] So we have several, the other issue is that we are new boys on the block we are oil and gas is concerned. And overnight we are being pitched, walked into the limelight as our future major producer of oil and gas over the Petroleum Act that basically directs how business is done.

Ulric Trotz [00:19:35] We have a Petroleum Act that was promulgated in 1986 and it is going to be revised and there should be a new Petroleum Act in place in a very short while. The capacity basically, of our institution Environmental Protection Agency, for instance, to oversee this new technical area that has to be built up over time.

David Blackmon [00:19:59] Right.

Ulric Trotz [00:20:00] And one would only hope that Exxon and the companies that are operating basically would not. I see this as a loophole for basically taking shortcuts, but that they would, in good corporate practice, ensure that they utilize what we might call international best practice in terms of how they operate in then as we build up our capacity to have proper oversight of the industry.

David Blackmon [00:20:33] And we of course, in the region, we see a similar dynamic happening it’s a couple of years behind the development of Guyana’s resources. But in Suriname, next door to the east, we have all these similar kinds of dynamics taking place in that country as well, correct?

Ulric Trotz [00:20:50] Yes, it is. And I have written on the potential of that in the paper in the sense all of the countries in the Caribbean, CARICOM, are committed to a net zero growth net zero and climate-resilient growth over the years, faithfully under the convention, we have been preparing reports, we’ve been preparing national climate change adaptation plans and for the Paris Convention.

Ulric Trotz [00:21:24] In keeping with the Paris convention, we, like other countries, have also put in what we call our nationally determined contributions, which talks about how we are going to phase out fossil fuel, which talks about how we going to build climate resilience.

Ulric Trotz [00:21:39] But as far as I’m concerned, these are just expressions of intent. What is really required is that we transform all of those documents into portfolios of investment projects, particularly for the energy sector, and basically get about getting the resources to implement that, the resources that are being generated. Well, let me backtrack for a minute.

Ulric Trotz [00:22:07] At the heads of government meeting. Last year, Caribbean governments put two items on their agenda as priorities energy and food security. And the paper argues that with the oil and gas resources now in this Diana Suriname, now I’m biased, not to mention the infrastructure, a lot of it on the mothballed at this point in time in Trinidad and Tobago.

Ulric Trotz [00:22:34] We have the opportunity to internalize what I call the supply chain for both energy security and food security in the Caribbean, in that the oil and gas that we generate is used to satisfy the entire Caribbean market during the transition and the natural gas with the chemical complex in Trinidad and Tobago could be utilized to provide us with one of the essential inputs into our thrust as food security, which is the fertilizer.

Ulric Trotz [00:23:11] So there is an opportunity basically, for us to internalize that whole supply chain for the Caribbean. Yes, and I would hope that it would find some sort of traction with the political directorate in the Caribbean. It’s an opportunity.

Ulric Trotz [00:23:30] You know, they have argued there has been the argument, I just would be glad to hear maybe that when Guyana was about to move ahead with the production, that we should keep the oil and gas in the ground.

Ulric Trotz [00:23:48] As a matter of fact, I must say that I was in that frame of mind at one time, particularly looking at climate change is problematic in this sense. But the thing is, if you look at our forests, Guyana basically has monetized ecosystem services and we are part of this global rep plus reducing emissions from forest degradation and destruction.

Ulric Trotz [00:24:22] And they have already entered into an agreement to sell carbon credits arising from the sequestration by our standing forests. You have the if the forests, we don’t destroy them. We get compensation for foregoing the revenue that we would derive from our timber, etc. And similarly, there was no such arrangement on the ground to tell countries if they keep their oil and gas in the ground, this is the compensation so that they can forego that development. That’s not that’s not there.

Ulric Trotz [00:25:03] And as you see, even the countries that are in production. I mean, USC recently, they’re going to lift the ban on drilling in Alaska. The Brits British government basically in face of the energy issue after the Ukraine war, issued a license for a new coal mine. Similarly with Germany, they’re returning to their coal mines, and even with India, although they are moving towards, you know, the net zero with renewable energy very aggressively.

Ulric Trotz [00:25:49] There, at the same time, investing in a 900 million U.S. dollars gas distribution pipeline, accepting the principle that natural gas will be a part of their energy security as they move to net zero.

Ulric Trotz [00:26:03] So as I said, you know, I was in that frame of mind when I was looking at it purely through climate change lens. But then this question of resources. I see this as an opportunity basically for us to more or less live up to the tenets of the Paris Agreement while at the same time addressing our own vulnerabilities.

David Blackmon [00:26:28] Well, that is a wonderful way to wrap this discussion up. We are just right at our 30-minute time limit, and that was going to be my next question. They keep it in the ground thing, so I appreciate you answering in advance. That’s really good. You anticipated me, but I really thank you for for for doing the show with me today. This has been a really interesting discussion. And just for our audience to know, where can they find your white paperwork and go to find it online?

Ulric Trotz [00:27:00] You have me there you know, I have tried.

David Blackmon [00:27:03] Well, I’ll Tell you what, I’ll look it up and I’ll include it in the show notes when we publish.

Ulric Trotz [00:27:08] Yes, I check all of you now. Okay? Yes, they do it they have it they have it and they have.

David Blackmon [00:27:14] Thank you. Thank you very much.

Ulric Trotz [00:27:17] Thank you very much for giving me the opportunity to share these views and to make them a bit more public than they are.

David Blackmon [00:27:24] Yeah, no, and I’m happy to do it. And it’s really an interesting discussion for me, so I really appreciate it. You have to have a wonderful way.

Ulric Trotz [00:27:32] You to David Thank You!

David Blackmon [00:27:33]  As we’re going to show, I want to apologize to all my friends at Hess Corporation, which is, of course, the third member of the Stabroek Consortium. I apologize for my senior moment there and not remembering the name of the company. Thank you to the Sandstone Group for hosting our show and to our extraordinary producer, Eric Parel. I’m David Blackmon, and that’s all for now.

 

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