Major renewable energy plans unveiled as Pres. Ali launches expanded LCDS

The content originally appeared on: INews Guyana
President Dr Irfaan Ali

President Dr Irfaan Ali today launched an expanded version of the country’s flagship Low Carbon Development Strategy (LCDS), in which he unveiled a slew of plans for major renewable energy that have the potential to transform the energy landscape in the country and ensure the nation is fully powered by clean and reliable power in the next decade.

See full speech delivered by President Dr Irfaan Ali during the virtual launch:

Today, I am pleased to launch a four-month consultation on Guyana’s new Low Carbon Development Strategy.

As you are aware, we have committed to launching a national consultation on this national development strategy. As I speak to you today, the strategy is already uploaded and ready for the population and even those in the international community.

LCDS 2030 advances a vision first articulated in 2008 by the then President, our Vice President, Bharrat Jagdeo. The vision was further developed in 2009 when it was encapsulated in the world’s first low carbon development strategy from a developing country.

The scale of vision captured 12 years ago remains valid today – and continues to rest on two fundamental questions.

One, how can Guyana harness the opportunities of low carbon development to prosper at home? And two, how can Guyana lead the way to globally relevant solutions to the biggest challenges of our time, including energy security and climate change?

A lot has happened since 2009. At home, we saw how many of the measures outlined in the LCDS were stymied by the previous administration, including the Amaila Falls Hydropower plant. This was the flagship of the LCDS and would have seen Guyanese and businesses enjoying affordable, non-polluting electricity by now.

Internationally, the world has endured a series of enormous economic shocks, including the banking and financial crisis, and the Covid-19 pandemic. Global progress on climate change has not been smooth – despite the 2015 Paris Climate Agreement.

Against this changing backdrop, Guyana has now become a producer of oil and gas – with the potential to transform the development opportunities for all our people.

So, the context of the LCDS we launch today – LCDS 2030 – is very different to the context of 2009.

But the fundamental challenge of delivering broad-based development and prosperity at home, while contributing to solutions to global problems, remains largely the same.

My Government’s guiding principle in rising to this challenge is the same guiding principle that influences everything my Government does: my unshakeable belief that the people of Guyana working together – as “One Guyana” – have the skills, the ingenuity and the experience to create a better country of which we can all be proud. Working together, we can transform our country without leaving any area of our country or segment of our people behind. We can become an ever more attractive place for investors and for our diaspora to choose to come home. And we can look after all our people by generating the resources to take care of the most vulnerable and provide help when people need support that only the state can provide.

The LCDS 2030 sets out an updated vision for how my Government intends to drive the transformation of our country. We will welcome feedback and insights over the coming months – but today, as we launch the consultation, I want to outline four main themes that the LCDS 2030 addresses.

The first theme is how we align our status as an oil and gas producer with being active participants in the global search for climate solutions.

Second, I want to focus on how Guyana once again intends to resume our work to build a global model for forest climate services and other ecosystem services.

Third, I will outline how we will drive the future low carbon development of our country – through clean energy and a suite of low carbon development opportunities, including investment in protecting our people and country against climate change that is already occurring.

To address the first theme: the discovery of oil and gas has rapidly integrated Guyana into a three to four trillion US-dollar annual global marketplace. Revenue from this market can transform our country and create opportunities for our people, especially our youth, that previous generations could only have dreamt of. Just last week, I returned from Dubai – where the level of awareness of Guyana, and interest in Guyana, was unprecedented. This is now our experience all over the world.

My Government recognises the responsibility that comes with this opportunity. We are deeply aware of our duty to manage the industry carefully and strategically. That is why over the coming months, we will finalise the legislation to improve the Natural Resources Fund and embed world-class standards of transparency in our management of oil and gas revenues. The new legislation will enable a certain amount of oil revenue to be invested in critical development priorities. The remainder of the revenue will be saved for the future – so that our children and their children can benefit for many years to come.

This means that over the coming decade, with resources from the oil and gas sector, we will make the highest level of investment in health and education that Guyana has ever seen. In the short term, investment in both health and education are critical to the recovery from the Covid-19 pandemic. Over the longer term, we will augment basic education investments with new support for technical and vocational skills, with a particular focus on strengthening digital skills for a rapidly digitising economy. Investment in health care can change the situation where too many people suffer from curable illnesses or die prematurely because we are a poor country: within ten years, our health system can be as good as anywhere in the world.

At the same time, we will invest in continued diversification of the economy by supporting non-oil sectors and areas of the country away from the coastline. This will involve support for physical infrastructure – including river, road and air transport networks, the electricity grids; the national digital connectivity network; and more. It will also involve repairing coastal and hinterland climate protection infrastructure, as well as targeted support for agricultural expansion in non-forested parts of the country – to enable Guyana to become self-sufficient in key agricultural products as well as an exporter to regional markets and beyond.

This investment will put Guyana on a long-term trajectory to sustain one of the highest growth rates in the world, create wealth for all our people and put the days when Guyana could not afford to run its Government even further in the past.
However, the global market for oil and gas will not last forever and will decline in the coming decades as the world decarbonises in line with the targets of the Paris Climate Agreement and the need to stabilise global temperature increases at 1.5 degrees above pre-industrial levels.

To ensure that Guyana will be ready for this future world, it is important to recognise that we are, in fact, participating in two transitions as a country: one domestic and one international.

Our domestic transition is outlined in the LCDS 2030: we intend to remain one of the world’s lowest carbon economies – prioritising action on forests and energy. I will talk more about our domestic low carbon transition in a few moments when I address the other themes of the LCDS 2030.

But first, I want to address the international transition because most of our oil and gas will be sold in the global marketplace. Actively managing the development of this marketplace in line with global decarbonisation targets is a challenge that the world continues to fail to grasp. This is why demand for oil and gas to safeguard global energy security continues to be high, rebounding after a slowdown due to the pandemic.

Global policies are needed, and if they are to work, they must be fair, economically rational and based on science.

Basic fairness means that the oil industry, and its US$3-4 trillion of annual revenue, should not just be for the benefit of incumbent oil producers, particularly when those incumbents are already very wealthy. Expecting developing economies to leave their oil in the ground really means protecting the monopoly-like situation of existing producers so that they can maximise their income from oil and gas.

Just three producers produce about 24 million barrels today, a level of oil production that needs to be reached by 2050 to align with the Paris goals – it would be perverse if the market was protected for them and them alone. The world’s largest oil producer – the United States of America – has a per capita income of US$65,000 – about ten times that of Guyana.

No responsible government should volunteer that its people stay poor so that richer countries can have their market protected. Putting faith in solutions that expect this to happen is irresponsible and ultimately damages the prospects of climate success.

Rather, since 2009, Guyana has supported two main global policies to drive global decarbonisation.

First of all, there should be a global price on carbon, levied on the consumption of oil and gas. This is the way to incentivise both the investment in lower carbon replacements for fossil fuel-based electricity and transportation – such as renewable energy and electric vehicles – while at the same time managing the global low carbon transition through incentivising progressively lower-carbon sources of fossil fuels.

The second main policy is that subsidies for fossil fuel production should be removed. In 2019, fifty of the largest economies in the world – which account for 80% of global greenhouse gas emission – increased their support for fossil fuel production by 30%. Most of this was in developed countries, which are already the incumbents benefiting most from the trillions of dollars in the oil and gas market. The Government of Guyana supports calls for the elimination of such fossil fuel subsidies, especially in OECD countries where the subsidies are the most distorting, destabilise prices, and do nothing to reduce the carbon intensity of the world’s economy.

Combined, these two policies can create a much fairer marketplace for oil and gas that is compatible with achieving the goals of the Paris Climate Agreement. Guyana will not shirk its responsibilities in such a marketplace.

At the same time, Guyana will pursue strong policies to ensure that its oil and gas sector operates to international standards. The Government is working to eliminate flaring from oil production, except in the case of genuine emergencies. When my Government took office in 2020, there were no safeguards in place to disallow flaring. As a result, we introduced one of the very few taxes on flaring in the world – where beyond the commissioning period, all flaring will be taxed at US$45 per tonne of carbon, along with the actual gas lost. For newly-licensed production, the tax on flaring will be accompanied by legal limits on the overall amount of flaring.

In parallel, with advancing a “no flaring” policy, new measures have been introduced to ensure that all waste management is the responsibility of the oil producer, in accordance with international standards, from “cradle to grave”.

My Government will also continue dialogue with oil producers to ensure that, alongside the above measures, exploration and production operations will continue to explore all opportunities for lower carbon technological innovation – including the use of renewable energy in oil production, Carbon Capture Utilisation and Storage (CCUS) and – when technologically viable – green hydrogen.

So in sum, my Government will meet our responsibilities to the people of Guyana by maximising the benefits to be accrued from the oil and gas industry while at the same time advocating for global policies to create a level playing field to align the global marketplace for oil and gas with the goals of the Paris Climate Agreement.

But to only focus on oil and gas is to be short-sighted. In all scenarios, a future global economy will decarbonise, so the other two themes of the LCDS 2030 look beyond the oil and gas sector.

In particular, the second theme looks to take Guyana’s vision for forest climate services and ecosystem services more broadly, to the next level of development.

If oil and gas is a bedrock of today’s global economy, the world’s ecosystems need to be the bedrock of the future economy. In our lifetimes, we need to see the proper recognition of the value created by the world’s forests, biodiversity, and oceans. This is the only long-term way to preserve these vital ecosystems for decades and centuries to come.

Guyana was one of the first countries in the world to recognise this. In 2009, when Guyana set out the original LCDS, we made an offer that no other country had made – to create a global model for jurisdiction-scale action to show how the world’s forests could be maintained.

Since then, other countries have followed, and Guyana has worked with partners around the world to gain a far greater understanding of the enormous contributions that our ecosystems make to the world’s health and economy.

Because of the work of the last twelve years, we now know that Guyana has maintained the second highest percentage of forest cover on earth – with more than 99.5% of our forest remaining – an area almost the size of England and Scotland combined. Deforestation rates are among the lowest in the world.

We now know that the Guiana Shield, one of the most pristine rainforests in the world – which we share with Suriname, French Guiana and Brazil – stores about 18% of the world’s tropical forest carbon and 20% of the world’s freshwater. Guyana alone stores about 19.5 billion tonnes of carbon in our forests.

We now know that we have extremely high levels of biological diversity in our country. We have four percent of known animal species. There are more bird species in Guyana than in the entire United States of America. We have 2.4% of known plant species.

All these ecosystem services and others provide enormous value to the global economy -Guyana’s forests alone are estimated to provide global value from US$40B to US$54B annually.
Yet – unlike oil and gas – the world does not yet recognise this value in monetary terms. This is the main reason that forests across the world are cleared for agriculture, mining, infrastructure, and other uses.

In short, the world’s tropical forests are worth more dead than alive and forest areas that are the size of Greece disappear every year, causing about 16% of global greenhouse gas emissions.

The world continues to make faltering progress towards recognising this value and creating alternative low carbon income streams for the communities and countries which have these assets, protect these assets for the good of everyone. Some progress has been made on REDD+, within the United Nations Framework Convention on Climate Change.

But compare the market for oil and gas with the market for ecosystem services, and you will see what the international financial system values.

This situation needs to change over the next decade if the worst extremes of climate change are to be averted, and if the world’s forests and other ecosystems are to be maintained to regulate rainfall, prevent diseases and provide the basis for much of the world’s future medicines.

Towards creating this new global ecosystem economy, in 2009, Guyana sought international partners who shared our vision. As a result, Guyana and Norway worked together to create a model for economic incentives for making forests worth more alive than dead. For the period 2009 to 2015, Guyana earned US$212 million in payments to be invested in the LCDS. Jobs were created, Amerindian villages were titled, hinterland and coastal businesses were supported, the Cunha Canal was rehabilitated, among many initiatives.

Unfortunately, US$137M of the money received was not invested, in large part because the previous administration did not proceed with Amaila Falls or any renewable energy projects to be funded from forest climate services. This situation changed earlier this year – and US$85 million of the revenues are now being used to build utility-scale solar power capability in Linden, Essequibo Coast and Lethem and other areas.

But all was not lost. As part of the Guyana-Norway partnership, the two countries also cooperated to build a world-leading Monitoring Reporting and Verification System – or MRVS – utilising satellite technology and ground-based work to provide the scientific basis for our knowledge of the scale of the value provided by our ecosystem services.

It is this MRVS that provides the basis for opportunities for Guyana over the next decade.

From early 2022, the quality of data provided by the MRVS means that there is a strong possibility that Guyana can access new market-based mechanisms for forest climate services that include private as well as international public sector financing.

There are a number of possibilities outlined in the LCDS 2030, but I want to emphasise that no agreements will be entered into until after the national consultation is completed and the LCDS 2030 is finalised. Moreover, even after the LCDS 2030 has been finalised, all agreements will involve the participation of those impacted – with a particular emphasis on adhering to a set of United Nations mandated safeguards – including a principle known as Free Prior and Informed Consent, or FPIC – for indigenous peoples and local communities.

We hope that progress can be made in the next six to twelve months towards the next step with forest climate services. This can bring us a step closer to a day when their true value will enable them to increase their significance as part of the domestic economy in Guyana. Guyana will support such markets, and hope that in years to come, global markets for ecosystem services will start to rival those for fossil fuels.

When outlining our plans for oil and gas a few moments ago, I mentioned that Guyana would be pursuing both an international and a domestic transition. I said I would come back to the domestic transition, and it is to that I now turn – as I address the third and fourth themes of the LCDS 2030.

The third theme relates to Guyana’s low carbon transition, starting with the energy transition.

Today’s energy problems are well-known – Guyana has some of the highest electricity costs in the Americas, and supply is about 97% dependent on imported fossil fuels. It is tragic that this is still the case – because the Amaila Falls Hydropower project could have come on stream in the past five years. All the technical analysis over the years, including a report presented by a consultancy engaged by the last Government and Norway, concluded that Amaila Falls Hydro project represented the best way forward to expand Guyana’s energy supply.

But given where we are today, Guyana can now resume its clean energy transition – through decoupling economic growth from greenhouse gas emissions.

The LCDS 2030 outlines how this will happen in three phases.

From 2022-2027, a near tripling of electricity demand will be met through a combination of natural gas and the Amaila Falls Hydropower project on the main national grid, coupled with a major expansion of solar power with batteries on the rural networks. By the end of this period, the Essequibo Coast, Linden, Leguan, and Wakenaam grids will be integrated with the national grid. The Bartica, Lethem, Port Kaituma, Madhia, and Matthews Ridge grids will be almost exclusively powered by renewable energy. Alongside the work on the country’s grids, all hinterland villages, about 200 villages with a total population of just under 100,000 people – will undergo an electrification programme by about 2026. This work has begun already in villages across the country, included Seba, Waramadong, Paruima, Kurukabaru, Whyaka, Mission Capoey, Lake Top Capoey, Annai, St Monica and Karaburi. Finally, the transmission and distribution network will undergo a massive upgrade to manage the forecasted electricity demand and meet the standards expected of a modern power utility company.

From 2027 to 2032, a second phase will see further increases in electricity demand being met by continued replacement of Heavy Fuel Oil, expansion of wind and solar power, and the commission of Guyana’s second hydro plant, the site of which will be identified in the coming years.

After 2032, the expansion will be driven by the prevailing market conditions, but it is likely that battery technology will be sufficiently advanced to enable solar and wind plants to provide new capacity increases while contributing to further downward pressure on electricity prices.

Further details are set out in the LCDS 2030 – but in sum, this energy transition will achieve a level that very few, if any, countries have achieved. Cheaper electricity will be supplied, and that supply can increase fivefold with emissions staying essentially flat.

The energy transition will form the backbone of the broader low carbon transition outlined in the LCDS 2030. Small and medium businesses will be supported to create low carbon jobs and economic opportunities. A dedicated 15% of funds from forest climate services will be invested in Amerindian communities’ priorities, including land titling and capitalisation of the Amerindian Development Fund to implement Community Development Plans. Low carbon infrastructure will be expanded – including transportation, digital infrastructure, e-Governance, and social inclusion. The urban built environment – roads, drainage and water infrastructure among other areas – will be improved in all our towns. Consideration will be given to international architecture and urban planning competitions for Georgetown and Silica City to match the unprecedented anticipated growth with high standards of urban planning. The LCDS 2030 will support entrepreneurship and innovation.

The Protected Areas System will be expanded, and we will see the creation of an International Center for Biodiversity. Work will resume on the restoration and maintenance of our important mangrove forests. In 2022, work will start on the implementation of Guyana’s Climate Resilience Strategy and Action plan, which was produced using revenues received under the Guyana-Norway partnership. Work will re-start to implement the strategy and upgrade sea defences, irrigation systems, build agriculture systems that are more resilient and address the threat to public health from climate change.

There is much detail in the document, and even more in the strategies and programmes which support it. But all in all, the LCDS 2030 captures how the next decade in Guyana’s development will leave a positive transformative impact on our country.

So I urge you all to take the time to read the LCDS 2030 and to participate in the consultations which will happen in the coming months.

To carry out the national consultation, the Multi-Stakeholder Steering Committee will be reconstituted. Details will be shared in the weeks ahead, and there will be ample opportunity for all our people to participate.

We are living in a very exciting time in our country – full of promise and potential. It falls to us – as a government and as a people – to seize this moment. If we work together – as one Guyana – we can hold our heads high, knowing that we are capable of rising to this moment. We can provide answers to some of the biggest questions the world faces: like balancing energy and climate security or creating the basis for a future ecosystem services economy. We can help our people to become prosperous without leaving anybody behind.

Not on the basis of slogans or simplistic but unworkable solutions – but on the basis of hard work that harnesses the ingenuity and innovation of the people of this country
So I say to you fellow Guyanese, this is our moment. We urge you to read the document, to take your time in analysing and understanding the document, to understand the context in which Guyana is operating, to understand the positioning of our country in the international dynamics. To understand the positioning of our country in transitioning from our natural resources now, which we must utilise, to a strong sustainable global economy.

Thank you and God bless you all.