Trinidad and Tobago Business Overview
Energy
Renewable Energy Post-Paris Pullout and How Trinidad Can Still Go Green

Despite being the world’s second highest producer of greenhouse emissions per unit of GDP - and the highest overall in relation to purchasing power - the government of Trinidad and Tobago voiced strong support for the United Nations Framework Convention on Climate Change’s (UNFCCC) agreement on reducing greenhouse gas emissions and financing adaptations to climate change in September 2015. Also known as the Paris climate accord, the agreement was signed on April 22, 2016 by more than 175 countries, and is widely seen as a watershed moment in the global effort to combat climate change.

 

DATE: 13/07/2017

 

However, with the United States announcing in June 2017 that they would pull out of the deal after November 2020 (the earliest legally available time a signatory country can do so), the agreement’s momentum has stalled. While many of the almost 200 signatory countries have expressed public disappointment in the announcement - especially island nations expected to be most affected by climate change - and have signaled their willingness to move forward without the US, some are seeing an opportunity to exit.

 

For instance, Turkey initially affirmed its commitment to the climate accord in the aftermath of the US’ announcement, but is backtracking as of July 2017 saying their ratification of the agreement was dependent upon France’s promise of financial remuneration for associated compliance costs. The agreement’s financial side involves $100 billion a year in aid to developing countries between 2020 and 2025 for “climate change adaptation and mitigation.”

 

This financial aspect has been a point of contention as out of the signatory countries with the five highest global greenhouse gas emissions, only Japan and the US have announced, signed and disbursed money to the Green Climate Fund, the financial authority of the UNFCCC meant to allocate funds for national climate change investments. The two developed countries - accountable for a combined 17.8 percent of global greenhouse emission - have disbursed $1.67 billion as of July 2017 out of their total $4.35 billion announced amount or 38 percent. The other signatory countries with the highest global greenhouse gas emissions - China in first, India in third and Russia in fourth - emit 39.7 percent of the world’s greenhouse gases and have announced, signed and disbursed no funds to the Green Climate Fund as of July 2017.

 

However, China and India have expressed a willingness to fill the void in global leadership toward green energy that the US has seemingly abdicated with their own national measures outside of the Paris agreement. China, routinely one of the biggest funders of renewable energy, has invested $78.3 billion in renewable energy in 2016 and has pledged a further $360 billion by 2020.

 

While China’s 2016 investment number is actually down by 32 percent from the previous year’s total, the country is expected to reach peak carbon emissions (and subsequently decline) ahead of their 2030 target date, but some of this may be due to slow global economic growth as China is the world’s largest manufacturer. And although India has already surpassed its wind power target numbers for the current fiscal year, a strong sign that it will meet its goal of 175 GW of renewable energy capacity by 2022, neither country has indicated that they would pledge funds to aid other countries’ emission reduction efforts.

 

Other points of contention with the climate agreement were its economic impact on existing industries (especially from the US’ perspective, as a March 2017 report from NERA Economic Consulting estimated the total economic cost of compliance to be close to $4 billion), the lack of enforcement mechanisms within the treaty if countries fail to meet their emission reduction targets and an insufficient global temperature reduction goal (0.05°C by 2100), with the latter two being the main reasons Nicaragua remained a non-signatory country. Despite this criticism, the Central American country is still on pace to meet its own goal of 90 percent renewable energy by 2020.

 

 

Fittingly enough just south of Nicaragua is a current green success story in the country of Costa Rica, which in 2016 produced more than 250 days of renewable electricity. The Costa Rican Electricity Institute (ICE) reported that 98 percent of its electricity came from carbon-free sources spread out among hydroelectric, geothermal, wind, solar and biomass sources. Notably, approximately 70 percent of this renewable energy mix in a given year comes from hydropower as the country’s Caribbean coast gives it a unique advantage in extreme amounts of rainfall (average annual amount is 3.5 metres) and multiple rivers for chokepoints in which to build dams.

 

For example, the Reventazón Dam, which was completed in September 2016, is the largest hydroelectric project in Central America and the second largest public infrastructure project in the region behind only the Panama Canal, according to ICE. The dam has an annual contribution to the national grid of 305 megawatts (MW), or enough electricity for half a million families.

 

The next largest green source in Costa Rica’s energy mix is geothermal with a 14 percent share due to the country’s numerous volcanoes, producing approximately 164 MW of electricity annually. In 2014, $958 million in funding was sourced from Japanese and European financial institutions to build three more geothermal plants with an expected annual production of 155 MW in order to decrease Costa Rica’s dependence on rainfall for energy through hydropower as geothermal is not dependent on the weather and can continuously generate electricity.

 

Wind power, making up 16 percent of the country’s total energy and growing, is being increasingly utilised as an offset for dry seasons or unexpected droughts when dams are not running at full capacity. And while solar projects predates even the country’s first hydroelectric dam by a year (1978), it still only constitutes 0.02 percent of the country’s electricity due to concerns that the decentralized nature of solar cells on home rooftops would cut into the state electricity monopoly’s profits.

 

And while biomass only generates the remaining 2 percent of Costa Rica’s energy mix, it is a vital one as it is primarily used for kitchen appliances and cooking, which reduces the country’s reliance on petroleum for non-electricity energy needs. This is an important caveat in the green national success story as the 98 percent number is for electricity, and does not include cooking, heating or vehicle fuel, the latter of which is often one of the primary contributors to greenhouse gas emissions. As of 2017, less than a quarter of Costa Rica’s total energy use came from renewable sources, with increasing car sales being the main culprit as the county has 287 cars per 1,000 people, above both the world and Latin American average. Exacerbating this trend is an 11 percent increase in gasoline sales last year and a less than 2 percent electric car ownership rate.

 

In order for Costa Rica to meet its carbon-neutral goal by 2021, it needs to tackle its vehicle traffic problem, which navigation app Waze ranked as the worst congestion in Latin America. It can accomplish this through updating its public transportation system as the main cause of this congestion (a majority of the country’s population lives in the capital San José) can also be used as a solution to it.

 

Thankfully, for Trinidad and Tobago, there is not only a lot the country can learn from Costa Rica, but there is also a lot on which it can improve upon. The exception to Costa Rica’s green success being the prime example as Trinidad and Tobago have ample natural gas reserves, and a growing downstream retail infrastructure, to encourage the adoption of compressed natural gas (CNG) as an alternative fuel to diesel and gasoline vehicles. Just converting vehicles to be dual fuel reduces greenhouse gas emissions by a third, while the next big step would be ameliorating Port of Spain’s and San José’s common problem - highly concentrated vehicle traffic - with a public transportation scheme fuelled by CNG. While any revamped national bus and rail system is only a dream for now on the twin-island republic, at least Trinidad and Tobago is in a better position to fuel it without increasing imports or greenhouse gas emissions.

 

However, even this has a sticking point as only 6 percent of Trinidad and Tobago’s greenhouse gas emissions come from the transportation sector, with the lion’s share (80 percent) coming from petrochemical and electricity production. While not much can be done about petrochemical emissions aside from using the carbon dioxide from its production in enhanced oil recovery for declining oilfields to boost crude oil production and obtain carbon credits, the electricity sector does have room for improvement. Although not having as much potential in hydro or geothermal sources of power as Costa Rica, where they make up more than 84 percent of the country’s energy mix, Trinidad and Tobago does have average potential in wind and solar for the Caribbean region, with their biomass and ocean sources yet to be fully explored.

 

 

Solar projects, while promising, have only been on a pilot scale in the country. The University of Trinidad and Tobago and the Trinidad and Tobago Electricity Commission (T&TEC) each have a 2-kilowatt (kW) off-grid photovoltaic (PV) system, while 21 schools around the country have had similar 1-kW systems installed. Wind energy has largely been restricted to one project at the Islamic Children’s Home in south Trinidad, which is actually a combined 2.5-kW wind and solar PV system, but it is connected to the national grid as opposed to the pure solar PV pilot projects.

 

However, one of the biggest potentials solar power has in the country is in water heating, which can reduce more than 25,000 customers’ electricity bills by 37 percent on average. Pioneered in Israel, but produced on a massive scale in China, solar water heaters use of thermal energy could defray 7,500 kilowatt-hours per household in a given year in Trinidad and Tobago that would have otherwise been powered by natural gas or diesel.

 

As with many trends though, in order for wider adoption of renewable energy to take place there needs to be not only a consumer awareness and appetite to change the energy status quo in a nation with fossil fuel reserves, but also in the removal of subsidies for conventional fuels which distort market preference by encouraging consumers to use more fuel than they would have in the first place. In the end, public education, strong political leadership, and steady patience will be required in the years leading up to 2021 in order for Trinidad and Tobago to realize its renewable energy goal of 10 percent mix share.