Renewable Energy In Our Not-So-New Home: Part 3

For Change
Feb 16, 2022
5 min read

Updated: Mar 2, 2022

by: Suemita Teeluck

Trinidad and Tobago before Renewable Energy

Historically, the global climate has been marked by a cycle of natural variability in cooling and warming. Within this century, however, there has been an anomalous warming of global atmospheric temperatures which has paralleled the growth in anthropogenic greenhouse gas emissions. According to the Intergovernmental Panel on Climate Change, environmental trends have reached a disturbing level at the beginning of the century. Therefore, it is no surprise that, as an understanding of the science of climate change advances, increasing attention is being paid to adaptation and mitigation efforts to address it.

The energy sector is a dominant one in Trinidad and Tobago and it plays an important role in the twin-island republic’s economy. In 2008, the share of the energy sector in gross domestic product amounted to approximately 48% while contributing 57% to total Government revenue.

In that same year, the sector’s share of merchandise exports was 88%, made up mainly of refined oil products including petroleum, liquefied natural gas (LNG), and natural gas liquids.

Trinidad and Tobago is the main exporter of oil in the Caribbean region and the main producer of liquefied natural gas in Latin America and the Caribbean. The role of the country’s energy sector is, therefore, not limited to serving as the engine of growth for the national economy but also includes providing energy security for the small island and developing states of the Caribbean.

However, with its hydrocarbon-based economy, Trinidad and Tobago is ranked seventh in the world in terms of carbon dioxide (CO2) emissions per capita, producing an estimated 40 million tonnes of CO2 annually. Almost 90% of these CO2 emissions are attributed directly to the energy sector through petrochemical production (56%), power generation (30%), and flaring (3%).

Trinidad and Tobago is a ratified signatory to the United Nations Framework Convention on Climate Change and the Kyoto Protocol. Although, as a non-Annex 1 country, Trinidad and Tobago is not required to cut its greenhouse gas emissions under the protocol, it is currently finalizing a climate change policy document as well as a national energy policy with specific strategies to address climate change.

A. ENERGY SUPPLY

The twin-island country of Trinidad and Tobago is an oil-rich nation with approximately 1.3 million inhabitants. The country discovered its first oil deposits in 1866 and by 1908 had started to undertake drilling and crude oil production. This later led to the establishment of the country’s first oil refinery in 1912 and exploration for offshore oil began in 1954. Crude oil was the major oil product but production of natural gas grew steadily from the mid-1970s and surpassed crude oil production by 1996. Natural gas production increased dramatically since 2000 and has more than doubled in output between 2000 and 2005.

In contrast, crude oil production has remained stable over the last two decades.

The energy sector plays an important role in the economy of Trinidad and Tobago. In 2008, the share of the energy sector in the gross domestic product (GDP) amounted to approximately 48% while contributing 57% to total Government revenue. In the same year, the sector's share of merchandise export was 88%, made up mainly of refined oil products including petroleum, LNG, and natural gas liquids (Central Bank of Trinidad and Tobago, 2009).

B. ENERGY EXPORTS

The United States of America has historically been a major importer of Trinidad and Tobago natural gas products. The percentage of Trinidad and Tobago gas products exported to the United States of America grew from 18% in 2000 to about 44% in 2004, representing a 26% point gain within a five-year period. The share of natural gas production exported to the United States of America has, however, declined since 2004, reaching a low of 15% in 2009. Trinidad and Tobago LNG exports to the United States of America reflect a trend similar to that shown by natural gas over the same period Trinidad and Tobago is the dominant exporter of LNG to the United States market. Between 2002 and 2006, imports from Trinidad and Tobago represented more than 66% of all LNG imports by the United States. The highest share of approximately 76% was recorded in 2008 but, by the following year, the share of LNG imports by the United States of America from Trinidad and Tobago had declined sharply to 52%.

C. CLIMATE CHANGE POLICY FACTORS

Given the importance of the energy sector in the economy of Trinidad and Tobago, and with the United States of America serving as a major export market for its LNG exports, domestic energy policy in the United States of America, as well as global trends in the world oil market, are expected to impact on Trinidad and Tobago energy sector export earnings. The United States of America, the world's highest energy-intensive country, is currently pursuing a domestic energy policy that is expected to shift consumption away from fossil fuels to renewable energy sources. The Obama administration recently indicated its commitment to reducing dependence on foreign oil by one-third by 2025. Although the impact on fossil fuel energy consumption is still marginal, consumption of fossil fuel energy by the United States of America as a proportion of total energy has been declining consistently since 2001. If the United States of America and other emerging economies such as China and India were to adopt a climate change policy that emphasizes GHG emission mitigation and invest considerably in renewable energy, then a shift away from fossil fuel consumption is imminent. This would have significant implications for oil-producing countries like Trinidad and Tobago, whose economies rely heavily on the export of fossil fuels for foreign exchange generation unless these economies can diversify to absorb the decline in government revenue from crude oil and natural gas (including LNG).

D. ENERGY DEMAND

The importance of the energy sector in Trinidad and Tobago is not restricted to foreign exchange earnings for the Government. The sector plays a critical role in providing energy for commercial, industrial, transport, residential, and public purposes. Energy intensity (total primary energy consumption per dollar of GDP) in Trinidad and Tobago has been on an upward trend since the early 1980s, implying that increasing amounts of energy are needed to generate a dollar of GDP in later years relative to earlier years.

In absolute terms, energy consumption has been increasing steeply in the industrial and

agricultural sectors since 1981, whereas consumption in the residential, commercial, and public sectors and the transportation sector have been more or less stable over time

Natural gas is not only a major foreign exchange earner for Trinidad and Tobago. It also serves as a dominant source of domestic energy. The final consumption of natural gas has been increasing since 1981. This reflects the fact that electricity is generated predominantly from natural gas on both islands.

As a major oil producer in the region, Trinidad and Tobago plays an important role in supplying oil products to other Caribbean countries, mainly for transportation and power generation. According to a report by the South Trinidad Chamber of Industry and Commerce (2009), Trinidad and Tobago supplies more than 50% of the primary consumption energy in countries such as Jamaica, Barbados, Jamaica, Guyana, and the Dominican Republic. Trinidad and Tobago energy services and petroleum marketing companies also export contracted services and distribute and retail petroleum products throughout the region.