From CO2 to CASH: Trinidad and Tobago's carbon market potential

Combating climate change while maintaining a stable economy might seem contradictory, as the fact remains that most of the world's most economically viable industries produce high emissions.

Farming, which may seem environmentally friendly, still produces 20 per cent of the world’s emissions according to 2020 statistics.

The energy used to power the tools we use every day comes at a cost – record-high 37.4 billion tonnes of carbon dioxide (CO2) emissions recorded in 2023 by the International Energy Agency.

In 2020, TT's total national emissions comprised of 42 per cent energy, five per cent agriculture, five per cent waste and 48 per cent Industrial Processes and Product Use (IPPU).

TT's 48 per cent IPPU emission surpassed the six per cent global average.

With 22 industrial parks spread across the country, TT’s factories are a key source of greenhouse gas emissions.

However, UTT professor Donnie Boodlal said this is a good thing.

Presenting at the Caricom Climate Change Centre seminar on carbon capture and storage (CCS) frameworks, Boodlal said the nature and volume of industrial emissions put TT in a "unique" position to capitalise on CCS.

The CCS process sees CO2 being separated from other gases at emission sources, transported mainly by pipeline and then injected and stored underground in geological formations, depleted oil and gas reservoirs or saline aquifers.

Boodlal, presenting the launch of UTT’s geological sequestration saline aquifers component project, said the high levels of ammonia production, which sees TT serving as the world’s leading supplier, is ideal for the process.

"This enables geological CSS in TT, this is a good pattern. Why? A large amount of these emissions comes from a stationary source. And typically, the emissions are relatively pure because of the production process in ammonia."

This allows for more efficient capturing of CO2. Even more efficient, Boodlal explained, than capturing energy industry emissions because only ten to 15 per cent of it is CO2.

"To capture that, you need to separate the CO2 from all the other gases and that costs money.

"But that’s largely done in the ammonia synthesis process, large amounts (of emissions) are already at that level where minimal treatment is required."

And while the CCS market is relatively new and not yet standardised globally, TT has already made investments in it.

In May 2024, the then-government established a first-of-its-kind blue carbon credit scheme for TT in collaboration with the Inter-American Development Bank.

This made US$550,000 available to establish the first blue carbon credit scheme for the country over the span of a three-year project.

Full development of this sees a special market to purchase and trade carbon credits as compensation for greenhouse gas emissions.

In enhancing geological CCS, Boodlal said UTT is working with the University of Texas to enhance local capacity, frameworks and data centres, with the objectives of conducting geological assessment of the storage capacity of saline aquifers.

"But the economic barriers still remain," he noted. "A business model has to be formulated to take this forward on the ground and I’ve been hearing that for many years.

"So let’s stop saying that and let’s start doing something about it.

"Let’s sit together and come up with this economic model to drive geological CCS deployment in TT."

Because of contrasting carbon market activity, resource availability and capacity, carbon market solutions vary from country to country.

Added to this, the World Bank notes several other challenges facing the development of a robust market infrastructure like ambiguity of roles and governance structures, lack of synchronisation between data systems and integrated marketplace architecture.

The World Bank also noted the recognition of the need for insurance systems to protect stakeholders against losses due to trade band, contract breaches and carbon credit reversals and non-delivery.

Such coverage is offered by the Multilateral Investment Guarantee Agency and carbon insurance agencies Kita and Oka.

According to the World Bank’s State and Trends of Carbon Market Pricing 2025, progress is being made.

Despite small declines over the years, revenue from carbon pricing continues to deliver over US$100 billion to government budgets used to target environmental development outcomes, such as investments in clean energy projects.

At present, over 80 carbon taxes and emissions trading systems exist worldwide, as all large and middle-income economies have either finalised or are considering the implementation of direct carbon pricing.

One leading country in the market is Colombia.

A voluntary report on the carbon market in Colombia, published by Global Finance Integrity in February, said that despite data and framework challenges, Colombia has emerged as a leader in the voluntary carbon market, having issued 142 million tonnes of nature-based solutions since its market inception in September 2024.

Taking advantage of its rich supply of in-demand credits sourced from its large carbon forest reserves, a natural climate solution which uses the expansion and maintenance of forests to neutralise carbon, Colombia has integrated the carbon credit market into its legal and public policy framework, creating an investor-friendly environment.

The Colombian government established a system for recording and measuring greenhouse gas emission reductions and removals called RENARE as part of a larger regulatory framework to work in conjunction with climate change and climate action laws.

According to the Paris Agreement, TT is obligated to regularly report emissions and progress on mitigation measures, but reporting by large emitters is not mandatory.

In 2022, the government proposed legislation to change that by making it mandatory, but it has not been made law.

Speaking at the seminar, Aditi Bisramsingh, climate change specialist at the Ministry of Planning, Economic Affairs and Development, said there are plans to change that.

"We did draft the legislation. It was submitted to our then minister at that time. We had to recall it to make some amendments and changes to the legislation, and we do plan to resubmit again to the new minister, who should be able to take it forward to cabinet and have the necessary approvals in place."

Boodlal said he looks forward to working with the ministry in developing the business model that would serve all stakeholders.