Navigating Trinidad and Tobago's energy transition

LATOYAA ROBERTS-THOMAS

TRINIDAD and Tobago faces a complex challenge in transitioning to a sustainable energy future while balancing its economic reliance on oil and natural gas.

As a small island developing state, the country must navigate the dual pressures of maintaining its petrochemical industry and meeting global commitments to reduce greenhouse gas emissions.

According to the State of the Extractive Industries Report 2024 issued by the TT Extractive Industries Transparency Initiative, TT's energy sector is at a crossroads. Gas and oil production has declined significantly. Global geopolitical tensions/flashpoints have affected energy prices and trade flows. And, the country has consistently run deficit budgets over the last decade.

But should not the country use this decline in oil and gas revenues as a pathway to more sustainable energy production and consumption?

Current challenges and future prospects with oil and gas

Over the years, TT’s economic fortunes were closely tied to the oil, gas, petrochemical and quarrying sectors.

In 2024, the country witnessed a marked decline in energy sector revenue.

The October budget revealed that projected oil revenue decreased from $16.709 billion in 2024 to $14.174 billion for 2025, based on a decreased oil price assumption of US$77.80 per barrel for 2025, down from US$85.00 per barrel in 2024.

Similarly, royalties declined year-on-year by 33 per cent, and production sharing contract (PSC) share of profit also declined year on year by 50 per cent.

However, in response to these challenges, the government has still actively negotiated a Dragon Gas deal with Venezuela to increase gas supply and held several bid rounds aimed at boosting oil and gas production such as PetroJam Ltd deal with Jamaica.

How Trinidad and Tobago is attempting energy transition

Despite the country still focused on petro-chemicals, there is gradual shift to focus on renewable energy and promote just transitions.

In 2023, NGC Green Company Ltd was established as a wholly owned subsidiary of National Gas Company of TT, helping to institute a cleaner energy future through investment in low-carbon fuels, energy efficiency, sustainable transportation and associated research and development.

TT approved an agreement in 2022 to open the Caribbean's largest utility-scale solar project lead through a partnership with bp, Shell and Lightsource bp.

Now set to open in 2025, the Brechin Castle solar project would be the country’s first grid-scale renewable energy with capacity of 92.22 MW of solar electricity, equivalent to the energy needs of approximately 31,500 households.

Additionally, the country has commissioned recent studies such as:

· The Roadmap for a Green Hydrogen Economy in TT in 2022 by the Energy Ministry, National Energy and the Inter-American Development Bank,

· Setting the Path for Wind Energy Generation in TT in 2023 by the Energy Ministry, Planning and Development Ministry and the European Union.

While all these studies are important and provide demonstrative products and pilots towards understanding the energy transition process, the country is still mindful of balancing the current oil and gas exports with a gradual shift toward sustainable energy while maintaining economic stability.

The energy transition dilemma

Sherwin Long, head of the TT Extractive Industries Transparency Initiative Secretariat, emphasises that there are potential environmental and economic benefits of accelerating the transition to renewable energy.

Long noted that increasing renewable power on the grid would reduce the country’s carbon footprint and help meet its Paris Climate Agreement obligations.

Economically, replacing natural gas used for power generation with renewable energy would allow the gas to be used for higher-value exports, such as ammonium and ethanol, providing more value per molecule of gas used.

He also acknowledges the challenges faced by TT as a small island developing state as the energy transition could impact prices, production and potentially lead to stranded assets which the country has accumulated over successful years of being an oil producer and exporter.

Notwithstanding, environmentally, the country is vulnerable to climate change impacts such as coastal erosion and increased flooding due to more intense rainfall and must be at the forefront of the energy transition drive to demonstrate to its Caribbean neighbours the understanding that change is imminent.

While the Environmental Management Authority’s Annual Report for 2022, has noted that there has been a slight decrease in applications for renewable energy projects, ongoing policy development and legislative plans aim to boost renewable energy adoption is still afoot.

TT’s path to a sustainable energy future is fraught with challenges, but the country is making significant strides.

By leveraging natural gas as a transition fuel, implementing robust policies and encouraging industry participation in emissions reduction, TT can achieve its climate goals while maintaining economic stability.

The commitment to transparency and continuous improvement will be key to overcoming the challenges of the energy transition.

LRT’s Media and Business Solutions continues to monitor and map aspects of TT's energy transition and provides knowledge and awareness to the public so that they can be better informed as we work towards building a sustainable country.

In navigating the energy transition, the TT Coalition of Services Industries (TTCSI) plays a pivotal role in shaping the nation's path to a sustainable future.

As the country seeks to diversify its economy beyond hydrocarbons, the development and export of high-value services – such as energy consulting, environmental management and digital innovation – offer a strategic opportunity.

TTCSI stands at the intersection of policy, innovation and industry, enabling service providers to support the clean energy shift while positioning TT as a competitive player in global sustainability markets. By fostering collaboration, capacity building and market access, TTCSI is not just adapting to the energy transition – it is helping to lead it.