Support for Trinidad’s green energy transition

Trinidad and Tobago

Carina Cockburn, country representative for Trinidad and Tobago at the Inter-American Development Bank (IDB), talks to The Energy Year about why the country’s oil and gas infrastructure positions it well for the energy transition and factors affecting its green hydrogen potential. The IDB funds and supports the development of major infrastructure projects in Latin America and the Caribbean.

This interview is featured in The Energy Year Trinidad & Tobago 2023

How well positioned is Trinidad and Tobago to rely on infrastructure and human capital in its drive towards a green energy transition?
Trinidad and Tobago’s investment in infrastructure for oil and gas and petrochemicals will be relevant going forward, even with the move into renewable energy. For example, when we look at the potential to implement power generation with offshore wind, we are thinking about using similar technologies, infrastructure, and services that made Trinidad and Tobago a successful offshore player.
A similar trend is happening in other countries, for example the conversion of the traditional oil and gas offshore activities in the North Sea in Great Britain to offshore renewables. So, from an infrastructure point of view T&T is well placed and this is what puts the country in a good position to transition at the forefront of areas like offshore wind generation to produce green hydrogen and then to leverage domestic industry. Most other countries do not have this advantage.
Where some challenges exist is to reskill and upskill the existing expertise in the sector to be ready for renewables. It would not take much, because the skills are transferable as engineers and others who work in the sector can transition to renewable energy operations and maintenance, for example. There will be a need for them to become more specialised and grow their knowledge in that field, but that challenge is reduced compared to that faced by countries starting from scratch.

Do you see promising prospects for green financing in the Caribbean region in the coming years?
There is a lot of funding for green finance becoming available – I don’t see an issue with the availability of funds for green investment. Where there may be an issue is whether there is a political will to go in that direction and at what pace. The industry is looking for the visible signs. The government has been receptive to expanding the energy mix, including these new segments. The recent example of the solar PV farm, which had its contract signed in 2022 with the private sector is a move in the right direction, and the government should get the credit for taking that project to the finish line.
But this is the beginning, and not the end. We must face the fact that eventually the technologies that are based on fossil fuels will be phased out. Some of the users of fossil fuels are going to go greener – for example, the transport sector, which is moving closer to zero emission vehicles. This is something the country has to be ready for even with the discussions around the use of CNG. Several countries have already announced a partial or total ban on internal combustion vehicles (ICE). We know the change is not going to be abrupt, but rather more of a transition by adding to the energy mix.

What key considerations need to be taken into account for establishing a green hydrogen economy in Trinidad and Tobago?
Some of the investment toward a green hydrogen economy is going to be very long term. To go into offshore wind is a process that will take approximately eight years, which is well beyond the political cycle. But Trinidad and Tobago needs to start.
We believe in an approach of doing it in phases, starting with demonstration projects. This is where our engagement with the National Energy Corporation of Trinidad and Tobago Limited, in particular, is going to progress. Can we do a test to learn how fixed offshore wind will work? Or can we do an initiative with the cement industry to reduce the carbon intensity of their plants?
We believe the government should be supporting demonstration projects that have an effect on the market by showing that the possibilities are there. There also needs to be sufficient demand and expansion of downstream infrastructure for the production of green ammonia and methanol.

What key factors need to be considered at a political level regarding these types of projects?
A demonstration project can be done in a few years, within the current political cycle. The question is whether the current government would be able to do it within their timeframe. Given their other commitments, governments may be reluctant to spend money on an investment that only delivers benefits in the long term. There needs to be a level of political maturity where that dialogue is taking place, in that all parties embrace some aspects of what the government is doing . There is a risk involved in some of these longer-term investments, and these investments would progress faster when both sides agree on them.

What do you see as the current financing options for oil and gas in the Trinidadian economy?
Private entities will be the source of financing for oil and gas projects. In reality, this has always been the case, in most countries. In Trinidad and Tobago for example, it was mostly the national government setting the vision, the policies, and the direction, and it is up to the private sector to bring resources via foreign direct investments (FDI) and technology transfer. At the IDB we are focusing our activities on supporting countries to achieve their National Determined Contributions (NDC) as part of the Paris Agreement. In this context, our activities are related to supporting countries in the energy transition and low-carbon solutions and making sure this is a just transition for everyone: for the workers and all members of the society, in particular the more vulnerable segments.

What role do you expect ESG to play in shaping the region’s transition to sustainability?
In our private-sector business, I would say we have a meaningful engagement on ESG. We have worked with banks and other non-bank financial institutions, to create and develop technical capacity on ESG policies, procedures and practices. In some instances, we have coupled loan financing with advisory services through our private sector window, IDB Invest. We see financial institutions and other entities increasingly taking a very active interest in ESG issues emerging from a pressure from clients and the market to take more responsibility for sustainability. Also, globally regulators are moving towards requiring climate risk disclosures from financial institutions. These are positive steps, because it means that while there are sustainability commitments at the macro level – through COP27 and such – there is also attention to climate issues at the micro level, which is at the level of a firm or financial institution itself.

What key objectives does the IDB have for operations in Trinidad and Tobago in 2023 and beyond?
We’re pressing hard on supporting Trinidad and Tobago’s development of low-carbon energy products, which in turn will augment its export potential. This relates for example to the production of green hydrogen in the country, which will in turn support the production of green ammonia and green methanol. These are the products for which the international demand is gradually increasing.
We want to support the government with the financing of demonstration projects in collaboration with the private sector. Other donors, such as the European Union, have also demonstrated interest to participate in this initiative. We think that we can put together a package to finance demonstration projects that can then be scaled and replicated later on by the private sector. Note, we have to proceed with the important role of the private sector in mind.
Then, there is also an opportunity to look at energy efficiency in Trinidad and Tobago. We did a pilot project of energy efficiency with the Ministry of Public Utilities a few years ago, and the savings were significant. So, there’s more work to be done on energy efficiency and energy conservation, including electromobility as well.
There is great potential to undertake electrification of the transport sector in Trinidad and Tobago as the country has a robust electricity grid and the distances to be traversed are relatively small. The higher deployment of electric vehicles, buses and vessels will provide fiscal and trade benefits as the country can reduce the import of fuel. Moreover, the implementation of energy efficiency and energy conservation measures will reduce the demand for electricity, which in turn will make more natural gas available for export.

What do you think is the importance of more women assuming leadership roles in the energy industry globally?
In a broader sense than just the energy sector, we have completed some research on women in leadership positions across the Caribbean, and T&T performs well in relation to its neighbours leading all LAC with 69% of public sector leadership positions being held by women. The issue now is not just presence, but influence – are you influential in terms of policy and decision making? That’s the remaining part of the transition that we need to see.
The other thing is that diversity pays off in decision making, as demonstrated by many studies on income profitability and productivity based on a diverse leadership and gender balance. IDB has a target of bringing the country representatives of the 26 member countries to a 50-50 gender balance, with 13 women and 13 men.
Diversity makes a big difference in the way the staff see that position, what they aspire to, what young women think they can achieve in terms of leadership and the kind of decision making that is being made for the organisation as a whole. I see it as critical. And when you see women entering senior leadership roles, then you have a higher quality of decision making which is more balanced in terms of its considerations.

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