Trinidad and Tobago is one of the least energy-efficient economies in the world and has one of the highest per capita greenhouse gas emissions rates. The introduction of renewable energy, improving energy efficiency and reducing our greenhouse gas emissions have become policy issues on the government’s agenda and are usually included in statements from the current Minister of Energy and Energy Industries and other senior politicians and government officials. However, they often seem to be presented as additional policy issues for consideration, rather than issues at the core of overall energy policy.
For many decades, the success of the Trinidad and Tobago gas industry was based around creating demand for natural gas, through the deliberate development of demand in petrochemicals, heavy industries and LNG. This model was extremely successful and has been emulated by many other countries, especially new hydrocarbon provinces in Africa. The downside of this constant drive to increase demand was that we often forgot to plan carefully to make sure that the resources were being used efficiently. This has especially been the case in the electricity generation sub-sector.
Since hitting peak gas production in 2010, the gas industry has been challenged to maintain a plateau of production to keep all of the users of natural gas fully supplied. The Trinidad and Tobago challenge is no longer to increase demand, but rather to make sure that the supply is fully in place to meet this demand. In a context of gas shortages, we have to make sure that every molecule of gas that we produce is used as efficiently as possible and adds value to the economy.
As the Energy Chamber has highlighted repeatedly, there are significant opportunities to increase the value of our natural gas if we could reduce the volumes of gas going to power generation and instead allow the gas to flow to the petrochemical sector or LNG (and hence also to earn much needed additional foreign exchange). This means that energy efficiency in power generation, to reduce the volumes of gas needed to produce electricity, and measure to reduce the overall demand for electricity by consumers, will have significant positive overall benefits for the economy. Introducing cost-efficient renewable energy would also allow more gas to be switched to the export-earning petrochemical and LNG sectors.
The challenge is that the existing contractual relationships in the electricity sector mean that there will be winners and losers along the electricity value chain as this shift takes place. Contractual relationships can, however, be changed through the right negotiations and the right commercial agreements. Under the existing system, the Trinidad and Tobago Electricity Commission (T&TEC) stands to lose revenue from reduced demand for electricity, while the National Gas Company stands to increase revenue as they will have more gas to sell to Point Lisas. The right commercial deal between the two entities could help them to align their financial interests and encourage them both to work towards reducing electricity demand in the national interest.
Putting renewables and energy efficiency at the centre of overall energy policy will create clarity about the direction being taken and help players in the industry make the right decisions. Energy efficiency and renewables are now core to our overall energy policy, not just additional objectives that would be nice to achieve.