The relevance of the global clean energy transition to Trinidad and Tobago

The nature and expression of power in today’s global political economy is characterised by economics and trade. World countries can no longer afford to advance their economic growth and development (through rapid industrialisation and exorbitant carbon emissions) without also worsening the socio-environmental crisis brought on by climate change.

The clean energy transition demands reducing carbon emissions and substituting renewable energy resources. Political-economic blocs like the European Union have implemented carbon border adjustment trade policies to force the world to join the transition.

Trade policies like these frustrate small island developing states’ economic growth and development. They are left exposed and increasingly vulnerable to shocks and shifts in the global capital market, even when they cannot realistically afford to transition.

Relevance to Trinidad and Tobago

Carbon border trade policies like CBAM threaten to diminish Trinidad and Tobago’s dwindling export income. These trade policies are a type of carbon tax that developed countries place on foreign imported goods to reflect the cost of carbon emissions. By making imported goods with high carbon footprints more expensive, these types of trade policies incentivise domestic producers to adopt cleaner technologies and reduce their emissions.

As a primarily oil and gas territory, Trinidad and Tobago already depends on the volatility of a finite resource whose prices it does not control. With the implementation of trade policies like CBAM, the foreign exchange income earned from exporting hydrocarbons will decrease further.

The bottom line is that the country needs to accelerate its transition to clean energy. However, this is not without difficulty as sustainability development projects are often much more expensive and developing states like Trinidad and Tobago have difficulty accessing climate financing.