Ear­ly in the new year, Trinidad and To­ba­go’s (T&T) en­er­gy in­dus­try will meet the dawn of a new era. On Jan­u­ary 1, 2026, the much-an­tic­i­pat­ed Car­bon Bor­der Ad­just­ment Mech­a­nism (CBAM), pre­sent­ed by the Eu­ro­pean Union (EU), takes ef­fect. CBAM is an EU pol­i­cy that places a car­bon cost on cer­tain im­port­ed goods to pre­vent “car­bon leak­age” and en­cour­age glob­al de­car­bon­i­sa­tion. Af­ter Mozam­bique, T&T is the sec­ond largest ex­porter of car­bon in­ten­sive prod­ucts to Eu­rope.

Ac­cord­ing to a Ju­ly 2024 re­port pro­duced by Dr Preeya Mo­han and Dr Jaymieon Jages­sar of the Uni­ver­si­ty of the West In­dies (UWI), this coun­try’s ex­ports to the EU af­fect­ed by the CBAM are in­or­gan­ic chem­i­cals (US$721.9 mil­lion, or 28 per cent of T&T ex­ports to the EU), min­er­al fu­els (US$687.4 mil­lion, or 27 per cent of T&T ex­ports to the EU), or­gan­ic chem­i­cals (US$499.5 mil­lion, or 19.5 per cent of T&T ex­ports to the EU), and fer­tilis­ers (US$411.8 mil­lion, or 16 per cent of T&T ex­ports to the EU).

An EU car­bon tax on some T&T ex­ports to Eu­rope could dis­suade com­pa­nies with­in the Union from buy­ing T&T chem­i­cals and fer­tilis­ers.

Op­por­tu­ni­ty not ob­sta­cle

On the side­lines of the Unit­ed Na­tions Cli­mate Change Con­fer­ence in Belem, Brazil, Vi­cente Hur­ta­do Roa, sat down with the Sun­day Busi­ness Guardian to ex­plore the im­pli­ca­tions and op­por­tu­ni­ties for T&T. Roa is the head of unit at the Eu­ro­pean Com­mis­sion for CBAM. He un­der­stands the im­pact such a mea­sure will have on the twin-is­land re­pub­lic but in­sists this coun­try must look at the op­por­tu­ni­ties.

“We are aware of the fact that you re­ly a lot on the ex­ports of those goods. I un­der­stand that there are al­so dis­cus­sions and plans to ex­port hy­dro­gen, and in par­tic­u­lar green hy­dro­gen, to the EU, and I think the CBAM has to be seen as an op­por­tu­ni­ty, on one hand, for a coun­try like T&T to de­car­bonise, to have a push for de­car­bon­i­sa­tion of those goods. That will al­low you al­so to com­pete in bet­ter con­di­tions with re­spect to oth­er coun­tries which have a high­er de­gree of car­bon in­ten­si­ty.”

It’s a point Philip Julien agrees with. The founder of Ke­nes­jay Green has be­come the lead­ing voice of ad­vo­ca­cy for this coun­try to ac­cel­er­ate its green hy­dro­gen am­bi­tions.

He told the Sun­day Busi­ness Guardian in a state­ment, “One could ar­gue that the whole world is mov­ing too slow in de­vel­op­ing green hy­dro­gen. One on­ly has to look at the tar­get met­rics set some years ago, com­pared to to­day. In Trinidad’s case, com­pared to most of the world, it can be one of the quick­est in re­al­is­ing green hy­dro­gen projects, in part be­cause of the im­me­di­ate mar­ket for hy­dro­gen found in T&T’s am­mo­nia and methanol plants, which are ur­gent­ly re­quir­ing ad­di­tion­al feed­stock to com­pen­sate for the on­go­ing nat­ur­al gas short­fall.”

Roa in­sist­ed in the in­ter­view that T&T can­not go wrong with the pro­duc­tion of green en­er­gy.

When asked if this coun­try risks los­ing the EU as one of its main trad­ing part­ners, he re­spond­ed, “There is a strat­e­gy in the EU to re­ly more and more on elec­tric­i­ty, green elec­tric­i­ty, and al­so green hy­dro­gen. But we will need to im­port elec­tric­i­ty and hy­dro­gen from third coun­tries. This is pre­cise­ly the rea­son why hy­dro­gen and elec­tric­i­ty are al­so part of the CBAM. We don’t im­port so much for the mo­ment, but we are aware that we will need to im­port more. We don’t want to stop im­port­ing. What we want to make sure is that, of course, we are im­port­ing green prod­ucts.”

A tran­si­tion­al pe­ri­od for CBAM start­ed in Oc­to­ber 2023, and when asked if he had seen any ev­i­dence to sug­gest that Eu­ro­pean com­pa­nies will be dis­cour­aged from im­port­ing T&T car­bon-in­ten­sive prod­ucts, Roa said, “It’s dif­fi­cult to say that we have seen com­pa­nies do­ing this or that. What I can tell you is that, in par­tic­u­lar, the largest im­porters, they have been able to pro­duce da­ta, and that’s im­por­tant.

“Over­all, I can tell you that those im­porters who are im­port­ing more than 1,000 tonnes per year, they were able, on av­er­age, to re­ly on re­al emis­sions, so they have the da­ta around 85-90 per cent, which is quite high. I think that shows that every­body is un­der­stand­ing the sys­tem and every­body is com­ply­ing with the sys­tem. It’s true that maybe some small im­porters were not re­al­ly giv­ing the in­for­ma­tion time­ly.”

Are T&T com­pa­nies ready?

With the on­set of CBAM ap­proach­ing fast, Mo­han, who is a se­nior fel­low at the Sir Arthur Lewis In­sti­tute of So­cial and Eco­nom­ic Stud­ies at UWI, could not say whether lo­cal com­pa­nies which ex­port car­bon-in­ten­sive prod­ucts to the EU are ready.

In a tele­phone in­ter­view last Wednes­day, Mo­han said, “Look­ing at CBAM and ex­porters, you need to have the ex­porters of the prod­ucts, the am­mo­nia, the fer­tilis­er, mea­sure the car­bon con­tent of their prod­ucts and I’m not sure if we’re ready for that. Through our stake­hold­er con­sul­ta­tions, the feed­back we would have re­ceived is that there is a need to build tech­ni­cal ca­pac­i­ty with­in the pri­vate sec­tor and de­vel­op a ro­bust Mon­i­tor­ing, Re­port­ing and Ver­i­fi­ca­tion (MRV) sys­tem so that they are able to mea­sure the car­bon con­tent of their prod­ucts.”

But Mo­han says the EU CBAM is just the be­gin­ning. Oth­er coun­tries like the UK are quick­ly fol­low­ing.

“The is­sue comes where when you read the de­sign of the EU CBAM and the UK CBAM that’s go­ing to be com­ing out very soon, is that it was made very clear that the prod­uct scope is go­ing to ex­pand, which means that any prod­uct we pro­duce, not just in en­er­gy but in man­u­fac­tur­ing, could be af­fect­ed. Fu­els could al­so be af­fect­ed which would af­fect tourism and trav­el. This is not to cause pan­ic but to un­der­stand that CBAM im­ple­menters in­tend to up­date the prod­uct scope through reg­u­lar re­view and we are at the mer­cy of the prod­uct scope, what­ev­er they choose to in­clude, and a con­tentious one for us would be methanol,” said the econ­o­mist.

Mo­han says while CBAM push­es T&T to de­car­bonise, one way around the EU im­port tax is to im­ple­ment a do­mes­tic car­bon tax and car­bon mar­ket.

“Ul­ti­mate­ly, if we pay a car­bon tax in Trinidad, we do not pay the CBAM tax to the EU. So, in or­der to pay a car­bon tax here, we need to price our car­bon and we need to de­vel­op a do­mes­tic car­bon mar­ket,” Mo­han ex­plained.

Car­bon on the Stock Ex­change

At COP30 in Brazil last week, Min­is­ter of Plan­ning, Eco­nom­ic Af­fairs and De­vel­op­ment, Kennedy Swarats­ingh, said T&T must find a way to trade car­bon cred­its.

“We have to do new forms of re­for­esta­tion. So, for ex­am­ple, like where the oil sands are, find­ing ways in which we can put some of the emis­sions back in­to the ground. We have to find new ways that we can con­tin­ue to evolve in the man­grove sec­tor, even on the blue side, as well on the blue econ­o­my side,” said Swarats­ingh. “We haven’t ex­plored those enough... We can’t pro­duce enough car­bon cred­its in or­der to deal with some of the large in­sti­tu­tions that buy these cred­its on in­ter­na­tion­al mar­ket, but what we are think­ing about is de­vel­op­ing a car­bon plat­form in the Stock Ex­change and trad­ing with oth­er coun­tries that trade car­bon cred­its, like South Ko­rea and some of the oth­ers,” the min­is­ter said.

CBAM may be an ex­ter­nal pres­sure, but it now stands as the strongest in­ter­nal push for T&T to re­think the fu­ture of its en­er­gy en­gine.