With more fo­cus on re­new­ables, the Ox­ford Busi­ness Group is ad­vis­ing that fi­nan­cial in­sti­tu­tions will be cen­tral to T&T’s tran­si­tion away from tra­di­tion­al en­er­gy sources.

Ac­cord­ing to its lat­est re­port ti­tled Is Trinidad and To­ba­go pre­pared for its green en­er­gy tran­si­tion?—it em­pha­sised that this coun­try’s clean en­er­gy goal will on­ly be suc­cess­ful with the sup­port of fi­nan­cial in­sti­tu­tions with cli­mate fi­nance lend­ing and broad­er in­vest­ment in green in­fra­struc­ture.

Cit­ing that T&T’s frame­work cur­rent­ly com­pris­es cli­mate funds, green bonds and ad­di­tion­al sup­port from mul­ti­lat­er­al sources, the re­port said banks and in­ter­na­tion­al or­gan­i­sa­tions how­ev­er, al­so have a role to play in set­ting the rules of the game.

But Marc Jar­dine, Vice-Pres­i­dent of Busi­ness Bank­ing, T&T and Lead of RBC’s Caribbean En­vi­ron­ment, So­cial and Gov­er­nance (ESG) Com­mit­tee not­ed that while many in­di­vid­u­als and busi­ness­es are in­ter­est­ed in bring­ing clean en­er­gy so­lu­tions to the Caribbean mar­ket at both the do­mes­tic and the in­ter­na­tion­al lev­el, in most in­stances, in­fra­struc­ture and na­tion­al agen­das are not yet where they need to be.

Jar­dine who eval­u­at­ed the push to achieve net-ze­ro car­bon emis­sions in the re­port said to bring many of these so­lu­tions to fruition at the in­dus­tri­al and com­mer­cial lev­el, amend­ments are re­quired from a macro­eco­nom­ic per­spec­tive by gov­ern­ments with re­gards to in­ter­con­nec­tiv­i­ty and ac­cess to grids.

In ad­di­tion, he sug­gest­ed there’s an op­por­tu­ni­ty to ex­plore sub­si­dies oth­er than du­ty-free clas­si­fi­ca­tions and ma­chin­ery im­ports that are ex­empt from val­ue-added tax.

Tan­gi­ble tax cred­its to green en­er­gy pro­duc­ers should be con­sid­ered, he added.

“The tran­si­tion to net ze­ro must be or­der­ly and in­clu­sive to be suc­cess­ful, recog­nis­ing the changes that need to oc­cur in our dai­ly lives and economies in terms of how en­er­gy and re­sources are con­sumed.

“We be­lieve that how we get there is just as im­por­tant as the des­ti­na­tion. In re­al­i­ty, be­cause suf­fi­cient en­er­gy sources are es­sen­tial for life and work, we can­not sim­ply flip the switch to clean en­er­gy.

“That is why part­ner­ships and col­lab­o­ra­tion through­out the in­dus­try are es­sen­tial,” Jar­dine fur­ther ad­vised.

Ad­di­tion­al­ly, he said many types of en­er­gy so­lu­tions are need­ed to meet grow­ing glob­al en­er­gy de­mand, and the re­liance on tra­di­tion­al sources of en­er­gy will re­al­is­ti­cal­ly con­tin­ue for some time to sat­is­fy those needs.

Ac­cord­ing to Jar­dine, this is where sus­tain­able fi­nanc­ing can help with the tran­si­tion by sup­port­ing clients that are in­volved in clean en­er­gy and oth­er in­no­v­a­tive projects that help re­duce car­bon emis­sions or en­hance re­silience against se­vere weath­er events.

And what ways can do­mes­tic busi­ness­es ap­ply ESG prin­ci­ples to sup­port the re­new­able en­er­gy tran­si­tion in T&T?

Jar­dine said it is im­per­a­tive for busi­ness­es to con­sid­er long-term val­ue cre­ation and sus­tain­abil­i­ty.

But, in the cur­rent con­text, this can­not hap­pen with­out ex­am­in­ing the im­pact of so­cial and en­vi­ron­men­tal fac­tors on a wider group of stake­hold­ers, he said.

“There needs to be a long-term fo­cus on cus­tomers, em­ploy­ees, com­mu­ni­ties, sup­pli­ers and share­hold­ers, and a more in­clu­sive ap­proach to de­ci­sion-mak­ing. ESG prin­ci­ples set a path for an or­gan­i­sa­tion to do that, not least by iden­ti­fy­ing en­vi­ron­men­tal guide­lines that a busi­ness can in­cor­po­rate in­to its poli­cies, prac­tices and prod­ucts,” Jar­dine ex­plained.

Fur­ther, he said the con­sid­er­a­tion of push and pull fac­tors is crit­i­cal when em­bed­ding ESG poli­cies in a com­pa­ny’s op­er­at­ing ecosys­tem.

Jar­dine ex­plained that busi­ness­es should un­der­stand that—in most cas­es—con­sumers grav­i­tate to­wards sus­tain­able prod­ucts and ser­vices when they have a choice.

“As there cur­rent­ly are not many green en­er­gy sources avail­able in T&T, lo­cal busi­ness­es must work to­wards de­vel­op­ing their own and place ad­di­tion­al em­pha­sis on en­er­gy ef­fi­cien­cy and con­ser­va­tion.

“ESG stan­dards help set re­spon­si­ble lend­ing prac­tices for project fund­ing, as well as aid in the de­vel­op­ment of prod­uct- spe­cif­ic ini­tia­tives such as per­son­al and com­mer­cial so­lar pow­er in­stal­la­tions,” he fur­ther ad­vised. The re­port how­ev­er, not­ed that some progress has al­ready been made re­gard­ing fi­nanc­ing as Mem­bers of Par­lia­ment and CEOs of ma­jor banks in the coun­try have high­light­ed the press­ing need for loans that en­cour­age the pro­mo­tion of sus­tain­able en­er­gy, as well as a pe­ri­od of merg­ers and ac­qui­si­tions ac­tiv­i­ty to re­struc­ture and cre­ate en­ti­ties fit for a new en­er­gy land­scape.

Ac­cord­ing to the re­port, glob­al­ly, fi­nan­cial in­sti­tu­tions and cap­i­tal mar­kets have al­ready in­cor­po­rat­ed cli­mate-change-re­lat­ed risks in­to their lend­ing prac­tices.

These, it sug­gest­ed, can be lever­aged in T&T to ac­cel­er­ate the move away from hy­dro­car­bons, while still en­sur­ing the buoy­an­cy of the coun­try’s ex­ist­ing ma­ture en­er­gy sec­tor.

“A top-down pol­i­cy fo­cused on sus­tain­able en­er­gy is set to have sub­stan­tial ben­e­fits for oth­er sec­tors, as the econ­o­my looks to di­ver­si­fy away from oil and gas in­to fast-grow­ing, more mar­gin­al in­dus­tries,” the Ox­ford Busi­ness Group fur­ther ad­vised.

It al­so sug­gest­ed that a bal­anced ap­proach be­tween main­tain­ing en­er­gy se­cu­ri­ty and dri­ving the sus­tain­able en­er­gy tran­si­tion for­ward of­fers a wealth of op­por­tu­ni­ties for the this coun­try, which has ex­plored so­lar and wind en­er­gy sources but has yet to im­ple­ment a com­pre­hen­sive re­new­able en­er­gy roadmap.

But where does this coun­try stand in so­lar en­er­gy com­pared to oth­er Caribbean coun­tries?

Elec­tric­i­ty gen­er­a­tion mix in T&T is still dom­i­nat­ed by fos­sil fu­els, the re­port said, adding that there has al­so been a “sig­nif­i­cant lack of in­vest­ment by for­eign and do­mes­tic com­pa­nies” in the coun­try’s re­new­able en­er­gy sec­tor, which has ham­pered the de­vel­op­ment of util­i­ty-size so­lar projects.

How­ev­er, it not­ed that in­creas­ing de­mand for clean and sta­ble en­er­gy, in tan­dem with wider fi­nance ini­tia­tives, is ex­pect­ed to be the pri­ma­ry dri­ver for the so­lar pow­er gen­er­a­tion mar­ket in the coun­try.

“Trinidad & To­ba­go has been one of the most ac­tive coun­tries in the re­gion in terms of de­sign­ing and pri­ori­tis­ing poli­cies for so­lar en­er­gy,” the re­port said.

In high­light­ing key de­vel­op­ments of T&T’s so­lar en­er­gy progress the re­port not­ed that the coun­try’s in­stalled ca­pac­i­ty for so­lar en­er­gy is fore­cast to reg­is­ter a Com­pound An­nu­al Growth Rate (CA­GR) of 109 per cent be­tween 2022 and 2027.

Ad­di­tion­al­ly, it said in Feb­ru­ary 2020 the Gov­ern­ment float­ed a ten­der for 130 MW of so­lar pow­er to at­tract for­eign in­vestors.

Re­gard­ing wind en­er­gy, the re­port said this is still in its in­fan­cy in T&T.

“De­spite the fact that many com­pa­nies are now ac­tive in the re­new­able en­er­gy sec­tor, many of these firms are not yet fo­cused on wind, and for those that are, their wind-re­lat­ed ac­tiv­i­ties are of­ten mar­gin­al,” the re­port ex­plained.

Off­shore wind en­er­gy it added, of­fers a promis­ing al­ter­na­tive for is­lands like T&T which has lim­it­ed land re­sources and ex­pan­sive ter­ri­to­r­i­al wa­ters.

While cit­ing that in 2013 the Gov­ern­ment- ap­proved Na­tion­al Wind Re­source As­sess­ment Pro­gramme out­lined five can­di­date sites for wind farm de­vel­op­ment across the is­lands, the re­port said there has been lit­tle con­crete progress since.

More­so, the re­port un­der­scored that this coun­try must in­cor­po­rate a bal­anced ap­proach to en­er­gy se­cu­ri­ty and its eco­nom­ic di­ver­si­fi­ca­tion strate­gies which it said un­der­pin the is­lands’ eco­nom­ic po­ten­tial.

“Though the coun­try’s fis­cal sit­u­a­tion be­fore and dur­ing the COVID-19 pan­dem­ic was not op­ti­mal, eco­nom­ic growth prospects are pos­i­tive and in­vest­ment in­flows are im­prov­ing,” the re­port added.

And while T&T re­lies on hy­dro­car­bons for elec­tric­i­ty, it can em­u­late oth­er is­land na­tions’ ex­pe­ri­ence in tran­si­tion­ing to clean en­er­gy.

Ac­cord­ing to the re­port, lessons from neigh­bour­ing is­land na­tions’ ex­pe­ri­ences in re­new­able en­er­gy, par­tic­u­lar­ly wind, can be in­te­grat­ed in­to the lo­cal en­er­gy mix.

This, it said would al­low this coun­try to ex­port more of its nat­ur­al gas to fur­ther fund en­er­gy tran­si­tion ef­forts and wider ESG goals.

The re­port not­ed that this coun­try re­lies heav­i­ly on nat­ur­al gas for elec­tric­i­ty gen­er­a­tion, and has missed its tar­get of meet­ing 10 per cent of en­er­gy needs with re­new­able sources by 2021.

But it main­tained that lessons on how to in­crease its re­new­able en­er­gy ca­pac­i­ty can be drawn from oth­er coun­tries and ter­ri­to­ries in the re­gion, no­tably Bar­ba­dos and Guade­loupe, with the for­mer hav­ing com­mit­ted to 100 per cent re­new­able en­er­gy use and car­bon neu­tral­i­ty by 2030.

“Tap­ping in­to T&T’s vast wind and so­lar re­sources for do­mes­tic elec­tric­i­ty con­sump­tion would al­low it to ex­port more nat­ur­al gas and use the ex­tra rev­enue to fi­nance its broad­er, long-term en­er­gy tran­si­tion plans,” the re­port em­pha­sised.