Trinidad & Tobago
Petrol's empty promises
The island nation of Trinidad and Tobago is small in terms of both population and landmass – only 1.3 million people spread over an area half the size of Cyprus – but has grown to become the wealthiest country in the Caribbean. Recognised as a high-income economy by the World Bank, Trinidad and Tobago’s rapid industrialisation since the 1970s has delivered prosperity and well-being to its citizens, and the country scores highly on human and social development indices. But the country faces an uncertain future, especially with tourist revenues in freefall post-COVID.
This affluence is largely based on the islands’ large reserves of oil and gas, delivering billions of dollars of foreign investment and export income for over fifty years. But this windfall has also fostered dependency: the petroleum sector provides 85% of Trinidad and Tobago’s export earnings, 40% of its government revenue and over 35% of its GDP – all while providing only 5% of the country’s jobs.1
This reliance on petrochemicals has left the country at the mercy of international commodity markets: booming growth when prices are high, but recession and stagnation when they fall. The 2008 global financial crisis caused a deep recession, with contracting exports, negative growth rates and increasing debt – projected to rise to 80% of GDP by 2021.2To make matters worse, declining reserves have led to falling output and rising production costs, further hammering income. The national oil refinery Petrotrin was closed in 2018 after years of falling output, with the loss of 5000 jobs.3
So far, green measures have been largely absent from COVID response stimulus and structural recovery plans, although the government's Roadmap to Recovery plan does include explicit commitments to social inclusion and job preservation. A few specific green stimulus measures include the removal of tax concessions on imported motor vehicles, but stimulus to date has largely supported business as usual activities, including new support to the petrochemical industries.
Fossil fuel dependency has affected Trinidadian society in more subtly pernicious ways too. With 99% of electricity produced from domestic natural gas, and big government subsidies for transport fuels, citizens have become accustomed to some of the lowest energy costs outside of the Middle East. Artificially low prices have led to high consumption – Trinidadians have the world’s second highest carbon footprint per capita – and rigged the market against renewable energy, despite the island’s world-class reserves of sun, wind and wave power.4
The short-term promises of oil & gas profits have thus left Trinidad and Tobago in a perilous situation. As a small island state, it is highly vulnerable to rising seas and intensifying storms brought on by climate change – and so pushed for a more ambitious 1.5°C warming limit at the Paris climate negotiations.
But its dependence to oil and gas income, even when that income is erratic at best, has leached ambition from the government’s environment policies, paralysed a potential transition to clean electricity, and left the Treasury stuck with expensive energy subsidies that would be politically nightmarish to remove. Sooner or later, Trinidad & Tobago will need to diversify its economy and find other sources of prosperity beyond petrol. But the longer it continues to shackle itself to the oil industry, the harder that transition will be.
Policy Scores
Last updated 23 Oct 2022
Green COVID-19 Recovery
Trinidad & Tobago has introduced several economic support packages to date, with measures extended as part of the June mid-year budget review - totalling approximately 3.8% of GDP. Prior to releasing their Roadmap to Recovery plan, the government engaged in an open consultation process with citizens which informed the initiatives selected. The aims of Phase 1 of the plan are to leave no one behind, preserve jobs and boost demand. Stimulus measures directed at households and businesses include increasing tax allowances, providing credit loans, relief and income support grants (including for workers in the informal sector). Green measures have been largely absent from stimulus and structural recovery plans. A few specific green stimulus measures include the removal of tax concessions on imported motor vehicles, with the lowest duties for hybrid and electric cars (although concessions remain in place for commercial and industrial vehicles), as well as the removal of fuel subsidies and increased penalties for illegal quarrying. The liberalisation of the fuel market and subsidy reform appears to be a significant step toward structural greening, however it seems have been implemented on the basis of low fuel prices rather than as a disincentive to polluters. This is evidenced by the decision to raise the petroleum tax threshold for small onshore oil producers (encouraging further investment and exploration), and an unconditional bailout to Caribbean Airlines. While stimulus to date has supported business as usual activities, there remains the possibility of re-aligning initiatives with a green recovery as part of Phase 2 of the recovery plan over the medium to long term.
Trinidad & Tobago has introduced several economic support packages to date, with measures extended as part of the June mid-year budget review - totalling approximately 3.8% of GDP. Prior to releasing their Roadmap to Recovery plan, the government engaged in an open consultation process with citizens which informed the initiatives selected. The aims of Phase 1 of the plan are to leave no one behind, preserve jobs and boost demand. Stimulus measures directed at households and businesses include increasing tax allowances, providing credit loans, relief and income support grants (including for workers in the informal sector). Green measures have been largely absent from stimulus and structural recovery plans. A few specific green stimulus measures include the removal of tax concessions on imported motor vehicles, with the lowest duties for hybrid and electric cars (although concessions remain in place for commercial and industrial vehicles), as well as the removal of fuel subsidies and increased penalties for illegal quarrying. The liberalisation of the fuel market and subsidy reform appears to be a significant step toward structural greening, however it seems have been implemented on the basis of low fuel prices rather than as a disincentive to polluters. This is evidenced by the decision to raise the petroleum tax threshold for small onshore oil producers (encouraging further investment and exploration), and an unconditional bailout to Caribbean Airlines. While stimulus to date has supported business as usual activities, there remains the possibility of re-aligning initiatives with a green recovery as part of Phase 2 of the recovery plan over the medium to long term.
Governance
National green economy plan
Key legislation is the National Development Strategy - Vision 2030, passed 2016, which sets out 56 national goals across five themes and with short, medium and long-term implementation phases. Themes 1 (Putting People First) and 5 (Placing the Environment at the Centre of Social and Economic Development) focus on green economy issues. Programme is closely structured around the UN SDG framework. However, detailed commitments and budget details are unclear, and timescales for decarbonisation are currently vague.
Key legislation is the National Development Strategy - Vision 2030, passed 2016, which sets out 56 national goals across five themes and with short, medium and long-term implementation phases. Themes 1 (Putting People First) and 5 (Placing the Environment at the Centre of Social and Economic Development) focus on green economy issues. Programme is closely structured around the UN SDG framework. However, detailed commitments and budget details are unclear, and timescales for decarbonisation are currently vague.
Inclusive governance
Some consultation for Vision 2030, but this seems to have been limited to within ministries and government; the preceding strategy Vision 2020 was informed by 80 public consultations and 28 expert committees, but no similar process was held for the 2030 version.
Some consultation for Vision 2030, but this seems to have been limited to within ministries and government; the preceding strategy Vision 2020 was informed by 80 public consultations and 28 expert committees, but no similar process was held for the 2030 version.
SDG business strategy
Vision 2030 is closely aligned with the UNs SDG framework, and includes provisions for a green infrastructure fund, but contains little information on supporting businesses and the private sector to contribute towards SDGs.
Vision 2030 is closely aligned with the UNs SDG framework, and includes provisions for a green infrastructure fund, but contains little information on supporting businesses and the private sector to contribute towards SDGs.
Wealth accounting
No mention of wealth accounting in Vision 2030; the preceding national strategy Vision 2020 planned a system of national statistics on economic, social and environmental factors, but this still under implementation.
No mention of wealth accounting in Vision 2030; the preceding national strategy Vision 2020 planned a system of national statistics on economic, social and environmental factors, but this still under implementation.
Finance
Green finance plan
Only limited mention of sustainable finance reform in the Vision 2030; several provisions to finance development aspirations laid out but none fully costed.
Only limited mention of sustainable finance reform in the Vision 2030; several provisions to finance development aspirations laid out but none fully costed.
Green fiscal & monetary policy
A green infrastructure fund and support for green technologies have been proposed, although no sectoral reforms planned. Government does require environmental impact assessments to be carried out for all new state projects. New progressive and green taxes proposed, including an increase on diesel; and a Green Fund has been in operation since 2001, comprising a 0.3% levy on corporate income, with revenue reserved for conservation and restoration.
A green infrastructure fund and support for green technologies have been proposed, although no sectoral reforms planned. Government does require environmental impact assessments to be carried out for all new state projects. New progressive and green taxes proposed, including an increase on diesel; and a Green Fund has been in operation since 2001, comprising a 0.3% levy on corporate income, with revenue reserved for conservation and restoration.
Safe & accountable banks
Stress testing regulations from 2017 introduced environmental risk and scenario planning for climate change related environmental events as a baseline for evaluation of the financial system, in addition to standard financial risk metrics.
Stress testing regulations from 2017 introduced environmental risk and scenario planning for climate change related environmental events as a baseline for evaluation of the financial system, in addition to standard financial risk metrics.
Pricing carbon
Though a proposal was made for carbon pricing by the Private Sector Business Chamber, government interest in developing such a policy is currently low.
Though a proposal was made for carbon pricing by the Private Sector Business Chamber, government interest in developing such a policy is currently low.
Sectors
Green sectoral policy plan
Although an independent, cross-cutting body does not currently exist, the role of intersectoral strategy and coordination is somewhat fulfilled by the Ministry for Planning and Development. Strategic initiatives under Theme 5 of Vision 2030 - Placing the Environment at the Centre of Social and Economic Development - provide some limited ambition for sectoral interventions in transport, energy, waste.
Although an independent, cross-cutting body does not currently exist, the role of intersectoral strategy and coordination is somewhat fulfilled by the Ministry for Planning and Development. Strategic initiatives under Theme 5 of Vision 2030 - Placing the Environment at the Centre of Social and Economic Development - provide some limited ambition for sectoral interventions in transport, energy, waste.
Small business support
No separate legal form, policy or financial support from the government for social enterprises. However, SMEs are a policy priority and there are numerous general programmes for developing entrepreneurship through fiscal incentives, targeted training programmes, loan facilities, grant funding, community business clusters, and protections for local manufacturing.
No separate legal form, policy or financial support from the government for social enterprises. However, SMEs are a policy priority and there are numerous general programmes for developing entrepreneurship through fiscal incentives, targeted training programmes, loan facilities, grant funding, community business clusters, and protections for local manufacturing.
Carbon budgeting
Climate change policy dates from 2011 and is currently being updated. The Policy and its associated NDC seeks to establish clear targets for CO2 emissions specifically, a 15% reduction in overall CO2e emissions from business-as-usual by 2030 but this is not consistent with a 1.5C pathway, is provisional on the receipt of additional Green Climate Fund finance, and has yet to be fully implemented.
Climate change policy dates from 2011 and is currently being updated. The Policy and its associated NDC seeks to establish clear targets for CO2 emissions specifically, a 15% reduction in overall CO2e emissions from business-as-usual by 2030 but this is not consistent with a 1.5C pathway, is provisional on the receipt of additional Green Climate Fund finance, and has yet to be fully implemented.
Clean energy policy
Vision 2030 sets a target of 10% renewables by 2021 and seeks to integrate renewable energy into development planning. The 10% target exceeds the recommendations of the Draft Renewable Energy Policy which mandated only 5% RE by 2021 but progress towards the goal is almost non-existent. As of 2018, T&T still generated 99% of its electricity from natural gas.
Vision 2030 sets a target of 10% renewables by 2021 and seeks to integrate renewable energy into development planning. The 10% target exceeds the recommendations of the Draft Renewable Energy Policy which mandated only 5% RE by 2021 but progress towards the goal is almost non-existent. As of 2018, T&T still generated 99% of its electricity from natural gas.
People
Green jobs
Draft National Environmental Policy (2018) does include some mention of green jobs, but no implementation plan included and only vague aspirations towards generating new employment rather than concrete policy.
Draft National Environmental Policy (2018) does include some mention of green jobs, but no implementation plan included and only vague aspirations towards generating new employment rather than concrete policy.
Pro-poor policy
Trinidad and Tobago has a relatively robust programme of social assistance and welfare for unemployed and low-income groups, although addressing inequality is not a stated priority and no significant public program on the linkages between poverty and environment, other than investments in non-profit entities receiving grants for infrastructure construction.
Trinidad and Tobago has a relatively robust programme of social assistance and welfare for unemployed and low-income groups, although addressing inequality is not a stated priority and no significant public program on the linkages between poverty and environment, other than investments in non-profit entities receiving grants for infrastructure construction.
Participatory policymaking
Continuous evaluation of public policy is provided by the Socio-Economic Policy Planning Division (SEPPD) within the Ministry of Planning, including assessments of social impact and stakeholder consultations.
Continuous evaluation of public policy is provided by the Socio-Economic Policy Planning Division (SEPPD) within the Ministry of Planning, including assessments of social impact and stakeholder consultations.
Innovative social protection
A number of different programmes exist, for example the Social Sector Investment Programme (SSIP) 2018, micro-credits for the poor, free public transport for the elderly and trauma assistance following natural disasters, but a lack of coordination and overall strategy has hampered impact.
A number of different programmes exist, for example the Social Sector Investment Programme (SSIP) 2018, micro-credits for the poor, free public transport for the elderly and trauma assistance following natural disasters, but a lack of coordination and overall strategy has hampered impact.
Nature
Ocean & land conservation
The Ministry of Planning together with UNDP developed a Roadmap for SDG Implementation in 2017, establishing priorities, targets and funding requirements for the goals including 14 & 15. Theme 5, Goal 5 of the 2030 Vision does include biodiversity, natural habitat and coastal/marine protection, although not specifically linked to the Sustainable Development Goals.
The Ministry of Planning together with UNDP developed a Roadmap for SDG Implementation in 2017, establishing priorities, targets and funding requirements for the goals including 14 & 15. Theme 5, Goal 5 of the 2030 Vision does include biodiversity, natural habitat and coastal/marine protection, although not specifically linked to the Sustainable Development Goals.
Natural capital accounts
Natural capital accounts not planned, but potential for assessment is growing thanks to improved data availability on biodiversity, pollution and waste management.
Natural capital accounts not planned, but potential for assessment is growing thanks to improved data availability on biodiversity, pollution and waste management.
Natural capital committee
Vision 2030 mentions the potential establishment of a fiscal board advising on sustainability, but this yet to be established and with no mention of natural capital accounting.
Vision 2030 mentions the potential establishment of a fiscal board advising on sustainability, but this yet to be established and with no mention of natural capital accounting.
Nature-based fiscal reform
Comprehensive fiscal strategy detailed in Vision 2030, but does not include sustainability or environmental concerns as priorities for informing policy design. Some fiscal developments around vehicle taxation and energy sectors, but no earmarking for natural capital management.
Comprehensive fiscal strategy detailed in Vision 2030, but does not include sustainability or environmental concerns as priorities for informing policy design. Some fiscal developments around vehicle taxation and energy sectors, but no earmarking for natural capital management.
References
- https://www.cia.gov/library/publications/the-world-factbook/geos/td.html
- https://www.imf.org/en/Publications/CR/Issues/2016/12/31/Trinidad-and-Tobago-2016-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-44034
- https://energy-analytics-institute.org/2018/08/30/shut-down-of-historic-petrotrin-refinery/
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