This study describes a potential renewable energy policy design for Trinidad and Tobago (T&T). Thestudy explores feed-in tariff (FIT) policy design as it relates to T&T’s specific policy objectives andnational conditions. This Section provides an overview of T&T’s policy goals and a general discussion of FIT policy. Section 2 includes a detailed explanation of feed-in tariff design issues and recommendedpolicy designs.
Trinidad and Tobago is currently exploring the introduction of grid-connected renewable energyresources in order to support several key policy objectives:
Long-term energy security
. T&T’s economy is heavily dependent on its domestic energy resources.T&T’s natural gas resources have enabled it to enjoy the lowest electricity prices in the Caribbeanregion and to establish a balance of payments surplus in trade (T&T Central Statistical Office, 2012).Energy accounted for TT$9.1 billion in domestic revenue in 2010, up from TT$7.8 billion in 2009, andaccounted for 82.5% of total exports. Oil production peaked in T&T in 1978, however, and there areapproximately nine years of proven natural gas reserves left at current production levels (McHalffey,2010). Although it is likely that additional natural gas fields will be discovered and moved intoproduction, T&T is beginning to explore renewable energy development in the near-term in order tohedge the risk of natural gas production declining. Renewable energy can also displace the need touse natural gas for electricity generation and free it up for use in higher value uses in downstreamindustries.
Climate change and environmental protection
. T&T has signed the Kyoto Protocol, and T&Tpolicymakers have framed the need to reduce greenhouse gas emissions from the energy sector as amoral issue. The emphasis on the environmental benefits of renewable energy has been aconsistent theme of T&T’s policy documents for more than a decade. The Ministry of Energy andEnergy Industries’Energy Policy Green Paper (1998), for example, identified renewable energy as apriority and noted that the environmental externalities of fossil fuel generators are notappropriately reflected in current energy prices. The Renewable Energy Committee’s
Framework for Development of a Renewable Energy Policy for Trinidad and Tobago
(2011), as well as
Draft GreenPaper on Energy Policy for Trinidad and Tobago
(2012) both identify greenhouse gas reduction as anexplicit policy objective and cite climate change mitigation as a justification for renewable energydevelopment. A commitment to renewable energy would enable T&T to address nationalenvironmental concerns and to play a leadership role in the region.
Further diversification of the economy.
Although T&T has successfully transitioned its economyfrom one dependent on agriculture (e.g. cocoa and sugar cane) to one driven by energycommodities and downstream natural gas industries, the future of extractive industries in T&T isuncertain. The T&T Vision 2020 study noted that global demand for natural gas would only beoutpaced by demand for non-hydro renewable energy sources (Vision 2020 Energy Sub-Committee,2006). Renewable energy market growth has rapidly accelerated during the past several years, with