The Paris climate pledges submitted through the system of Intended Nationally Determined Contribution (INDC) action plans aim for global decarbonisation. The Trinidad & Tobago pledge includes the concept of a Caribbean Carbon Market (CCM) hosted by the Energy Chamber of Trinidad & Tobago. The market plan has been vetted by Bloomberg New Energy Finance and was showcased at its 2015 summit in New York City. 

One of the greatest threats to society is the inability of world leadership to provide secure, affordable energy to its citizens without causing catastrophic environmental damage. The Paris climate agreement is historic because after 20 years the global community has committed to action on climate change. The agreement focuses on developing technologies that will transform the world’s energy system, sending a strong signal that some fossil fuels, like coal, are on their way out and that a massive scaling up of investments in low emission and clean energy is required. 

On its own, the accord may be insufficient to save the planet, but combined with other measures to capture the cost of carbon, success can ultimately be achieved. A market-based approach ensures that the environmental costs of carbon emissions are reflected in fossil fuel prices, making renewables and low emission strategies increasingly competitive in the open market. 

Rich countries promised to help clean and low emission projects in developing countries almost 20 years ago. Trinidad’s USD 3 milion investment in the European carbon trading system is stranded because its carbon market was not designed with enough supply and demand flexibility. A private-sector-hosted, regional carbon market is a more reliable option as a source for equity and financing for Caribbean climate project developers. The Chamber will directly engage other national and sub-national cap-and-trade markets, multilateral and bilateral financial institutions to raise the needed funding. 

Carbon markets fall into two categories: cap-and-trade systems and emission reduction credit systems. Under the cap-and-trade, regulated emissions are “capped” and the sources purchase allowances equal to their emissions. In a credit system, sources voluntarily undertake emission reduction projects and are awarded “credits” that are sold to emission sources in cap-and-trade systems. The transaction is known as an “offset”. 

In an emission credit system, participants that undertake particular emission reduction projects are awarded “carbon credits” that can be sold to any participant in other cap-and-trade systems. A link between a cap-and-trade system and a T&T credit system will offer a capand- trade system’s regulated sources greater savings and access to low emission and renewable energy opportunities in Trinidad & Tobago. 

ARTICLE 6 of the Paris accord advocates global cooperation through market approaches. The country leaders of France, Canada and China all highlighted carbon pricing or emissions trading in their remarks on the ground in Paris. Carbon markets establishes a new global status quo that is built around comprehensive, country-by-country action to address climate change. Markets will create a new energy establishment and change the energy system. 

Some may argue that the more relevant parts of the accord are that it set a target for global warming well below 20C (a victory for small island states), or beginning in 2018 that nations are subject to pledge review every five years, or that the agreement sets a floor of climate aid to developing nations at USD100 billion, or a loss and damage feature that provides support to developing countries for disaster related to climate change. What I like more, as a TOSL Engineering Limited Vice President and an Energy Chamber member is that globally countries are coming up with ways to put a price on carbon. Emission trading and rising carbon prices will drive the low emission and renewable energy infrastructure development markets. The International Energy Agency estimates that fulfilling all the climate pledges would entail investments of $13.5 trillion in energy efficiency and low-carbon technologies between 2015 and 2030. 

The Trinidad & Tobago climate pledge reads in pertinent part: “Trinidad & Tobago's aim is to achieve a reduction objective in overall emissions from the three sectors by 15% by 2030 from business as usual (BAU), which in absolute terms is an equivalent of 103,000,000 of CO2e. The estimated cost of meeting this objective is USD2 billion, which is expected to be met partly through domestic funding and conditional on international financing including through the Green Climate Fund. In this regard, Trinidad & Tobago will commit to unconditionally reduce its public transportation emissions by 30% or 1,700,000 CO2e compared to 2013 levels by December 31, 2030”. 

If my math is correct, that’s an amazing 99.98% conditional pledge. Great job, T&T government! I doubt if financing from the Green Climate Fund referenced above will get close to what is needed to meet our emission reduction goal, let alone meaningfully scale up, but the money can be raised from an Energy Chamber carbon market. 

There will be some cap-and-trade market link compatibility challenges as well as artificial trade barriers put in place by rich country cap-and-trade officials, but as a Party to the agreement most threatened by climate change, we own moral authority and are a participant in an effective international climate accord that requires developed nations to, in good faith, work with small island developing states on creating energy security. 

Regional job creation, technology transfer, sustainable climate finance, local business opportunity, foreign investment and economic growth are an outcome of the Chamber’s work with markets and climate change.