Fossil fuels are going to remain an important part of the energy mix for many years to come, but renewable energy is growing quickly. Trinidad and Tobago needs to be aware of this reality and embrace the global energy transition to a lowercarbon future. The energy transition is being driven not just by climate change policies, but also by technological innovation and the changing economics that the technological revolution has spurred.
Large-scale solar electricity is now cheaper than conventional fossil fuel power electricity generation in some countries, and across the board, the cost of renewable energy has declined faster than most people predicted. When this is combined with significant improvements in electricity storage and the rapid uptake of electric vehicles, the challenge to petroleum products is very clear.
The energy transition suggests that there will be longterm downward pressure on oil prices as supply outstrips demand, meaning that only the lowest-cost producers will be able to continue to operate. This in turn means that oil and gas companies will maintain their relentless drive to increase efficiency and drive down costs, which obviously has serious implications for service companies and contractors. Technology has a key role to play in helping increase efficiency. The companies who are best able to successfully take advantage of automation, data analytics and artificial intelligence are most likely to survive and thrive in this new environment.
This has serious implications for Trinidad and Tobago. The fact that we are primarily a gas-based economy has some advantages, given the key role of natural gas in electricity generation in an increasingly electricity-driven world. However, we must be much more efficient in the way that we use gas to generate electricity and the way that we use electricity. Natural gas is too valuable a resource to be simply wasted, especially as it is our primary generator of foreign exchange, and we need a very serious plan to significantly increase efficiency and begin to swop natural gas with renewable energy in electricity generation.
The energy transition also highlights the need for us to produce our significant remaining oil reserves as quickly and as cheaply as possible. We do not have further time to waste and we need to urgently attract significant, additional private capital to invest in increasing oil production, safely and efficiently. Many Trinidadian service companies will also need to change how they operate and embrace new technology and new work processes to drive increased efficiency and productivity.
Legislative reform is urgently needed to create the necessary environment for companies to be able to respond quickly to changing market conditions. Reform of the education system is also crucial to give people the skills that they need. Technological change and the energy transition is going to happen no matter what we do here in Trinidad and Tobago; we need to take this reality seriously.