Trinidad and Tobago is the largest exporter of ammonia in the world. In 2024, the country produced more than four million tons and exported almost all of it, generating substantial foreign exchange in the process. Most ammonia goes into the production of fertilisers, though there are other uses.
The largest export market for ammonia is the United States which accounts for approximately 25% of the exports. Morocco (16%), Switzerland (9%) and Mexico (9%) are also important.
One of the major trading segments of importers of ammonia from Trinidad and Tobago is the European Union and the United Kingdom. For the purpose of this article, we’ve lumped them together to illustrate the volume of trade which goes with this market (21%).
The reason we have combined these two markets is because both the European Community and the UK are currently implementing Carbon Border Adjustment Mechanisms (CBAMs). The European Union has begun the process of introducing new taxes on imports of some petrochemicals (like ammonia) and other products (such as cement) based on the carbon emissions associated with the particular product. The United Kingdom has also begun the implementation of similar taxes.
The measures are aimed at addressing carbon leakage by adjusting the prices of commodities to ensure that producers do not avoid carbon taxes levied against domestic production in the importing market, by offshoring production to jurisdictions without carbon pricing mechanisms.
This has serious implications for exporters of the commodities that may attract CBAMs, including Trinidad & Tobago. Imports of ammonia into the EU, UK and other markets adopting CBAMs will be taxed based on their carbon emissions, making our exports less competitive against producers with lower carbon intensity or which have had carbon taxes levied in the producing nation. This represents a serious challenge to our petrochemical producers, and this challenge is likely to only increase, as more jurisdictions introduce similar measures.
Ammonia production generates CO2 as a by-product, and therefore typically has a high carbon intensity. There are ways to reduce its carbon footprint, through either substituting green hydrogen produced from green electricity and water or through capturing the CO2 produced and sequestering it either underground in depleted oil or gas reservoirs (Carbon Capture and Sequestration). These both require significant investment.
Plans are already in place to develop a green hydrogen plant in Pt Lisas. There are also plans in place to develop CCS projects in Trinidad. Projects like these should be executed as quickly as possible to meet the CBAM requirements but also to develop further low carbon initiatives within the country.
In addition, one vital step to meet the CBAM requirements is to implement a robust national system of monitoring, reporting and verifying emissions, usually called the MRV system. Importing countries with CBAMs are not just going to take a company’s own data about the emissions associated with a particular commodity and they will want to see that there is a robust and credible national system to measure emissions. This will also be important for any fair carbon taxation system.
Industry does not typically call for new regulations from the Government, but in this case Trinidad & Tobago does urgently need a national legislated MRV system to be put in place.
The Energy Chamber is committed to working with all our members and with Government to make sure that a robust MRV system is legislated and operationalized.
As the largest exporter of ammonia in the world, there should be urgency in addressing issues for ensuring sustained trade with one of the largest export markets of the commodity.