Identifying some business opportunities for

Trinidad and Tobago in a Climate Change context

By Joan Ferreira

Chief Executive Officer

Trinidad and Tobago Chamber of Industry and Commerce

May 27, 2009

Ladies and Gentlemen,

I am honoured to be afforded the privilege to be part of this distinguished panel to share with you the Trinidad and Tobago Chamber’s position on dealing with the dilemma of climate change and must say thank you to the Delegation of the European Commission and the Ambassador for the Federal Republic of Germany in T&T for inviting the Chamber to be here.

First and foremost, I would like to fully endorse the sentiments expressed by the European Union and I quote, that, “climate change is already happening and represents one of the greatest environmental, social and economic threats facing the planet….that is why an integrated policy for climate change is particularly relevant for Trinidad and Tobago and the other states of the region. Measures to mitigate and adapt to climate change need to be taken quickly”, end of quote.

Ladies and gentlemen, without a doubt, it is clear that business today must be driven by not only risks but by opportunities presented by the global environmental challenges.Sinclair Knight Mertz in a recent study entitled, “Business Opportunities in the Primary Sector Arising from Climate Change”, noted that, “there is a shift in perception of climate change – from being a business burden to being a potential business opportunity”. Mertz further pointed out that private sector bodies across the globe are now putting significant pressure on governments to respond to climate change with “decisive action that creates more certainty for businesses”.

The private sector internationally is not just talking the talk but has already taken concrete steps in dealing with the issue of climate change, the most prominent example of this was in 2007, when about 150 companies including a number of multinationals such as Shell, Nokia, Cadbury, Nestle and Adidas to name a few, globally signed the Bali Communiqué calling for a “legally binding United Nations agreement to reduce green house gas emissions by at least 50 percent by 2050 to provide the required certainty to scale up global investments on low carbon technologies”. This Group vociferously stated that, “businesses in renewable power, energy smart products and clean technologies are generating revenues, profits and jobs at rates that would have been unthinkable a few years ago”.

Push Factors / Drivers for Change

This statement is significant primarily because it illustrates that consumer tastes and preferences are changing internationally, regionally and locally. I would like to spend a few minutes to examine some of key factors calling for a change in the way we manufacture products and produce services. These factors are:

  • International obligations and adherence to a number of United Nations Agreements: namely the Kyoto Protocol - an “international agreement linked to the United Nations Framework Convention on Climate Change. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions .These amount to an average of five per cent against 1990 levels over the five-year period 2008-2012.” Trinidad and Tobago signed this Agreement in January 1999. Furthermore, given that this country recently signed the Economic Partnership Agreement with the European Union this means that our goods and services must be “environmentally friendly”.
  • Our Economic Partnership Agreement with the EU at Chapter 4 (Articles 183-190):Environment : Outlined that CARIFORUM agreed to seek to develop policies for sustainable development and to adopt international environmental standards wherever national standards do not exist, wherever practical and appropriate. The EC has committed to provide development support in the areas of developing environmentally-friendly products, technologies and production processes and funding projects relating to energy efficiency and renewable energy. CARIFORUM and the EC have agreed to consult on and notify each other of any measure designed to protect the environment and public health, which may affect trade.
  • Shift in business perception and expectations: environmental awareness has become much more entrenched in every day business decisions and I can tell you that this is not just a global phenomena but one that is happening right here in Trinidad and Tobago. The Chamber’s Corporate Social Responsibility (CSR) Committee and our Energy Committee have played significant roles in shifting mindsets in this country.

Already we are seeing the establishment of the environmental equivalent of international stock exchanges with carbon trading and credits. The Chamber’s CSR Committee for instance, last year, met with Global Vantage LLC a firm that specialises in the execution of transactions in the carbon credit trading market. Additionally, Global Vantage proactively advises clients on the regulatory requirements affecting their emission reduction projects and on the factors that affect the monetization of the carbon credits derived from these projects. Carbon credit trading involves companies engaging in approved projects that reduce greenhouse gases in the environment as well as projects which accrue monetary benefit through carbon credits. Does this present a business opportunity for us?

  • The CSR Committee also has on the drawing board a “Recyclable Bags Projects” – a pilot project involving Hi-Lo Food Stores, discussions are currently on-going. Our Energy Committee, on the other hand, is currently in the process of exploring options on the concept of importing hydroelectric power from Guyana. A briefing paper has been prepared outlining feasibility and opportunities for business.
  • On the demand side, it is evident that consumers are more concerned with purchasing eco friendly products.
  • A direct response to this has been the demand for new technology, services and information.

All of these drivers are closely linked; the resulting impact is that a shift in consumer tastes and preferences will have the ultimate effect of driving changes to public policy and private sector responses.

We have already seen a shift in the policies of several countries. The most prominent being the stance taken by President Barack Obama on dealing with what he refers to as America’s addiction to foreign oil. The Obama Energy Plan has specific targets, these include:

  1. Eliminate their current imports from the Middle East and Venezuela within ten (10) years;
  2. Get 1 million plug in hybrid cars on the road by 2015;
  3. Ensure that 10 percent of electricity comes from renewable sources by 2012, and 25 percent by 2025;
  4. Help create 5 million new jobs by strategically investing US$150 billion over the next ten years to catalyze private efforts to build a clean energy future and
  5. Implementation of an economy-wide cap and trade programme to reduce greenhouse gas emissions by 80 percent in 2050.

I cannot help but over emphasize how critical President Obama’s Energy Plan is to us in the Caribbean region. It is clear that this country needs to fully explore the way we currently do business. Change is at our doorsteps – the fact is that this country may have oil and gas but pretty soon we may not have buyers for our resources. The good news is that we are working on an alternative energy policy as well as a climate change policy. But these need to be fast tracked.

There is still time for us to collaborate and turn the potential adversity presented by climate change into an opportunity. There are numerous business opportunities that have emerged over the past two to three years that we need to put on the front burner.

But there are three sectors that I would like to focus ontoday and I need to place the first two into the context of the vulnerabilities of our countries as small island developing states. Because of our size, we are much more susceptible to the impact of climate change particularly on our food security and our tourism product, among others. So we need to focus on what we can do differently where these are concerned, and how we can convert adversity into business opportunity.

First, the Agriculture sector. Food security amid rising food costs is without a doubt one of the emerging risks of this century. Last year was historic simply because it was the year that the prices for many staple foods reached record levels. The price of corn in the latter half of 2007 was 50% higher than twelve months previously, rice – the staple food for about three billion people worldwide rose by as much as 70% and the price of wheat doubled. Added to this dilemma was the fact that global food reserves are now at its lowest in 25 years! One of the reasons for this problem has been climate change.

The World Economic Forum places food security as the nexus of a number of key global risks – this just gives you an idea of the intensity and far reaching impact that this pending crisis will have on global affairs.

Here in lies an opportunity for the region, Warren Smith, Director of Finance and Planning at the Caribbean Development Bank warned regional leaders in April 2008 that overhauling local agriculture was critical to solve mounting problems of food security. It is thus clear that greater emphasis into the agricultural sector is needed – this is obviously an area where the region can have a comparative advantage.

Caribbean states are in a vulnerable position. According to the CARICOM Secretariat our food import bill stood at some US$3 billion in 2006. Closer at home, in 1999 our food exports valued TT$937.9 million while we imported TT$1.6 billion in food supplies, interestingly over the period January to October, 2007 our food import bill stood at TT$2.7 billion while our food exports valued TT$957 million - this means that in 9 years our food exports increased by 3% whilst our food imports increased by just under 69%.

The situation will only worsen if we sit idly and do not act NOW. As pointed out, by Consultant Mr. Ian Ivey in his April 2008 publication for the Forum, “CARICOM Opportunities in Agriculture: Success Stories”, “…consumers are becoming far more individualistic and allocating an increasing proportion of their disposable income towards products and services that improve their personal well being …such niches are not necessarily small and can include hundreds of millions of people”. In Ivey’s case studies, the traditional means of approaching agricultural development is not sufficient. It is now clear that success is only achieved when agriculture is conducted as a business. Successful agriculture is profitable business. What is needed is the enabling environment to support the business of agriculture.

The second sector I would like to emphasize is the Tourism sector. Aulianna Poon in the late 1990s, identified that sun, sand and sea will be a thing of the past. She illustrated that a ‘new tourist’ was emerging; some one who was concerned about the environment and wanted to delve into the ‘native experience’. Dr. Poon’s study is much more relevant today, simply because we have lived this experience. Given the current economic situation, now is the time for us to re-think our position on the tourism sector. According to the World Tourism Organization (WTO), ecotourism is considered the fastest growing market in the tourism industry with an annual growth rate of 5% worldwide and representing 6% of the world gross domestic product, 11.4% of all consumer spending - not a market to be taken lightly.

The WTO further stated that in order for eco tourism projects to be successful they must:

  • effectively promote the preservation of entire local ecosystems, not just individual species, vistas or sites;
  • be economically viable in order to attract financing and be sustainable:
  • be well planned, financed, managed and marketed in order to meet the stringent environmental and recreational demands of a true ecotourism development.

Right here in the Caribbean, we have examples of hotels being environmentally certified for example the Six-Star Diamond Green Award to Butch Stewart’s BeachesHotel in the Turks and Caicos for “its impressive friend-of-the-environment programmes” .This is indeed another way we can develop into the ‘green’ type of tourism that we should be pursuing. Definitely tourism is a sector that is worth exploring.

The third sector I would like to focus attention on is the construction sector that is, the demand for the construction of “smart” buildings. The Trinidad and Tobago Bureau of Standards in its March 2009 newsletter pointed out that the development of smart building technologies make it possible to identify where a need is and to intelligently transfer resources to that building section to meet the need. The First Citizens bank led the way some years ago with the construction of their head office as a ‘smart’ building. Another already in construction in this country is the E-Teck complex in Tamana. According to the TTBS, “the complex will employ a sophisticated system of remote monitoring with occupancy sensors increasing the efficiency of the building’s lighting, ventilation and air conditioning systems. Efficient energy use will be facilitated by means of external shading and a solar cooling system with photovoltaic panels to utilize solar energy. The E-Teck complex will also feature an advanced air conditioning system which mixes optimal amounts of fresh air with re-circulated air in order to optimize air quality”. Without a doubt, this trend will catch on in Trinidad and Tobago, the TTBS further pointed out that, even though smart building technologies are new, they will assume increasing importance as the world prepares to house more than 8 billion people by 2050. Our architects as wehave heard from dr. Agard, have their own green building code and contractors must now do the necessary ground work to adapt to these new developments particularly since with a growing population the demand for buildings will increase considerably.

Conclusion

Ladies and Gentlemen, our Chamber has been calling for the diversification of our economy into non-energy sectors such as agriculture, tourism, ICT and education. Business opportunities abound in these sectors and development augers well for us not only in an economic context but a in a climate change context as well. I hope I have provided you with some ‘food for thought’. The writing is on the wall. However, as Louis Pasteur once cautioned, “fortune favours the prepared mind”. Indeed, business people who have the vision and foresight of environmental considerations will be better positioned to transition their organization to meet the demands of the “new consumer”.

Thank you.

EUDelegation T&T Climate Change Conference 2009-05-27

Trinidad and Tobago Chamber of Industry and Commerce:

“Identifying some business opportunities in a climate change context”