Oil production or carbon neutrality? Why not both, says Guyana

  • Guyana’s government says the South American country has already achieved zero carbon emissions and adds that it will further reduce its emissions by 70% by 2030.
  • The statement follows Guyana’s becoming the world’s newest oil-producing country; it started pumping crude oil at the end of 2019.
  • The government has played down the dissonance between its status as an oil producer and its emission reduction targets, arguing that oil revenues can be channeled into the green economy.
  • The question, says Vice President Bharrat Jagdeo, “is whether we can become an oil producer while maintaining our environmental credentials and continuing to advocate globally for a zero carbon economy. And we think the answer is yes.

Achieving net zero carbon emissions by mid-century was one of the goals of the United Nations COP26 climate summit in Glasgow, Scotland, last November.

Guyana claims to have reached this point.

“Where the world is trying to reach by 2050, we are already there,” Vice President Bharrat Jagdeo told a local newspaper in October 2021. He attributed this to Guyana’s vast forests, which act as a carbon sink.

Whether Guyana is a net zero carbon emitter is questionable, as it became the world’s newest oil-producing nation when it started pumping crude at the end of 2019. However, that position is now reflected in the debate. update of the government’s Low Carbon Development Strategy (LCDS). ) 2030, launched at the end of October, which notes: “Guyana intends to achieve ambitious national objectives to maintain its position as a net zero economy”.

The government has said it supports global efforts to move to a carbon-free future and pledged to cut emissions by 70% by 2030.

“Although we have recently become an oil producer, we support the removal of subsidies for fossil fuel production and advocate for a high global carbon price,” President Irfaan Ali told other world leaders at COP26 .

Overlooking part of the vast forests of Guyana in Mabaruma, in the first region (Barima-Waini) of Guyana, near the border with Venezuela. Image courtesy of Carinya Sharples.

Guyana’s oil production is expected to continue for another 20 to 25 years, according to the former head of its Environmental Protection Agency, but there is a strong possibility that this timeline will be extended with oil exploration still underway. Classes.

It was only recently that ExxonMobil increased its estimate of the recoverable resources discovered for the offshore Stabroek block to 10 billion barrels of oil equivalent. This followed requests for environmental clearance from ExxonMobil to begin drilling explorations in two other offshore blocks, Kaieteur and Canje.

It’s a delicate position in less than six months after the International Energy Agency (IEA) called for “no new oil and gas fields approved for development” beyond projects already committed to from 2021, and in the wake of the sixth report of the Intergovernmental Panel on Climate Change (IPCC), which said: “It is unequivocal that human influence has warmed the atmosphere, oceans and land.

But Jagdeo says the two aren’t mutually exclusive.

Speaking at the Baker Institute in Texas in August 2021, he told audience members, “The big challenge has been, and the question locally and among many of our friends overseas, is whether we can become an oil producer while maintaining our environmental credentials, and continue to advocate globally for a zero carbon economy. And we think the answer is yes.

Guyana’s environmental credentials are mainly linked to its vast forests and low rate of deforestation – encouraged and incentivized under the Guyana REDD + Investment Fund (GRIF), established through an agreement with Norway in 2009. The final payment was made in 2019.

A sign in Georgetown Botanical Gardens with the ExxonMobil logo, a sign of the company’s attempts to align with Guyana’s green spaces. Image courtesy of Carinya Sharples.

Guyana has also been a member of the Coalition for Reducing Emissions by Accelerating Forest Finance (LEAF), which also provides funding for tropical forest protection goals. Jagdeo says negotiations on the sale of carbon credits under this program to other members of the coalition are “well advanced.”

The revised LCDS outlines the government’s plan to meet global commitments on climate change while marketing its carbon credits and at the same time maximizing financial benefits to the country’s oil industry.

With adequate funding, the plans highlighted in the LCDS include protection against the effects of climate change, the creation of a low-carbon economy, and the pledge that 15% of revenues from forest climate services will be invested in forests. indigenous peoples of the country and other communities dependent on the forests of Guyana.

The final LCDS project is expected to be formalized in April 2022, after a consultation with Guyanese citizens that began in late 2021.

The Guyanese government’s policy stance on the IEA’s call to stop the development of new oil fields was also highlighted in LCDS 2030, in which it says it believes such a move would leave its oil resources and gas under the control of other parties.

Facing the sea along the Guyanese coast. Offshore oil drilling began in the country in late 2019. Image courtesy of Carinya Sharples.

If Guyana were to prematurely renounce oil and gas revenues, the document notes, this would leave the industry, and its profits, in the hands of the “de facto monopoly”: “It would also mean that Guyana would remain poor and incapable of ‘invest. by raising the standard of living of its people.

The government says funding is essential for climate change mitigation and adaptation. Therefore, apart from his own agenda, he will continue to seek funding to address these issues so that at least part of the oil revenues can be directed to the country’s green economy.

The tendency of oil-producing countries to neglect other natural resources and sectors of the economy is common enough to have given rise to the term “resource curse”. In Indonesia, the volatility of oil prices in the 1970s and 1980s necessitated diversification of the oil-dependent economy, although in some cases the resource curse simply shifted to other natural resources, such as gold and palm oil.

Countries may also be limited in their efforts by the documents they sign. A recent review by the New York-based National Resource Governance Institute of 34 publicly available contracts from 11 countries signed since the 2015 Paris Agreement found that “none of the force majeure clauses specifically required companies to prepare for climate change events ”and that“ contract language may limit the flexibility of government policies and not adequately address the risks of climate events ”.

Banner image: A bird’s eye view of Georgetown, the capital of Guyana, which is bordered by a long sea wall because the land is below sea level and is therefore prone to flooding. Image courtesy of Carinya Sharples.

Carbon emissions, climate change, climate change negotiations, climate change policy, climate change policy, deforestation, drivers of deforestation, emission reduction, environment, environmental economics, environmental law, environmental policy, gas, greenhouse gas emissions, natural gas, offshore drilling, Oil, Oil drilling, Tropical forests

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