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The best of both worlds? Guyana wants to be a low-carbon oil producer

View of the rainforest from Guyana's Kaieteur Falls. Photo by Dallas Reeves on Flickr, CC BY-ND 2.0.

By Vishani Ragobeer

This post was produced with the support of Climate Tracker and originally published at Newsroom Guyana. An edited version is republished here with permission, as part of Global Voices’ coverage of COP26.

Some 200 kilometres offshore Guyana, a second oil ship sailed in this week as ExxonMobil looks to ramp up activities to extract the 10 billion barrels of oil it now estimates it can recover. On land, an area the size of England is covered in forests. The South American nation, long beset by poverty, believes it’s time to make its fewer than a million citizens rich, and thinks it can do so while keeping the forests intact and pursuing a prolific oil industry.

The idea seems plausible.

Yes, the oil industry is notorious for emitting carbon dioxide and other harmful greenhouse gases which has resulted in the climate crisis, such as rising sea levels—another reason Guyana needs the money. The coastland, where 90 per cent of the population lives and where most economic activities take place, is below sea level and a flood this year devastated the country and brought back memories of the 2005 flood that affected 230,000 people and wiped out 59 per cent of the country’s Gross Domestic Product (GDP).

Guyana’s leaders argue the country can still be a net-zero carbon emitter, meaning that the harmful gases released into the atmosphere by oil and other sectors can be balanced out by those which its trees suck in. The country’s forests store 21.8 billion tonnes of carbon; if the trees were cut down, all of that carbon would be released into the atmosphere, causing further harm to the environment.

For over a decade, Guyana has lobbied for a global system that pays the country for keeping the forest intact. Norway was the first to buy in, signing a deal for 250 million United States dollars, once deforestation rates remain intact—and that has been the case. Latest figures put the deforestation rate at 90 per cent lower than most tropical countries, so Guyana is looking for others—be they countries or companies—who want to offset the harmful gases their industries generate, by paying Guyana to keep its forests standing.

Vice President Bharrat Jagdeo recently announced that a US $300 million deal is being negotiated. President Irfaan Ali, meanwhile, said Guyana is not ignoring the concerns about the effects of the oil and gas sector, confirming that his government will pursue strong policies to ensure that the sector operates to international standards.

“The Government is working to eliminate flaring from oil production, except in the case of genuine emergencies,” he said in an address to the nation. All flaring is taxed at US $45 per tonne of carbon beyond the limit allowed by law. For newly-licensed production, the tax on flaring will be accompanied by legal limits on the overall amount of flaring, but the president said what the country wants is a policy that disallows flaring.

With the emergence of the petroleum sector, the International Monetary Fund (IMF) projects that the Guyanese economy will expand by 20.4 per cent—more than any other country in the Latin America and Caribbean region. ExxonMobil has so far made over 20 discoveries in the 6.6 million-acre block it was licensed to prospect for oil and develop wells.

Not all are happy with what is happening.

Janet Bulkan, environmental and human rights activist and a professor at the University of British Columbia, has asked the Inter-American Commission on Human Rights (IACHR) to tell Caribbean states to cease “further risky fossil fuel exploration.” Part of her presentation pointed out that the sector’s adverse impact on Guyana’s environment has already been illustrated by the excess flaring of associated gas because of a faulty compressor on the Liza Destiny, the first oil-producing ship. It produces 120,000 barrels of oil a day.

Bulkan also argued that Guyana’s developing oil and gas sector conflicts with low-carbon aspirations and contributes to the global climate crisis, including rising sea levels that contribute to worsening floods. She also emphasised that such activities threaten the “effective enjoyment” of human life.

This is not the first time such concerns have been raised, but Vice President Jagdeo, who championed the forest-saving deal with Norway, argues that there will continue to be a demand for fossil fuels and Guyana couldn’t just leave all the oil it has in the ground while other countries pursue their industries, feeding their growth and development. He added, however, that Guyana’s aim is to pursue the development of the oil and gas sector in a responsible way.

In announcing its updated Low Carbon Development Strategy (LCDS), President Ali said his government will also continue dialogue with oil producers to ensure that, alongside the above measures, exploration and production operations will continue to explore all opportunities for lower carbon technological innovation—including the use of renewable energy in oil production, Carbon Capture Utilisation and Storage (CCUS) and, when technologically viable, green hydrogen.

At a recent consultation forum to update Guyana’s Nationally Determined Contributions (NDCs) under the United Nations’ (UN) Paris Agreement, Jagdeo said that the government intends to use oil revenues to fund the country’s transition to more renewable energy, thereby cutting emissions while improving the lives of citizens. According to him, the natural gas harnessed through the proposed US $900 million gas-to-energy project will cut emissions by 50 per cent and significantly reduce the cost of energy for the average consumer. Further, he said oil revenues can fund planned renewable energy projects, including a mega hydropower project, and he anticipates that the country will phase out the use of about 70 per cent of non-renewable fossil fuels by 2027, through the use of natural gas and renewable energy.

For Guyana, at least, flooding is one of the more apparent effects of climate change, with the country experiencing nationwide flooding only a few months ago. It is also the natural disaster that President Ali uses to emphasise the need for urgent climate action, including reduced emissions and adequate climate financing.

At a recent high-level UN debate, the president did not mention Guyana’s oil pursuits, but said that the country will continue to provide the world with “critical climate and ecosystem services,” particularly through the expanded LCDS.

The focus on the marine economy is important, since not much is known about this area. A team of young researchers spent six days offshore Guyana identifying the larger animals found there, such as dolphins and whales, as part of efforts to create a baseline for monitoring offshore activities. This is critical since Guyana’s oil is being produced from deepwater wells and there are concerns about the potential impact of this activity on the marine ecosystem. The pipeline for the gas-to-energy project is also expected to be laid on the seabed, and this may result in further interactions between the marine ecosystem and the oil sector.

With development in the oil and gas sector continuing unhindered, President Ali has pinned much of Guyana’s climate ambitions on the expanded LCDS. At COP26, this year’s UN Climate Summit, Guyana will be making its case for why the low carbon development model is an ideal one to pursue in solving the climate crisis.

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