Sunday, November 27, 2022

Guyana tying growth of oil sector with domestic, global low-carbon transitions – President Ali

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Guyana’s President, Dr. Mohamed Irfaan Ali, has recognized once more that Guyana will need to align the development of its oil and gas sector with global trends towards decarbonization. To achieve this, the President has outlined strategic objectives that Guyana will pursue to ensure domestic and global low-carbon transitions.

On the domestic side, the Head of State in announcing a revitalized and expanded draft Low Carbon Development Strategy (LCDS) 2030 on Thursday, recalled the strategies the government has already implemented to ensure it achieves decarbonization. These policies include eliminating routine flaring except in the case of emergencies; a fee of US$45 per tonne of carbon emitted along with the actual gas lost; and for newly licensed productions, the tax on flaring will be accompanied by legal limits on the overall amount of flaring. He also noted the government’s achievement in ensuring all waste management is handled by the oil producer, in accordance with international standards, from “cradle to grave.”

As it relates to the global policies that are needed, Dr. Ali was keen to point out that these strategies must be “fair, economically-rational and based on science.” To this end, the President said that there should be a global price on carbon levied on the consumption of oil and gas.

“This is the way to incentivize both the investment in the lower carbon replacements for fossil fuel-based electricity and transportation such as renewable energy and electric vehicles, while at the same time managing the global loss carbon transition through incentivizing progressively lower carbon sources of fossil fuels,” he explained.

The second main policy the President highlighted is the removal of subsidies for fossil fuel production. In 2019, he recalled that 50 of the largest economies in the world, which account for 80% of global greenhouse gas emissions, had increased their support for fossil fuel production by 30%. Most of these countries, he pointed out, “are the incumbents benefiting from most of the trillions of dollars in the oil and gas market.”

“The Government of Guyana supports calls for the elimination of such fossil fuel subsidies,” he iterated, “especially in OECD countries where subsidies are the most distorting, destabilize prices, and do nothing to reduce the carbon intensity of the world’s economy.”

Combined, President Ali is confident that these two policies can create a much fairer marketplace for oil and gas. He also reaffirmed his government’s promise of meeting its responsibilities to the people of Guyana by maximizing benefits to be accrued from the oil and gas industry, while at the same time advocating for global policies to create a level playing field to align the global marketplace for oil and gas with the goals of the Paris Agreement.

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