Tuesday, September 27, 2022

Splitting the climate change bill for consuming hydrocarbons

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By Dr. Lorraine Sobers – OilNOW

A disproportionate fraction of the climate change bill is already being paid by developing countries. There is no correlation between where climate change hits hardest and the source of massive greenhouse gas emissions. It is challenging enough to split a restaurant tab with friends; it is a more complex task to determine the financial obligation of each country to cover the burden of climate change effects. 

Consider Africa, home to several of the least developed countries. In a recent interview Mo Ibrahim, Co-founder and Co-chair of the Africa Europe Foundation, which was launched in 2020 to reset and bolster Africa-Europe relations,  summarised the situation, “as the least industrialised continent, Africa is the continent least responsible for climate change. However… Africa is the most vulnerable to its impact, with less adaptation means.“ 

Similarly, severe flooding in Guyana has been a heavy cost to the agriculture, logging and mining industries. The May to July rain of last year resulted in record flooding which wreaked havoc through Guyana’s coastal and hinterland area. The cost of recovery and adaptation falls heavily on Small Island Developing States (SIDS). Dr. Adelle Thomas, Senior Caribbean research associate at Climate Analytics and senior fellow at the Climate Change Adaptation and Resilience Research Centre at the University of the Bahamas commented ahead of last year’s COP26 meeting, Although loss and damage has been a key issue for SIDS in the international policy arena… there is a yawning chasm between the negative impacts of climate change that are already being experienced and the research and policies that are needed to address such loss and damage.”

The bill for recovery efforts and the cost to socio-economic development often falls squarely in the laps of SIDS. Pledges to fund adaptation and mitigation projects need to be accompanied by accessible funding for recovery after climatic disasters.

Guyana’s Right to Hydrocarbon Development

Oil production began in Guyana a mere two years ago.  However, by 2027, Guyana is expected to produce 1.2 million barrels of oil per day (bpd) from the Stabroek Block. At present the country is producing and exporting more than 300,000 bpd which is backed by reserves of almost 11 billion barrels oil equivalent and 18 million hectares of forest that store 19 gigatonnes of carbon dioxide (CO2) and removes more than 154 million tonnes of CO2 annually. 

The Tyndall Centre recently published an interesting report, “Phaseout Pathways for Fossil Fuel Production” which proposes a timeline for reducing and, eventually eliminating fossil fuel production to achieve the global warming limit to 1.5°C. The report suggests that, “richest countries … phase out oil and gas production by 2034, to give lower income nations longer to replace their income from fossil fuel production. The poorest countries should be given until 2050 to end production, but they will also need significant financial support to transition their economies within that time frame”. However, the report goes on to state that “there is no practical emission space… for any nation to develop any new production facilities of any kind”.

President Dr. Mohamed Irfaan Ali rejected the position on “new production facilities” at the CARICOM-US (Caribbean Community – United States) forum in May 2022, if you’re locking out new suppliers, it is to whose advantage? We can very well be creating a monopoly for those who are already in the business, who have already extracted this natural resource and developed their own jurisdiction.”

Guyana’s oil revenue is earmarked to advance much needed development in infrastructure, energy reliability and access, telecommunications, healthcare, education, agriculture, housing and national security. The issue is more about survival than it is about progress. Only the people of Guyana ought to dictate the country’s timeline for meeting its needs. 

Energy expert, Professor Anthony Bryan, recently estimated revenues of US$50 billion to US$200 billion through 2050. The energy boom Guyana is currently experiencing is almost always expressed as revenue, production or reserve volumes. Often these extraordinary numbers can cloud the end goal which is socio-economic development. It is worth keeping in mind that this boom allows Guyana to afford modern healthcare facilities, upgraded power generation and distribution, new access roads, employment, comprehensive education facilities, business development, improved food security and resilience to natural disasters. 

Further, oil demand is expected to decline after 2050 and Guyana is racing against the clock to produce and sell a commodity that is slated to be phased out. Revenue projections indicate that this is a long-awaited opportunity to secure sufficient funds to meet national objectives and absorb inevitable economic shocks. 

Transitioning to clean energy consumption

Guyana holds a unique position being a longstanding significant carbon sink then swiftly becoming a significant oil exporter, transitioning to clean energy consumption and boosting the development of the nation in less than a decade. The Tyndall report and the IEA are asking governments and oil and gas producers to walk away from hydrocarbon reserves. While IEA recognises carbon capture utilisation and storage (CCUS) as a critical technology to reducing CO2 emissions, the Tyndall report dismisses any impact from it, pointing to its low deployment rate and high cost of implementation.

Guyana is pursuing low carbon development by switching to natural gas for electricity generation. Gas is considered to be a “transition fuel” alongside the development of hydropower, solar and possibly wind energy. Although a source of greenhouse gas emissions, natural gas is half as polluting as fuel oil which is currently used.

The battle lines have been drawn with strong sentiments being expressed by the African Petroleum Producers’ Organisation (APPO) Secretary General Omar Farouk Ibrahim,  “We will not allow billions of barrels of oil to go to waste and we will not be bamboozled into projects that we don’t need – ones which will not address energy poverty. We need to sit down and have an honest conversation about the energy transition.”

Guyana can thrive and survive during this transition by being aware of, but not obsessed with, external timelines, metrics and rhetoric. Now is the time for development. The vehicle that has shown up at Guyana’s doorstep runs on sustainable fossil fuel. The next leg of the journey will be cleaner and greener.

About the Author

Dr. Lorraine Sobers is a Fulbright Scholar currently lecturing at the University of the West Indies, St. Augustine. Dr. Sobers has a BS in Chemical Engineering and postgraduate degrees, MS and Ph.D., in Petroleum Engineering from Texas Tech and Imperial College, London respectively. She has 19 years’ experience in the energy sector specialising in Carbon Capture and Storage (CCS). Dr. Sobers is the Project Coordinator for CO2 Emission Reduction Mobilisation (CERM) Project and a Fellow of the Caribbean Policy Consortium.

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