SAN DIEGO, USA, Nov 27 (IPS) – Long before the discovery of its offshore oil revolution in 2015, Guyana made a strong commitment to decarbonisation and climate action as set out in the Low Carbon Development Strategy (LCDS) 2030. Development of its oil industry has led to remarkable economic growth in Guyana, including a 62.3% growth rate by 2022.
But balancing its oil-driven economic growth with its long-term commitment to climate action and the promise of sustainability — the cornerstones and goals of the LCDS policy framework — will be important. Simply put, how can its idealism and ambition become reality?
First, it is important to understand the situation that is really changing the development of the country’s oil and gas sector. Offshore oil deposits have reached 11 billion barrels and production is set to top 1.2 million barrels per day (bpd) by 2027, making the small Latin American country one of the world’s fastest growing oil producers.
The expected growth in manufacturing is estimated to generate 7.5 billion dollars for the Government of Guyana by 2040. This is a strong enough incentive for a small developing country like Guyana to balance the “goose that lays the golden egg” with its commitment to the Paris Agreement Targets and global status as a leading decarbonization advocate among developing countries that was discovered before its offshore oil was discovered.
In Guyana, there is a clear and obvious key to achieving such a fragile balance: the nation’s forest ecosystems. Guyana is a country with the second highest percentage of forest cover in the world which can annually store 19.5 billion tons (about 40% of global emissions) and capture 154 million tons annually into the atmosphere.
This has given the coastal nation a clear claim as one of the world’s few carbon-negative destinations. In addition, it allowed the country to successfully monetize its conservation efforts through the Architecture for REDD+ Transaction: REDD+ Environmental Excellence Standard (“ART TREES”), a global climate initiative focused on forest conservation, including management, monitoring, and reporting of carbon credits . .
With the carbon credit certificate from ART TREES, Guyana has issued carbon credits for the first time as a country. Successive efforts allowed Guyana to secure a carbon-credit transaction in 2022 with Hess Corporation, a US gas and oil producer.
The agreement, covering the years 2016-2030, includes a payment to Guyana totaling at least 750 million USD to offset the carbon emissions of the oil production process.
The agreement also confirms Guyana’s commitment to balancing oil production and sustainability by protecting its tropical forests, as carbon credit payments are based on the requirement that 99% or more of Guyana’s forests remain intact.
Another hallmark of Guyana’s long-term readiness to strike a balance with its dynamic energy transition program is the Community-produced Village Sustainability Plans (VSPs).
As stated in the LCDS 2030, 15% of the revenue from the carbon market is used for indigenous peoples and local communities (IPLCs). It should be noted that this is an important difference in Guyana’s efforts compared to other countries in the region.
In addition, the VSPs are part of Guyana’s sense of urgency to mitigate and adapt to the risks and impacts of climate change as a Latin American country most vulnerable to the most dangerous impacts of climate change.
The country has repeatedly emphasized how it considers its role as one of the most important countries in the conservation of biodiversity while shaping policy studies and governance on how to invest oil revenues in the potential expansion and conservation of forests, coasts, land and marine biodiversity, as well as increasing resilience to impacts of climate change.
Successful development and implementation of these programs could save lives in the region and drive Guyana’s economic development while providing important lessons learned for the rest of the world.
In addition, Guyana also uses revenues from the carbon market to invest in education and other public services, agriculture, manufacturing and IT industries.
These measures are important to avoid and reduce the effects of the resource curse. Early results are positive with the non-oil economy expected to grow by 12.6% by 2024, indicating an important starting point and convincing evidence that Guyana is working to diversify its economy.
In other words, Guyana is already preparing a solution to stop the “Dutch disease,” a situation where rapid growth in one sector harms the economy in another sector as seen in the Netherlands, where the discovery of oil and gas and the rapid development and income generation of the country resulted in the decline of manufacturing industries in the 1970s.
Finally, Guyana knows that its continued commitment to environmental sustainability improves the long-term viability of its oil production and domestic economy.
Continued development of the efficient level of production in its growing offshore oil industry combined with important carbon capture technologies positions the nation’s production as so-called “low carbon” barrels.
As demand for oil declines in the coming years, it seems likely that changes in international laws and governance will affect producers with the highest carbon footprint first.
Nothing can promise the long-term prospects for Guyana’s oil producer like sustainable low-carbon oil production. Such qualities can ensure the competitiveness of Guyanese oil even after achieving net-zero carbon emissions globally despite being a latecomer to the global oil market.
An optimist might add that this will pressure other major existing producers to reduce their carbon emissions considering Guyana’s cooperation with Norway—another oil producer that has aimed to reduce its overall carbon emissions in recent years.
Guyana has demonstrated its strong commitment and confidence in the sustainability of oil production and socio-economic development by committing to policy and legislation at the domestic level.
The nation’s desire to take advantage of the economic opportunity presented by the discovery of its vast offshore oil wealth has not yet culminated in a long-term and necessary commitment to diverse environmental and climate actions.
Indeed, the country has a clear path forward to use its oil and gas resources for economic and social sustainability through long-term investments in overall social, environmental, and economic sustainability.
The Rio Namegaya it’s a graduate student at the University of California San Diego’s School of Global Policy and Strategy (GPS)
© Inter Press Service (2024) — All Rights ReservedOriginal source: Inter Press Service
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