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SAN DIEGO, USA, Nov 27 (IPS) – Long before the transformative discovery of its offshore oil in 2015, Guyana had made a strong pledge to decarbonization and climate action as set forth in its Low Carbon Development Strategy (LCDS) 2030. The development of its oil industry has led to remarkable economic growth in Guyana, including a 62.3% growth rate in 2022.
But balancing its oil-driven economic growth with its longstanding commitment to climate action and the promise of sustainability — the milestones and objectives of the LCDS policy framework — will be essential. Put simply, how can its idealistic and ambitious pathway become a reality?
To begin, it is essential to understand the truly transformative nature of the country’s oil and gas sector development. The country’s offshore oil deposits have reached 11 billion barrels and production is set to top 1.2 million barrels per day (bpd) by 2027, making this small Latin American country one of the fastest-growing oil producers in the world.
The expected boost in production is estimated to bring in revenue of 7.5 billion USD to the Government of Guyana by 2040. This is motivation strong enough for a small developing country like Guyana to balance “the goose that lays the golden egg” with its promise of Paris Agreement targets and a global status as a leading advocate for decarbonization among developing countries that was earned before its offshore oil was found.
For Guyana, there is a clear and obvious key to achieving such a delicate balance: the nation’s forest ecosystems. Guyana is a country with the second-highest percentage of global forest cover that can annually store 19.5 billion tons of carbon dioxide (almost 40% of global emissions) and capture 154 million tons per year from the atmosphere.
This has afforded the coastal nation to stake a clear claim as one of the globe’s few carbon-negative jurisdictions. Furthermore, it has allowed the country to succeed in monetizing its conservation efforts through Architecture for REDD+ Transaction: the REDD+ Environmental Excellence Standard (“ART TREES”), a global climate initiative focused on forestry conservation, including managing, monitoring, and reporting carbon credits.
With the carbon credit certification from ART TREES, Guyana 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, that spans the years 2016-2030, includes payment to Guyana totaling at least 750 million USD to compensate for emissions in the oil production process.
This agreement also proves Guyana’s commitment to balancing oil production and sustainability by way of protecting its tropical forests, as the carbon credits payments are conditioned upon the requirement that 99% or more of Guyana’s forests remain intact.
Another notable sign of Guyana’s long-term readiness to strike the balance for its ambitious energy transition plan is Community-produced Village Sustainability Plans (VSPs).
As stipulated 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 distinction for Guyana’s efforts when compared to other countries in the region.
Moreover, the VSP’s 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 particularly vulnerable to the most pernicious impacts from climate change.
The country has repeatedly underscored how it views its role as one of the most crucial countries in biodiversity conservation while shaping policy and governance lessons as to how to invest the oil revenue in possible expansion and conservation of forests, coastal, land, and ocean biodiversity, and heightening resilience against climate change impacts.
Successful development and implementation of these plans could both save lives in the region and further advance Guyana’s economic development while affording crucial lessons learned globally.
Further, Guyana also uses revenue from the carbon market to invest in education and other public services, agriculture, manufacturing, and IT industries.
These measures are important to stave off and mitigate the impacts of the resource curse. The early results are positive as the non-oil economy grew by 12.6% in 2024, which points to an important start and reassuring evidence that Guyana is working to diversify its economy.
In other words, Guyana is already preparing an antidote to “Dutch Disease,” a phenomenon where accelerated growth in one sector harms the economy in another sector as seen in the Netherlands, where discovery of oil and gas and rapid development and income generation for the nation resulted in a decline in manufacturing industry during the 1970s.
Finally, Guyana is aware that its continued commitment to environmental sustainability improves the long-term viability of both oil production and its domestic economy.
Continued development of an efficient level of production in its burgeoning offshore oil industry combined with important carbon capture technologies is positioning the nation’s output as so-called “low-carbon” barrels.
As oil demand declines over the coming years, it also seems apparent that changes in international regulations and governance would impact high-carbon producers first.
Nothing would promise longer prospects as an oil producer for Guyana than as a sustainable low-carbon oil producer. Such attributes can ensure Guyanese oil competitive even after achieving global net-zero carbon emissions despite being a latecomer to the global oil market.
An optimist might even add that this would pressure other major existing producers to lower their carbon emissions if considering Guyana’s collaboration with Norway—another oil producer aiming to lower net carbon emissions in recent years.
Guyana has shown its strong and confident commitment to sustainability in oil production and social and economic development through a commitment to policy and legislation at the domestic level.
The nation’s ambitiousness of harnessing the economic opportunity presented from the discovery of its massive offshore oil wealth has not subsumed the longstanding and necessary commitment to biodiversity and climate action.
Indeed, the country has a clear path forward to employ its oil and gas resources for economic and social sustainability by investing long-term in sustainability across society, environment, and economy.
Rio Namegaya is 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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