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By Monte Reel- As rising seas imperil Guyana, leaders sign sweetheart deals with Exxon to help fund the transition to a sustainable future.
Go to the seawall in Georgetown late on a Sunday afternoon, and you’ll find Guyana with its guard down. Everyone’s “liming”—a term that washed onto this South American shore decades ago from Trinidad that means hanging out, talking about nothing. To lime isn’t to deny the existence of challenges or threats, it’s to temporarily deny them the power to darken your state of mind.
Families sit side by side on the waist-high concrete wall, feet dangling, the sea breathing hard behind their backs. Across the shoreline road, vendors under nylon canopies sell fried fish and plantain chips. Just after the sun sinks into the water, the rear doors of minivans swing open, speakers pulsing with reggae and hip-hop. Every now and then, the sea asserts itself, slamming against the wall, spraying a salty mist. Less often, maybe a couple times a year, it sends waves all the way to the road. On very rare occasions—like that unforgettable January back in 2005—tides and rain conspire to swallow the seawall whole, deluge nearby homes and carry off some of the people there.
Theoretically, every one of Guyana’s 800,000 or so residents could claim for themselves about 66 acres of real estate inland, safe from the sea. Much of that land is forested, some of it full of rare wonders, like endangered polychromatic tree frogs and waterfalls spilling from green plateaus. In reality, roughly 90% of the population is crammed into the narrow floodplain hugging the Caribbean. Almost half of them live in Georgetown, the waterlogged capital, most of which sprawls across a coastal basin that’s about 7 feet below sea level and depends on a network of drainage canals to remain habitable.
They live on the coast because that’s where the economic opportunities, such as they are, can be found. Guyana historically has been one of the poorest countries in the Western Hemisphere; from 2000 to 2015 the gross domestic product of the entire country was much smaller than that of most midsize US cities.
Such modest fortunes could be swept away in an instant. That 2005 tidal surge wiped out 59% of the annual GDP. Putting in adequate countermeasures—expanding and reinforcing the 280-mile-long seawall, upgrading drainage canals, building housing infrastructure on higher ground—will cost billions.
Guyana will almost certainly experience another devastating surge. Warming Caribbean waters are projected to rise 8 to 10 inches in the next 30 years, according to the U.S. National Ocean Service. And if the world continues to burn fossil fuels at the going rate, the same report says the sea will rise 6 feet by century’s end. If nothing else changes, Georgetown’s seawall will be under water, and its residents will have scattered.
In the face of this, Guyana’s government is betting on a paradox: The very thing that threatens the country will be its salvation. The country’s leaders, praised in the past for their environmental stewardship, now believe the most effective way to rescue Guyana from fossil-fuel-induced climate change is—crazy as it sounds—to fully embrace the business of fossil fuels.
At the bottom of Guyana’s share of the Caribbean Sea sits a massive cache of oil. In 2015 exploration crews from Exxon Mobil Corp. found what would prove to be billions of barrels of crude about 120 miles from the shore—a once-in-a-generation jackpot that accounts for about one-third of the total oil discoveries worldwide since then. Some industry analysts estimate that the reserves in Guyanese waters could equal China’s.
The collision of these elements—the tangible threat of climate change, the country’s extreme economic stress and the sheer enormity of the discovery—has turned this strip of South American coastline into something of a proving ground, the spot on the map where the contemporary tensions shaping the world’s energy landscape have most forcefully converged. Other countries have stumbled upon truly transformational oil finds, but none has done so under circumstances quite so stark, at a moment long after the developing nations of the world pledged to wean themselves off of fossil fuels.
“Investing in new fossil fuels is moral and economic madness,” United Nations Secretary-General António Guterres declared earlier this year. Maybe so, but for Guyana’s leaders to reject a discovery potentially worth hundreds of billions of dollars would be political madness.
They’ve promised to create a different kind of petrostate: an environmentally sustainable one that uses oil revenue to build a more durable infrastructure powered by renewable energy. Other developing countries with potential oil reserves are watching Guyana: They, too, want to know if drilling could be an acceptable way to pay for entry into a post-oil future.
Since the first oil was drilled three years ago, Guyana’s economy has become the fastest-growing in the world. And some of the new petrostate’s weaknesses are already being exposed. Its contract with Exxon gives the company unusual advantages: a bigger share of revenue than normal with fewer tax requirements. Even so, Guyana is exploiting as much of its oil as it can, as fast as it can. The oil is quickly flowing, the sea is slowly rising, and the world is watching.
The discovery of vast reserves of oil offshore has turned Guyana’s capital city into a boomtown.
On the morning of May 26, Guyana’s Independence Day, dozens of government-issued cars and trucks left the capital to venture west along the coast. Custom dictated that the president and other officials would celebrate the holiday during a midnight flag-raising ceremony.
They were heading toward Anna Regina, a town on the other side of the Demerara and Essequibo rivers. To cross the Demerara, the vehicles passed over a mile-long pontoon bridge that was meant to last 10 years when it was built 44 years ago. To cross the Essequibo, they boarded a ferry. The distance between Georgetown and Anna Regina, if you draw a straight line across the map, is about 40 miles. But the journey took more than three hours. The highest-ranking government officials flew.
At the ceremony in the town’s central square, President Irfaan Ali addressed the crowd with a State of the Union-style litany of triumph. He told them the pontoon bridge would finally be replaced with a permanent one. A four-lane highway was already under construction—one of dozens of road-building projects that will link Guyana’s cities to one another and to Brazil and Suriname. More homes than ever were being connected to reliable water and energy services, thanks to a 107% increase in the government’s capital budget this year alone. “We are finally on the path to prosperity,” Ali said.
Everyone knew the money for all of this was coming from oil. Guyana is producing about 360,000 barrels a day. That figure is expected to reach 580,000 next year, and likely 1 million a day by 2027. Guyana’s GDP is projected to jump 58.7% this year, and already oil accounts for more than 60% of the country’s exports, supplanting sugar and rice. It will expand the economy fivefold over 10 years.
Guyana’s blueprint for managing its growth is called the Low Carbon Development Strategy 2030. It aims to protect natural resources, mitigate climate change with reinforced seawalls and other infrastructural improvements and diversify Guyana’s industries. The oil money will fund a new energy grid that will eventually run exclusively on renewable sources. The document is based on a plan first floated during the presidency of Bharrat Jagdeo (1999-2011), who is currently serving as vice president, now updated to account for oil revenue. Term limits prevented Jagdeo from seeking reelection, but today he’s widely acknowledged, inside the government and among the public, as the man in charge of the country’s oil wealth.
Last year, Ali and Jagdeo pitched the oil-funded blueprint as an enlightened manifesto—a way for Guyana to break free from an oppressive global system that discriminates against developing countries. “Expecting developing economies to leave their oil in the ground really means protecting the monopoly-like situation of existing producers, so that they can maximize their income from oil and gas,” Ali said at the time. He called it a matter of economic justice. “No responsible government should volunteer that its people stay poor so that rich countries can have their market protected.”
Guyana might be setting a trend. Barbados Prime Minister Mia Mottley, who delivered the opening remarks at this year’s COP27 UN climate conference, recently reopened her country’s waters for exploration by fossil fuel companies. Her rationale echoed Guyana’s: Barbados hopes to use oil money to partly finance a complete shift to renewable fuels by 2030. It’s not an ideal solution, she suggested, but the developed nations of the world have given them little choice. Ever since the Kyoto Protocol was drafted in 1997, developed countries have pledged to contribute billions of dollars to poorer countries to help them adapt to climate change, which the industrialized world, primarily, triggered. Very little of that money has materialized.
So Ali, at the podium in Anna Regina, described the country’s recent growth as a leap toward true independence, 56 years after Guyana declared itself free from British rule.
About 20 minutes before the flag next to the stage was to be raised, the skies opened. Thousands of spectators scrambled for whatever cover they could find, but Ali and Jagdeo ventured out into the storm. They joined the flag-waving dance troupe that stomped in the puddles in front of a stage. Then, clothes soaked, glasses foggy, they returned to their VIP tent.
Rain fell all over the country that day and night. The next morning, Jagdeo toured a region where flooding had forced dozens of residents into an emergency shelter at a sports complex. “To manage Guyana is to manage water,” he said in an interview after he returned to Georgetown. And to do that, he suggested, Guyana was on its own. “If we wait on the world,” Jagdeo said, “we will be inundated by the sea.”
Guyana’s turn toward oil is awash in irony, not least because Jagdeo, as his presidency was ending in 2011, was lauded all over the world as an ecological superstar: the man who’d figured out how protecting the environment and limiting carbon emissions might supercharge, instead of strangle, financial growth in the developing world. At a gala in Seoul, he accepted a trophy as a “Champion of the Earth” from the UN. Five different universities, from Ontario to Moscow, awarded him honorary doctorates for his work to fight climate change. Time magazine printed his name on its cover as one of its “Heroes of the Environment.” In New York, the actor Harrison Ford and other environmental activists celebrated Jagdeo’s commitment to conservation. All praised him for coming up with a way for rich nations to reward poor ones that resisted the sort of development that drove up carbon emissions.
About 85% of Guyana remains covered in forest, sponging up tons of the carbon dioxide richer countries are emitting. Jagdeo argued Guyana should be compensated for the service. With the support of the UN, in 2009 he negotiated a deal in which Norway agreed to pay Guyana as much as $250 million to leave large swaths of its share of the Amazon rainforest untouched. In return, Norway would receive carbon credits to offset its overall emission totals, allowing it to meet its climate goals. It was the world’s first bilateral carbon-trading scheme.
Now, some of the organisations that heaped praise on Jagdeo seem conflicted about Guyana. For example, Conservation International’s local chapter last year rejected a $10 million grant to fund preservation and sustainable development initiatives because the money came from Exxon.
Jagdeo and Ali have responded to criticism by amplifying their insistence that Guyana can, in effect, have its cake and eat it too. “There’s absolutely no contradiction,” Ali said in an interview. “We are not moving away from any of our commitments. As a matter of fact, we are expanding our commitments on the side of the environment.” They believe today’s oil revenues can ensure that Guyana thrives even after the international demand for oil dries up. They figure they have about 30 years until that happens.
More than anything else, it’s this sense of haste—the desire to sign a contract and get the oil flowing with little regulatory interference—that has stoked the chorus of doubters. They’re armed with evidence from almost three years of drilling and analysis of a contract they say was flawed from the start. They believe the government’s plans have already begun to spin out of control.
To be continued…. (Bloomberg)