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The People’s Progressive Party (PPP) regime is making decisions that have the effect of gambling Guyana’s entire future on the oil and gas industry. Whether it is a considered decision to do so, or the result of the PPP’s ad hoc nature of doing things may not be very significant. The important fact is that the future prospects of all Guyanese – including those not yet born – are tied to a single industry. And that may be a mistake.
There is no doubt that the world is moving away from fossil fuels towards a future of renewable energy sources. The inevitably of this move is being pushed by the inescapable evidence of climate change, and consequent melting polar ice caps, rising sea levels, and documented mass extinctions.
Interestingly, pressures are now being exerted by governments and even shareholders on oil companies to convert their business models to “energy companies” with a view to diversifying production to include renewables.
Will Nichols, head of environmental research at Maplecroft, a risk analysis firm said that, “These companies are facing pressure from regulators, investors, and now the courts to up their game. That’s a big chunk of society, and it’s not a great look to be pushing back against all of that.”
What was Mr. Nichols talking about?
Somini Sengupta, the international climate reporter for The New York Times wrote the following more than two years ago in May, 2021
“A nun, an environmental lawyer, pension fund executives, and the world’s largest asset manager. These were among the unusual collection of rebels who claimed a series of startling victories this week against some of the world’s biggest and most influential fossil fuel companies.
“From Houston to The Hague, they fought their battles in shareholder meetings and courtrooms, opening surprising fronts in an accelerating effort to force the world’s coal, oil and gas companies to address their central role in the climate crisis. And even as they came with strikingly disparate points of view — corporate shareholders, children’s rights advocates, environmentalists, thousands of Dutch citizens — they delivered a common underlying message: The time to start retreating from the fossil fuel business is no longer in the future, but now.”
Ms. Sengupta cited the following incidents, and came to some reasonable conclusions, the expert wrote:
“The most dramatic turning point came in the Netherlands, where a court instructed Royal Dutch Shell the largest private oil trader in the world and by far the largest company in the Netherlands itself, that it must sharply cut greenhouse gas emissions from all its global operations this decade. It was the first time a court ordered a private company to, in effect, change its business practice on climate grounds.
“The symbolism was inescapable: The Netherlands, famously built on land reclaimed from the sea, faces the immediate threat from a warming climate caused by the burning of Shell’s own products — oil and gas.
“In another example, at the 2021 annual shareholder meeting of Exxon Mobil the biggest American oil company, the message was framed sharply in terms of profits: A tiny new hedge fund led an investor rebellion to diversify away from oil and gas — or risk hurting investors and the bottom line.
“Additionally, Chevron’s shareholders voted to tell the company to reduce not only its own emissions, but also, remarkably, the emissions produced by customers who burn its oil and gasoline. And in Australia, a judge warned the government that a proposed coal mine expansion, a project challenged by eight teenagers and an 86-year-old nun, would need to ensure that it wouldn’t harm the health of the country’s children.
“The timing was significant. This week scientists also concluded that, in the next five years, the average global temperature will at least climb more than 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, warmer than in pre-industrial times. Avoiding that threshold is the main objective of the Paris Accord, the landmark global climate agreement among the nations of the world to fight climate change.”
Analyst Steve Cohen of the Columbia Climate School wrote: “Several dramatic developments that tell us that the fossil fuel era is coming to a gradual end. The issue is: how gradual? The rate of change has accelerated, and perhaps we are reaching a tipping point. I believe that fossil fuel companies will need to become energy companies or they will go out of business.”
The World Energy Outlook 2022 (WEO) issued the following warning:
“The global energy crisis triggered by Russia’s invasion of Ukraine is causing profound and long-lasting changes that have the potential to hasten the transition to a more sustainable and secure energy system.
“Today’s energy crisis is delivering a shock of unprecedented breadth and complexity. The biggest tremors have been felt in the markets for natural gas, coal and electricity – with significant turmoil in oil markets as well, necessitating two oil stock releases of unparalleled scale by the International Energy Agency (IEA) member countries to avoid even more severe disruptions. With unrelenting geopolitical and economic concerns, energy markets remain extremely vulnerable, and the crisis is a reminder of the fragility and unsustainability of the current global energy system.”
Finally, Village Voice News notes that the consensus among experts appears to be that a tipping point will be reached by 2030. At that point, global demand for energy with be matched by the growth of renewable energy sources. If that projection is anywhere close to correct, Guyana will be in trouble because the international demand for fossil fuels will fall to almost zero. Also, considering the agreement among experts that the oil era is almost over — and official and general hostility towards the industry — the wisdom of the PPP’s actions of gambling Guyana’s future on oil is very much questionable.