Guyana’s Low Carbon Future, Climate Change and the Cost of Development

A road bridge over water
Kaieteur News
Guyana’s Low Carbon Future, Climate Change and the Cost of Development

When Guyana’s President Irfaan Ali attended COP26 in Glasgow, he made several pledges surrounding his government’s commitment to reducing carbon emissions and protecting Guyana’s biodiversity. Specifically, the President stated that it was his intention to reduce Guyana’s carbon emissions by 70% by 2030, even as the nation embarks on a transformative development agenda, spearheaded by the President himself and fueled by newly unlocked petroleum revenues which risk undermining Guyana’s environmental objectives.

Since President Ali’s pledges at COP26, there have been many developments in the world and especially in Guyana. Much of the rhetoric espoused by world leaders at COP26, centered around recovering from the COVID19 pandemic and tackling the climate crisis as its impacts are being felt in all corners of the world.

For Guyana and other small island developing states (SIDS), it is even more important that the climate crisis is tackled as the South American nation’s capital city, Georgetown, has been identified as one of nine cities expected to be underwater by 2030. Certainly, the social and economic impacts of the climate crisis are already being roundly felt by Guyanese.

Waves crashing over a sea wall
Sea walls being breached at the Uitvlugt, West Coast Demerara / Credit: Kaieter News Online.

In 2005, Guyana suffered the worst flooding in the country’s history with over five hundred million American dollars being recorded in damages alone, a figure that represented more than half of the nation’s Gross Domestic Product (GDP) for that year. And last year, the nation once again was subjected to some of the worst flooding in its history, with citizens in every region coming dangerously close to reliving the horrors they experienced in 2005. Estimates for the losses were reported to have been in the billions at the time; however, no official figures have been released.

Flooding has been a recurrent issue within Guyana with billions having been invested over the years to address an outdated drainage and irrigation system and to invest in various sea defense initiatives. For instance, in the 2022 National Budget, some $13 billion dollars were allocated to upgrade drainage and irrigation systems in the country, with another $5 billion earmarked to improve Guyana’s flood protection infrastructures. Additionally, the budget assigned some $1.2 billion dollars to the National Drainage and Irrigation Authority in August as supplementary funds to aid ongoing works.

But owing to Guyana’s low-lying northern coastal zone and the gradual rises in sea levels which have been recorded over the years, Guyana’s coastal zone is uniquely positioned to bear the brunt of further climate and extreme weather related catastrophes. And despite the government of Guyana having invested billions of dollars into shoring up Guyana’s sea defences, deficiencies still exist and overtopping continues to occur along the coastal zones.

The forecasted outcomes for Georgetown are dire especially as it is home to the majority of the nation’s citizens and is the center for business and commerce in Guyana. President’s Ali’s pledges at COP26 considered the impacts of Guyana’s particular circumstances, the need for its pristine and invaluable rainforests to be preserved and for the country to develop in a sustainable and carbon friendly manner. However, outside of those pledges and subsequent pronouncements, there has been very little in the way of government policy.

industry on the coast of Guyana
Guyana's low-lying northern coastal zone bares the brunt of climate change / Credit: Kaieter News Online.

A low carbon future

The updated Low Carbon Development Strategy (LCDS), released last November, is the government of Guyana’s recently resuscitated policy document detailing its commitment to the development of a green economy mainly through low carbon energy, employment and development opportunities.

Most importantly, the document sets out the government’s intentions to upgrade and transform the nation’s current energy mix, moving away from its over reliance on imported fossil fuels such as Heavy Fuel Oil (HFO) and Diesel which make up over 90% of the country’s current electricity mix with a move towards cleaner sources of energy such as natural gas and hydropower. According to the LCDS, between 2022 and 2027, the government intends to meet growing electricity demands using a combination of natural gas—a source that could make as much as 94% of the power mix by 2024—and solar and hydropower. And by 2027 to 2032, the government intends to continue its elimination of HFOs and increase its use of renewables, to reach around 75% of the electricity mix by 2040.

In providing the foreword for the document, President Ali stated that the government would be making  “massive investment in adapting to the impacts of climate change”. Going further to state that his government would manage the oil and gas sector “responsibly” for the benefit of all Guyanese. Critics however remain skeptical as plans to accelerate oil and gas production are well underway with the government aiming to bring 10 floating production, storage and offloading vessels (FPSOs) on stream by 2030.

The document makes a number of bold claims which according to experts are almost impossible to verify in fact, owing to the lack of baseline data available. For instance, the document states that Guyana’s 18.5 million hectares of rainforests are capable of storing 19.5 billion tonnes of Carbon Dioxide (a key greenhouse gas) while adding that the world emits about 50 billion tonnes per year. According to the Global Carbon Project, the total annual greenhouse gas emissions per year amounts to just about 34 billion tonnes of CO2 equivalent.

Janette Bulkan, Forestry Specialist and Associate Professor at the University of British Columbia, was keen to refute those figures as more than mere “pronouncements” as the data contained in the study does not appear to be clearly sourced and has not been independently verified. She went on to relate that if the government is serious about cutting carbon emissions by 70% as pledged, there should be at least a white or green paper presented by the government to show the short and long term steps to be taken, but ultimately nothing of the sort exists.

The LCDS goes on to state that “at the same time, Guyana can grow its economy fivefold over 20 years and can keep energy emissions flat”, while protecting the coasts and hinterlands from climate change. Recognizing the shortcomings of the LCDS, Senior Associate and Forest Management Specialist John Palmer however noted that the document is generally better and a “great improvement” from previous iterations however he further stated that some of the data is “highly suspect with wild estimates” which he states contribute to the government being able to draw policy conclusions which are ultimately not justified.

One such manifestation is the government of Guyana’s Gas-to-Energy project with ExxonMobil and its partners. The project represents the largest infrastructural project the government of Guyana has ever undertaken with estimates for its costs starting at US$1.3 billion for the pipeline to transport the gas to shore alone. It is unclear if there are further costs associated with the project’s execution as the government has not released or published any feasibility studies or financial viability study for this project.

Nonetheless, as part of this agreement, the government of Guyana intends to procure natural gas from the oil companies which would be used to generate electricity to support the nation’s electrical grid.

The government of Guyana’s other flagship energy generation initiative, the Amaila Falls Hydro Electric Project (Amaila Falls) has also been criticized for its price tag too. According to information released by the government, the project is expected to cost an estimated US$900 million dollars to generate and contribute an estimated 165MW to the nation’s electrical grid.

According to Energy Technologist and former head of Physical Sciences at the University of Guyana, Alfred Bhulai, Amaila Falls is simply “far too expensive” when considering the alternatives available to Guyana. According to his calculations, consumers would be paying some 14 cents for Amaila and 9 cents for Gas-to-Energy per kWh unit of electricity.

Bhulai has written extensively about the benefits and relative ease with which Guyana is able to adopt solar power as a clean, inexpensive and reliable energy source as compared to natural gas and hydro. And according to the model he proposes, consumers would be paying as little as two cents per kWh of electrical energy from solar power. However at present, it is estimated that solar power only contributes approximately 5MW to the Demerara Berbice Interconnected System (DBIS), according to the LCDS.

The DBIS, which is the nation’s main electrical grid responsible for power distribution struggles with frequent power outages. Mr. Bhulai explained that the DBIS ordinarily generates an output of around 100MW to 150MW when at maximum capacity but owing to built in fail safes, the grid usually trips whenever there are fluctuations in power. The Energy Technologist however lamented  that it would be very expensive for the government to attempt to improve and upgrade the DBIS noting only that an estimate of US250 million dollars was proposed by former Prime Minister Sam Hinds anecdotally.  However, no formal studies have ever been conducted. Bhulai’s recommendation to the government would be to proceed with installing “mini solar grids” in communities throughout the nation, which would not be connected to the DBIS and which could also be rolled out to far off hinterland communities.

Guyana’s LCDS has been in circulation since 2009 and was first conceived by then President and current Vice President, Bharat Jagdeo, who is now heading up Guyana’s oil and gas sector. Since then, the Vice President has become a somewhat divisive figure in Guyana, largely enjoying support from the nation’s private sector and the government’s investment partners. However, a number of civil society organizations, activists and several vocal critics are urging the Vice President to address the shortfalls within its partnership with the oil companies so that Guyanese might truly benefit from the extraction of their resources and take all reasonable steps to mitigate the environmental costs of oil production.

The cost of development

Guyana was one of a few economies that recorded positive economic growth during the COVID-19 pandemic with the nation’s oil and gas sector fueling the lion’s share of that growth.

Dubbed as the fastest growing economy by most of the major financial institutions over the last few years, Guyana’s emerging oil and gas sector has become the government’s primary focus with approximately eleven billion barrels of oil discovered to date. The oil revenues have been earmarked already for national development priorities with the first deposits from the Natural Resource Fund (NRF), some six hundred million US dollars already being withdrawn and integrated into the nation’s 2022 Budget, pegged for public spending.

But despite President Ali pledging to retain the country’s forests and working with local communities to preserve biodiversity, his government has also been announcing massive expansion plans for the nation’s mining and oil and gas sectors.  There is an ambitious plan being pushed by the government of Guyana and its oil partners; ExxonMobil, Hess Corp and CNOOC (the China National Offshore Oil Corporation) to have ten FPSOs in Guyana’s lucrative, oil rich Stabroek block by 2030.

Then earlier in May of this year, Senior Minister within the Office of the President with Responsibility for Finance, Ashni Singh, announced that three large scale gold mining operations would soon be established in Guyana. The Minister confirmed that the expected scale of the developments would be larger than the Omai Gold Mines operation which has been one of the largest mining operations in Guyana’s history.  It was only last month in July that President Ali boasted about how well documented Guyana’s biodiversity and environmental wealth has been, noting particularly that the standing value alone of the nation’s forests is over five hundred billion US dollars.

But the experts are not convinced that the President, nor his government, truly understand how Guyana’s forests operate, how carbon is stored and sequestered and whether the forest is able to offset the greenhouse gasses from the oil operations, as they claim. Janette Bulkan has written and spoken extensively about Guyana’s forests and was able to state categorically that “for quite some time, Guyana has not been a carbon sink and certainly now that the nation is producing oil, it has actually become a massive carbon emitter”. She stated that this is attributed largely to the emission of greenhouse gasses from the oil operations and the clearing of land for gold mining operations.

Furthermore, the government only recently released information in late August for the first time about how much the oil companies have been flaring since operations began back in 2019. Vincent Adams, a Petroleum and Environmental Engineer and Former Head of the Environmental Protection Agency (EPA) was able to scrutinize the data released and was dismayed to find that since December 2020, the oil companies have been routinely exceeding safe operating limits set within their EPA issued permits and licenses and have been flaring massive quantities of greenhouse gases. Adams noted that in July 2022 alone, the data show that the companies flared in excess of twenty million standard cubic feet (mscf) of gas on a daily basis.

Adams also noted that according to the permits he had drafted whilst at the EPA, flaring had not been permitted to occur, however following his controversial departure from the EPA, a clause was inserted into the permits and license, essentially allowing the oil companies to flare as much as they wanted with the only caveat being that they were able to pay for it. Currently, the oil companies are taxed $50 per ton of gas flared. Essentially, Adams views this as an incentive that the government has given the oil companies to flare with impunity. As he explained, the government “gave them the license to flare any quantity of gas as long as they can pay for it”.

On the horizon

COP27 is scheduled to convene in Egypt in November 2022 and will mark the 30th anniversary for the adoption of the UNFCCC. President Abdel Fattah El-Sisi of Egypt, in his welcome message, highlights the urgency with which the global community should act to reduce greenhouse gas emissions and tackle the existential threats posed by climate change as the world collectively builds its capacity to adapt. Most importantly, President El-Sisi expressed his hope that “COP27 becomes the moment when the world moved from negotiation to implementation and where words were translated to actions”

The general sentiment of COP27 appears to be geared at encouraging world leaders to move from rhetoric to action where agreements and pledges are translated into actions and programs. And though the government of Guyana has not yet indicated what its strategy will be for COP27, civil society advocates bemoan their lack of involvement as the government has not yet held any consultations with them in the lead up to COP27.

Longstanding sustainable development and climate justice advocate, Vanda Radzik, is however doubtful that President Ali and his government are truly committed to the pledges he made at COP26. Radzik had played an active role in consultations when Guyana formulated its Intended Nationally Determined Contributions (INDCs), as part of the UNFCCC reporting framework in 2015 which preceded Guyana’s later participation in COP21, where the Paris Agreement was unveiled to the world in December 2015.

The climate justice advocate noted that Guyana’s INDCs “have been rolled back from the  Paris Agreement to what is now being proposed where the strategy of the government is ‘drill baby drill’, according to [Vice President] Jagdeo”. Radzik has been involved with many of Guyana’s social and sustainable development CSOs over a decade long career and has been an outspoken critic of the government’s approach to the management of the oil and gas sector. She has written extensively in the local media about the shortcomings associated with what she deems “the worst oil contract in the world” and went on to state that “Guyana is going to become a major fossil fuel extractor without any of the precautionary measures in place, any consideration of rights being abused with extremely limited, scanty, obfuscated information coming to the Guyanese public.” She explained that, “everything has to be looked at with a cumulative lens” and that the government’s LCDS “strategy is looking at 85% of the forest and saying that is going to absorb all the carbon is a fallacy”.

In recognizing the need to protect and preserve Guyana’s forest while formulating a concise energy strategy, Mr. Bhulai shared a few observations. He lamented that sometimes fires can be seen to the southern regions of Guyana where hinterland communities are burning the forest to create fuel for their communities and that “sometimes you can see fires on the horizon of the Atlantic where Exxon is flaring”. His recommendation is that “they [the government of Guyana] use the oil money as it comes to roll out solar power to far away places and let GPL try and manage with what they already have.” GPL (Guyana Power and Light Inc) being the agency responsible for the management of the DBIS.

And to truly garner the value of Guyana’s forests, Mr. Bhulai suggested that Guyana should “get other countries who have enjoyed cutting down their forests to pay us to keep our forest, that’s the reasoning at many of the COP events.”

President Ali did not respond to a request to discuss his pledge to cut carbon emissions by 70% by 2030 at COP26. However, it has to be assumed that he will once again be offered the opportunity to expound on that commitment and further on his government’s strategy for addressing the obvious impacts of climate change in Guyana.

With COP27 quickly approaching in November, it is unclear how President Ali will balance his commitments on climate change as the world continues to witness Guyana’s economic transformation at the hands of the oil and gas sector.

This story was produced with support from Internews’ Earth Journalism Network. It was originally published by Kaieteur News on 19 September, 2022. It has been lightly edited for length and clarity.

Banner image: Demerara Bridge, Guyana / Credit: Dinesh Chandrapal via Unsplash.

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