By Neville Trotz
Now retired, Ulric (Neville) Trotz was formerly the Deputy Director & Science Adviser, Caribbean Community Climate Change Centre, Belmopan, Belize.
The decisions reached at the recently concluded Conference of the Parties (COP 29) of the United Nations Convention on Climate Change (UNFCCC) fell short of the expectations of developing countries which are party to the Convention. The Conference was supposed to address the perennial issue of climate finance to support global transition to zero carbon and climate resilient economies, in keeping with the requirements of the 2015 Paris agreement. In 2009 at the COP in Copenhagen, agreement was reached to provide a sum of 100 billion US dollars per year for developing countries (inclusive of Small Island Developing States and Least Developing Countries) to respond to climate change impacts. This sum of $100 billion US was not realised until 2022!! Recent assessments of the amount required by developing countries for effective response to climate change is far in excess of previous estimates. Developing countries expected that at COP 29 there would have been agreement to a target of $1.3 trillion US per year available for supporting the implementation of their national climate adaptation and mitigation programmes.
Instead, the final agreement was for an increase of the present sum from $100 billion to $300 billion per year and this to be realised, not immediately, but by 2035!! This decision flies in the face of the most recent science reports on the state of global climate and does not satisfy the scale at which or the time frame in which climate action has to be implemented, if we are to avoid the catastrophic consequences of the impacts of runaway climate change.. The mechanisms in place for developing countries to access climate finance are not time sensitive and do not reflect the need for urgency by countries to implement climate action . The clear message from the COP 29 decision is that developing countries cannot depend on global mechanisms for the provision of climate finance at the scale and in the time frame required for them to effectively respond to the existential and projected threats they face from a changing global climate. Added to this, would be the need for heavily indebted developing countries to incur further debt to access climate finance for adaptation, as we have lost our earlier battles to have a significant part of climate finance for adaptation provided as grants, and not as loans.
With this new realisation, CARICOM countries ( and other developing countries) must seek to explore avenues other than global climate finance to enhance their capability to address the climate change challenges that we face. For CARICOM, recent developments offer an opportunity to explore ways in which the region might achieve implementation of their climate change response goals, as expressed in their National Determined Contributions(NDC) submitted to the UNFCCC. As they stand, the NDCs are just expressions of intent and lack the finances for implementation.
The first development is the recently discovered oil & gas resources in the Guyana Suriname Basin and the other is the CARICOM decision to prioritize regional action on Energy and Food security.
In an earlier article on the issue of Oil & Gas in the Guyana-Suriname basin, I alluded to a letter to the Stabroek News by Guyanese citizen, Mr. Kapil Dev, in which he articulated a way forward with implementing the Enhanced “Cooperation Mechanism” recommended in a report of the CARICOM Commission on the Economy:
“Moving from the theoretical to the reality of Caribbean geography, history, sociology and governance challenges, in addition to economics, I suggest that Trinidad, Guyana and Suriname are most ideally suited to proceed on the “Enhanced Co-operation Mechanism” proposal. Guyana and Suriname have already taken steps for closer collaboration in each of the four areas identified by the Commission – transport, closer financial integration, economic cooperation and climate change. All that is needed is for Trinidad to be invited to the table. With their 50+ years of experience in oil, manufacturing and deeper financialization they are an ideal fit for the “new kids on the oil block.”
With the climate change requirement for renewables and energy efficiency, all CARICOM countries as expressed in their NDCs are committed to a carbon free energy sector and to pursue the establishment of a zero carbon energy sector.
Were Guyana, Suriname and Trinidad and Tobago to form an alliance using climate change as one of the focus areas of their collaboration as recommended by Mr Dev. one can envisage multiple opportunities to use this as a basis for action on the implementation of the “Enhanced Cooperation Mechanism” recommended by the Commission.
CARICOM’s decision to prioritise regional action on Energy and Food Security raises some issues that the region is well equipped to address ( e.g. through the agency of a CARICOM Task Force) that can contribute to the direction the region chooses to address these goals. The recently discovered Oil & Gas resources in the Guyana /Suriname basin offers the region the opportunity to explore avenues for the utilisation of these resources to address both their food and energy security needs. For the energy sector, it is a fact that as the region transitions to achieve a Net zero status in 2050, countries will still require a supply of fossil fuel, as they change the architecture of their energy sector to one that is completely fuelled by renewable energy systems. CARICOM’s present disposition is to pursue the resuscitation of the lapsed PETROCARIBE agreement with Venezuela which provided fuel at a below market price to Caribbean countries to meet their present and future needs for fossil fuel. For the food sector, one of the key inputs, fertilizers, can be derived from the yet unexploited natural gas reserves in the Suriname/Guyana basin. It would be in our interest to determine the feasibility of utilising the oil and gas resources of Guyana, Suriname and Trinidad and Tobago (including the installed
processing facilities – refinery, Point Lisa petrochemical facility in Trinidad) to address the region’s food and energy security needs . Such a study could take into consideration inter alia, underutilised refinery capacity in the wider Caribbean and issues related to the costs for resources from the Guyana/Suriname source, to include advantages of a local supply chain, lower carbon intensity of deposits in the Guyana/Suriname basin and transportation costs from source to user, carbon footprint of the entire transaction compared to what would obtain in its absence, security of supply and insulation from the vagaries of the international market and geopolitical issues (evident with the Venezuelan issue). Consideration of this approach is premised on a
perception that endogenization of the supply of fossil fuel resources for CARICOM energy and food security would redound to the financial, environmental and political benefit of countries in the region and we need a rigorous technical, well informed investigation to confirm this. It is my fervent hope that there would be regional consensus to explore the feasibility of such a course of action.
Implementation of such a regional arrangement could ensure that the entire region would have access to more affordable and secure energy supplies and that this would give them some fiscal space to address other development priorities on their national agenda, – including actions to build climate resilience. All CARICOM countries like Guyana have committed to transform their energy sector to be totally dependent on renewables within a certain time frame and to address their vulnerability to climate change through taking action to implement adaptation measures across all vulnerable sectors of their economy. Just like Guyana, as they transition to a fossil fuel free energy sector, their energy needs would be supplied under a reliable and more affordable arrangement which operates under the CARICOM umbrella.
Here again can we think of a regional investment fund that is set up to support investments in renewable energy, so that the region has a readily accessible source to funds at an affordable rate to install a zero carbon energy sector. The regional investment fund could be a public/private partnership with a generous investment from Suriname’s and Guyana’s oil revenues but from other governments and the regional private sector inclusive of the banking sector and credit unions.
Figures have shown that investments in renewable energy have a very high Internal Rate of Return on Investment (IRRI) and this makes the investment climate quite favourable. Also, savings in energy costs caused by the switch to renewables provide the customer with resources to repay the loan. Some of these savings can also be used to support national adaptation programs and accelerate our efforts at climate resilience building.
At some time too, thought should be given to expanding this arrangement to our CARIFORUM partners who share the same aspirations for low carbon and climate resilient growth and face the same challenges of the lack of resources to pursue these goals..
The climate change platform provides the Caribbean with an opportunity to truly realise some of the aspirations of the Treaty of Chaguaramas while at the same time, through this Enhanced Cooperation Mechanism, facilitating and accelerating the region’s efforts to achieve a low carbon and climate resilient Caribbean. That way, the oil economy of Guyana and Suriname would have contributed to the region’s timely transition to a carbon neutral Caribbean, that is well fortified to meet the challenges of a changing climate. That way too, Guyana and Suriname can perhaps demonstrate one way in which countries like them, especially poor developing countries, can face the paradox of being a fossil fuel producer and at the same time, espousing the tenets of the Paris agreement and the global imperative to achieve a zero carbon climate resilient world by 2050.
