S3, Ep8 | The Turning Point

Amy Westervelt [00:00:04] In 2023, Guyana's vice president Bharat Jagdeo was asked to speak at the oil and gas industry's biggest annual conference, Cambridge Energy Research Associates Executive Conference. It's put on by S&P Global. And everyone calls it CERA week.

Daniel Yergin, Vice Chairman of S&P Global [00:00:21] And it's my understanding this is the fastest offshore oil development in history. How did it happen?

VP Bharat Jagdeo [00:00:28] Well, we support that vision in a fast paced development of the resources offshore. Particularly in the context of net zero, we believe it's a wise strategy to do as much exploration as possible, now. Prove the resources and then have them removed and transformed into financial assets that in the future can serve to transform the country.

Amy Westervelt [00:00:56] Particularly in the context of net zero, let's get that oil out and sold as quickly as possible. Net zero was meant to be a goal for companies and governments to work towards an emissions reduction target, not an incentive to fast track oil and gas production. But Jagdeo was putting into plain words there what the fossil fuel industry's approach to net zero has been all along, despite a whole lot of slickly produced ads to the contrary: get as much oil out of the ground and sold before it's too late.

Carroll Muffett, CIEL [00:01:36] Guyana is emblematic of what we are seeing in countries around the world. It's emblematic of this broader wave of extractive colonialism that is playing out in frontier countries across the global South.

Amy Westervelt [00:01:55] Carroll Muffett, president and CEO of the Center for International Environmental Law, has worked with Melinda Janki, the attorney we heard from earlier this season.

Carroll Muffett, CIEL [00:02:04] Countries that don't have a history or any significant history of oil and gas development or oil and gas dependance are being pushed into that dependance.

Amy Westervelt [00:02:15] That push tends to include swift backlash to any opposition.

Carroll Muffett, CIEL [00:02:21] When people on the ground speak out against that development, when they ask difficult questions, when they ask why is this investment happening? What are the risks? Why? You know, what is really in this for the people of our country? They come under profound political pressure. They come under social and economic pressure. And, you know, and they are criminalized and intimidated.

Amy Westervelt [00:02:47] Sometimes the pressure is just in the form of financial incentives or rigging the system in a particular direction.

Carroll Muffett, CIEL [00:02:55] It's important to recognize Guyana is a very small country, and that means that the the universe of people with expertise in any given domain is also going to be comparatively small. I think that means that for an actor like Exxon, it is really surprisingly easy and probably highly cost effective to identify those people and to take them out of the equation one way or another, whether it's by offering them grants and donations, whether it's offering them jobs.

Amy Westervelt [00:03:36] That's true of journalists as well. When Kiana Wiburg first started covering the oil and gas beat for Kaiteuer News, she had five colleagues working on the desk with her. Now it's just her. The others were all hired away by the government or the oil companies.

Kiana Wilburg [00:03:53] Oil companies. Typical incentive is that you get a car and almost every young. Journalism sees that as a very good incentive to. Switch. And I think also there's this sort of esteem, these very sexy titles, corporate public and governance affairs liaison for Exxon Mobil or CNOOC and whatnot. There's an appeal to these these titles. If I did not see the need for staying and serving in my capacity, I would have been gone, too, because I was offered multiple times.

Amy Westervelt [00:04:46] So far in Guyana, the oil companies are sponsoring cricket, making big donations to all of the environmental organizations that might have been opposed to oil and hiring journalists away from newsrooms. Sometimes shutting down opposition is as easy as just offering people a higher salary, a big donation or a free car. The critics who remain have to be willing to withstand negative political and social pressure. Here's Vice President Jagdeo again.

VP Bharat Jagdeo [00:05:20] The industry had some negatives at home because of of what is taking place globally. This push to net zero, we have a lot of NGOs that have descended on the country and some saying don't leave the oil in the ground is flawed with ten F vessels operating offshore. We will be carbon negative. We're already carbon negative where the world is hoping to get to in 2050. We are we are already there. Our forests is bigger than England and Scotland combined. So it's a huge sink and therefore we have a balanced strategy to develop the oil and gas industry.

Amy Westervelt [00:06:07] This is something Jagdeo has been saying a lot lately, that even with ten FPSOs, offshore Guyana would still be a carbon sink. It sounds like he's just making up that ten, pulling it out of the air. But it's actually a reference to something specific.

Amy Westervelt [00:06:25] In 2022, the government asked Exxon to include a new metric in its environmental impact assessment for its latest drilling site. They wanted the company to lay out what the cumulative impact of all of its existing and proposed offshore activities would be on the country's greenhouse gas emissions. It concluded that even taking all of Exxon's biggest plans into account, the country could have ten FPSOs offshore and still remain a carbon sink. But — and this is a really big but — it calculated only the emissions generated by extraction and refinement, not the emissions that come from the actual use of that oil and gas. To put that in perspective, the emissions associated with fossil fuels are about 90% how you use them–burning oil and gas– and about 10% how you got them. To offset those operational emissions, one of Exxon's partners in the offshore oil project, Hess Corporation has made a big commitment.

Archival News Guyana [00:07:36] The government of Guyana on Friday signed the first sale agreement of its carbon credits to Hess cooperation at a tune of USD 750. The sale agreement, which was signed on Friday at the White House, will support Guyana's efforts to protect the country's vasts forests and to provide capital to improve the lives of Guyana's citizens.

Amy Westervelt [00:07:58] With this sale announced last December, Guyana became the first country to receive and sell carbon credits under a new UN program designed to protect forests. Called Trees. Trees is part of the UN's REDD project, which stands for Reducing Emissions from Deforestation and Forest Degradation. It allows polluting companies and governments to pay other groups and governments to offset their carbon emissions. So remaining a carbon sink isn't just about greenwashing or promotion in Guyana. There's actual monetary value to it to.

Ketan Joshi [00:08:35] Carbon offsets basically just open up this window for emissions to actually get worse because you can claim to have neutralized your greenhouse gas impact without actually having done so.

Amy Westervelt [00:08:48] Ketan Joshi is a writer and energy analyst and something of an expert on carbon credits and carbon offsets. It's hard to see how Guyana's carbon credits will pencil out on the emissions front, especially because around the same time that this program was announced, the Government made another big announcement.

VP Bharat Jagdeo [00:09:06] We put on auction 14 properties offshore. You can bid on any of them, but the maximum that would be allocated would be three per successful bidder. The reason is that we want multiple, oil companies there in Guyana exploring.

Amy Westervelt [00:09:25] If you are constantly being criticized about one contract, sometimes the best strategy is to throw 14 new contracts in the mix. Several oil majors paid the $25,000 fee required to enter the auction. That includes Chevron, Shell and yeah, Exxon. But the auction has now been postponed for several months, so we won't know until next year whether any new companies will be drilling offshore. Which brings us back to the question we've been grappling with all season long: How do we tackle energy poverty and the climate crisis at the same time when there's no real money in either for oil companies? For all their talk about it — and oil companies do talk a lot about getting energy to poor people. It's like their sole purpose in life these days — The reality is that in most places where they're drilling for oil and gas, it's being exported for profit, not used to provide sustainable, reliable energy for locals. Nigeria, a global south country that's been in the oil business since the fifties, for example, is currently last in the world for energy access. The simplest answer, but not the one that anyone in the Global North seems to like very much is to reduce energy demand in the global North to allow for an increase in demand in the global South. But that increase can't be to the excessive levels of, say, American consumers today who are wildly wasteful with energy. But getting everyone to what Dr. Narasimha Rao calls a "decent living level of energy" would change the math considerably for fossil fuel developments in places like Guyana. If you're a global oil major and your product is oil and gas, you'd prefer to just see demand skyrocket everywhere. And that's where things like carbon credits and carbon offsets can be quite handy. They let people pretend they're reducing emissions, so the incentive to reduce consumption disappears entirely. But while they sound okay on paper, as does Jagdeo's creative math on how Guyana can become a top oil producer and remain a carbon sink at the same time, none of it changes how the atmosphere actually works. Reducing the impact of Guyana's oil industry on the global climate system would actually require shutting down the industry elsewhere, like Texas, for example. That's our story today. I'm Amy Westervet. And this is the last episode of our special Drilled and Damages co-production Light Sweet Crude. Stay with us.

Dr. Vincent Adams [00:12:57] I'm originally from Guyana. When I was a teenager, I represented Guyana in Cricket. I was in the first class of engineers graduating from the University of Guyana, and then I migrated, went to school in the United States and worked for for Amoco, at the time as a senior petroleum engineer, Amoco and they're now British Petroleum.

Amy Westervelt [00:13:27] Vincent Adams went from his job as a petroleum engineer at Amoco to the United States Department of Energy, where he worked for 30 years.

Dr. Vincent Adams [00:13:36] I ended up with the highest level of the United States government as a senior executive of the U.S. government within the U.S. Department of Energy.

Amy Westervelt [00:13:46] And then he fully intended to retire.

Dr. Vincent Adams [00:13:50] My plan was to do my my, my voluntary service that I was doing for B.A., Right. I was going to spend more time knowing, Diana that I had the time to do that type of stuff. And but then a lot of my friends, you know, ministers and the president, you know, said, please, could you go? So I said, okay. The president himself. Well, how long? I said, Chief, I, I, you know, I've been planning for this retirement for a long time. I've been counting the days. Then I said, okay, I'll give you three years, because I figured by three years I would set up all the institutional systems and stuff like that.

Amy Westervelt [00:14:25] That was the previous president, David Granger, and the job was a big one, updating Guyana's Environmental Protection Agency and starting a petroleum oversight program there, because after decades of looking, the country had finally found oil. Unlike Melinda Jaki or Troy Thomas, Adams was not overly concerned about the climate implications of this discovery or with the industry moving quickly. In fact, he sees it as necessary.

Dr. Vincent Adams [00:14:53] We have an opportunity to get rich and we have an envelope, a small envelope to produce as much as we get because the entire world is moving towards renewables.

Amy Westervelt [00:15:06] But that doesn't mean he fully supports Exxon's expansion into Guyana.

Dr. Vincent Adams [00:15:11] Exxon is doing it in a way that is very risky, which is which is an absolute no no.

Amy Westervelt [00:15:18] Adams has also said all along that Guyana should never have had a production sharing agreement. That complicated contract we talked about early this season, and in both cases his reasoning is the same.

Dr. Vincent Adams [00:15:32] We absolutely do not have we do not have the capacity to do that.

Amy Westervelt [00:15:38] When he was put in charge of Guyana's EPA, Adams says the office didn't even have a filing system, let alone a means to oversee major offshore oil production. By collecting fees that had been due to the agency for years, he was able to put some of those systems in place, hire more people, and even buy the agency a few vehicles to allow EPA officials to check up on permitted projects. His recommendation for the floating offshore production rigs was that there should be an EPA official on those rigs overseeing operations. Similarly, when it comes to the contract, he says, for a country to make a production sharing agreement work, they need to have the capacity to be regularly auditing costs. Guyana doesn't have either the oversight or the accounting capacity. So Adams recommended a more straight forward contract.

Dr. Vincent Adams [00:16:30] We should go for nothing more than just a straight taxes and the royalty contract, or what is called a concession type contract. And with a concession type contract, you know, just to put it very simply, it's if you produce a hundred barrels of oil, I let's say I say we the government decides to take part 2% of that quantity. If you produce 100 barrels of oil, I think talk to buyers and you take you get 70. I don't have to worry about cost or anything. All I would need is some high school kid who can come barrels as they're being produced. All I would need is a mechanic or a good electrician to make sure that that that oil meter that measures that it's running properly. I don't need all these accountants and everybody. Now of course, that's putting it very, very simplistic to me, but that's the difference in the magnitude of the oversight that you've got to work with.

Amy Westervelt [00:17:37] These production sharing agreements or PSAs, they're not going away as it prepares to auction off more offshore drilling blocks to global companies. Guyana has drafted a new and improved PSA and government officials claim it solves all the problems people had with the Exxon contract. But Adams says the country is no better equipped today to manage these complex contracts than it was seven years ago.

Dr. Vincent Adams [00:18:07] It's the oil companies, by the way, that introduced this nonsense because it saves them, especially Exxon. They know that a PSA is a nightmare for them and for a country such as Guyana to verify costs.

Amy Westervelt [00:18:20] Adams says the oil auction is a distraction, an attempt to shift the public's attention away from any problems with Exxon and make it seem like the government is fast tracking oil profits.

Dr. Vincent Adams [00:18:33] It's the biggest disruption that I have ever seen, which is which is the modus operandi. This is right in the middle of Jaguar's playbook. It's a distraction from this renegotiation stage. So now everybody are going to start talking about this new model contract mechanism. Okay. And that's exactly where everybody are right now. And even if you go ahead and look at it, it's grossly it gets to protect Exxon. Again, I'm telling you, Exxon is calling all of the shots and running this country.

Amy Westervelt [00:19:12] Exxon, Chevron and Shell all requested bid packets for the auction. And the government will announce next year, which, if any, have decided to move forward with offshore drilling projects outside of the Stabroek block where Exxon has staked its claim so far. Even if there are no takers, Exxon's drilling alone is set to make Guyana the world's largest oil producer per capita in the world by 2035. The country is on track to become a major gas producer now as well, with a new pipeline and gas plants set to begin construction this year.

Dr. Vincent Adams [00:19:50] They are producing 600 million cubic feet of gas a day. Okay. You know, how much are we going to be using in that? About 50

Amy Westervelt [00:19:59] Neither the government nor Exxon has announced yet what the plan is for excess gas, but it could easily be sold on the global market.

[00:20:09] Which brings us back to that balancing act that Dr. Narasimha Rao mentioned a couple of episodes ago. Is there a way to let Guyana build as big an oil and gas industry as it wants without exacerbating the global climate crisis? So far, the answer to that question from the government of Guyana is first, that it's only responsible for its own emissions, not for those associated with the oil and gas produced there, which is exactly how everyone else in the world calculates emissions. The United States, for example, likes to point out how our emissions have been on the decline in recent decades. So does the U.K., So does the European Union. The oil and gas produced by American, British and European companies all over the world? That doesn't count.

[00:21:01] Guyana's leaders have also highlighted the country's leadership in forest conservation and consequently the service that it provides to the world as a carbon sink. And here again, yes, that does give it a leg up on most other oil producing countries when it comes to climate action. What, then, is the answer? Because what we've described in Guyana throughout this season is not just happening there. Guyana's neighbors are also getting into the oil business in a big way. Right next door in Suriname, for example, Shell and Total energies are regularly announcing big new offshore discoveries. Barbados, or Prime Minister Myanmar has become a global champion for climate action. It had its own offshore oil auction right around the same time as Guyana's and Africa. New fossil fuel industries are springing up in Tanzania, Uganda, Mozambique, Namibia and more.

[00:22:03] And the Global North is ramping up too. The so-called climate president Joe Biden in the United States has approved multiple large scale drilling projects, long time industry leaders Qatar, Saudi Arabia, the United Arab Emirates and Norway. They're all drilling as quickly as possible. So is Brazil, which also supposedly just elected a climate friendly president. It's a global game of musical chairs where the company or the country left with the least untapped oil reserves, winds and the rest of us lose in the biggest way possible.

[00:22:47] Unless! Unless the fever dream that capitalism built, this idea that more is always better, that the biggest consumers are the world's winners gets tossed on its head. Even if we managed to do what a lot of climate advocates want and electrify everything, we must at some point grapple with the very simple fact that a lot of us on this planet consume a lot more than we need to.

Thea Riofrancos [00:23:16] When I was first in Chile researching the social and environmental impacts of lithium mining there—and Chile is the world's number two producer of lithium—and also some of the kind of contentious politics around extraction of this mineral, I started to kind of think, you know, would it matter in terms of how much lithium was needed, how the sort of global energy transition is designed or how the U.S. energy transition is designed. Right?

Amy Westervelt [00:23:45] Thea Riofrancos is an associate professor of political science at Providence College and a member of the Climate and Community Project. Her research focuses on the impact of extractive economies and how we might rethink them. And she's been concerned for a while about the fact that if we keep everything else the same and switch to renewables tomorrow, we're pretty likely to end up with some major environmental crises on our hands. The land use and mining impacts of electrification are often cynically weaponized by those who would prefer to see us hooked on fossil fuels forever. But there's substance to them too, which got Riofrancos thinking: Are we destined to replace one environmental problem with another? Or could we do things differently? And how differently would we need to do them to really change things?

Thea Riofrancos [00:24:42] Are there futures in which less lithium and less of these other transition minerals are required than some of the most alarming kind of reports and predictions I began to see from the International Energy Agency and then the World Bank and multiple other forecasting agencies, which were and remain pretty alarming in terms of how much mining they are predicting will occur or be demanded?

Amy Westervelt [00:25:03] Riofrancos recently looked at this question in great detail around transportation and whether there are decisions we could make today that would make the electrification of transportation more sustainable.

Thea Riofrancos [00:25:16] So I was thinking a lot about an urgent and rapid and just energy transition in the U.S., but I was kind of thinking about both ends of the supply chain at once. Like here I am in Chile, in the Atacama Desert, seeing these mining related harms. And then there I go in the U.S. kind of advocating for a rapid transition, like how do I align these two goals and how and is there a way to kind of have a less extractive energy transition? And the answer was that that research didn't exist, at least not for the U.S. transportation sector. I saw forecast after forecast that assumed basically a binary of the future, right? Either we stay with the fossil fuel status quo and the existential crisis that that is causing for the planet and all of its people. Or we transition to an electrified, renewably powered future. But that doesn't really change anything about how these sectors or economic activities are organized.

Amy Westervelt [00:26:10] There was a powerlessness to it all a global giving up on ever doing things differently. And Riofrancos thought, surely this is not all actually set in stone.

Thea Riofrancos [00:26:23] It's totally understandable to me that the vast majority of Americans use cars to get around because they live in contexts, even some urban context, but especially suburban and obviously especially rural contexts where there really is no other option. And so I neither blame individuals for those choices, but nor do I see our current transportation system as a paragon of freedom. Right? I mean, especially when we consider how financially burdensome cars are for poor and working class people.

[00:26:53] We're at a critical juncture in terms of specifically how that renewable energy transition is designed, who the winners and losers are, what the what decisions made around certain trade offs, right in the form of policy and resource decisions. So so I'm worried that the that this moment which could could if we think about it critically, organize around it and advocate for it, maybe put us on a slightly less car dependent path.

Amy Westervelt [00:27:24] Spoiler alert. None of it is set in stone. It's absolutely possible to shift energy demand and behavior with policies that support those shifts.

Thea Riofrancos [00:27:34] But if we just take that snapshot year of 2015 and we look at lithium demand, our worst case scenario to our best case scenario is a 92% difference. So if we just take the year 2050, this future that we're looking at a zero emission transportation sector, our worst case scenario is we maintain current levels of car dependency, car usage. Cars have this outsized kind of share of overall transportation models. Vehicle ownership rates remain like the same as they are now. And we also get to continue on this trend of bigger and bigger batteries, right. That are getting more and more out of step with like global averages. That's our worst case scenario. Things get kind of actually worse but electrified. And our best case scenario is we bring battery sizes back to a sort of reasonable size. We expand how many folks are using busses or cycling. We densify our suburbs a bit. We have maximum levels of recycling and recovery that are technically feasible. That second future is 92% less lithium than the first feature. And I know that the ambitious future is probably beyond the realm of what feels politically possible right now.

[00:28:42] And I understand that, you know, I'm not like living in the clouds. I'm aware of that. But I think that having that option on the table because in that most ambitious future, we totally limit in emissions and everyone has a way to get around, right?

Amy Westervelt [00:28:57] But even in the least ambitious, most politically feasible future that Riofrancos and her colleagues imagined and modeled, some pretty simple decisions made a big difference.

Thea Riofrancos [00:29:09] Another finding that I really like just because it addresses folks who are understandably concerned. Like there is no America without car dependency, you know, we can't move away from being car dependent. We just have to suck it up. And I say to those people, we could stay in scenario one, which is the one where we keep levels of car usage and vehicle ownership rates and we don't densify anything. And we've lots of sprawl. We can stay in scenario one and we can just bring our batteries to light the right size and not this gargantuan size. And in 2050 we can use 42% less lithium with the same amount of cars and the same amount of car usage and vehicle ownership. If we just make the batteries a more normal size like rather than the super size, it's not a smart car. You know, those tiny European cars are not, you know, not even going there. Again, I know my audience. I know my limits of what I can suggest. So, no, we're talking about the Nissan Leaf or we're talking about what people drive in Berlin or whatever.

Amy Westervelt [00:30:00] Narasimha Rao and Jayashri Roy both mentioned a similarly small shifts with big payoffs.

Dr. Narasimha Rao [00:30:07] New homes in the US are significantly larger than new homes in some of the richest countries in Europe. And that's something that is not something one can regulate.

Dr. Joyashree Roy [00:30:19] In cold and warm countries, sometimes we make it so hot and so cold in the rooms that it becomes not comfortable anymore. Right. Are the default setting can be done in such a way is so that over heating and over cooling can be reduced and that can have a very high health implication. And we could see that without reducing employment without reducing human well-being. Actually, 40 to 70% of 2015 level of projected emission can be reduced by working on the demand side.

Dr. Narasimha Rao [00:30:59] I think we need to have incentives as policy incentives for healthier diets that are more environmentally friendly.

Dr. Joyashree Roy [00:31:06] We do need policy that helps planners, choice architects, city planners, investors to plan complexities with walking cycling lanes, public transit system, to help people to make better choices for their own health and environment.

Amy Westervelt [00:31:23] Eating slightly less meat, living in more walkable cities and in slightly smaller homes. None of these are actually the massive sacrifices that they're often made out to be. In fact, these are all things that tend to cost individuals less money while also improving health and quality of life. But it's important to understand that simply shifting demand or consumer behavior will not automatically curb fossil fuel production. We know this from history time and time again. Absent policies that manage an energy transition, fossil fuel companies will simply find new markets. The plastic boom is a great example. When demand for fossil fuels in transportation and residential energy decreased, the industry focused its attention on ramping up petrochemicals as a revenue stream that could make up the difference. That's happening with the fossil fuel push in the Global South right now, too. The headline here is that there is a path forward. There is time to do something. There is a way to address global poverty and global warming at the same time. But it requires action and it requires choices in the global north that might be briefly, briefly, a little bit painful or a tiny bit unpopular. Historically, our politicians have not excelled at embracing short term pain for long term gain. But that doesn't mean they cannot or will not behave differently, just that they're unlikely to unless pushed.

[00:33:02] In the meantime, Global South countries like Guyana are going to continue to fund both development and climate adaptation any way they can. Even if it means selling oil to pay for seawalls.