Developing Nations Look to Balance Oil and Gas Opportunity with Climate Concerns

• The International Energy Agency (IEA) recommends leaving new oil discoveries in the ground to achieve global climate aims.
• African and Caribbean nations face pressure to choose between economic development and climate action.
• Developing countries need support from high-income countries in the form of financing for renewable energy development.

As the world focuses on transitioning to green, there are big questions about whether new oil and gas resources should be developed. On the one hand, new oil regions present the opportunity to develop lower-carbon oil and gas through less damaging operations. On the other, the International Energy Agency (IEA) and environmental organisations say it is vital to transition away from fossil fuels to green alternatives and leave any new oil in the ground, to achieve global climate aims. However, many recent oil discoveries have been made in low-income countries across Africa and the Caribbean, offering them the opportunity to develop their natural resources for significant revenues, which is difficult for many to turn down. 

For decades, the Western World has been exploiting fossil fuel resources to provide power worldwide and bring in high revenues. This has led regions such as China, the U.S., and the European Union to be some of the world’s biggest polluters. High levels of greenhouse gas emissions produced from fossil fuel production and industrialisation have contributed to climate change, an issue that the governments of many high-income states are attempting to tackle through decarbonisation and a green transition. However, a global green transition will require support from governments around the globe, from both rich and poor nations. 

To combat climate change, the IEA recommends that oil and gas producers decrease their production and leave any new oil discoveries in the ground. However, there is still not enough renewable energy capacity to make the switch, meaning that the global demand for fossil fuels remains high. In addition, many oil discoveries in recent years have been made in Africa and the Caribbean. These regions are looking increasingly attractive to producers looking to develop “low-carbon” oil operations and move away from existing depleted oil fields. Oil and gas majors insist that developing these regions would help decrease the carbon emissions associated with oil and gas production, as well as help low-income countries improve their economies. 

The World Bank estimates that the African continent held around 40 percent of the natural gas discoveries from 2010 and 2020. Many countries have increased their reliance on the region following the Russian invasion of Ukraine and subsequent sanctions on Russian energy, as they seek out alternative gas supplies. However, environmentalists worry that developing new oil and gas regions could quash efforts to tackle climate change. To ensure there is enough energy to replace the demand for gas, significantly more investment must go into developing the world’s renewable energy and nuclear power capacity. In addition, high-income countries must provide financing for developing countries to establish their renewable energy industries and allow them to turn down the opportunity to earn high oil and gas revenues. 

Nevertheless, turning down money is a difficult pill to swallow, particularly as many African and Caribbean powers view the Western World as highly hypocritical. The African Energy Chamber believes that “At a time when both African and Caribbean nations are making great strides towards developing recently discovered oil and gas reserves, countries whose development was driven by hydrocarbons are accelerating efforts to transition to a renewable energy future. This transition has seen wealthy nations establish a ‘green agenda,’ one which does not take into consideration Africa’s economic needs.” 

Macky Sall, the President of Senegal – a country which discovered a deposit of 15 trillion cubic feet of gas in 2015 – explained, “How can you tell people in Africa, where half the population does not have electricity … ‘Leave your resources in the ground’?” He added, “There is no sense in that, and it is not fair. We need an energy transition that is fair.”

Meanwhile, Mohamed Irfaan Ali, the President of Guyana, a massive new oil power, stated, “Did you know that Guyana has a forest that is the size of England and Scotland combined… a forest that stores 19.5 gigatons of carbon, that we have kept alive? “I’m going to lecture you on climate change. We have kept this forest alive that you enjoy, that the world enjoys, that you don’t pay us for, that you don’t value,” in response to calls to leave its oil in the ground. 

Further, many believe that Africa’s fossil fuel problem stems from the decades-long involvement of foreign oil majors who have exploited the region’s resources. Vanessa Nakate, a Unicef goodwill ambassador, says “Oil and gas giants have sold African leaders big promises that gas is the key to development. But this week’s analysis by energy experts at the IEA makes those seem even more dubious. It predicts that beyond 2025 there could be too much natural gas in the global energy system, causing a “gas glut”.” Nakate calls for greater investment in Africa’s renewable energy sector, which would give leaders across the region a reason to leave their fossil fuel resources undeveloped. 

By Felicity Bradstock for Oilprice.com

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