Oil Exports or Carbon Credits: The Global South’s Dilemma

Earlier this month, the Science Based Targets initiative caused a revolt among its employees when it announced it would allow the use of carbon credits to offset Scope 3 emissions. The revolt promptly made SBTi change its mind under pressure from those claiming carbon credits were no way to advance the net-zero agenda because all they did was allow emitters to keep emitting. A lot of poor countries would beg to differ, beginning with Guyana—the oil hotspot.

Guyana’s president Irfaan Ali made headlines this month as he responded to a BBC journalist’s attempt at lecturing him on climate change by turning the tables and informing him that Guyana has a huge carbon sink in the form of an ancient forest that can sequester 19.5 billion gigatons of carbon dioxide. It was Guyana’s right, Ali said, to develop its natural resources, especially since it was countries such as Stephen Sacur’s native Britain that had an insatiable appetite for those resources. The interview prompted a wave of positive reactions online as it joined earlier signals from the developing world that it was no longer willing to listen to wealthy nations telling it what to do with its own natural resources. And right now, wealthy nations are claiming the developing world must leave its resources unused and instead focus on those carbon sinks by selling carbon credits. 

The job has become tougher lately after several reports into carbon credits that showed they are not working exactly as planned and quite often do not work at all. The idea behind them was simple enough—an emitting company or country pays another country or individuals in it to keep a forest or a wetland, or another ecosystem alive. It turns out, however, that this simple idea does not in fact lead to lower emissions. Yet it still has many proponents.

This week, Forbes columnist Ken Silverstein wrote an article, in which he argued that rainforest nations such as Guyana would make more money by getting paid to keep its forest alive than by exporting its crude. To say that this statement is questionable is putting it mildly. Report after report show that carbon credits do not work as advertised and yet they are still being pushed as a win-win solution to what many claim is our carbon problem—while the world’s oil demand continues rising.

Over the past few years, Exxon, CNOOC, and Hess Corp. made a string of more than 30 discoveries offshore Guyana. These have tapped reserves estimated at an impressive 11 billion barrels of oil. But now people like the BBC’s Sacur and Forbes’ Silverstein are suggesting Guyana should say no to the export revenues for this oil and instead start taking in carbon credits paid for by companies that are trying to reduce the emissions they generate through the use of oil. It’s a script fit for Tom Stoppard.

Of course, there are many poor countries that lack Guyana’s oil resources. Silverstein is promoting them as the place to be for carbon credits in his role as editor-at-large for an organisation called the Coalition for Rainforest Nations. For these nations, which have few sources of income, carbon credits might work—if and when the aura of uselessness ever leaves them.

Yet for resource-rich nations, promoting the non-use of those resources and abstaining from the economic benefits their extraction would bring about smacks of that same condescension Guyana’s Ali accused—rightly—the BBC’s Sacur of. Because it’s the ones being condescending that use the great bulk of those resources.

Activists are right in disliking carbon credits. They do betray the purpose of the net-zero push, which is a major reduction in the amount of carbon dioxide that humankind generates. It is true that reducing emissions to zero would be impossible even if we drive ourselves to extinction, however, and one way to keep them lower may be preserving ecosystems in developing nations, for a price. Asking these nations to stop exploiting their oil, gas, or mineral resources and rely exclusively on the credit income is going a step too far—a big step.