The Buxton Proposal & and the World Bank’s “Climate Change is a Development Problem” - Part 11

Introduction

As I had noted in last week’s column, there are two major analytical observations that flow from my discussions of the United Nations’ Sustainable Development Goals, SDGs. I evaluate both in the first part of today’s column. The first is based on my contention, which has been consistently advanced in recent weeks, that economic growth and development, particularly if accompanied with a resolute focus on jobs, the reduction of income poverty, inequality and related deprivations, represent the best observed policy response to adverse climate change impacts. Presently, adverse climate impacts are best addressed and environmental progress simultaneously assured when there are rising levels of prosperity; stable and rising jobs and incomes; as well as, their typical accompaniments, such as technology, innovation, enhanced skills and ideas. These features inform the targets at which the Buxton Proposal is directed.

Economic Growth and Climate Change Impacts

Economic growth combined with a reduction of income poverty and inequality strongly support efforts directed at developing low carbon communities; for example, a decisive shift in favor of climate smart agriculture, along with environmentally-friendly forest management practices. In Guyana, this would entail a shift away from slash and wood burning along with charcoal use; two exceptionally high carbon emitting practices closely associated with poverty.

More emphatically, the World Bank has posited that “climate change is a development issue”. In a famed lecture at Georgetown University, entitled, ‘Confronting Climate Change,’ its then President Dr. Jim Yong Kim had advertised the Bank’s policy guidance on climate change as “the pursuit of five ways” in which the institution can help to cope with climate change and its adverse impacts . These were given as: 1) promoting the creation of low carbon communities, such as by avoiding wood burning for fuel and affording waste removal; 2) supporting the transition to energy efficiency and the use of renewables, such as the development of solar and wind energy; 3) avoid giving subsidies to support oil and gas use; 4) promoting climate smart agriculture and environmentally sound forest management practices; and, finally, 5) putting a robust price on carbon.

In addition to the above, one may reasonably anticipate that potentially prosperity would increase national capacity to afford macro-level benefits, which could flow from improved livelihoods. Thus, we know state revenues generally expand with income growth thereby facilitating public spending on health and education; research and development (R&D); as well as environmental services, such as safe waste disposal, and avoidance of slash and burn land clearing. The list of examples of such beneficial outcomes is exceedingly long.

Petroleum’s Window of Opportunity

The second analytical observation referred to above is exploration of the likely window of opportunity remaining for windfall revenues to continue flowing to Guyana from its crude oil production and sale going forward; especially in light of rapidly increasing international environmental pressures to limit man-made global warming and its adverse impacts.

Readers are aware from my recent columns that I support the prediction of the US Environmental Information Administration, EIA, as contained in its publication, International Energy Outlook, 2019, with projections to 2050. This report projects that present day’s leading role played by petroleum liquids as a source of global energy use is projected to last until 2050 or thereabouts. After then, it is further projected to be overtaken by global utilization of renewables. This is not a case of projecting peak oil, a much-discredited activity. Instead, the report predicts a modest growth in demand (0.6% per annum) for petroleum liquids beyond 2050. Renewables (solar, wind, hydro, biomass) become the leading replacement source for energy supply in the global energy mix.

Clearly, this transition cannot occur as a simple straightforward process of plug and play. As others have pointed out, immense technical challenges have to be overcome if this substitution is to occur; while global living standards continue to rise, at the minimum, along its current secular trajectory. As also indicated earlier, it is apposite to note here, I have recommended two priorities for the public spending of Guyana’s windfall petroleum revenues; namely investment in renewables and cash transfers under the sobriquet of the Buxton Proposal.

Global Climate Change Policy, COP26

The tepid results of the recent COP 26 have reinforced my judgement that environmental alarmism poses great harm to the effective utilization of Guyana’s world-class petroleum finds in the context of: 1) its underutilized renewable energy resources; 2) its natural contributions to Planet Earth’s well-being; 3) the severe failure gap in estimated and actual revenue capture under present governance arrangements; and 4) the nation’s gargantuan problems of poverty, inequality and related deprivations.

World leadership has given token notice to climate change in the face of global environmental alarmism. For the first time, this year’s COP 26 summit has officially acknowledged the harmful greenhouse gas emissions of oil and gas. Coal, which is presently the largest emitter of greenhouse gas emissions was agreed to be phased down, and not out. The Glasgow Climate Compact, 2021 has given scant acknowledgement to the variable impacts of climate change as seen in limited finnceing of mitigation and adaptation in poor countries.

The above observations, while recognising that climate change is happening, do strongly indicate as well that there is no robust prospect for global climate change politics and policies to result in a distinct narrowing of the window of opportunity going forward that is available for Guyana’s crude oil exports to fall below that predicted in the US EIA’s long -term projection to 2050. Due to space limitations, next week’s column will offer a brief statement on UNEP’s production gap analysis of global climate actions

Conclusion

In conclusion, I make bold to claim that Guyana has greater challenges to contend with than climate change, while acknowledging the country’s varying and limited capability to determine outcomes.