One of the world’s greenest countries is weeks away from becoming the first to sell UN-backed carbon credits. One of the world’s most promising frontier oil markets is planning a $9 billion development to become a major crude producer. Believe it or not, they’re the same nation.
Suriname — a densely-forested former Dutch colony on the northern coast of South America — wants to market both hydrocarbons, and the offsets needed to cancel out their environmental damage. The fact that such a simultaneous proposal is being considered is a sign of how threadbare our systems for calculating carbon footprints are becoming. If we want these rules to be fit for the 21st century, that’s going to need reform.
Suriname in 2021 registered a reduction of 4.8 million metric tons of carbon dioxide, thanks to forest growth that’s absorbing more greenhouse gases than the country emits, Reuters reported last week. About 30 companies are studying whether to buy them, according to the report.
At the same time, TotalEnergies SE Chief Executive Officer Patrick Pouyanné was meeting with the country’s President Chandrikapersad Santokhi to kick off studies on an offshore oilfield that could contain 700 million barrels of crude when it starts producing in 2028. Such a reserve could emit about 75 times as much climate pollution as the forest credits would absorb — or nearly eight times as much in a given year, at planned production levels.
The proposals hang on two separate loopholes in international climate rules. The first is that fossil fuels are only counted where they’re burned, not where they’re produced. Australia likes to boast that its 437 million metric tons of domestic emissions only account for about 1.1% of the global total — but that figure more than triples if you include the roughly 1 billion tons that are spewed out when its coal and gas exports find their way into a power plant. Like Suriname, Australia is happy to make money selling fossil fuels to the world — it just doesn’t want to get the blame for the damage they’re going to cause.
The second loophole is that verification of carbon credits is a confusing morass of standards and frameworks that has become riddled with questionable assumptions. The offsets Suriname is offering are based not on planting new forests, but on refraining from cutting down existing ones — so-called REDD+ credits. That system has come under heavy criticism over the past year after the Guardian newspaper reported that deforestation generally wasn’t any slower than in other areas, which would mean the credits were largely bogus. A paper published in the journal Science last month found that only 6.2% of offsets from REDD+ projects it examined were actually generating emissions reductions.
Suriname isn’t alone in its contradictory ambitions. Of the six countries that have already certified themselves as achieving their net-zero targets, three are, or have aspirations to be, major oil producers.(1) Neighboring Guyana saw the fastest pace of economic growth globally last year after an ExxonMobil Corp.-led consortium began production in 2019. Its offshore fields contain about 11 billion oil-equivalent barrels, similar to the reserves of Norway, Algeria or Brazil. Hess Corp., Exxon’s junior partner in the project, last year bought $750 million of carbon credits to preserve Guyana’s forests.
Across the Atlantic, Gabon — a longstanding oil producer that first joined the Organization of the Petroleum Exporting Countries in 1975 — in 2019 became the first country in Africa to receive payments from a separate UN-backed anti-deforestation program. Plans to issue the largest-ever slice of carbon credits may now be on hold thanks to a military coup last month. Mozambique, which is working toward becoming one of the world’s biggest gas exporters, in 2021 was the first to receive REDD+ payments from yet another program, this one funded by the World Bank.(2)
The REDD+ system has attracted criticism because the avoided deforestation it’s based on depends on comparing forest cover with a counterfactual of what might have happened if the carbon credits hadn’t been sold. It’s much more expensive to plant a new forest than to not cut down an existing one, so without rigorous verification such programs are little better than greenwashing.
That’s particularly going to be the case in small countries like Suriname, Guyana and Gabon. Economic activity is naturally going to switch from low-value, land-intensive industries like logging, rice, sugar and palm oil when a massive offshore oilfield is discovered. That doesn’t make the decline in deforestation much of an asset on the world’s carbon ledger.
Governments of such countries can hardly be blamed for finding ways to exploit the mess of climate rules we’ve set up. Developing economies need every cent of foreign income they can get, whether it comes from selling oil or carbon offsets. The rest of the world doesn’t have to go along with the charade, however.
If we want the world’s natural environments to play a role in our path to net zero, we’re going to need to find ways to close up these loopholes in carbon accounting rules and give the process more credibility. The medieval Catholic Church showed its moral bankruptcy when it started selling indulgences for sinners to buy absolution for their misdeeds. Like that system, the carbon offsetting industry is badly in need of a reformation.
More From Bloomberg Opinion:
Why All Carbon Credits Aren’t Created Equal: Lara Williams
The Carbon Offset Market Keeps Growing, Unfortunately: Mark Gongloff
Domino Effect in Africa, Embarrassment in Paris: Lionel Laurent
(1) The six are Benin, Bhutan, Comoros, Gabon, Guyana, and Suriname.
(2) Another of the six net-zero countries, Comoros, is adjacent to Mozambique’s offshore gas fields and has sought to exploit them without success.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
David Fickling is a Bloomberg Opinion columnist covering energy and commodities. Previously, he worked for Bloomberg News, the Wall Street Journal and the Financial Times.
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