Is it more profitable for Belize to leave oil in the ground?

The recent referendum to decide whether to maintain the current offshore oil exploration moratorium in Belize has given rise to new discussions about the possibility of climate finance by leaving oil in the ground. This article looks at the context from which this latest discussion has arisen and considers the pitfalls of other countries' attempts to pursue this type of climate finance.

In this time of escalating impacts of the climate crisis, the world will need to take more drastic measures to reduce CO2 emissions before runaway climate change more dramatically transforms the Earth. This need was most clearly rendered in 2022, by the floods in Pakistan that have left 33 million people displaced. It is because of this reason and many more that countries as a  collective force need to take more drastic measures to actively reduce CO2 emissions before it’s too late.  

 

Two such avenues are the cessation of fossil fuel extraction and the expansion of global climate finance to aid countries in deploying mitigation and adaptation strategies and building resilient infrastructure.  

 

Climate finance often involves arrangements between international financial institutions or  conservation organizations and carbon-negative countries.

 

Belize had its first major brush with climate finance in 2021, when it was the second country in the world after Seychelles to successfully negotiate a Blue Bond agreement with The Nature Conservancy. This effectively restructured Belize’s debt on the infamous $533 million Superbond in exchange for a  commitment by Belize to classify 30% of its waters as marine reserves. 

 

The Blue Bond requires Belize to make an unprecedented commitment to mitigate harm to the  sea by initiating revisions to the Environmental Impact Assessment process and protecting the  sea from harm via other economic activities, such as fishing and oil exploration and extraction.  

 

Therefore, it was a shock to many in the conservation community when Oceana announced a call for a referendum to determine whether the 2017 offshore oil drilling moratorium should be  lifted.  

 

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Image: Bathymetric Image of the sea floor from the National Center for Environmental Information (2022)

 

This announcement emerged from a September 6 discussion with Prime Minister John Briceño that Oceana Belize director Janelle Chanona stated was held “principally to discuss the  strengthening of the offshore oil moratorium.”

 

According to Chanona, during the meeting PM Briceño shared the Government of Belize’s intention to conduct seismic testing, which typically precedes oil extraction. Chanona says,

 

“The Prime Minister asserted that there was no need to go  to the public with this decision before lifting the moratorium in order to conduct the seismic surveys.”  

 

The process of seismic testing is itself a hazard for marine systems. While emitting sound waves from air guns into the water may seem innocuous, Nadia Bood of the World Wildlife Fund and the Coalition to Save Our National Heritage says that the process ‘disorients marine life’ and is potentially fatal to those in the affected area, even audible to divers during initial seismic assessments conducted in 2012.  

 

News of the government’s intent to conduct seismic assessments might have been shocking to those who remember the Prime Minister as one of the advocates for the moratorium in 2016, telling Channel 7 at the time, “the Belize Barrier Reef gives us more than 600 million dollars every year.”

 

According to Nadia Bood, the figure is closer to at least 1 billion dollars per a 2000  report.

 

Bood explained that the “figure is outdated and would likely be higher if a new assessment were conducted.” Offshore oil extraction would therefore jeopardize one of Belize’s most significant  economic assets in one fell swoop with one of its most unique ecological areas. 

 

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The coastal area of Belize is an outstanding natural system consisting of the largest barrier reef in the northern hemisphere, offshore atolls, several hundred sand cays, mangrove forests, coastal lagoons and estuaries. 

 

It was a twist, therefore, to hear the Prime Minister later tell the press that no seismic was scheduled to be conducted soon but that Belize needed to “take stock of what we have.” This stock-taking, he went on to say, “does not mean that we have to go and do any drilling. It simply means that we can go to the more developed countries, we can go to the big international NGOs to say well, we have this asset. We want to keep it there but help us; we have extreme poverty.”  The availability of climate finance by leaving oil in the ground has mostly been untapped so far globally. Neither Bood nor Senator Chanona was aware of any examples of this occurring.  

 

In the Americas, the most notable attempt was The Yasuni Trust Fund in Ecuador. The Trust was established in 2007, committing to leaving an estimated 850 million barrels of oil in the ground  to combat climate change in exchange for $350 million dollars per year for ten years. However, by 2013 the Trust had failed to receive the expected initial financing from Germany, which had decided to instead contribute to the UN’s REDD+ forest carbon programs that notably only  protect the land above the ground.  

 

Pamela L. Martin and Imme Scholz discussed in a 2014 International Development Policy ‘Policy Debate’ paper the lessons of the Trust’s failure. Martin states that this failure was partly due to doubt about Ecuador’s former President Correa’s commitment to leave the oil in the  ground as he actively “pursued [oil extraction] at the same time they were collecting contributions to keep the oil in the ground.” Additionally, Martin writes the Trust failed because the UN REDD+ program provides “an easy alternative for industrialized nations to claim to act on climate change initiatives without having to reduce fossil fuel production and consumption.”  

 

For now, the Government of Belize has decided against pursuing seismic testing, which Belize Natural Energy petroleum engineer Mandela Wade said could’ve also been profitable to Belize through selling geophysical data via Belize’s partnership with Lynx Information Systems.

 

However, if Belize decides to conduct seismic testing with the intent to pursue ‘leave it in the ground’ finance it’ll face a significant uphill battle. Not only would the country have to demonstrate an unwavering commitment not to extract any oil deposits it discovers, but it’ll also have to hope that the countries most responsible for climate change will finally decide to pursue  a post-petroleum future.  

 


 

This story was originally published by The Reporter, with the support of the Caribbean Climate Justice Journalism Fellowship, which is a joint venture of Climate Tracker and Open Society Foundations.

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André Habet

André Habet

André is a writer, teacher, and journalist based in his home country Belize. He writes film, poetry, and comics criticism and serves as assistant editor at Bent Pin Press. He’s been an avid cyclist since his first car died on him in college.

André is completing his Ph.D. in Rhetoric and Composition at Syracuse University with a dissertation ruminating on the rhetorics of Belize’s various climate imaginaries, an examination of how the possible futures we imagine informs and shapes policy decisions today

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