THE PRICE MUST BE RIGHT

Dec 28, 2009 Features / Columnists, Peeping Tom

---

The conclusion of the summit in Copenhagen must not dash this country’s hope of developing a low carbon economy. On the contrary, the failure of the UN conference should force the government and local stakeholders to now rid itself of the over emphasis on financing which was the hallmark of Guyana’s Low Carbon Development Strategy and should inspire them to remodel the LCDS to become a blueprint for cleaner and more environmentally friendlier policies for Guyana.

All is not lost by the failure to agree to significant cuts or for the creation of a REDD+ initiative which would allow countries such as Guyana to be compensated for keeping its forests intact. While a deal has not been made, this does not mean that the issues that have been laid on the table will simply disappear. They will not.

Copenhagen failed because of a fundamental difference between the powerful countries of the West and the emerging economies. Countries like the United States of America wanted emerging economies like China and India to do more about greenhouse gas emissions, while these countries in turn wanted the West to accept greater responsibility for its historical pollution of the global environment.

In this tangle, Guyana was a small knot, a voice that was heard more on the sidelines but a voice no less important because Guyana’s advocacy of the need to deal with climate change had long become an echo of powerful environmental non- governmental organisations. It was these organisations which had wooed Guyana and drawn it into its orbit.

But Guyana also had its interests in pursuing climate change. Guyana has been highly dependent on donor financing ever since 1989 and the sources of these financing are going to be exhausted unless a new developmental initiative can emerge. The new initiative did emerge and it had to do with the creation of what is known as green financing or funding for projects that are environmentally friendly. The World Bank in particular has a number of Funds which have been created to provide financing for what it calls “clean development”.

Guyana will soon find that its ability to secure financing for simply pursuing poverty reduction will be limited. It thus needs to cling on to this new lifeline which has been thrown out by the international financial institutions. Therefore, regardless of what happened in Cophenhagen, Guyana cannot get off of the low carbon bandwagon because without green financing, the economy of Guyana will go into a tailspin.

This is all the more reason why it was a tactical political blunder by the Peoples National Congress Reform to have recently offered its support for Guyana’s Low Carbon Development Strategy because the government can now use this consensus to approach the financial institutions for financing under the many clean development initiatives.

As for the Norway financing, the government may now find that with the failure to achieve a global climate deal that the attitude of the Norwegians may change. The Norwegians will not repudiate the Memorandum of Understanding that was entered into with the government of Guyana. They cannot. The European Union has committed itself to moderate cuts of emissions by 2020 and thus the Norwegians will need to find countries from which it can purchase carbon credits so that it can stay within the agreed limits.

However, without a global climate deal, the Norwegians are not competing with any other countries in seeking these credits and thus it will now drive a harder bargain when dealing with the government. This is all the more reason why it is unfortunate that the main opposition has signed on to the government’s low carbon development strategy

Obviously now Guyana is not going to earn anywhere near the US$500 M per annum that was touted as the value of the environmental services provided by our forests. Guyana will not have to switch gears and venture into securing financing for green development initiatives such as hydro electricity, solar generation, bio-fuels etc.

But those likely to finance these projects will demand that these be private sector driven and as such, instead of the opposition cuddling up with the government in terms of its low carbon development strategy, it ought to be on the lookout for deals which will not be in the best interest of Guyanese.

Already we are told that the Inter American Development Bank will co-finance a hydroelectricity project. What we have not been told is at what price power will be sold to the national grid as part of this deal. Right now we have electricity rates that place local manufacturers at a competitive disadvantage and thus as much as there will be widespread support for hydropower in Guyana, the critical variable is the likely benefit to consumers.

The price must be right. Just as how under the LCDS we had planned to keep our forests intact in exchange for financing, unless electricity will be sold to the national grid under US$ 0.07 c per kilowatt, it would be better that we do not exploit the falls and rivers which have to be dammed to provide renewable sources of energy.

We were prepared to go green only if the compensation for our forests was right. Similarly, if the benefits of hydroelectricity are not going to make a big difference for Guyanese, it would be best that we leave these resources untouched. The failure at Copenhagen at least allows us that focus.

---

---