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“US$30 FLARING PENALTY FOR EXXON…” EPA ignorant on polluter pays principle – Melinda Janki
Kaieteur News – The Liza Phase One Environmental Permit was recently revised by the Environmental Protection Agency (EPA) to include a provision which states that ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) will pay the regulator US$30 per tonne of Carbon Dioxide equivalent released after May 13, 2021 via the Liza Destiny vessel. The EPA said too that this measure is being implemented in accordance with the Polluter Pays Principle.
International Lawyer, Melinda Janki
But upon noting this line of reasoning, International Lawyer and ardent defender for the protection of the environment, Melinda Janki, categorically stated that the EPA has demonstrated ignorance about what is meant by the “Polluter Pays Principle.”
During an interview with Kaieteur News, Janki said, “The ‘polluter pays principle’ is not a licence to pollute. On the contrary, the polluter pays principle requires that Esso pays to remove the greenhouse gases and other pollutants emitted by unauthorised flaring.”
Furthermore, Janki reminded that the role of the EPA is to protect the Guyanese people and its environment by making ExxonMobil obey the law and comply with its original permit, which did not provide any leeway for flaring at a cost. With this in mind, she opined that the EPA is acting unlawfully by attempting to allow Exxon to flare gas at a nominal fee. She stressed that this is contrary to the Environmental Impact Assessment ExxonMobil would have submitted for the Liza Phase One Project and the environmental permit that was issued in 2017 on the basis of that document.
Taking the foregoing into consideration, the lawyer said the EPA is failing to carry out its statutory duties. She said, “It is up to the people of Guyana to ensure that the EPA does its job. Democracy is not just about voting. Democracy depends on citizens who are vigilant against abuse of power by any elected government and by State agencies.”
GUYANA ULTIMATELY PAYS
While the Environmental Protection Agency has disclosed that it will be imposing a US$30 penalty on every tonne of Carbon Dioxide equivalent (CO2e) for which ExxonMobil flares after May 13, 2021, what it has not revealed is the fact that Guyana will ultimately have to foot that bill.
This is as a consequence of the Stability Clause in the Stabroek Block Production Sharing Agreement (PSA).
At Article 32.2 of the PSA it states, “After the signing of this Agreement and in conformance with Article 15, the Government shall not increase the economic burdens of Contractor under this Agreement by applying to this Agreement or the operations conducted thereunder any increase of or any new petroleum related fiscal obligation, including, but not limited to, any new taxes whatsoever, any new royalty, duties, fees, charges, value-added tax (VAT) or other imposts.”
It goes on to state at Article 32.3, “If at any time after the signing of this Agreement there is a change in the laws of Guyana whether through the amendment of existing laws (including the hydrocarbons law, the customs code or tax code) or the enactment of new laws or a change having the force of law in the interpretation, implementation or application thereof (whether the change is specific to the Agreement, the Contractor or of general application) and such change has a materially adverse effect on the economic benefits, including those resulting from the fiscal regime provided by this Agreement, accruing to the Contractor hereunder during the term of this Agreement, the Government shall promptly take any and all affirmative actions to restore the lost or impaired economic benefits to Contractor, so that Contractor receives the same economic benefit under the Agreement that it would have received prior to the change in law or its interpretation, application, or implementation. The foregoing obligation shall include the obligation to resolve promptly by whatever means may be necessary any conflict or anomaly between this Agreement and any such new or amended legislation, including by way of exemption, legislation, decree and/or other authoritative acts.”
In light of the fact that Guyana has no legislation predating the signing of the contract, which sets out the US$30 penalty for flaring, it therefore means that Guyana will ultimately have to compensate ExxonMobil.
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