Sunday, September 30, 2007

Ecuador's Correa: Pay Us for Not Producing Oil

A case of carbon mitigation or carbon extortion?

China Confidential: Ecuadorean President Rafael Correa--who has threatened to default on his country's $10.3 billion foreign debt--wants wealthy nations to pay Ecuador $350 million a year in exchange for a promise to never exploit an estimated one billion barrels of oil that is believed to exist under its pristine Yasuni rain forest.

The $350 million is about half of what Ecuador says it could earn each year from extracting Yasuni oil.

In foregoing the potential revenue stream, the South American nation would become the first country in the world to deliberately leave significant oil reserves underground in order to help reduce the greenhouse gas emissions that cause global warming.

The proposed annual payments would be used for a variety of purposes, including renewable energy projects, providing healthcare and education to the country's impoverished masses (60 percent of the population is poor), and promoting ecotourism and sustainable development for the Amazonian region.

Ecuador says it would be sequestering the equivalent of 436 million tons of carbon dioxide.

The 2.4 million-acre (982,000-hectare) Yasuni National Park is home to at least two indigenous tribes that live in voluntary isolation--hunting with spears and blowguns--in one of the most biodiverse places on earth.

Environmentalists have praised Correa's initiative as a creative carbon offsetting scheme; but critics question if politically unstable Ecuador, which relies on oil for nearly half of its export revenues, can keep a promise of this magnitude to the international community.

Correa, who is Ecuador's eighth president in 10 years, is a close ally of Venezuelan leftist President Hugo Chavez. Like Chavez, he is a proponent of "21st century socialism" and part of an anti-American axis that also includes Evo Morales in Bolivia and Nicaragua's Daniel Ortega.

Correa is expected to win a big political victory Sunday, when Ecuadoreans vote for increased state control of the economy and to dissolve a unicameral Congress that he calls "corupt and incompetent."

Post Script: China Confidential's correspondent in Caracas reports that Chavez is fascinated by Correa's proposal, seeing it as a test case for Venezuela, which could make staggering sums, theoretically, by abstaining from massive heavy oil development in the country's Orinoco River belt.

No comments: