15 November 2009

Oil Or Trees? Ecuador and Germany in the news.

In June 2009, German newspaper, The Spiegel reported that Ecuador, which derives one third of its national revenue from oil, was prepared to forgo the income from mining the oil if developed nations could come up with a plan to compensate Ecuador for "some of its lost income". In order to mine the oil, mining companies in Ecuador would potentially destroy the rainforest that is home to an amazing range of bio-diversity. Known as the National Yasuni Park, it is a UNESCO biosphere Reserve. (Ref: The Spiegel Online, 23rd June 2009. Oil Or Trees? Germany Takes Lead in Saving Ecuador's Rainforest)

The report by The Spiegel stated that Germany had yet to confirm statements of a $50 million pledge to help sustain the Ecuadoran rainforest. It also noted that the Kyoto Protocols would expire in 2012 and that the Copenhagen Climate summit in December is expected to producea new United Nations mechanism for managing/countering climate change.

In October 2009, Wall Street Journal Online reported that Germany had pledged $50 million per annum to the "Yasuni-ITT project", which will compensate Ecuador for not mining the petroleum reserves under the rainforests. (Ref: WSJ, 27th October 2009. 2nd UPDATE:Ecuador: Germany Pledges $50M/Yr For Yasuni Proj) Among other highlights of the WSJ report:
  • Under the Yasuni-ITT project, Ecuador is seeking an "annual $350 million compensation", which would be "equivalent to 10 to 12 years of earnings";
  • The project will keep 850 million barrels - or 20% of Ecuador's proven oil reserves - under the ground.
  • The project will prevent 407 million metric tons of carbon dioxyde from being released into the atmosphere by avoiding deforestation.
  • Ecuador is in negotiations with France and Spain to contribute to the project.

Interestingly enough, when one considers the statement that the project will keep 850 million barrels under the ground, and prevent the release of 407 metric tonnes of carbon dioxide, the question to be asked should be: For how long? How long before Ecuador decides that it needs to chop down the rainforest?

It would appear from a statement of the Ecuadoran Prime Minister, Rafael Correa, that his country expects compensation for as long as the rainforests are maintained. From the WSJ report:
"They shouldn't compensate only forestation but (abstaining from) deforestation."
(Source: WSJ, ibid.)

In September 2009, BusinessGreen, a news portal related to green initiatives, reported that Germany would pay $650 million to Ecuador over the next 13 years. (Ref: BusinessGreen, 2nd September 2009. Weekly CDM and VER market summary - 24-30 August 2009) In the same report, it was also stated that "UK, Italy, Norway and Sweden have pledged to contribute to the fund but have made no firm pledges." (Found via Mongabay, 3rd September 2009. Germany to pay Ecuador $650 million to forgo oil drilling, protect rainforest reserve.)

Interestingly enough, in October 2009, Associated Press reported that a German government official disputed that Germany has made a solid offer of $50 million per annum to Ecuador. (Ref: AP, 26th October 2009. Ecuador to Europe: Pay us not to drill in Amazon)

According to the said official:
The amount of a potential donation and the method and period over which it would be paid have yet to be determined."

Further, the said AP report also stated that Spain had donated $200,000 to help kickstart the fund. Also, the said report stated that Ecuadoran President Rafael Correa would be approaching "Canada, France, Sweden, Belgium and the United States in November." (Source: Ibid.)

Interested readers may read more about the Yasuni-ITT project through the following links:
For purposes of clarification, "ITT" stands for: "Ishpingo-Tambococha-Tiputini (ITT) oilfields" (Source: LiveYasuni, undated. Save Yasuni.)

One important question is whether Malaysia is getting paid for keeping its rainforests? It would be great if our country is getting paid for retaining and maintaining the rainforests. That is unfortunately, a question for another piece.