Suriname: Balancing Carbon Negativity and Oil Prospects
Suriname’s oil sector is undergoing significant growth, marking a pivotal moment in its progression towards becoming a key regional oil producer. Although the country had been producing oil since the 1980s, it wasn’t until a few years ago that significant offshore discoveries were made.
While the production of oil is anticipated to bolster the country’s economy and alleviate poverty, it’s crucial to acknowledge the environmental concerns that arise. The potential negative impact on Suriname’s natural environment, particularly its rainforests, is a matter of grave concern. These rainforests serve as a wildlife sanctuary and a reservoir of living biodiversity, making their preservation a global responsibility. Suriname has maintained a carbon-negative economy since 2014, thanks to its extensive forest cover that spans over 93% of the country.
Historically, Suriname prioritized natural conservation, but the shift to oil development threatens this. Oil exploration and extraction risks deforestation, habitat loss, and potential oil spills. The construction of oil infrastructure could also increase greenhouse gas emissions, challenging climate change efforts and the country’s carbon-negative status.
However, Suriname’s government sees oil and gas as an opportunity to transition into a green economy. According to the country’s Minister of Foreign Affairs, the plan is to use oil revenues to transition to renewable energy and establish Suriname as a regional trade hub while protecting its biodiversity. The country currently faces several challenges, such as dependence on donor finances, economic instability, institutional weakness, and ethnic tensions.
This week, I talked to Dr. Scott MacDonald, a Chief Economist at Smith's Research and Gradings and Fellow at the Caribbean Policy Consortium. Dr. MacDonald has authored, co-authored, or edited 20 books, including The New Cold War, China and the Caribbean.
This conversation explores Suriname's approach to oil production and climate commitments, environmental risk mitigation, oil sector transparency, and the impact of oil exploration on indigenous communities.
Climate Change Commitments
How does Suriname plan to balance oil production with its climate commitments, given its carbon-negative status?
Suriname’s oil boom has been slow in coming, but it is considered critical to lifting the Dutch-speaking Caribbean country of a little over 600,000 people out of a prolonged economic crisis as well as helping to finance badly needed social programs and sustainability efforts. While Suriname is one of the world’s handful of carbon-negative countries (maintaining 93% of its original forest cover), the advance of the oil industry raises major questions. Suriname, like its neighbor Guyana, faces the dilemma of using “dirty” money to pay for “clean” energy projects that improve sustainability and resilience.
As of 2020, roughly 53% of Suriname’s electricity was generated from fossil fuels, 47% from hydropower, and a minuscule amount from solar power. The government is committed to maintaining the share of electricity generation from renewable sources above 35% by 2030. While it is intent on oil and gas development, there are concerns that not enough efforts are being made to halt deforestation (pushed by illegal gold mining and logging, large-scale agricultural development, and infrastructure construction to support the merging oil and gas complex). Finding the right balance between tapping Suriname’s oil and gas potential and living up to climate change commitments will be a tough challenge.
Environmental Protection Measures
What measures are Suriname and oil firms taking to reduce environmental risks?
Suriname’s state-owned oil and gas company, Staatsoile, functions as the country’s major regulator and is the contracting party on behalf of the government for offshore exploration agreements with international oil companies. Staatsoile’s approach is to ensure that oil companies have emergency response plans in place in the event of an oil spill or other problems. The government and companies are expected to conduct continuous reviews of these plans and their effectiveness. Additionally, the state-owned company ensures that it secures insurance for cleanup costs only from the parent companies, not their subsidiaries.
While Staatsoile has a good reputation with many of its foreign counterparts, there are critics who question the robustness of the company’s measures taken to reduce environmental risks. In addition to Staatsoile, Suriname has the National Environment Authority (NMA), which was established in 2020 and acts as an independent agency with a legal personality. Also founded in 2020 is the Ministry of Spatial Planning and Environment, which oversees the Directorate for the Environment and is charged with the country’s environmental management. The effectiveness of these agencies has yet to be fully assessed, especially considering the nature of the government’s fiscal austerity related to the protracted economic crisis.
Legislation and Governance
What steps are being taken to ensure transparency and accountability in the oil sector, especially concerning environmental protection?
Transparency and accountability are a major challenge for Suriname. Although the government is seeking to improve conditions, the country still lacks a Freedom of Information Act (as of late 2023), and there are critics who believe that not enough information is being made available on the nature of contracts with foreign companies. A proposed bill was sent to a parliamentary committee for a Freedom of Information Act, but it appears to have stalled. At the same time, Suriname gets credit for joining in 2017 the Extractive Industries Transparency Initiative (EITI). Being a signatory commits countries like Suriname to disclose information along the extractive value chain, which encompasses how extractive rights are awarded, how revenues make their way through government, and how they benefit the public. By agreeing to join the 50+ countries already members of EITI, Suriname has indicated its commitment to making its oil and gas sectors transparent. However, Suriname’s track record of filing the necessary EITI reports in a timely matter is spotty. Most recently, Suriname was suspended from the organization due to its failure to meet the reporting deadline for the fiscal year January 1 to December 31, 2021. The deadline was December 31, 2023. There is room for improvement.
Impact on Indigenous Communities and Biodiversity
How could oil exploration affect Suriname's indigenous communities?
One of the politically more sensitive issues in the development of fossil fuels in Suriname concerns land tenure rights of the Indigenous and Tribal peoples. Suriname is the only country in tropical South America that has not yet legally guaranteed the collective rights of Indigenous peoples to the territories to which they and their ancestors have longstanding links. While Suriname has done much to maintain its forest cover, there is considerable pressure from extractive industries on land for gold mining, logging, cattle ranching, and commercial agriculture. Indigenous people are concerned that this will disrupt the forest’s ecosystem as well as have concerns over the equity involved in economic development in areas that they consider fall under their claims. Considering the above, a wave of onshore oil and exploration would raise deeper concerns and complicate the resolution of land tenure rights.
For more information about Dr. MacDonald’s work and research, follow him on LinkedIn.
Suriname has implemented some key policies to protect its environment over the years. Policy highlights include:
The Environmental Framework Act: This act is a cornerstone of Suriname's environmental policy, aiming to ensure sustainable environmental management.
The National Climate Change Policy, Strategy and Action Plan: This plan aims to enhance climate resilience in key sectors, focusing on coastal and internal areas to lessen Suriname's climate change vulnerability.
The Suriname National Adaptation Plan (NAP): This plan highlights the impact of climate change on Suriname, emphasizing sustainable forest and natural resource management.
In conclusion, Suriname stands at a crossroads between its oil prospects and its commitment to protecting the environment. While the newfound oil reserves bring potential economic prosperity, they also pose environmental threats, particularly to the country's expansive rainforests and biodiversity. Despite its challenges, Suriname intends to use oil and gas revenues for a green economy transition, underscored by the policies highlighted above.