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Flaring penalty so low Guyana effectively grants Exxon a licence to pollute – CIEL President
By Kiana Wilburg
Kaieteur News – The Environmental Protection Agency (EPA) recently disclosed that after May 13, 2021, ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), will be charged US$30 for every tonne of Carbon Dioxide equivalent (CO2e) released via flaring aboard the Liza Destiny vessel. This decision is reflected in the modified Liza Phase One Environmental Permit that was signed by ExxonMobil Guyana officials and the EPA.Upon noting the foregoing, several industry stakeholders, both locally and internationally, told Kaieteur News that some Guyanese may perceive the US$30 penalty as a good move. The truth however, is that such a tax will in no way, disincentivise the oil giant from flaring.
In fact, President for the Centre of International Environmental Law, Carroll Muffett, categorically stated that the penalty is so low when compared to other market values that Guyana has essentially given the oil giant a licence to pollute its air space with over 250 toxic chemicals.
In an invited comment, the Chief Executive Officer (CEO) of the nonprofit organisation that uses the power of law to protect the environment said, “Whether revising the permit in this way is actually permissible is an important question, but one better directed to a Guyanese attorney. Even assuming that the permit revision was permissible however, this seems to be yet another instance in which Exxon has secured an uncommonly sweet deal from the Government of Guyana.”
CIEL President, Carroll Muffett.
The CIEL President highlighted that earlier this year, President Joe Biden’s administration pegged the social cost of carbon pollution in the United States at US$51 per tonne. In the European Union, Muffett said the benchmark cost for carbon emissions is more than 55 Euros (USD $67) per tonne. Taking this into account, Muffett said, “This permit revision (by the EPA) lets Exxon go on emitting greenhouse gases for less than half the price it would pay in the European Union, even assuming it were permitted to flare gas there. Setting the penalty so low is effectively granting Exxon a licence to pollute.”
Muffett said this is particularly troubling given the sustained and massive scale of the flaring in Guyana. In this regard, he reminded that ExxonMobil’s subsidiary has flared 14 billion standard cubic feet of gas already from the Stabroek Block. Muffett said this is equivalent to burning almost 2.7 million barrels of oil. He added, “That’s nearly 1.5 times the oil all of Guyana burns for electricity in a year. And from a climate perspective, it has the same impact as burning huge swaths of Guyana’s forests to the ground.”
But by far the most troubling aspect of this matter he said is that the flaring appears to be driven by repeated and serious failures of critical equipment—failures that continue despite ExxonMobil’s repeated assurances to the Government and people of Guyana that the equipment is fully functional, fully operational and safe. Muffett in this regard, was making reference to the four times the Liza Destiny’s gas compressor system would have malfunctioned. It is now in the USA undergoing repairs.
Muffett said this state of affairs raises serious and pressing questions about the safety of the company’s ongoing operations in Guyana’s waters. Additionally, the CIEL President said if ExxonMobil cannot demonstrate its gas compressor system is safe and functional after18 months of trying, the people of Guyana would be reasonable to ask how the safety and functionality of other critical equipment can be guaranteed. “And beyond just asking that question, they have a right to an answer,” the CIEL President.
Additionally, as reported in a separate article in today’s lead story (“Govt. ‘penalises’ ExxonMobil on flaring but country ultimately has to pay,” pg 3), even the already low penalty will essentially be ineffective since the Stabilisation Clause in the Stabroek Block Production Sharing Agreement (PSA) ensures that the oil giant is compensated for any new tax or levy that is imposed after the deal was sealed in 2016.
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