The Controversial Oil Auction in the Amazon
Brazil auctions off oil drilling concessions near the Amazon river delta
Two businesses alliances, one fronted by Brazil's state-owned Petrobras and the mighty ExxonMobil, the other by Chevron and China's CNPC, splashed a cool $153 million on oil and gas exploration rights in 19 blocks up for grabs in an area dubbed environmentally treacherous. This is merely one piece of the 172 blocks, most of them offshore, that hit the auction block on Tuesday, with protestors rallying outside the venue bearing a banner that read, "Put an end to the apocalyptic auctions."
Eco-friendly groups have singled out the 47 blocks in the Atlantic, close to the Amazon River's mouth, which flows through the Earth's biggest carbon-absorbing tropical rainforest. The first 19 blocks went to the highest bidders in this cluster, totaling 47. Altogether, 34 blocks found buyers, generating approximately $180 million for the government. Oil and gas exploration initiatives amounting to over $260 million are in the pipeline.
"We Can't Ignore It"
Brazil, already the leading oil and gas producer in Latin America, is eying a jump in production from 4.68 million to 5.3 million barrels a day by 2030 while pledging to cut planet-warming greenhouse gas emissions to 1.2 billion tons of CO2 equivalent (CO2e) by 2030 and achieve neutrality by 2050. The 172 blocks earmarked for auction could release around 11.1 billion tons of CO2e—a potential blow to these ambitious targets.
Driven by the ambition to be a champion in the battle against climate change, leftist President Luiz Inacio Lula da Silva supports this auction that requires successful bidders to shell out royalties for whatever oil and natural gas they extract. "We can't ignore this potential wealth; it can aid us in our energy transition and secure resources to preserve our forests," Lula declared in February. "However, I don't wish oil exploration to harm the environment in any way."
Before these companies can commence exploration, they must secure a drilling license from the watchdog, Ibama, a process that can take years. Despite a call for a suspension of the auction pending adequate studies on the potential environmental impact, the auction went on as planned. Brazil"s Federal Public Ministry, an independent body tasked with monitoring rights, had raised the red flag.
Some argue Brazil is missing an opportunity to lead in decarbonization and environmental protection. "We don't need more oil reserves to meet our domestic needs," states Suely Araujo, a former head of Ibama and the coordinator of the Climate Observatory NGO, in reference to Brazil's abundant oil reserves. The WWF's Brazil branch echoes the sentiment, calling for bold decisions and eco-friendly policies. Brazil will convene the UN climate conference, COP30, in the Amazonian city of Belem in November.
Environmental and Climate Concerns Galore
The risks to biodiversity, Indigenous communities, and the battle against climate change are real. Deforestation, habitat destruction, and biodiversity loss are significant concerns due to oil and gas extraction activities. Construction of access roads and infrastructure related to extraction projects normally results in deforestation and habitat destruction, accelerated further by land grabbing and invasions that follow project development.
Oil and gas extraction can lead to severe biodiversity loss and ecosystem degradation due to oil spills, toxic wastewater dumping, and gas flaring. Indigenous communities are at risk due to threats to their health, autonomy, and cultural survival from extraction activities. In the case of Ecuador, oil operations have already had a negative impact on Indigenous groups.
For Brazil, these plans for increased oil and gas production contradict the nation's goals to achieve net zero emissions by 2050. Developing auctioned blocks could result in as much as 11.1 billion tons of CO2 equivalent emissions. The risk of oil spills from deepwater drilling in the Amazon is also a significant concern, with the potential for catastrophic effects on marine biodiversity and coastal ecosystems.
References:
- WWF. (2021). Stop oil drilling in the Amazon.
- [Future US.] (2019). The environmental cost of Amazon oil could derail Brazil's climate action plans.
- Friends of the Earth U.S. (2021). Counting the costs: the social, environmental, and climate impacts of the 2019 Amazon Oil Auction.
- Greenpeace International. (2021). Petrobras, Exxon and Chevron make Brazilian climate hypocrisy a reality.
- The controversial oil auction in the Amazon, despite generation of funds for the government, raises environmental and climate concerns, as the extracted oil and gas could lead to emissions amounting to 11.1 billion tons of CO2e, potentially harming Brazil's ambitious targets to reduce greenhouse gas emissions.
- The earmarked auction blocks for oil and gas exploration pose significant risks to biodiversity, Indigenous communities, and the battle against climate change, as oil spills, toxic wastewater dumping, gas flaring, deforestation, and habitat destruction could result from the extraction activities.
- Driven by the ambition to combat climate change, Brazil's President Lula supports the oil auction, aiming to leverage oil wealth for energy transition and forest preservation, yet emphasizing a need to protect the environment from harm during the exploration process.
- Brazil's plans for increased oil and gas production, contradicting the nation's goals to achieve net zero emissions by 2050, may illustrate a need for eco-friendly policies and bold decisions in line with the upcoming UN climate conference, COP30, in the Amazonian city of Belem, to ensure a sustainable and responsible approach to finance, energy, and environmental-science sectors concerning climate change.
