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Oil and Climate Change: Voices from the South

There are new voices from the South that are clamouring to make themselves heard on climate change. They demand "climate justice" and refuse the alms offered by the North in the form of so-called flexibility mechanisms and "adaptation loans", which transform the polluter pays principle into the "polluted adapts" principle.


Oil and Climate Change: Voices from the South

Joan Martinez-Alier, Leah Temper

Peak oil refers to the maximum output produced annually in the world, after which time extraction will decrease while potential demand will still rise. Another effect of peak oil is that more and more energy is needed to pump the remaining oil out of the ground, what is referred to as

There are new voices from the South that are clamouring to make themselves heard on climate change. They demand “climate justice” and refuse the alms offered by the North in the form of so-called flexibility mechanisms and “adaptation loans”, which transform the polluter pays principle into the “polluted adapts” principle.

Joan Martinez-Alier (Joan.Martinez.Alier@uab. cat) is president of the International Society for Ecological Economics. Leah Temper is a doctoral student at the Universitat Autonoma de Barcelona.

yoto has failed. Despite so many admonitions from the Intergovern mental Panel on Climate Change (IPCC), the reality is that emissions of carbon dioxide (CO2) in the world are going up by over 3 per cent per year. This is the failure of the countries that signed up to Kyoto, and even more so, of those like the US who stayed outside the timid Kyoto framework, and also of those not included in Annex I of the Rio de Janeiro climate change treaty of 1992 (UN Framework Convention on Climate Change).

The world is currently burning about 85 million barrels of oil per day. As we approach peak oil (at 90 mbd?/100 mbd?), the price of oil goes up and up despite the efforts to get more of it by means foul or fair as in Iraq, in the Niger Delta, in Amazon and other “commodity frontiers”. In Canada, rocketing oil prices have finally made exploitation of the Alberta oil sands profitable, whereby one barrel of oil equivalent is needed to produce three to five barrels of oil. The Hubbert curve is named after the geologist who 60 years ago predicted that the US peak oil would take place in the early 1970s. The road down the Hubbert curve will be terrible. Downhill will be harder than uphill.

The price of oil is followed by the price of natural gas. There are also conflicts around the world on gas extraction, like in Bolivia a few years ago where the gas contracts cost some dozens of human lives and a change of president, and in Mynamar where Unocal infringed on human rights when building a gas pipeline to Thailand. The juggernaut goes on, trampling indigenous peoples and biodiversity under its wheels.

Peak Oil

Oil and gas prices are still too cheap, in the sense that neither local damages (“externalities” if you wish), nor their effects on climate change, are included. But their prices are rising rapidly because peak oil and later peak gas are fast approaching.

energy return on energy input (EROI.)

In contrast, the supplies of coal are plentiful, and there is no Organisation of Petroleum Exporting Countries (OPEC) of coal to restrict supply. Therefore the first half of the 21st century is likely to be an era of coal. In the 20th century the use of coal increased by a factor of six. The world’s fastest growing economies, China and India, are fuelling their industrialisation with cheap, readily available coal, counteracting reductions in energy intensity elsewhere. The trouble is that coal is socially and environmentally a very “dirty business”, whether procured by underground or open cast mining. Coal usually contains sulphur, which causes acid rain. Per unit of energy delivered, coal produces considerably more CO2 than oil or gas. Nevertheless, the fear of emissions caps has not deterred a boom in the construction of coal-fired power plants, even in “progressive” European countries, with Romanian and Bulgarian massive coal deposits a growing supply source.

While the technology for capturing some carbon emissions from coal and storing them underground is becoming available at a cost, current prices for carbon emissions on the European market provide no incentive to do so. It is simply cheaper to pollute now and pay it off later. Or rather to pollute in Europe and then invest in a tree plantation or some other Clean Development Mechanism (CDM) project in the developing world. Because of this trend, human-produced CO2 emissions in the world keep increasing in a trajectory that means that a concentration of 450 parts per million (ppm) would be reached in little more than 30 years, while according to the IPCC emissions should come down by 60 per cent in the next few decades.

History of Climate Change

The intellectual history of the enhanced greenhouse effect is not yet common knowledge. It begins at least over 100 years ago, when Svante Arrhenius from

december 15, 2007 Economic & Political Weekly


Sweden, a Nobel Prize winner in chemistry, by Herman Daly in Vienna to the cartel published some calculations on the effects leaders, proposed a new eco-tax on oil


on temperature of a doubling or tripling of the contents of CO2 in the atmosphere, with results very close to the present ones. In 1938, electrical engineer G C Callendar published an article explaining that the combustion of coal would produce a slight increase in temperatures around the globe. According to him, there was nothing to worry about. Everybody knew that burning coal was good for the economy and human well-being, and the increase in temperature was also good because it would extend the margin of cultivation to the North. Twenty years later, at the end of the 1950s, Roger Revelle (who is featured in Al Gore’s film) and other scientists sounded a cry of alarm. Systematic measurements of CO2 concentrations in the atmosphere were made. In the late 1980s, the IPCC began to get going.

This intellectual history is interesting for its own sake (late lessons from early warnings) but also because it bears on the historical responsibility for climate change that falls on the industrial counties. Should the question of responsibility go back to 1992 and the Rio de Janeiro treaty? Should it go back to 1960, or even further back?

The OPEC Eco-tax?

The newly industrialised countries such as China and India do not want to talk about climate change. When they do, they argue that they should have the same opportunity to grow as the west did. On their side, the oil exporting countries (as well as the coal exporting countries, such as Colombia in Latin America), do not want to hear about the enhanced greenhouse effect. The curb or the cap on emissions, if it ever came, would mean lowering the demand for fossil fuels. Even in 1992 Saudi Arabia started to complain that they would claim compensation against those who were ready to spoil the oil market by unproven alarms about climate change. Today the official position of OPEC remains the same, only slightly modified of late by proposing to constitute a fund to subsidise research on carbon “sequestration” technologies.

Therefore, it is all the more remarkable that at the OPEC meeting in Riyadh on November 18, 2007, president Rafael Correa of Ecuador, aware of a 2001 speech exports by OPEC countries with the explicit aim of lowering a little the demand for oil in order to diminish CO2 emissions. The proceeds from the tax (the Daly-Correa tax?) should go for poverty-reduction (including energy-poverty reduction), and for alternative energies (meaning geothermal, wind and solar, and not, let us hope, agro-fuels or civil-military nuclear proliferation). Correa stated that for a beginning the tax could be 3 per cent of the price of oil. There is in this proposal an element of economic justice (many rich countries put heavy taxes on imported oil and gas, against the exporting countries). There is also an element of climate justice, based on a new awareness (among at least one of the smallest OPEC members) of the realities of the enhanced greenhouse effect, and the international distribution of its causes and effects. Such realities are apparent in Ecuador with glaciers in the Andes losing ice cover, and future sea-rise threatening Guayaquil.

Ecological Debts

Other voices from the South ask in Bali for recognition of the ecological debts or the environmental liabilities owed from North to South. There is a public and a private aspect to this.

First, countries which historically have produced and continue to produce more CO2 per capita than the rest have a “carbon debt”. Jyoti Parikh, a previous member of the UN IPCC argued in 1995 that the average global emissions were about one tonne per person per year. Industrialised countries produced three-fourths of these emissions, instead of the one-fourth that would have corresponded to them on the basis of population. The difference was 50 per cent of total emissions, some 3,000 million tonnes at the time. Contemplating the increasing marginal cost of reduction, the first 1,000 million tonnes may perhaps be reduced at a cost of, say, $ 15 per tonne, but then the cost would increase very much. Taking an average of $ 25 then, a total annual subsidy of $ 75 billion was forthcoming from South to North [Parikh 1995].

The North has occupied the sinks (such as the oceans) and the atmosphere as a temporary deposit. They are debtors

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and they should pay, as Anil Agarwal and Sunita Narain from the Centre for Science and Environment of Delhi argued as early as in 1991 basing their case in equal per capita emissions allowances (with populations of 1990).

Liabilities of Oil Companies

From the point of view of corporate accountability, many oil companies have done terrible damage to the local inhabitants and to other forms of life in the name of profit.

Thus, in the Niger delta, with high population density and an ecosystem of mangroves and agriculture, the Ogoni and Ijaw activists have often pointed out the inconsistency between the international rhetoric on “saving the world’s climate” and the local reality of oil extraction, waste dumping and gas burning at the cost of so many human lives.

Shell has not been held accountable either for the environmental and social damage done or for the death of Ken Saro-Wiwa and his comrades in 1995. At present Shell continues to flare gas despite new laws prohibiting the practice. Since almost 30 years ago the government of Nigeria has been setting deadlines for oil companies to stop gas flaring. The current deadline to stop gas flaring is January 1, 2008. But the oil companies – who save money by gas flaring, thus increasing their unpaid environmental and social liabilities – want at this very moment to postpone the deadline yet again to 2011.

As defined by the NGO Environmental Rights Action (ERA) whose president is the writer and activist Nnimmo Bassey, gas flaring (that also takes place in the Amazonia of Ecuador or Peru where oil is extracted and in so many other places)

is the burning off of gas, which sends a

cocktail of poisons into the atmosphere. In

the mix are CO2 and methane that are major

causes of global warming. Gas flaring causes

acid rain which acidifies the lakes and streams

and damages crops and vegetation. It re

duces farm yields and affects human health,

lives and livelihoods. Gas flaring increases

the risk of respiratory illnesses, asthma and

cancer. It often causes painful breathing,

chronic bronchitis, decreased lung function,

body itching, blindness, impotency, miscar

riages and premature deaths.

As reported by ERA, since 1979, the oil companies have simply ignored government deadlines and court orders to end gas flaring. In a suit brought by the Iwerekhan community, the judge ruled that gas flaring “is a gross violation of their fundamental right to life, including healthy environment and dignity of the human person”.

Again, Ecuador provides other lessons. The court proceedings against Texaco (now Chevron-Texaco) that started in New York under the Alien Tort Claims Act in 1993 are now reaching a conclusion in a court in Lago Agrio, an oil-polluted township in Sucumbios province. There might be an agreement out of court. The damages (because of oil spills, gas flaring, over 600 pools of polluted extraction water and the resultant cancer cases, extinct tribes, and lost biodiversity) are now being quantified in money terms because this is the nature of the court case (a civil suit for damages and not a criminal case).

The damages caused by Texaco between 1970 and 1990 (when it extracted over 1.3 billion barrels of oil) must now be valued in money terms. It would seem that in a forensic context, there is no room for debates on incommensurability of values. There are damages in terms of lost human health, the destruction of local indigenous groups, soil and water polluted, and loss of biodiversity. Texaco made a conscious decision not to re-inject the water, standard practice in the US at the time, nor to line the waste pits. These damages could be estimated in terms of saved costs, or in terms of the economic value of human suffering and nature spoiled. The Frente de Defensa of Amazonia based in Lago Agrio is headed by the resilient leader Luis Yanza, and the young local lawyer Pablo Fajardo who in December 2007 has obtained a CNN award for “unknown world protagonists”. They are fighting an unequal fight against Chevron-Texaco although they have been able to mobilise some resources: pictures of the singer Sting, his wife, Al Gare, Luis Yanza and Pablo Fajardo, all of them crossing arms and smiling together taking the victims’ side in the Chevron-Texaco case in Ecuador have appeared in the US media.

A claim for about $ 6 billion has often been mentioned. The present value of this sum (at a rate of interest of only 5 per cent, and taking also into account the loss of purchasing power of the dollar in the last 20 or 30 years) would exceed $ 20 billion.

The lesson from Lago Agrio is that oil, coal, gas companies can no longer get away with not paying for their social and environmental liabilities, even when they are operating in places where human life is cheap and the destruction of nature is not carried into the bottom line of the profit-and-loss account. Since 1993, it has been civil society, through its organisations and support groups in Ecuador and abroad that has pushed the case.

The Yasuni ITT Proposal

Finally, another innovative oil policy coming from civil society is the ITT Yasuni proposal, also in Ecuador [Martinez-Alier 2007]. The idea was first expressed in the Oilwatch position paper in Kyoto in 1997: keeping fossil fuels in the ground deserves “carbon credits”.

Over 10 years ago, the idea arose in Ecuador and in the Niger delta (through the network Oilwatch) that stopping oil extraction and gas flaring was a contribution to the struggle against climate change. The consumers of oil, the governments of oil exporting or importing countries, should recognise in Bali that civil society organisations fighting for environmental justice are more advanced than they are.

Thus, in the Ishpingo-Tambococha-Tiputini field in the Yasuni National Park, about 920 million barrels of heavy oil would remain in the ground in perpetuity or in a moratorium sine die, in an area inhabited by indigenous groups, some living in voluntary isolation, and that holds unique biodiversity. An ancillary benefit of keeping this oil in the ground (apart from respecting nature and human rights), is that the CO2 that would be produced when burning the oil elsewhere, is “repressed” underground. The avoided emissions of CO2 are of the order of 410 million tonnes from the oil, plus some more from the avoided gas flaring and avoided deforestation. Ecuador is asking for a part of the money from outside in recognition of its foregone monetary revenue. (The Frente de Defensa of Amazonia, if strongly successful in the Chevron-Texaco case, would probably be willing to make a substantial financial contribution to keeping oil in the ground in the Yasuni ITT field.)

At present, there is strong support inside the government of Ecuador for this project,

december 15, 2007 Economic & Political Weekly


which was launched by the then minister of energy, Alberto Acosta, early in 2007. Acosta is now the president of the assembly that is writing the new constitution: he has stated that the ITT field and other natural parks should be declared out of bounds for the oil industry. However, support from president Rafael Correa is not firm because he is by training a development economist with anti-environmental inclinations.

This project, if successful, could be copied elsewhere – for instance in U’Wa territory in Colombia whose inhabitants have argued against the oil companies that the land is sacred, in the Niger delta, or in some of the worse coal mines in the world in India or China.


Callendar, G S (1938): ‘The Artificial Production on CO2 Dioxide and Its Influence on Temperature’, Quarterly Journal of the Royal Meteorological Society, Vol 64, pp 223-37.

Daly, Herman (2007): ‘Sustainable Development and OPEC’, Ecological Economics and Sustainable Development, Edward Elgar, Cheltenham.

Martinez-Alier, J (2007): ‘Keep Oil in the Ground: Yasuni in Ecuador’, Economic and Political Weekly, October 20, pp 4227-28.

Parikh, J K (1995): ‘Joint Implementation and the North and South Cooperation for Climate Change’, International Environmental Affairs, 7, 1.

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