Ecuador to Leave Oil Underground

Ecuador will be the first country to leave oil reserves untouched in response to climate change and the need to protect indigenous homelands

Ecuador has offered to leave a fifth of its oil reserves untapped forever, in exchange for financial compensation from developed countries. In a bold scheme, which could pave the way for a new international response to climate change, the country’s government has signed an agreement with the United Nations, establishing a trust fund to protect an oil-rich stretch of the Amazon from exploitation.

An area within Yasuni National Park, the Ishpingo Tambococha Tiputini (ITT) oil field contains an estimated 846 million barrels of crude oil. Ecuador’s government are pledging to leave it all underground, if $3.6bn is donated to the trust fund – the equivalent of half the current market value of the oil.

The region is considered to be the most biodiverse on the planet and was declared a World Biosphere Reserve by UNESCO in 1989. It has more tree species in a single hectare than the US and Canada combined and is teeming with a diverse array of insects, birds, amphibians and mammals, a significant number of which are endangered. The 675sq mile ITT sector is the ancestral territory of the Huaorani people, as well as the Tagaeri and Taromenane – two of the last remaining ‘uncontacted’ tribes in the world.

While protecting the rainforest and the livelihoods of its indigenous peoples, preventing drilling in the area will avoid the 407 million metric tonnes of carbon dioxide that would enter the atmosphere if the oil was used.

The unique, legally-binding trust fund is being administered by the United Nations Development Programme (UNDP) and will receive contributions over a 13-year period. These are to be invested in renewable energy infrastructure across Ecuador. The subsequent revenue will, in turn, be used to fund development projects including large-scale reforestation, the provision of healthcare and education facilities for indigenous groups, and job creation in sustainable activities such as ecotourism and agro-forestry. Despite the Amazon oil region being the country’s main source of income, there is currently a high rate of poverty and social marginalisation as the wealth has not filtered down.

The proposal was hailed as “holistic and revolutionary,” by Ecuador’s foreign minister, Ricardo Patino. “In addition to conserving biodiversity and contributing to the solutions to global climate change,” he said, “it aims to combat poverty and inequality in the country.”

At a press conference, the country’s heritage minister, Maria Espinosa, said Germany is expected to contribute €50m this year. Political support has been received from Belgium, Italy, Spain and the EU, which Ecuador hopes will now translate into finance.

In exchange for contributions to the trust fund, Yasuni Guarantee Certificates (CGYs) will be issued by the government. Holders would be entitled to their money back with interest should the moratorium on drilling ever be broken by a future administration. Further protection will be given to the scheme through public backing. Online donations will be sought from citizens in Ecuador and across the world – as well as NGOs and companies – who wish to symbolically buy a barrel of oil guaranteed to stay underground.

President Rafael Correa first proposed the project to potential donor countries in 2007, suggesting that together they could “lay the foundations for a more human and fair civilisation,” but initial negotiations were often fraught with difficulties. However, the Huaorani people and civil society organisations maintained pressure on the government and raised the profile of the proposal.

In 2008, Ecuador made the headlines of Positive News when it became the only country in the world to recognise the legal rights of nature. It is hoped that the ITT deal will mark another historic shift towards a post oil society. The government says that the initiative reflects the vision of its National Plan for Good Living – Plan Nacional para el Buen Vivir, which it describes as a new paradigm for development. The plan focuses on social equality and cohesion, improving quality of life, justice, democracy and living in harmony with nature. It also calls for a sustainable economic strategy that prioritises such aims above material accumulation and maximising gross domestic product.

In particular, the Yasuni ITT initiative promises to be a step forward for a region that has suffered the effects of oil extraction for over four decades. The human rights group Amnesty International has expressed “serious concern” for the health and welfare of the indigenous peoples in Ecuador, many of whose land and water has been contaminated by oil spills. In an ongoing, monumental legal battle, 30,000 Ecuadorians are suing US oil company Chevron for environmental damage – as was brought to wider attention last year by the documentary film, Crude.

There has been caution towards the plan from some of Ecuador’s indigenous groups following a recent announcement that other blocks would be opened for drilling. “We don’t want Rafael Correa to offset his lost income from leaving the ITT oil in the ground by opening up other areas of equally pristine indigenous lands,” said German Freire, President of the Achuar people.

But at a time when the impacts of oil exploitation have been highly exposed following the spill in the Gulf of Mexico, support for the Yasuni project is widespread. It is backed by the Organisation of Petroleum Exporting Countries (OPEC) and environmental groups. “We welcome this long sought after final step to protect an important part of Yasuni National Park,” declared Kevin Koenig, co-ordinator of Amazon Watch, adding: “This is a big win for Ecuador, and the world.”

A number of Nobel Peace Prize winners, including Muhammad Yunus and Desmond Tutu, have stated their support, as have former USSR president Mikhail Gorbachev and HRH the Prince of Wales.

At the signing of the ITT deal on 3rd August, Rebeca Grynspan, the UN under secretary general, said: “We are witnessing the inauguration of new instruments of co-operation, which will act as a basis for supporting other national and international efforts directed towards a search for economies that are in harmony with society, nature and the planet.”

Representatives of the Huaorani were present at the signing, where Ecuador’s vice president, Lenín Moreno, urged industrialised countries to join the scheme in “a spirit of shared responsibility.” A deadline of December 2011 has been set for at least $100m to be received if the initiative is to proceed.

Contact: www.undp.org
www.yasuni-itt.gob.ec