November 6, 2019 / 11:08 AM / 12 days ago

Brazil discounts climate impact in holding oil auction

BRASILIA (Reuters) - Brazil is overlooking potentially dire climate change consequences by moving ahead with its biggest auction ever of oil exploration blocs that could release millions of tonnes of carbon emissions, according to environmental activists.

An environmental activist attends a protest against Brazil's government auction for offshore oil fields, in Rio de Janeiro, Brazil November 6, 2019. REUTERS/Ricardo Moraes

The country’s oil regulator ANP estimates that the blocs up for sale on Wednesday in the offshore pre-salt oil area could contain up to 15 billion barrels of oil.

Consuming that oil would release up to 8.6 billion tonnes of carbon dioxide equivalent, the standard measure of greenhouse gas, according to a calculation by environmental non-government organization 350.org.

That is about 1.5 times the annual emissions in the United States, the world’s second-biggest greenhouse gas emitter.

“It’s immoral to explore and make this quantity of oil available to burn,” said Nicole Figueiredo Oliveira, Latin America managing director for 350.org.

“The government ignores us, taking the position of generating profits without thinking of the impact these blocs will have on the lives of people around the world.”

Brazilian authorities say the auction could raise 106.5 billion reais ($26.67 billion) in signing bonuses at a time when the country faces a budget shortfall.

ANP declined to immediately comment on the climate impact of the oil auction.

Experts say that if the world continues to pump greenhouse gases into the atmosphere at current rates rising water levels will submerge coastal cities and there will be an increase in extreme weather such as hurricanes and drought.

Nearly all of the world’s countries agreed in the 2015 Paris Agreement to a goal of limiting the global temperature rise to 1.5 degrees Celsius (2.7 degrees Fahrenheit) to avert these effects.

Reaching that target would require the world cutting annual emissions in half by 2030, said Kelly Levin, a senior associate for emissions and climate at the World Resources Institute, a non-profit research organization.

However, the world can only add an additional 420 billion tonnes of carbon dioxide to have “medium confidence” of reaching that goal, Levin said.

The carbon potentially released from the Brazilian auction would be about 2% of that goal, a significant amount, she said.

“Any large projects that result in an increased emissions is going in the opposite direction of where we need to go,” Levin said.

But Brazil’s leaders want to speed up their oil exploration rather than slow it down.

At an oil conference last year, ANP Director General Decio Oddone acknowledged that “oil is headed for obsolescence” as the world shifts to a low carbon economy. He said Brazil has to debate quickly if it wants to take advantage of its oil reserves before that happens, arguing it should seize on the chance to develop its economy.

“I hope it will be closed with a decision to explore our reserves as fast as possible,” he said.

Roberto Castello Branco, the chief executive officer of state-owned Petroleo Brasileiro SA, has said the firm must take advantage of its oil resources in the short-term as they will only remain commercially attractive for a finite amount of time.

Slideshow (5 Images)

The oil production may not have a large impact on Brazil’s national climate commitments as much of its oil is exported and consumed internationally.

Oil companies need to account for climate risks because fossil fuel demand and prices will likely fall as global concerns over emissions increase, said Mike Coffin, an analyst at think tank Carbon Tracker and a former geologist at BP.

“Accelerating production in the short term would lead potentially to an oversupply and the destruction of value in a low-demand world,” Coffin said.

Reporting by Jake Spring; Additional reporting by Gram Slattery; Editing by Christian Schmollinger

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