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In Ecuador, an Unusual Carbon-Credit Plan to Leave Oil Untapped

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Washington Post Foreign Service
Tuesday, May 26, 2009

QUITO, Ecuador -- Beneath the tropical jungles of northeastern Ecuador lies a vast pool of oil, representing one-fifth of the small Andean country's petroleum reserves and potentially billions of dollars in revenue. Directly above that pool, the Yasuni National Park is home to a diversity of wildlife that is among the richest on the planet, Ecuadoran and U.S. biologists say.

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Faced with these two treasures, Ecuador is pursuing an unusual plan to reap the oil profits without actually drilling for oil.

The idea envisions wealthy countries effectively paying Ecuador to leave its oil -- and the carbon dioxide that would result from using it -- in the ground. Environmentalists hail the proposal as a potentially precedent-setting approach to conservation in developing countries.

Ecuador would sell certificates to governments or companies that would allow them to emit carbon dioxide in amounts corresponding to the carbon left underground in Yasuni. Proponents say the plan would help reduce overall levels of air pollution.

"From my perspective, this has got to work," said Matt Finer, a biologist with Washington-based Save America's Forests, who has studied Yasuni National Park. "This area is really of just supreme global conservation importance."

Similar ideas have become increasingly popular across South America. Brazil has developed an Amazon Fund, which seeks to attract money to conserve the rain forest-- so far, Norway has pledged up to $1 billion over the next several years. The Japanese government recently agreed to lend Peru $120 million to protect 212,000 square miles of Amazonian rain forest over the next decade. And Colombia is seeking funds from Norway to combat climate change by protecting forests.

But relying on other countries to send cash to save remote jungles has run into repeated obstacles, including a lack of clarity on what exactly they would be buying, how the money would be spent and, in the case of Ecuador, how the Yasuni certificates could be sold on carbon markets. Plus, the global economic crisis has made funding scarcer for environmental causes.

"One of the issues that is difficult to handle in this financial crisis is to ask governments for taxpayers' money," said Roque Sevílla, a prominent Ecuadoran environmentalist who is on the committee in charge of the Yasuni initiative. "So that's a huge problem. That's another reason we're trying to go to the carbon market."

Sevílla said that focusing on carbon could save Yasuni. The 410 million tons of carbon dioxide that would avoid being emitted could raise $4 billion to $7 billion, Ecuador estimates.

European countries could accept the Yasuni certificates as an equivalent to the carbon allowances traded on the European Energy Exchange in Leipzig, Germany. The exchange is a market for energy products such as electricity and natural gas, as well as carbon dioxide emissions rights. But such an arrangement is not allowed under the rules of the 1997 Kyoto Protocol, aimed at curbing greenhouse gas emissions -- a treaty the United States rejected. Ecuadorans say they hope this type of pilot project could be embraced under climate change rules to be formulated at a meeting in Copenhagen in December, Sevílla said.

"The benefit to the planet is not that we leave the oil underground. That has no benefit. The benefit is the C02 that we keep underground," he said. "So the idea is: try to obtain a compensation not for the oil but for the carbon."

The money from selling carbon-emission certificates would go to a trust fund managed by international organizations. The interest would be spent on protecting national parks and funding alternative energy projects and other environmental initiatives.


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