Caracas Chronicles

Last December, a momentous agreement was forged in France. The Paris COP21 Agreement on climate change has been rightly hailed in the press as a landmark, with historic consequences for world energy markets, and a miracle given the excruciating negotiations involved.

What do Venezuelan politicos think about this game-changing agreement? We don’t know, because they act as if it had happened on another galaxy.

But let’s be clear: as much as Paris is great for humanity, it spells big trouble for our country. Forget the Good-Riddance nihilism fashionable in some bits of the opposition: when the whole world gets together and formally pledges to use less of the thing you live off of selling, that’s not good. At the very least, we need to prepare.

 
There is basically no alternative energy program worth its name in Venezuela.

The agreement sets out clear guidelines for reducing greenhouse gas emissions. As a NY Times piece succinctly put it, “[m]ajor oil producers like Russia and Saudi Arabia, already weakened by the slide in the price of oil, could shed some power.”

Shed? It’s more like amputating power. According to Thomas Friedman, the world will have “two billion more people by 2050, who will all want cars and homes, and … scientists [are] saying the only way to stay below the 2 degrees C redline is to phase out all fossil fuels by roughly the same date.”

Let me highlight the “phase out all fossil fuels” bit. Worried yet?

Now, you might think that 2050 is really far away, but big changes could hit sooner than you think. In the US alone, “the goal is to reduce greenhouse gas emissions 26 to 28 percent from 2005 levels by the year 2025,” says a piece in the New York Times.

One particularly scary angle is that China seems to be on board. Likewise, the continued domination of the Democratic party in the US ensures climate change abatement remains a high priority.

In the face of this, what can we do? What should we do?

It’s important to understand that Paris hurts us most because it provides incentives for the development of alternative energy. “The ambitious targets included in Saturday’s deal for limiting the rise in global temperatures may help companies involved in renewable energy and energy efficiency by expanding their markets,” says that NY Times piece.

In other words, COP21 will end up subsidizing our competitors, either through helping them develop clean technologies, or subsidizing them directly. With major car companies already betting big on electric, and grid parity already a reality in many electric markets, oil-dependent economies could be caught napping.

The time when this could all be dismissed as a specialty concern for a handful of hippies is long gone. Even the oil majors are getting on board. “On Twitter on Saturday night, BP, the British oil giant, called the Paris agreement a “landmark climate change deal” and pledged to be “a part of the solution.” In June, BP, Royal Dutch Shell and Total called for a tax on carbon emissions, saying it would reduce uncertainty and help oil and gas companies figure out the future,” says the NY Times.

Oil companies are beginning to adapt and become energy companies, which spurs them to delve into alternative fuels.

Is PDVSA ready to do the same? Hardly.

 
But optimism for Venezuela would mean devastation for the rest of the world.

There is basically no alternative energy program worth its name in Venezuela. The only “green” energy investment of any relevance was undertaken more than fifty years ago. The plan to set up a big windfarm in Paraguana never made it past blueprint stage.

PDVSA could be investing in alternative technologies. It could be investing in making our oil more greenhouse friendly. It could be investing in exploiting Venezuela’s sizeable natural gas reserves – hardly a green fuel, but much cleaner than our current mix. Hell, it could consider changing its name to something like “Energía de Venezuela, SA.”

But PDVSA is too busy staving off bankruptcy to care about such measly things as “the future.”

If COP21 fulfills its promise, cheap oil will be here to stay for a while. This will force us to adapt or die. Certain areas of the country (Zulia, Monagas) will be especially hard hit. Natural gas may be a big winner.

Then again, perhaps we don’t need to do anything. Perhaps the agreement lacks any real staying power, and we have nothing to fear.

Paul Krugman seemed to hint at this. “Nations have agreed both to emission targets and to regular review of their success or failure in meeting those targets; but there are no penalties other than censure for countries that fail to deliver.” This sounds like a recipe for optimism.

But optimism for Venezuela would mean devastation for the rest of the world. And don’t think we would be immune from this: we would be hit by climate change just as much as everyone else. Our water supply – already under strain – could break. Our agricultural areas would suffer.

You will not find the solutions to these complicated questions in these blog posts. The risks involved are so severe for our country, that we need to plan ahead and sketch out a strategy.

But, for now, it seems the greatest risk is the fact that our collective heads are buried in the sand.