Adam Moolna, Lecturer in Environment and Sustainability and Programme Director for Natural Sciences at Keele University, UK
Potential petroleum exploitation may offer a golden opportunity to improve the lives and environment of all Mauritians. The petroleum industry is generally lucrative so, if economically viable in Mauritius, it will almost certainly happen despite climate or pollution concerns. Petroleum can, if managed intelligently, support climate action by financing an accelerated transition to zero-carbon and reducing overall cumulative emissions. Sovereign wealth would also allow Mauritius to take control of its own development path and not be constrained by narrower external geopolitical agendas and conditional aid. An improved environment and more equitable society with better livelihoods and opportunities is what matters for people in general. Realising such potential, however, needs robust institutional arrangements, advances in management of environmental impacts, development aligned with sustainability, strategic expertise, and political will. Without these key factors, petroleum will, by default, exacerbate climate change, act only as a budget subsidy, contribute negligibly to a sustainable future, and risk extensive damage to marine ecosystems and the wider Blue Economy. The real opportunities of a petroleum industry will be tragically missed unless government is actively challenged to develop a drastically improved, comprehensive, and trustworthy framework to deliver that vision.
Can petroleum exploitation be reconciled with responsibilities to address the climate emergency?
Mauritius is in the early stages of petroleum exploration, with considerable potential in remnants of sedimentary basins across shallow undersea banks. An updated legal and regulatory framework was introduced by the 2021 Offshore Petroleum Bill. “Blue Economy” ocean and coastal resources including petroleum are prime economic opportunities for Small Island Developing States (SIDS) such as Mauritius. While such economic developments also bring social benefits such as employment and development of human capital, they need reconciling with environmental sustainability, biodiversity conservation, broader social progress, and climate change action. It is well documented that deep-water petroleum exploitation risks serious negative impacts on marine ecosystems and little studied seabed habitats. This also threatens existing key Blue Economy sectors such as fishing. Petroleum exploration must invest in research to increase baseline knowledge, advance the state-of-the-art in environmental management, and mitigate potential harm ahead of exploitation. Advances in offshore infrastructure, information, and governances should also be applied to support the wider Blue Economy.
Fossil fuel use increases atmospheric concentrations of carbon dioxide (CO2) and is a leading factor in human-driven climate change, yet petroleum exploitation does not need to contradict long-term climate action. There are global budgets of total CO2 emissions under the United Nations Framework Convention on Climate Change (UNFCC) and petroleum revenues can finance an accelerated transition to zero-carbon, so a lower final total of cumulative CO2 is emitted. Carbon offsetting can drastically reduce the net carbon emissions of petroleum exploitation if managed correctly. Replacing international imports with domestic production can reduce transport emissions and the carbon footprint of national fossil fuel consumption.
A Mauritian petroleum industry would emerge into a global energy landscape in which producer states take a strategic outlook on decarbonising oil and gas including diversified energy mixes and nature-based carbon capture. An eventual zero-carbon future would have no fossil fuel use, with electricity from renewables and transport powered by electricity, biofuels, or renewable hydrogen. Focus should shift to achieving zero-carbon as soon as possible, rather than detailed CO2 budgets, because climate change is not solely dependent on CO2 and the context of carbon matters more than simplistic accounting.
The economic catalyst opportunity depends on government approach rather than size of reserves
What petroleum means for the economy, environment, and society depends both on revenue management and on reserve quantities and quality. The UK and Norway share equal ownership of petroleum in the North Sea but, whilst Norway invested in a sovereign wealth fund that has led to long-term prosperity, the UK squandered revenue as a budget subsidy. Dubai was not afforded petroleum reserves on the same scale as its fellow emirates such as Abu Dhabi but used an initial boom (providing 50% of Gross Domestic Product) to develop a diverse economy in which petroleum now represents less than 1% of total wealth creation.
Potential petroleum reserves or annual production rates for Mauritius are unknown, and need much more exploration, so we can only speculate on possible financial and carbon implications. Importantly, exploitation of petroleum will only be possible if extraction of such deep-water reserves proves technically and economically viable. Revenue depends on royalty and tax regimes, differences in oil grades, extraction costs, and volatile prices. CO2 emissions depend on variable factors upstream and downstream of production. We could, however, contextualise possible scenarios using credible figures of US$15 revenue and 500kg CO2 emissions per barrel of crude oil and the approximately US$3.3bn revenue in the 2022-23 Government of Mauritius budget. Mauritius has a carbon budget of approximately 75 million tons CO2 from 2021 forwards (a share of the 460 billion tons globally budgeted by population) and envisages spending US$2bn to reduce projected annual emissions of 7 million tons in 2030 by 40%.
Annual production on par with UK and Norway experiences (representing 10% of government revenue) would see US$300m from 20 million barrels with 10 million tons of CO2 emissions. An initial boom equivalent to Dubai would see annual revenues of US$1.5bn from 100 million barrels with 50 million tons of CO2. With consideration of broader greenhouse gas inventories and carbon offsetting, lucrative petroleum exploitation can align with climate responsible development.
Towards a greener, fairer, and more prosperous Mauritius
From political and academic consensus, a sustainable society has: (1) environmental management to protect and enhance the natural environment; (2) economic development to increase people’s livelihoods and society’s wealth; and (3) social progress to reduce poverty and inequality of wealth and opportunities. Mauritius should invest petroleum revenue in substantial financing and rigorous expert planning for an ambitious transformation of economy, society, and environment. Environmental, Social and Governance (ESG) or Triple Bottom Line approaches could help frame credible business and finance models.
Petroleum wealth invested properly in a sustainable future can both reduce total carbon emissions and improve prosperity, social equality, and the environment. Mauritius can take control of its development path and build capacity and expertise for informed choices to be made and delivered. Sustainability should be part of the lived experience of all, with comprehensive and inclusive development that considers synergies and trade-offs. The current outlook for petroleum management is underwhelming, however, with limited consideration of sustainable development opportunities. The likely trajectory is for revenues to be absorbed into current spending plans and, without investment in decarbonising the economy, increased emissions will exacerbate climate change.
Effective policy measures importantly require strong political will and commitment to deliver impact. Long-term institutional management of petroleum revenues should be independent of political parties with a sovereign wealth fund controlling investment for a sustainability revolution. Petroleum exploitation should not begin until government puts in place irreversible, transparent, and robustly planned arrangements to use revenues for a zero-carbon sustainable future.
Main photo by Jan-Rune Smenes Reite on Pexels.
Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).