(Bloomberg) -- Nelson Mugisha’s rural farming community near the shores of Uganda’s Lake Albert is lush and green — and woefully underdeveloped. Now, more than 15 years after oil was discovered in the area, a $4 billion pipeline project promises to change everything.
The consortium behind the project — which includes the Ugandan and Tanzanian governments, France’s TotalEnergies SE and China’s Cnooc Ltd. — say the 900-mile East Africa Crude Oil Pipeline, or EACOP, will create thousands of jobs and generate billions of dollars in government revenues.
Opponents, including Ugandan activists, European parliament members and Western environmental groups, argue that the project — which will involve drilling hundreds of oil wells in and around nature reserves — will destroy delicate ecosystems and increase emissions at a time when the world should be moving away from fossil fuels. They have already convinced several banks and insurers to withhold support for the pipeline, delaying the project’s financial close — now expected to happen later this year.
The debate is raging in African countries with few other options for economic development than to exploit their planet-warming fossil fuels. The involvement of foreign companies — often based in developed nations with ambitious climate targets — further complicates the picture. Locals like Mugisha are caught in the middle.
“When the oil is extracted it will lead to development and some people will get jobs” while the government earns revenues, said Mugisha, a 33-year-old coffee farmer. But “the pipeline project will not be beneficial to the whole community” and it “will damage the environment.”
Environmentalists have raised concerns that endangered animals like elephants and chimpanzees will be impacted as the pipeline cuts through four nature reserves. But developers say that because 80% of the pipeline will be underground, the vegetation that will be cleared for construction will grow back, allowing animals to roam free.
“Detractors don’t have enough information about the project and the benefits it will bring to the region,” Ernest Rubondo, executive director of the Petroleum Authority of Uganda, said in an interview.
Yet opponents’ concerns have made it to boardrooms thousands of miles away. In May, Tokyo-based Sumitomo Mitsui Financial Group Inc. became the latest lender to rule out financing the project, following environmental group 350.org’s statement that the bank was a financial advisor to the project.
The pipeline still has financial backers, Uganda’s Energy Minister Ruth Nankabirwa told reporters in Kampala earlier last month. China’s Exim Bank and two companies from two unidentified African countries are also ready to fund the pipeline, she said. Last month a senior executive at South Africa’s Standard Bank said it’s in talks to provide funding as it considers the social and environmental impacts of the project.
“The EACOP alone will produce 34 million metric tons of carbon per year for the next 40 years,” said Dickens Kamugisha, chief executive officer of the Kampala-based Africa Institute for Energy Governance. “They are pushing for the project for selfish and profits motives.”
TotalEnergies is making efforts to minimize emissions from operations by powering pumping stations along the pipeline with solar energy and has signed an agreement with governments to develop renewable power projects for the local population, a company spokesperson said in a statement.
A Cnooc spokesperson didn’t immediately reply to a request for comment.
The pipeline will carry 216,000 barrels a day from the Tilenga and Kingfisher oil fields, through Uganda and Tanzania to terminals on the Indian Ocean coast, where it will be exported abroad — often to countries that are limiting their own fossil fuel production.
“It highlights the inequality that exists at a global level,” said Zaki Mamdoo, the coordinator of the South Africa-based Stop EACOP campaign. “These resources are servicing the energy needs of the Global North to facilitate their own transition away from fossil fuels, while African countries get locked in a fossil fuel economy and their people are made to bear the entirety of the social and environmental costs.”
Maria Arena, a Belgian member of the European Parliament with the Socialist Party, calls TotalEnergies’ participation “hypocrisy.” “In Europe we protect our people from climate change and we need to do it outside of Europe as well,” she said.
Arena was among the EU parliamentarians that last September pushed forward a resolution highlighting human rights abuses linked to EACOP, and warning about the project’s environmental, social and climate impact, including the risk of displacement of about 100,000 people.
Last week, members of the EU parliament including Arena approved a directive that forces companies based in Europe or operating there to limit or eliminate impacts on the environment and human rights abuses on their own operations and supply chains, making them liable for damages if they fail to comply. Lawmakers will now need to enter talks with member states on the final shape of the regulation.
For now, Africa’s access to sustainable solutions is hamstrung by a lack of climate finance. The continent needs as much as $2.8 trillion by 2030 to meet its climate goals, but received just $29.5 billion in climate finance from 2019 to 2020, according to a report by the African Development Bank. A push led by Barbados Prime Minister Mia Mottley to reform global financial institutions — an effort known as the Bridgetown Initiative — is attempting to change that.
“For a while Africa has struggled with an implied tradeoff between economic growth and prosperity in one hand, and environmental sustainability in the other,” Kenyan President William Ruto said in a speech to the Pan-African Parliament last month. “Given the [green] transition imperative, it is possible for Africa to execute clean green industrialization that can enable the rest of the world to attain the net zero target as well.”
But at another recent conference, Ruto relayed a conversation he had about EACOP with his Ugandan counterpart, Yoweri Museveni.
Ruto, who has vowed to keep Kenya’s oil in the ground, pointed out that the project will contribute to climate change, which has a disproportionate impact on Africa. Museveni’s answer was simple, according to Ruto: “Those who are telling us ‘don’t exploit’ have developed beyond measure because of exploiting.”
“That conversation,” Ruto conceded, “you cannot argue with.”
--With assistance from David Malingha, John Ainger, Francois De Beaupuy, Paul Burkhardt, Zheng Li and Kathy Chen.
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