What Comes Next for Venezuela’s Oil Industry?

In May of 2022, The Guardian published a five-month investigation about planned “carbon bombs,” a term used to describe large fossil fuel projects or other big sources of carbon. According to their research, “these plans include 195 carbon bombs, gigantic oil and gas projects that would each result in at least a billion tonnes of CO2 emissions over their lifetimes, in total equivalent to about 18 years of current global COemissions. About 60% of these have already started pumping.”

The Orinoco Belt in Venezuela is a large carbon bomb in South America. In addition to being the source of Venezuela’s oil economy, the Orinoco Belt causes a number of environmental and human rights challenges. This episode of “The Sweaty Penguin” examines the impacts of oil drilling in the Orinoco Belt. With special guest Dr. Luisa Palacios, Senior Research Scholar at the Columbia University Center on Global Energy Policy.


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ETHAN: Welcome to episode 104 of The Sweaty Penguin: Antarctica’s Hottest Podcast. I’m your host, Ethan Brown. Today, we are talking about the Orinoco Belt, and I hate to break it to you astrology girls, but the Orinoco Belt has nothing to do with Orion’s Belt. I know it sucks. The Orinoco Belt is totallyyyy a Gemini for that.

ETHAN: In actuality, the Orinoco Belt is the site of another carbon bomb. [booing] I know, I know. If you need a review on what carbon bombs are, well, you’re in luck! Ladies and gentlemen, it’s time for America’s Next Top Emitter!

**game show music, cheering and applause**

HOST: Welcome to America’s Next Top Emitter! I’m your host, Tyra Oil Tanks. Let’s meet our first contestant, shall we?

JET: Hi guys, I’m Floyd Mayweather’s private jet. I fly Floyd Mayweather around while he sulks about losing that one boxing match in the 1996 Olympics. I also emit over 7,000 tons of carbon dioxide per year, and I think I have a good shot at this title! Excited to be here!

HOST: We’re excited to have you, Floyd Mayweather’s jet. Next up, we’ve got Mark. Mark, do you want to introduce yourself?

**cow moo, then fart sound**

HOST: I guess I should clarify, Mark’s a cow! Great to have you here, Mark, although I wish you’d stop farting for a second, it smells terrible! Next, we have… carbon bombs?

CARBON BOMBS: Yeah, we’re carbon bombs. We’re 195 oil and gas projects emitting over a billion tons of carbon each, and we alone are poised to blow past international climate goals!

HOST: By yourselves?

CARBON BOMBS: By ourselves!

HOST: I think we have our winner then! Why are we even doing this TV show? Anyway, tune in after the break to see which polluter can make a lake green the fastest. We’ll be right back.

**game show music, cheering and applause**

ETHAN: Well, that sounds like an easy win, doesn’t it? It’s true though. In May, The Guardian published an investigative report on carbon bombs, which are projects that would emit over a billion tons of carbon dioxide from start to finish. Their investigation revealed that the world’s largest oil and gas companies have planned/started 195 carbon bombs, and combined, these projects would emit 646 billion tons of carbon dioxide. And I know, carbon dioxide is plant food, but can you imagine just being handed 646 billion tons of something? “Oh hey, I heard you like pasta, here’s 646 billion tons of it! What do you mean, you don’t want it?” Actually, I take that back. I see no issue with eating that much pasta. [slurp sound]

ETHAN: At The Sweaty Penguin, we are breaking down these carbon bombs one by one. Today, we’re looking at our fifth carbon bomb: the Orinoco Belt. The Orinoco Belt is a 21,357 square mile territory in Venezuela’s Orinoco River Basin, and the site of the Orinoco Joint Ventures project. This oil project is South America’s highest emitting carbon bomb, estimated to release 6.7 billion tons of carbon dioxide from start to finish. For context, in 2019, the entire world emitted 59 billion tons of carbon dioxide, so 6.7 billion tons would be over a ninth of the world’s annual emissions!

ETHAN: Despite that high number, the Orinoco Belt’s oil industry is a mess. It’s an even worse mess than my bedroom after a weeklong depression where all my laundry is on the floor, my comforter has crept so far up my bed that now my feet are sticking out, and some sort of flying cockroach has spawned and set up shop underneath my dresser. Under an increasingly autocratic regime which has resulted in harsh sanctions from the United States, Venezuela’s oil production is decreasing rapidly. You might even say it’s… tanking. [ba dum tss] Sorry, that was bad. Plummeting oil production hasn’t gone swimmingly though. It has contributed to a humanitarian and refugee crisis in Venezuela, exacerbated environmental issues due to deteriorating infrastructure, and led Venezuela to turn to a mining industry that has become riddled with crime, pollution, and deforestation. Today, we discuss why the Orinoco Belt is important, the litany of issues created by the region’s oil industry, and a few ideas from an environmental perspective for how the region could move forward.

ETHAN: The Sweaty Penguin is presented by Peril and Promise: a public media initiative from The WNET Group in New York, reporting on the issues and solutions around climate change. You can learn more at pbs.org/perilandpromise. If you want to take two minutes to help out The Sweaty Penguin, you can either leave us a five star rating and review or join our Patreon at patreon.com/thesweatypenguin. Doing that either earns you a special shoutout at the end of the show; joining the Patreon gets you merch, bonus content, and a whole lot more.

ETHAN: But before we get too many studded leather loops into the Orinoco Belt, let’s give a little backdrop. The Orinoco River is the fourth largest river in the world, assuming you don’t count every husband’s river of drool while they’re sleeping. The majority of Venezuela’s Indigenous population lives within the river’s basin, and these communities rely heavily on the river for food and transportation. The name “Orinoco” comes from the Warao term for “a place to paddle,” and as a noted doggy paddler myself, I couldn’t love this name more. Seriously, every other body of water you go to, people are doing front crawl or breaststroke or backstroke just to look better than us, but not the Orinoco! That’s for doggy paddlers. Who’s with me? [cheers]

ETHAN: In addition to being a place to paddle, the Orinoco River and its delta are an incredible ecosystem, featuring multiple national parks and protected areas. The region is home to 17,420 [nice] species of plants including mangroves, swamps, marshes, palms, and a variety of other forests and grasslands. It’s also home to 1,300 species of birds including flamingos and parrots, and over 1,000 species of fish including carnivorous piranhas, catfish that can weigh over 200 pounds, and electric eels. I have to say, pretty cool that they’re making electric eels now! Who knew eels were going green? I mean, I did catch a plug-in hybrid eel on my last fishing trip, but clearly they’ve made some progress since then. The Orinoco is also one of the only habitats for the cardinal tetra, which you may know is the species of fish I have in my home aquarium. The region also houses 250 mammals and 119 reptiles, which, taken together, forms the most diverse group of carnivores in the entire Western Hemisphere, although I’d like to think my Fourth of July barbecue gave it a run for its money. And some of these species are critically endangered, including river dolphins, giant river otters, giant anacondas, and Orinoco crocodiles. In fact, Orinoco crocodiles are so endangered that people are taking some pretty extreme measures to save them.

REPORTER: Some estimates suggest there are only 250 animals left in the wild. To ensure their survival, you need a firm hand and a steady nerve. So, I know that looked pretty brutal, but we need now to keep her in the water to buy Jackson time to be able to dig up these eggs. She’s back, poised again, ready.

ETHAN: If you couldn’t tell from the audio, one guy was fending a mama crocodile off with a stick while the other guy was stealing her eggs from the sand. And just to be clear here, the Orinoco crocodile is arguably, on average, the largest crocodile in the Americas and the largest predator in the Americas. It is a chonky croc! I think I even saw some jibbitz on that croc! So the fact that people are willing to fight one of those off with a stick in order to ensure their survival is pretty telling if you ask me. This is an extremely endangered species, and the only reason people would even think to rob a 10+ foot crocodile is because the situation is just that dire. That said, your weapon of choice was a stick? Come on, did you not read the Three Little Pigs? Everyone knows the only way to protect yourself from a big bad crocodile is a weapon made of bricks!

ETHAN: And if endangered animals, national parks, and Indigenous communities aren’t enough reason to believe the Orinoco is special, let me give you one more. Enya’s “Orinoco Flow” is about this river! That’s right, Enya cares about the Orinoco! How can anyone in their right mind not care if Enya cares?

ETHAN: Unfortunately, the region is also the largest heavy oil enriched area in the world, with heavy oil reserves of about 200 billion tons. And as much as I’ve tried, that oil has yet to sail away, sail away, sail away. You’re welcome for getting that song stuck in your head now. In addition to the global climate change impact of the 6.7 billion tons of carbon emissions estimated from the Orinoco Joint Ventures project, there are a number of more local environmental issues stemming from drilling in the river basin. Some of these issues remain unknown. Petroleum of Venezuela, or PDVSA, is Venezuela’s state-owned oil and natural gas company, and PDVSA has been very reluctant to share this information. You’d think a company with PDA in the name would be pretty public, but apparently not.

ETHAN: That said, via local and international reporting, we do know some things. We know there have been a long list of oil spills, which many locals attribute to PDVSA’s unwillingness to properly inspect, supervise, and maintain its infrastructure. At this rate, PDVSA’s slogan should just be “don’t cry over spilled oil.” [crying] These have included the explosion of an oil refinery in 2012 which sent a toxic fireball into the air killing 50 people and injuring hundreds more; another refinery spill in 2020 that leaked over 20,000 barrels into the waters of a national park home to mangroves, coral reefs, and endangered species; and an oil tank leak in 2021 where rather than repairing the crack, the tank was left alone, and 3.6 million liters of gasoline leaked out over the course of nine days. That’s right. You thought the Hanukkah candle that burned for eight nights was a miracle? Check out an Orinoco oil tank! [boooooo] These spills can kill some of the important wildlife in the Orinoco region, decimate the local fishing industry, contaminate water, and create public health risks for the surrounding communities. And again, many of these spills would be preventable with properly managed infrastructure and some semblance of accountability.

ETHAN: As for some other local environmental impacts we’re aware of: air quality can be one — pollutants such as sulfur dioxide and hydrogen sulfide were found to be at illegally high levels around the four upgraders that process the oil from the Orinoco Belt. We know pipelines are degrading, causing more leaks and spills. And since this is really an oil region, when natural gas comes up at an oil well, it is often flared, meaning rather than capturing it, producers just burn it off right into the atmosphere. Flaring emits greenhouse gasses into the atmosphere further contributing to climate change, it can cause noise pollution, and it can also lead to a number of adverse public health effects by emitting volatile organic compounds into the air. That’s right. You’d think a volatile organic compound would be a condo complex with moody people and no pesticides, but apparently it’s a class of toxic chemicals! And counterintuitively, even though Venezuela’s oil industry is in decline as I mentioned in the intro, its flaring has gone up. The country hasn’t been able to spend the money to collect and utilize the natural gas, so it’s burning it off instead. In fact, in 2020, Venezuela was the sixth largest flaring country in the world. To put that in context, I couldn’t find 2020 numbers, but in 2021, Venezuela was 25th in the world in oil production, so sixth in flaring means they are flaring a really disproportionate amount as compared to the rest of the world. Basically, Venezuela is to flaring as Sweden is to hot people, or Australia is to bad toast toppings.

ETHAN: The Orinoco Belt’s oil hasn’t just created environmental and health questions; it’s also created economic questions. If we can rewind for a second [rewind sound], you might remember me saying that the Orinoco Belt is the largest heavy oil enriched area in the world. What does that mean? Fortunately, it does not mean I’m fat shaming oil deposits, so hopefully I’ll survive another week without being canceled. Once I give my take on Tyler Norris from Bachelor in Paradise though, it’s all going to come crumbling down. Heavy oil refers to the oil’s density, and when oil is heavier, that means it’s more complex and expensive to extract and more difficult to transport via pipeline, making it less economically lucrative. At the same time, heavy oil ends up being cheaper on the global market because it is more complicated to refine. So it’s more expensive to drill, you can’t sell it for as much, and as a result, even though the Orinoco Belt is the world’s largest heavy oil enriched area, a lot of that oil just isn’t worth obtaining.

ETHAN: But despite these economic questions, Venezuela created an economy completely centered around oil. In order to keep poor Venezuelans happy and hold power, Hugo Chávez spent oil profits on tons of social programs which would have been impossible to sustain if oil prices fell. In 2014, after Nicolás Maduro took office, oil prices plummeted, Maduro started printing ridiculous amounts of money for his allies, and the Venezuelan economy fell apart. The annual inflation rate rose to 1.3 million percent from November 2017 to November 2018, which meant prices were approximately doubling every nineteen days. To put that in an American context, if a loaf of bread were 2 dollars today and we had that rate of inflation, then it would be 4 dollars in 19 days, 8 dollars in 38 days, 16 dollars in 57 days, and by the end of the year, it would be [drumroll] 1,048,576 dollars. For a loaf of bread. And unless it’s some challah brioche french bread pretzel bun fusion, I just can’t justify that. I mean, even Javert would start stealing bread at those prices.

ETHAN: As a result of that inflation, the majority of Venezuelans became impoverished, struggling to afford necessities like food, toiletries, and medicine. Without medicine, diseases such as malaria, measles, and diphtheria have rebounded and even spilled over national boundaries. Meanwhile, Maduro has undemocratically and unconstitutionally rigged the government to consolidate his power, and jailed, prosecuted, harassed, tortured, and even killed those who oppose him, be it protestors, journalists, or legislators. Listen to this clip with Carlos Lozano, a man from Venezuela who was targeted for sharing videos of state violence against protestors on the Internet.

CARLOS LOZANO: When we all ran out, I heard someone say “there goes Lazano!” That’s when I was hit by a bullet here at waist level. Every peaceful protest we held became practically a war where we had to hide from the police and government forces. –But he says his breaking point came in 2016, when pro-government intruders vandalized his office. –They came to our business and totally destroyed it. They looted it. They broke the glass. They stole absolutely all the material. Years of work. They drew graffiti of weapons on the walls that said “we’re coming for you. We’re coming for your family. We want you dead and that’s it.” I knew I couldn’t stay in the country with my wife and children anymore.

ETHAN: Carlos received death threats against himself and his family just for sharing the truth with the world. That is terrifying, and it is no wonder why he and millions of other Venezuelans chose to flee the country. Carlos and his family walked nearly 150 miles into the neighboring country of Colombia, where they then flew to Houston, Texas where they now reside. And while staying put in Venezuela is dangerous, fleeing is too — refugees have fallen victim to smugglers, traffickers, irregular warfare, and xenophobia. I obviously don’t have time to adequately break down this crisis in one episode, but I hope you can at least see from Carlos’s experience how horrifying the current situation in Venezuela is.

ETHAN: So that’s the obvious way Orinoco oil ties into the refugee crisis in Venezuela. But there’s another less direct way. Can you guess it? Let me give you a hint: it’s basically my entire personality. [pause] No, not dad jokes! I’m talking about climate change. Drought has become a major issue in Venezuela, with rainfall having declined on the order of 50 to 65 percent between 2013 and 2016. That’s right, even rain can’t keep up with this inflation! Come on, you think rainwater is just rolling in bolívars? I don’t think so. These drier conditions make life difficult for Orinoco farmers and have also increased wildfire risks in the region. Meanwhile, sea level rise has caused severe flooding in the Orinoco Delta. This saltwater intrusion means a loss of drinking water, which, for Indigenous people, could force them to move and lose much of their culture. And while this particular incident wasn’t in the Orinoco Belt, I mentioned Wednesday how just last week, dozens of people were killed in landslides in Las Tejerias, Venezuela due in part to Hurricane Julia. Factors like these might not single handedly make someone decide to leave Venezuela, but they can unquestionably be a part of that difficult decision. I’m not saying oil from the Orinoco Belt is to blame for these climate impacts, but when you consider that fossil fuel behemoths such as Chevron, Eni, Rosneft, and Gazprom have partnered with PDVSA in various capacities and then their emissions add up and fuel these disasters… it’s not a direct link, but it’s not nothing either. It’s like in If You Give a Mouse a Cookie. Is it fair to blame his awful haircut on the glass of milk? Not entirely, but like, it did play a factor.

ETHAN: Now, seeing this humanitarian crisis and autocratic regime playing out, the United States banned the import of Venezuelan oil in 2019. But even before that sanction, it became evident that the nation’s oil industry was, as Enya predicted, sailing away. Attempting to resuscitate the economy, in 2016, Maduro formalized the creation of the Orinoco Mining Arc — a 43,243 square mile mining project that would extract gold, diamonds, bauxite, and coltan from the Orinoco region, and just to clarify, I’m talking about coltan the mineral, not Colton Underwood. I think one Colton Underwood in the world is plenty. Venezuelan officials project that there are about 100 billion U.S. dollars worth of coltan deposits and 200 billion U.S. dollars worth of gold reserves in the Orinoco Belt. Unfortunately, this project has led to a rush of illegal mines, which have displaced locals including Indigenous communities, contributed to the rise of armed criminal groups, and even created more environmental issues for the region. According to Cristina Burelli, Founder and Executive Director of V5Initiative, deforestation is one such issue which has gone very underdiscussed.

CRISTINA BURELLI: We can say that Venezuela is the Amazonian country with the highest number of illegal mines and the highest rate of deforestation. And by the way, none of the big environmental organizations are highlighting this or saying anything about this. They’re all concentrating on Brazil, but they don’t say anything about Venezuela.

ETHAN: Now, to be clear, when Googling Cristina’s claim that Venezuela is the Amazonian country with the highest rate of deforestation, I found different sources saying different things. She may be right, but I wasn’t able to confidently verify it. But regardless of that fact, she brings up a good point. When we think of deforestation, we don’t think of Venezuela. We think of Brazil. Or Bambi. But the Orinoco Belt has a serious deforestation problem too. Among other important reserves, development in the Orinoco Mining Arc threatens the Canaima National Park, a 12,000 square mile UNESCO World Heritage Site that provides a habitat for jaguars, giant otters, and giant anteaters. In addition to threatening these species and ecosystems, deforestation has led to increased erosion and sedimentation in the Orinoco River Basin, which has disrupted rain patterns, flood prevention, and hydropower. Even with its oil reserves, Venezuela gets 68 percent of its electricity from hydro, but deforestation — coupled with drought — looks to make that a lot harder. Deforestation and drought might be a worse power couple than Tom Cruise and Cher. And that’s saying something! For those reasons, I think Cristina is absolutely right to say we ought to pay a little more attention to deforestation in Venezuela. Although I do think it’s a little ironic that if you’re mining coltan in the Orinoco, you have to look… under wood. [booo] No good?

ETHAN: And if that wasn’t enough, gold mining specifically has also led to mercury poisoning in the Orinoco Belt, which is really frustrating. Here I am trying to convince you the Orinoco Belt has nothing to do with astrology, and then I have to tell you mercury is rising? Mercury has already been found in high concentrations in Orinoco river dolphins and 92% of the indigenous women who live near the Caura River, a major affluent of the Orinoco, have higher than internationally permissible levels of mercury poisoning. Almost 37% of these women faced childbirth complications related to their exposure to mercury.

ETHAN: After learning all of that, I’m really glad that we’ve been taking these carbon bombs one-by-one and approaching them not by asking “how do we detonate this carbon bomb,” but rather “how does this region of the world sustainably move forward, and moreover, why is that in their best interest?” This episode could have been over fast if I just said “hey, oil production in the Orinoco Belt is plummeting. One down, 194 to go!” Maybe that would’ve been an easier script writing process. I could even have time to fix the comforter on my bed. But that’s not fair to the people who live around these projects. Even if less oil production helps the climate, it’s not worth a humanitarian crisis and it’s ridiculous to think even more environmental issues are being exacerbated as a result.

ETHAN: So where do we go from here? Well, obviously, I’m not smart enough to solve every issue in Venezuela. If I were, I would not be spending half my time podcasting and the other half tweeting about how Kenny Pickett is undefeated against Tom Brady and therefore the new best quarterback of all time. Fit Kenny for his gold Hall of Fame jacket now, cause he’s gonna need it! Here’s what I can say. Looking at oil specifically, the U.S. plays an interesting role. By sanctioning Venezuela in 2019 by banning oil imports, the U.S. intended for Venezuela to receive a message and make some changes. According to Florida International University’s Dr. Brian Fonseca, that hasn’t really worked out.

  1. BRIAN FONSECA: I think it’s important to note that isolation hasn’t gotten us very far either, right? Two decades of isolation and persistent sanctions against Venezuela hasn’t shaped Venezuela in a direction sort of advantageous to the United States.

ETHAN: I know it’s unpopular to suggest sanctions against an autocratic government could have a downside. If there’s three things America agrees on, it’s that McDonald’s has the best fast food french fry, Jon Hamm can get it anytime he wants, and nobody wants to trade with an autocratic regime. However, Dr. Fonseca makes an interesting point here, so hear him out. When the U.S. banned Venezuelan oil imports, Venezuela had two choices: (1) restore democracy, improve their humanitarian crisis, and repair the relationship with the U.S. or (2) do none of that and just let their economy suffer as a result. If you’re the U.S., you really only achieve your goal if the former happens. The latter scenario hurts the U.S. economy too — Chevron had been doing work in the region, and Citgo is actually owned by PDVSA. Our interviewee today was the chairwoman of the Citgo Board of Directors from 2019 to 2021 before assuming her role at Columbia University, and in that time, due to the U.S. sanctions, Citgo had to undergo a very weird and confusing untangling of their relationship with Venezuela. And in 2022, the U.S. economy is really feeling this decision. After banning oil imports from Russia due to their invasion of Ukraine, the U.S. has had to look elsewhere for oil. Why not use domestic oil? Because oil drilled in the U.S. is light oil, but our refineries are largely set up to process the heavier oils found in Russia and Venezuela. As such, the U.S. has discussed negotiating with Venezuela here, and that gets tricky. Once you’ve imposed a sanction, you don’t want to cave. So as weird as it might sound at first, you can see why Dr. Fonseca argues that sanctions aren’t working here.

ETHAN: Let’s pretend for a moment, though, that Venezuela did take some steps that made the U.S. comfortable reopening trade, whatever that may look like. I don’t know our government’s threshold. If that were to happen, and Venezuela regains an oil customer, we could start to see oil production bounce back, and that’s obviously a concern from a climate and environmental perspective. In that event, there’s some things the U.S. could do. They could require an independent regulator for PDVSA to ensure some accountability. Via U.S. partners such as Citgo and Chevron, the U.S. could invest in infrastructure improvements to prevent issues such as oil spills, or just tell PDVSA to do the mature thing and store their oil in sippy cups. Come on, it’s an obvious solution. I don’t know why no one’s thought of this yet. PDVSA, you’ll get your big boy cup when you’re ready. And if they can’t handle that, just give them a bottle and work their way up. And they could listen to the locals in the Orinoco Belt. Civil society groups in the region have been some of the staunchest advocates for environmental protection in the region. They may have useful insights to try to fend off some problems if Orinoco oil were to rebound.

ETHAN: Another option is to not do that. In theory, Venezuela could stay the course with their mining industries and make improvements there. I am not qualified to solve the issues with illegal mining and criminal organizations, though certainly that would take a major change in attitude from the Venezuelan government that has turned the other cheek, and in some cases, even offered under-the-table support to this point. Assuming that got under control though, they could look to protect some of the more important ecosystems within the Orinoco Mining Arc to prevent deforestation. And on the mercury side, there are ways to mine gold without mercury. Check out episode 19 of the podcast on Mercury to learn more about that.

ETHAN: All that said, Venezuela has an exciting opportunity in front of them. Like I mentioned before, Venezuela is already obtaining a major amount of electricity from hydropower. You might even call them a… dam nation. [booo] Come on, you gotta give me that one! In addition to hydro, Venezuela has an average solar potential of 236 watts per square meter, which is just 40 watts behind the place with the greatest solar potential in South America. And before the collapse of the Venezuelan economy, the Venezuelan Wind Energy Association estimated that the country could generate 10,000 megawatts of wind power by 2025. That explains why according to Venezuelan engineer and energy expert José Aguilar, Venezuela has an immense opportunity to become an international player in clean energy.

JOSE AGUILAR: We have a diverse system, but our levelized cost of electricity is very, very important, very low, very competitive. And that’s important to transmit and project to the world; that we have the possibility of an immense opportunity in Venezuela.

ETHAN: José uses the phrase “levelized cost of electricity,” and that refers to the estimated revenue required to build and operate an electricity generator over a specific time period. Essentially, what he’s saying is that Venezuela has a low levelized cost of electricity for a variety of renewable resources, and as such, is a good, competitive investment for international buyers. I mean, it’s almost as good as GameStop! If Venezuela can improve its image, the country can regain its position as an energy leader in a low carbon world. Venezuela could export clean energy to other countries, reducing its reliance on oil and other extractive industries. The bonus of relying on something renewable? You won’t run out! It’s like baking powder. Seriously, tell me the last time you’ve ever run out of baking powder. You can’t, can you? It just creates more of itself in the can every time you use it, it’s the only explanation. Of course, the idea of transmitting actual electricity to the world via clean energy is a challenge — Venezuela can’t run powerlines all the way to the United States or Europe — but they could obviously bring in investors from other parts of the world and form new electricity relationships with neighboring countries. In that sense, Venezuela could start to stabilize their economy, help the climate, and improve the rest of the world’s perception of them. It may not be a flawless idea, but you can see why José sees this as an immense opportunity.

ETHAN: I know this isn’t the most feel good episode. You know it’s bad when stealing eggs from an angry crocodile is “the fun part.” But I hope, at the very least, we could add a climate and environment lens to what is already a very challenging issue, and show that are sustainable paths forward here. It’s not an easy situation, but it’s not a hopeless one either. If Venezuela can get its act together, it can mitigate climate change, resuscitate its economy, protect important ecosystems and endangered species, improve public health and justice, and tell all those issues to sail away, sail away, sail away.

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ETHAN: The Sweaty Penguin is presented by Peril and Promise: a public media initiative from The WNET Group in New York, reporting on the issues and solutions around climate change. You can learn more at pbs.org/perilandpromise.

ETHAN: Welcome back to The sweaty penguin. With me today is Dr. Luisa Palacios Senior Research Scholar at the Center on Global Energy Policy at Columbia University. Dr. Palacios, welcome to the show.

PALACIOS: Thank you, Ethan, thank you for the invitation. Delighted to be here.

ETHAN: First off, could you tell us a bit about your background and your research interests?

PALACIOS: Of course, I am originally from Latin America, and I come from an oil exporting and operating sim country. And that I think has shaped a lot of how I looked at this industry, because it is it has permeated how you know the political system, society and economics. So I had the opportunity to understand investment flows from the point of view of different types of assets, different types of instruments, and the political risks and how commodity prices affect those investments and affect those risks. Now, how impacts risks. My last job was a very singular job because given my experiencing financial distress assets and investments in general I and my understanding of the commodity sector I was appointed as chairwoman of Citko Petroleum Corporation which is a US based refinery owned by a national company the national company Anthony soda, but that because of geopolitical reasons, the country Venezuela has lost control over that of other assets having to deal with geopolitical risks and the impact of the pandemic, which I think accelerated this concept of climate change, energy transition. And so seeing it from from such an upfront point of view, I think led me to the realization that this is a serious issue that the oil industries have to cope with all companies have to cope with. And part of your risk management responsibilities is to prepare companies countries for that energy transition.

ETHAN: Obviously, there’s a lot of conversations in there, and they’re ones that tons of people are having. But I’m curious, since you had the experience of living in Venezuela, how does that influence your perspective in these conversations?

PALACIOS: It influences my perspective, from from the point of from two points of view, the first one is that there are many countries, not only Venezuela, there are many countries in different parts of the emerging market world that are all exporting and and producing countries and their economies, their governments depend on the revenues that these industries provide. And therefore, there’s this issue about what is going to happen to this country’s high level of oil and prices that we all and gas prices that we see today provide a window of opportunity for countries and companies to start to prepare themselves. For the future, the energy transition is not happening tomorrow, but it is happening. And so it is the responsibility of countries, government companies, societies to prepare for it. And so but it is, it’s going to be more difficult for some countries than for others. And so there’s a theme up there about a just transition. The second thing is, I think, from the point of view of the industry, it is clear to me that there is a concept known as the social licence to operate, which I think the industry is threatened with. So in order. So this is an industry that is responsible for high level of emissions is not the only industry that generates emissions. But it is an industry that is a high emitting industry. So in understanding your social licence to operate, and you have to understand that now, and in many countries, societies, communities, where these companies in the sector operate, want these companies to first of all decarbonize and to cause the least environmental damage, and to contribute to their communities and societies and to prepare for and to start to use some of those revenues in order to deploy the new type of clean energy technologies. A lot of them are trying very hard to deploy clean energy technologies to navigate into this new era of energy fueled by renewable resources. So there are companies that are going to be able to navigate that and have understood that there are countries that are going to be able to navigate that and have understood that what worries me are those that are not are not preparing or not doing anything are operating as usual, and continue to cause environmental damage, which is not only environmental damage, but social and economic damage as well.

ETHAN: Venezuela is home to the Orinoco belt, which holds some of the world’s largest reserves of petroleum, as compared to some of the other oil producing countries in the world. What would you say is unique or different about this region?

PALACIOS: The thing with Orinoco oil is that it has one of the largest reserves space in the planet. It’s not like other reserved space, it is actually tends to be much higher intensity in terms of emissions, just because it’s very heavy oil, it’s very high sulfur. So this is an oil that can actually not even if you extract the you cannot export it to international markets, you have to process that oil you have to blend it with you either have to process it or you have to blend it with lighter groups, which then went to Iraq for you to be able to transport it and to be refined, and refineries all over the world. So so it’s not if you were to do a comparison, there are barrels of oil that are much lighter and much less carbon intensive than the Venezuelan Orinoco oil, but it is a real source that is very low cost. And because it’s you don’t have to deploy a significant amount of capital just because it’s not, you know, offshore in very complex places, it’s really, you know, next to the Orinoco River, you just have to drill and the oil is not very deep, it’s just there. But because it’s near very critical areas for biodiversity, you actually have to be very, very careful in how you protect the environment in which you’re, you’re producing this oil. And so that comes again, the concept of social licence to operate, which means that with these kinds of oil reservoirs, knowing that their carbon intensity tends to be much higher than in other types of reservoirs, then you then have to invest significantly more in trying to decarbonize it, capture its carbon and store it as a way to offset some of the emissions that you’re generating. 

ETHAN: You’ve written that in order to prepare for a global transition to cleaner energy sources, oil producers, such as Venezuela ought to be investing some of the high profits they’re receiving now into their future. Could you elaborate on that a little bit? What types of strategies do you see as being effective for the region? And why has it maybe not happened yet?

PALACIOS: So I think there’s a lot of political wheel here involved, I mean, you have to be committed to that kind of strategy, you have to assume that you are responsible, you have to pitch in and not freeride on those that are actually using the money that they’re getting from higher oil prices in order to invest in clean energy technologies and decarbonisation strategy. So you can actually free right and not do anything. And one of the things that is happening is that while you might with the high level of oil and gas prices, and we’re on Ukraine, and the scarcity, or the tightness, as we call it, a global oil markets, consumers might not be as picky in terms of what kind of oil is high emitting. But that’s going to change in time, more and more, you’re going to have consumers, international markets, governments, other companies, suppliers, customers wanting to buy and wanting to acquire wanting to work with companies that respect the environment, buying products that have low carbon intensity. And so because of high oil prices, maybe their companies or countries in the region, that are not seeing the writing on the wall, because it’s too far away, right 2050 This is a problem of advanced economies, this is not our problem. We didn’t pollute the environment. That’s understandable, right? That is something that is correct. The emerging markets and nothing America did not cause climate change, they are not very high level polluters, that’s that’s that’s, they have a point there. And by the way, the region as a whole electricity generation is highly led by renewable energy, Hydroelectricity is a big component of electricity production in the region more so than in any other region. So the region is far ahead on electricity generation from from renewable sources, the thing is, is that climate change and energy transition considerations are just going to weigh more and more as the years go by. And the adjustment to this new reality is just going to take a long time. And it’s going to require significant resources, and those that are prepared today are going to be the ones that are going to be ready for tomorrow. But what I’m most concerned with is those that are not doing it or doing a very bad job, because they’re gonna fall behind in a significant way in the future. And it is not it will have significant consequences as in going back to the theme of Venezuela to me, Venezuela is can be seen as a picture of what happens to a country when it doesn’t deploy the right technologies, the clean energy technologies, the has a strategy to evolve and to incorporate energy transition strategies into their energy planning. And what happens when that doesn’t occur is significant economic distress, which we are also seeing in from a social perspective, given the humanitarian crisis in Venezuela, so countries that today enjoy significant oil revenues and might continue to enjoy them for some years. At some point, there could be a very clear moment or maybe, you know, gradual moment where those rents are not going to be enough and their economies will have to survive on something else other than oil. So you have to prepare today for the, for the energy of the future, you have to prepare your companies, your governments and your economies and failure to do so we might not see it today, but we’re gonna see it tomorrow will have significant negative consequences. And Venezuela has an interesting opportunity here as a country that also sits on a lot of mineral deposits, they could be a player in the global clean energy transition rather than being left behind in it.

ETHAN: So what would it take for Venezuela to be able to make a name for themselves in that regard? Do you see that as a likely possible scenario?

PALACIOS: Venezuela can be a paradise in terms of so many opportunities, so many resources that are going to be at play for the energy transition, let me just give you a few of those examples. First, in the energy transition, model biodiversity, and what I mean by that is worse and you know, tropical forests, and trees and land occupy a significant part of how you offset emissions and the Amazon region, the Amazon forests, you know, touches upon many countries in Latin America, including Venezuela, unfortunately, there has been mining, the way mining development has unfolded in Venezuela is very, it’s really not taking at all into consideration environmental risk. So you are probably not in the future. If you do not do mining responsibly, you’re probably not going to enjoy exactly the same things that you were talking about, which has to do with critical minerals and the role that minerals have in this new energy landscape. So critical minerals are a part of it. biodiversity and nature are another part of it. And they provide carbon offsets, they can provide carbon offsets in the future, that could be a source of revenue for any government in any country that is rich in biodiversity. Minnesota is also sitting in magnificent terrain or land for solar deployment, and when deployment. And so that’s another thing that could be an opportunity for the future. But also because Venezuela has been producing for such a long time, one of the clean energy technologies that exist has to do with how you actually clean up the air of carbon. And there are new technologies about storing capturing carbon, storing it and utilizing it in different ways. And Venezuela could also be a fantastic place for storing that those carbon emissions just because of depleted oil wells. And so it’s a way to retrofit to reuse your existing infrastructure in a way that is not against but favors the energy transition. 

ETHAN: Venezuela is also a region hard hit by climate change. I’ve read about severe droughts in the region, among other issues. So I’d imagine there would be some motivation in that regard to tackle climate change. Do you get the sense that people in the region think about these climate vulnerabilities and the oil production as linked? Or should they be thinking about it that way?

PALACIOS: I think people are increasingly thinking about those issues. And I think some of the politics in the region are telling you that these kinds of environmental issues are starting to resonate, particularly with young voters and voters not from urban places, but from rural bases, where some of these things are more obvious. I have to say that regardless of whether Latin America cost or not, which we already discussed, did not cause climate change, or is not really a very important emitter of greenhouse gases. The fact of the matter is that is being impacted. Right? What you just said is climate change is impacting the region, regardless of whether you’re at fault here or not, you are being impacted by it. So how do you deal with that? One way, is that you really have to become much more resilient. And so you have to build energy systems that are resilient, then to Trump’s, because that’s one of the clear things that is happening to you. And in a region that used to depend on 50% of its electricity generated by hydro, you need to think about backups. So you need to deploy wind and solar because they can come in and at this level, high oil and gas prices that solar and wind are much, much cheaper than fossil fuels at this moment. And so when thinking about energy, affordability, you know, this is something that you you’re it’s in your interest to deploy. And I have to say some countries in Latin America have been very, very successful at deploying this type of renewable energies. Latin American countries are not rich countries necessarily. And so having to import natural gas at today’s very, very high level world prices. It’s not really the best solution from an energy affordability perspective. Active, it’s very difficult, very costly, takes a long time to be able to become an exporter of natural gas because of the transformation of the natural gas into liquefied natural gas. And so most of the emerging markets, what they do is that they export the natural gas through pipelines, it’s actually a good way for both the producer and consumers of natural gas because it’s an affordability issue. So, for example, Bolivia exports most of its natural gas to neighboring Argentina and Brazil, Venezuela has vast amount of natural gas, it has an idle pipeline with Colombia, that he could be exporting natural gas in Colombia, Colombia has to import liquefied natural gas, they recently announced the discovery of natural gas or in Colombia assured that that’s going to be great for the country. But then he’s fully sitting on this huge natural gas reserves that he could deploy. It’s a much cleaner than ArenaBowl, for example, and it’s much more needed in the energy transition, the modeling that has taken place by different international organizations, including the International Energy Agency to see a much more important role for natural gas in the energy transition for oil. So this is a way in which you navigate the energy transition provided that you produce it in a responsible way.

ETHAN: A lot of these ideas for Venezuela’s future are quite broad and far reaching. So I want to ask in the short term, what are maybe some smaller concrete steps that either Venezuela can take to create a better future for themselves or the rest of the world can take to help Venezuela in that regard?

PALACIOS: So Venezuela, like other countries, is now exhibiting high oil prices. Actually, Venezuela is among seven countries, even with this very low levels of oil production, that it has the highest flaring levels in the world, fixing that does not require a lot of money, and it will do a lot for the environment. And it will show goodwill, I actually think that this is the project of stopping or are fixing the flaring issue in Venezuela could be financed provided that the government were to care about the flaring that takes place. And were to recognize that there is an environmental issue. Resources are there for these kinds of projects to help countries improve on their energy and environmental possibility. So this is one thing that could happen, like right away, because it doesn’t cost too much just to not do flaring. And there will be money available to help. 

ETHAN: I feel like we could talk for hours about this. But is there anything else you wanted to add?

PALACIOS: About the energy transition in Latin America, I mean, you can see it as a glass half full or glass half empty, there will be opportunities. But in order to unlock those opportunities, there’s a lot of work that needs to be done. And it’s the kind of work that requires new ways to think, creative ways to think about markets, really ways to think about energy. There’s a lot that we need to do. I do think that we should not sugarcoat the costs and decide this is going to be tough, but there is significant opportunities to unlock.

ETHAN: Dr. Palacios thank you so much for joining us.

PALACIOS: Thank you, Ethan for the invitation.

ETHAN: This wraps up episode 104 of this sweaty penguin. Take two minutes, help out the show and get a shout-out at the end of the show by leaving a five-star rating and review on Apple or podcast addict or join our Patreon at patreon.com/thesweatypenguin, you get merch bonus content and more. Clips today came from BBC Earth PBS Newshour Center for Strategic and International Studies. NBC News and Chatham House special thanks to our emperor penguin patrons Lawrence Harris and Brownie Central. The Sweaty Penguin is presented by Peril and Promise, a public media initiative from the WNET group in New York reporting on the issues and solutions around climate change. You can learn more at pbs.org/perilandpromise. The opinions expressed in this podcast are those of the hosts and guests. They do not necessarily reflect the opinions or views of Peril and Promise or the WNET group. Thank you all for listening, and I’ll see you next week.