To a great degree, Ecuadorian oil profits end up in the Global North

Research by the University of the Basque Country (UPV/EHU) reveals an unbalanced distribution of the impacts generated by the exploitation of two blocks in the Amazon.

A study by Ortzi Akizu-Gardoki published in Science of The Total Environment has analyzed the effects of the oil extracted from the two blocks in Ecuador and concluded that 21% of the revenue remains there.

As the study revealed, although most of the economic benefits have gone abroad, the Amazon suffers, on average, 19.6% of the environmental impacts. The study also detected cultural transformations in Indigenous communities as a result of the extractions.

The latest study by the UPV/EHU’s Life Cycle Thinking research group shows that 79% of the oil money from Blocks 16 and 67 in Ecuador goes to wealthy countries: The oil companies receive 20%, the refineries and distribution intermediaries 21%, and the Government of Spain 38%, due to the special tax on hydrocarbons because they are not sustainable.

“The fact that only 21% of the revenue remains in Ecuador, the country where the resource originates, indicates that the distribution of benefits and damages is not equitable. Our study quantified the unequal distribution of the economic and environmental impacts of oil exploitation in the Global North and South,” explained Akizu-Gardoki.

Ecuador produces approximately 175 million barrels of oil a year, the export of which is the country’s main source of income. More than 80 blocks are spread throughout the country, but the most controversial ones are those in the Amazon rainforest, due to the social and ecological damage they cause.

In fact, blocks 16 and 67 analyzed in the UPV/EHU study are located in the Yasuni National Park, one of the most biodiverse areas in the world. These wells were selected for the research because that was where the quantification was first made of the balance between the impacts and profits of the extractions relating to nature and the local Indigenous communities.

Another reason is that Repsol has been exploiting these two blocks for the last 24 years.

“It is not possible to know whether the fuel we buy comes from one of those two blocks, but we do have petrol stations owned by that company in the Basque Country. The work has contributed to the aim of raising the awareness of us end-users here about the responsibility we have for the impacts of the oil being extracted in the Amazon,” explained Akizu-Gardoki.

The research has filled a gap. In fact, it is the first time that the ecological footprint has been crossed with the profits generated in the exploitation of these two areas. The conclusion is that on average, 19.6% of the equivalent CO₂ emissions resulting from production and consumption are directly born by Amazonia itself.

To obtain these results, researchers at the UPV/EHU used the life cycle assessment of oil. To be able to compare the data, the carbon footprint produced when the oil is used as fuel in private vehicles was taken into consideration.

In other words, they quantified the CO₂ emissions that are produced from the moment the oil is extracted from the two blocks in the Yasuni National Park, transported to the refineries, processed, and distributed to the petrol stations, until it leaves car exhaust pipes.

The results indicate that 38.7% of the emissions occur directly as a result of keeping engines running; 37.1% comes from building vehicles and infrastructure; and 24.3% from the work to extract, refine and distribute the oil.

With this data, Akizu-Gardoki would like to raise the awareness of end-consumers, stating, “It is clear that drivers bear a huge responsibility. On many occasions, we only look at the CO₂ that comes out of the exhaust pipes, but we must be aware that the environmental footprint of the act of driving is bigger and leads to damage in other countries, too. We are not responsible for the energy models created by private companies and governments, but we can be agents of change.”

The social impact on Indigenous communities

In addition to the environmental impact, the UPV/EHU study also explored the social impact of extraction from the Yasuni National Park on local Indigenous groups.

“We held in-depth interviews with representatives of the Waorani ethnic groups,” said the researcher, “and detected severe impacts on their quality of life. There are also cultural transformations from which there is no turning back. Among other things, we saw dependence on the economic model and the loss of customs as a result of civilization.”

It was also concluded that the exploitation of oil in the Amazon has led to the emergence of alcoholism and an increase in gender violence.

However, according to the leader of the Life Cycle Thinking group, when conducting the analysis, the researchers saw that companies and governments fail to quantify the social and ecological damage.

“They do so deliberately, because the lack of impact measurements allows them to continue generating impacts, and facilitates the arbitrary compensation of unquantified damage,” noted Akizu-Gardoki.

The study by the UPV/EHU has contributed to this first step to find out about the relationship between profits and impacts, but the author stressed that more steps need to be taken. For example, to reduce the impacts, he proposes starting to indicate at petrol stations where the oil comes from.

“Just as we’ve got used to asking where the fruit we buy comes from and we’re willing to pay twice as much for the local apples we have, let’s look at where the fuel we put into our vehicles comes from, and how it’s produced. Basque society has the potential to bring about changes in the current energy model.”