The devastating thirst for oil
Iraq remains utterly dependent on oil exports, despite suffering the consequences of climate change. Bold political action is required to secure Iraq’s future.
At a climate conference in March, Iraqi Prime Minister Mohammed Shia al-Sudani pledged to tackle the deepening impact of climate change on the country even as he failed to recognise the contribution of Iraq’s financial addiction to oil exports to rising global temperatures.
Oil revenues account for 95% of the Iraqi federal budget, with government after government announcing plans for diversification only to fail to implement them. Aside from the massive fiscal vulnerability that this dependence represents, Iraq is already facing the ravaging impacts of climate change and should be at the forefront of global efforts to stall its onward march.
Soaring temperatures have compounded drastic water scarcity in a country reliant on rivers that are being dammed by upstream neighbours Turkey and Iran. The reduced flow of water in its rivers combined with falling levels of rainfall caused by rising temperatures means that an estimated 92% of Iraq’s land is at risk of desertification. The paucity of water resources is driving farmers to abandon lands that they can no longer irrigate, and growing rural to urban migration is causing social unrest in cities unable to adequately resource existing residents.
The death of vegetation is reducing groundcover that is crucial for protecting cities from frequent sandstorms whose impact is growing more severe. In 2022, Iraq experience ten sandstorms during a period of just two months, causing respiratory illnesses and millions of dollars of loss to the economy as flights were grounded and peopled shielded indoors instead of going to work. Soaring summer temperatures are also stifling economic activity, and contributing to ill health.
Although the government claims to be committed to combatting the impact of climate change, it is far from the priority that it needs to be. Iraq needs to urgently modernise its inefficient irrigation systems, invest in building renewable energy plants, reduce its own carbon emissions and provide support to urban areas trying to absorb climate IDPs. To achieve these daunting goals, the Iraqi government needs to put its money where its mouth is, and invest a substantial portion of its resources to making progress here instead of diverting endless funds to the systemic corruption that greases the entire political system.
Iraq could achieve more if was able to access international financial capital, but it must first take radical steps to reform its appalling investment environment. Currently, foreign investors face arbitrary, contradictory and inconsistently applied regulations, a surfeit of red tape, serious issues receiving payments from government contracts, lack of access to dispute resolution mechanisms, and confusing visa and residency rules.
International donors have been providing funding to Iraq to support efforts to combat climate change, for example in 2022 the UK and Canada announced a three-year project entitled Catalytic Climate Action in Iraq. There is limited appetite, however, from tax-payers in the West to provide ongoing funding to this middle-income country. In 2022 the Iraqi economy grew by 7% because of rising oil prices, even as Western economies struggled under the weight of rapidly rising inflation. Iraq must do more to demonstrate its commitment to tackling the climate change, including by deploying its own financial resources, in order to persuade global donors countries to provide ongoing support.
Iraq has the world’s fifth-largest proven crude oil reserves, representing 8% of total global reserves, and most of Iraq’s substantial oil fields are either in production or development. It has an estimated production capacity of 4.6 million barrels of oil per day, an amount that is forecasted to rise by an additional 1.3 million barrels of oil per day by 2030. If this escalation of oil exploitation is improperly managed, it could lead to further environment degradation, and may heighten grievances of local populations who are often excluded from the financial benefits derived from their lands. The anger that local communities direct towards international oil companies is already palpable, and causes frequent outbreaks of tribally-led conflict in areas that believe they are denied a fair share of profits.
The Iraqi government has announced the goal of eliminating gas-flaring in the next four years, and it is critical that this is achieved. The practice of gas-flaring, which is the burning of natural gas associated with oil extraction, was responsible for Iraq releasing 33.46 million tonnes of CO2 in 2021. The practice had also been linked to a substantial rise in cancer cases in affected areas.
It is crucial that Iraq takes serious steps to address climate change in the coming years, not least in order to secure its own future. Key focus areas should include: implementation of sustainable water management practices, the end of gas-flaring, diversification of the economy away from reliance on oil, investment in renewable energy production, promotion of energy efficient practices and participation in international climate agreements.
As its own oil production capacity grows, Iraq should take steps to ensure that this expansion is implemented responsibly and that its benefits are equitably distributed among local communities. By strengthening its governance and investment frameworks, Iraq could also benefit from far more significant infusions of global capital.
To create a resilient future, Iraq must simultaneously reduce its contribution to climate change, whilst counteracting its most deleterious impacts, and managing the exploration and exploitation of its natural resources in a responsible and inclusive manner.
