With the second-largest percentage of forest cover in the world, Guyana is also the country with the second-highest forest carbon stocks in the world with more than 87 per cent of the country’s uninhabited forests – 18.4 million hectares – storing approximately 20 billion tonnes of carbon dioxide equivalent.
Recently, US-based energy company Hess Corporation signed a multi-year agreement with Guyana’s Government to purchase 2.5 million carbon credits annually for a total of US$750 million from 2016 to 2032.
The deal includes 12.5 million legacy credits from 2016 to 2020 which account for 30% of the country’s total carbon credits.
Certified under the Architecture for REDD+ Transactions (ART) Environmental Excellence Standard (TREES), the purchased credits are among the first market-ready credits issued to a jurisdiction which were classified as “High Forest, Low Deforestation” (HFLD).
ART’s website states TREES is the body’s standard for the quantification, monitoring, reporting and verification of Greenhouse Gas (GHG) emission reductions and removals from REDD+ activities at a jurisdictional and national scale.
Dissecting the deal
During the signing, Guyana’s Vice President Dr. Bharrat Jagdeo said the deal will see Guyana’s carbon credits be sold for US$20 per tonne from 2021 to 2025 which estimates indicate will generate an extra US$250 million in revenue.
From 2025 to 2030, an additional US$312 million is anticipated from the sale of the credit at US$25 per tonne.
Jagdeo explained, “We’re selling 30 per cent of the credits available to Guyana over the period 2016 to 2030 for a minimum of US$750 million …that’s a floor.”
He added, “Why do we say minimum? Because based on parameters established in the agreement, should there be a movement in prices, we will share 60 per cent of the upside in movement of those prices.
“So, we anticipate the market to grow, the value of credit to grow in the future years and the agreement that we’re signing with Hess would allow us to share those upside benefits.”
Jagdeo also claimed the country’s Amerindian communities are set to benefit from the deal which he assured gives the communities an opportunity to make decisions on their development.
He said, “We made a commitment that 15% of all of the proceeds from any sale of forest carbon will go to Amerindian communities.
“We had a discussion at the National Toshaos’ Council (NTC). We agree that all of the communities of forested and non-forested Amerindian communities will benefit in an equitable manner and they will decide on the distribution.”
Deal a pathway to reducing Guyana’s emissions
Jagdeo highlighted the fact that deforestation and land degradation were responsible for 20 percent of greenhouse gas emissions.
If forests are not actively considered part of the solution to reduce emissions, Jagdeo warned it will be impossible to limit global warming to two degrees above pre-industrial levels by 2050.
With this in mind, Jagdeo explained the Government has prioritised and expanded the country’s low-carbon development strategy.
“Today, the vision set out in 2007 moves to the next phase where payments for forest climate services can be sourced from global carbon markets. We are pleased that the vision of 15 years ago moves forward in a major way,” said Jagedeo.
Guyana committed to deal
Guyana’s President Mohamed Irfaan Ali said the country takes pride in being one of the nine jurisdictions in the Amazon Basin and has long recognised the need for efforts to protect its forests.
Ali explained, “We said long ago that national or jurisdiction-scale action on forests, coupled with access to global private finance, could create solutions that benefit the peoples of forest-rich countries while also achieving global climate goals.
“We are committed to playing our part in the global environment, climate change, providing energy security and we are equally committed to the social and economic transformation of our country and our people.”
Ali said the country will continue to work with its allies to achieve climate mitigation, adaptation and sustainable development which includes upholding its 2050 net-zero pledge.
Given the country’s emerging oil and gas sector, Ali said there is a commitment to ensure the benefits of the sector are sustainably utilised.
Funds received under the Hess deal will also be used to fund the nation’s Low Carbon Development Strategy 2030 under a benefits-sharing framework to fund development strategies in several key areas such as renewable energy.
Hess leadership: company walking the talk
At the signing, Hess’ chief executive officer John Hess said, “Many companies, many countries make pledges about net zero …we are actually showing action.”
“The country of Guyana is showing action and steps to make 2050 net-zero a reality.”
Lamenting that the world faces a dual challenge of reaching net zero by 2050 while growing the global energy supply by about 20 per cent over the next 20 years, Hess called on Governments, businesses and civil society to work together on cost-effective policies to meet the challenge.
Hess said his company’s efforts to reduce carbon emissions, and commitment to achieving net zero, are reflected in the Guyana deal.
Acknowledging Guyana’s extensive forest cover, Hess applauded the country’s efforts to protect its rainforests and said the country is a model for other countries.