United States oil giant ExxonMobil is not keen on buying Guyana’s “high-quality” carbon credits and is, instead, channelling its investment in other areas locally as part of the company’s overall commitment to fighting climate change.
This is according to Vice President Bharrat Jagdeo during a press conference on Thursday when he was asked whether Exxon has expressed interest in purchasing any of the country’s remaining 70 per cent certified carbon credits.
“We raised this matter with them, they have not been positively inclined to do that.”
“Every business or every person has their own business model. Exxon says they’re investing in carbon capture and storage and therefore, that’s their contribution to the fight against climate change. I’m not defending them, because I think they should do more globally and here. But they have indicated, by the way, that they’re prepared to invest in other things – mangroves and reforestation, and all of that. So, we’ve had a different conversation,” Jagdeo noted.
Back in December 2022, the Guyana Government signed a historic multi-year agreement for the sale of certified carbon credits to US energy major Hess Corporation to the tune of US$750 million – 15 per cent of which is going directly towards the development of hinterland communities.
This deal came after Guyana was the first country to receive certification of its carbon credits by the Architecture for REDD+ Transactions (ART) on December 1, 2022.
The 33.7 million credits being sold to Hess Corp is just 30 per cent of the carbon sink contained in Guyana’s vast forest. The country’s more than 18 million hectares of forests are estimated to store approximately 20 billion tonnes of carbon dioxide equivalent.
The remaining 70 per cent of Guyana’s carbon credits will be put on the market for future sale agreements but according to the Vice President, Government was not in a rush to sell as it explores which carbon offset market will attract the highest value for Guyana’s credits.
Immediately after the Hess deal was signed last December, ExxonMobil Guyana President Alistair Routledge told reporters that trading carbon credits was among the options being considered by the oil major in its efforts to manage climate change.
“ExxonMobil is looking at lots of different ways to manage climate change and this [trading of carbon credits] is always going to be one of the considerations,” he related.
Asked whether any discussions have already started in this regard with Guyanese authorities, Routledge indicated he “can’t comment on anything that’s in the future” .
Nevertheless, during Thursday’s press briefing, VP Jagdeo dismissed the notion that Exxon’s unwillingness to make the purchase would bring the quality of the country’s carbon credits into question. In fact, he pointed out that Hess was one of Exxon’s co-venturers and a major investor in the oil-rich Stabroek Block offshore Guyana, where exploration and production activities are ongoing.
“So, I don’t see it as anything [if Exxon doesn’t buy our carbon credits]. Globally, we’re recognised as the best quality of forest carbon so it doesn’t matter [whether Exxon buys or not]. We’ve had interest from a number of people, but we’re being very cautious before we sell the additional 70 per cent. Exxon is not the barometer or the litmus test for the quality of our carbon credits. But a co-venturer of theirs has bought it and it’s the largest purchase of carbon credits anywhere in the world, including in Brazil or Indonesia or any of the other countries that have substantially bigger forest than ours,” the Vice President contended.
He further outlined that, “We’re not begging Exxon to buy our credit. Our credit is competitive and we’re looking for the best deal. So, if Exxon changes its mind and comes along with an offer that is good and outcompete any other offer, they could participate. If they don’t, then we will go with the higher offer. We’re not begging Exxon to buy our carbon.”
With Guyana now a leading trader in the global forest carbon market, Government is looking at ways to increasing earnings from those transactions.
As a matter of fact, Guyana’s is also one of the few credits in the forestry sector that can now be sold in the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) market, which is the compliance market for abating airlines emissions.
With a global push by operators in various sectors to reduce their carbon footprints, VP Jagdeo had said back in August that Guyana is receiving broad interest from major players in the international aviation sector that are exploring buying the country’s high-quality carbon credits. These include some big airlines based in Asia.
Jagdeo had noted that the country’s carbon credits would attract a higher value now that they could be traded in the CORSIA market.
He explained, “When we go into the market, people look at where the credit can be used: so, if it’s only for voluntary offsets [market] or if it can be used in a compliance market. So, that lends value to the credit itself. That’s why we got priced significantly higher than the market price.”
A carbon credit is a tradable permit or certificate that allows the holder of the credit the right to emit a stated tonnage of carbon dioxide or an equivalent of another greenhouse gas. Countries and companies that exceed their permitted limits can purchase carbon credits from nations that have low emissions such as Guyana.
There are two categories of carbon offset markets in which carbon credits are traded: the voluntary carbon market and the compliance carbon market.
In the voluntary carbon offset market, organisations or countries, in Guyana’s case, create carbon credits by lowering their own greenhouse gas emissions and sell to other organisations or countries that have high emission levels.
With the compliance market, however, there are certain caps on emission levels set by governments and other regulators as a means of achieving carbon reduction targets. This market is also known as the cap-and-trade and similarly, allows organisations that emit less to sell to high emitters but this is driven by legal mandate.
