The remaining 70 per cent of Guyana’s carbon credits are currently attracting interest from several markets, and Government is now exploring these opportunities, according to Vice President Bharrat Jagdeo.
This development follows the historic multi-year agreement which the Government made with United States energy major Hess Corporation, for the sale of 30 per cent of Guyana’s high-quality carbon credits to the tune of a whopping US$750 million.
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.
“We’ve had several people reaching out to us and we are exploring those opportunities. When you look at the voluntary markets for forest carbon globally and you see the prices we got, these are really good prices. You will see a huge difference. We’re exploring other interests.”
For the period 2021 to 2025 in the Hess deal, Guyana’s carbon credits would be sold for US$20 per tonne, thus earning the country another US$250 million; while another US$312 million is expected during the 2025-2030 period when the credits would be sold at US$25 per tonne.
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 cover. The country’s more than 18 million hectares of forest is estimated to store approximately 20 billion tonnes of carbon dioxide equivalent.
A total of $4.7 billion (US$22.5 million), which is 15 per cent of the US$150 million earned from carbon credits, is earmarked for distribution to Indigenous villages.
Of the 242 villages which have benefitted from the grants, 160 have already submitted plans approved by the communities for the utilisation of the money. Some have already started implementing those plans.
Meanwhile, indicating that Government is not in a hurry to sell the remaining carbon credits, the Vice President told the media on Thursday that Government is also exploring compliance markets.
“We’re exploring some compliance markets now and what it takes to get into those compliance markets. There may be some additional things that are required.”
Being a signatory of the Paris Agreement, the former Government had put forward the intention of achieving 100 per cent renewable energy by 2025.
Given that no country has been able to achieve this and the former coalition failed to make a dent, Jagdeo said Government will be working on the revision of Guyana’s Nationally Determined Contributions (NDCs) to make it more realistic. According to Jagdeo, this will move Guyana closer to such markets.
“We have to resume the consultation and then submit a realistic NDC. That’s one of the things we will move forward on and hopefully, that will allow us to move closer to some of the markets that are currently available. So, we’re exploring some compliance markets, we have to get that done,” he shared.
The deal with HESS came on the heels of Guyana being the first country to receive a certification of more than 33 million carbon credits by the Architecture for REDD+ Transactions (ART) on December 1, 2022.
However, it was explained that while the deal is for a 10-year period, that is, 2022 to 2032, the Government was able to negotiate, as part of the sale agreement, for the oil major to also purchase some 12.5 million carbon credits from the period 2016 to 2020 – referred to as “legacy credit”.
Regarding the 12.5 million legacy credits, Hess will be paying a minimum of $15 per tonne, thus taking the total to about US$187 million. It was anticipated that this amount would be paid in full within 18 months of the signing.
Unlike the arrangements with the Norway deal, payments from this Hess agreement go directly into the Treasury as revenue but will be placed in a separate account for auditing and parliamentary accountability purposes as well as to allow for easy access to financing.
