President Dr. Irfaan Ali announced on Friday that the Hess Corporation will pay Guyana US$750M for saving the rainforest through a special carbon credits scheme. Hess will buy 2.5 million carbon credits annually, covering 2016-2030.
The door is open for Guyana to gain hundreds of millions more as on Thursday, Guyana became the first country to get special carbon credits issued to it by the Architecture for REDD+ Transactions (ART).
ART is a global initiative that seeks to incentivize governments to reduce emissions from deforestation and forest degradation (REDD), as well as restore forests and protect intact forests.
A total of 33.47 million credits, known specifically as REDD+ Environmental Excellence Standard (TREES) credits- is available to buyers.
The announcement of Hess being the first buyer was announced at the State House, in Georgetown in the presence of the Chief Executive Officer (CEO) of the Hess Corporation, John Hess.
The US$750 million payment is the minimum amount Guyana is expected to collect from Hess. Should prices for carbon credits increase on the international market, Guyana will be able to get more money.
Importantly, the Guyanese Head of State emphasised that Guyana continues to show the world its environmental prowess by virtue of getting these credits.
And though the country is now pursuing a prolific oil and gas industry, which is seen by some as conflicting with its environmental stewardship. Dr. Ali believes that Guyana is demonstrating its commitment to keeping the environment safe.
“… our commitment is always backed by strong action,” the President said.
He added, “Guyana has demonstrated that it can be done and it will be done.”
For context, a carbon credit is a kind of tradeable permit or certificate that represents the removal of a certain amount of carbon dioxide from the environment. Since carbon dioxide is the principal greenhouse gas that harms the environment, it is tracked and traded like any other commodity, and hence the name carbon market.
What Guyana is hoping to do, as it did before with Norway, is sell these credits to countries or companies. This would essentially mean that the countries or companies would pay Guyana to keep its forests intact.
Countries and companies that purchase these credits hope to signal that commitment to environmental protection and, in some cases, offset their own harmful emissions.
It is known that Guyana has 18.4 million hectares of largely pristine forest, covering more than 87 per cent of the country’s landmass. This gives the country the reputation of having the world’s second-largest percentage of rainforest cover and the second-highest carbon stock per capita globally.
During the recently-concluded United Nations’ Conference of the Parties (COP) 27 in Egypt, President Ali highlighted, “With an estimated storage of 19.5 billion tonnes of carbon dioxide equivalent, the economic value of the ecosystem services which our forests alone provide have been estimated at between US$40 to 54 billion annually.”