Guyana can earn about US$5B from forests in future
…if companies or countries forced to pay for carbon credits
By Vishani Ragobeer
Guyana is earning payments for its forest-saving efforts through a voluntary partnership with the Hess Corporation but in the future, if companies or countries are forced to pay for forest-saving efforts, the small South American nation can possibly earn about US$5 billion.
This is according to Guyana’s Vice President Dr. Bharrat Jagdeo, who discussed the country’s Low Carbon Development Strategy (LCDS) at the ongoing International Energy Conference.
“These forests are a living part of the country…people look to the forests as a source of livelihood and sometimes, that doesn’t come across in the international countries.
“Clearly, we have to find a balanced approach to allow people to continue to have a decent livelihood using the forests and at the same time protect the forests,” the Vice President said at the event held at the Marriott Hotel in Kingston, Georgetown.
It was this consideration that led to the development of the LCDS, which earns Guyana funds for protecting its forests. Those intact forests cover a landmass greater than the size of England.
Over a decade ago, the country first developed the LCDS. In 2021, that strategy was updated by the Irfaan Ali-led government.
And in December 2022, the country entered into the first voluntary payment scheme for at least US$750 million with Hess after its carbon credits were certified by the Architecture for REDD+ Transactions (ART). Hess is buying 30 per cent of Guyana’s credits.
Under the current arrangement, Dr. Jagdeo said the trade of all Guyana credits could earn the country about US$2 billion.
But if there is a compliance market for Guyana’s credits, the Guyanese official believes the prices can escalate.
“It has the potential to go to US$80/90 dollars per tonne (of carbon).
“Potentially, this could become a US$4 or US$5 billion deal if it is traded upwards,” Vice President Jagdeo told the conference.
Hess is voluntarily paying Guyana US$15 per tonne of credits from 2016 to 2020. For the period 2021 to 2025, the company is paying $20 per tonne; and for the period 2026 to 2030, the company will pay US$25 per tonne.
VOLUNTARY VS COMPLIANCE MARKETS
A carbon credit is a kind of tradable 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.
There are two types of markets: the voluntary and compliance market.
According to the United Nations Development Programme (UNDP), compliance markets are created because of regulatory requirements.
In some cases, these markets require emitters (for example, companies) to pay for those permits if they pollute the environment with too many harmful greenhouse gases like carbon dioxide.
The voluntary market, as its name suggests, allows emitters to freely purchase these credits in an attempt to offset their emissions.
But Jagdeo said more buyers are lining up.
“We have a number of people trying to buy those credits, we’re a bit cautious now but soon we’ll go into the market for that,” the Vice President said.
These credits, alongside oil revenues, are being used to fund national development priorities. Flood control and water management are among those priorities.
And Jagdeo defended the country’s low carbon, oil wealth pursuits as one that is needed to protect the country from the harsh effects of climate change, like flooding along the vulnerable coastline.
“We can’t wait for climate funds or adaptation funds to come through the global mechanism.
“Most countries in the region are waiting, we can’t wait,” he stressed.
