Guyana’s initial carbon credits, which have been a long time in the making, have started to bring revenue into the country, under a deal signed in December between the Guyanese government and Hess Corporation, which belongs to a consortium of oil and gas companies developing Guyana’s offshore resources.
Hess has agreed to purchase 37.5 million carbon credits from Guyana for a minimum of $750 million between 2022 and 2032. Vice President Bharrat Jagdeo recently said that the deal could potentially bring in much more revenue than that, if the credits gain value as they are traded on secondary markets.
Forest carbon credits issued by independent verification bodies are a means to put a value on the carbon stored by trees. Companies that emit greenhouse gases can compensate for their emissions by buying these tradable credits. Each carbon credit equals one metric ton of carbon that has been reduced, avoided, or sequestered.
Speaking at the International Energy Conference and Expo Guyana 2023—held in the Guyanese capital of Georgetown in mid-February—Jagdeo said that 15% of the proceeds from Guyana’s carbon credits will go directly to Amerindian villages in the country’s hinterland, “recognizing the stewardship role they’ve played over forests.”
He said that he was about to meet with the leaders of 240 villages and that the government would soon be disbursing a total of $22 million to their communities, as their share of the first payment of $150 million.
The Wai Wai are a Carib-speaking indigenous people of southern Guyana and northern Brazil. Credit: Marcelo Camargo/Agência Brasil CCBY3.0
Jagdeo said that the deal with Hess represented 30% of Guyana’s internationally certified carbon credits, and that the government could enter into additional such agreements in the future. Nearly 90% of the country is forested, he said, which means that Guyana plays an important role in absorbing carbon from the atmosphere.
“We’re making our contribution to the global fight against climate change, but we are monetizing these resources and reutilizing these resources for the development of our country,” he said.
Guyana, which is part of the Amazon Basin, has an estimated 18 million hectares of mostly old-growth forests—a larger geographical area than the South American country of Uruguay or the U.S. state of Florida. These forests store around 20 billion tons of carbon dioxide and remove about 154 million tons of CO2 from the atmosphere every year, according to government figures.
In his remarks at the conference, Guyanese President Irfaan Ali talked about the need for the world to make more progress in recognizing the economic value of stored carbon and biodiversity. In the meantime, he said, Guyana should celebrate the accomplishment represented by the recently signed agreement.
“This is visionary, proactive, sustainable, and it catalyzes the value of our natural resources,” he said. Ali added that the agreement is consistent with Guyana’s Low Carbon Development Strategy 2030, which he said he hoped would become “a global model on sustainability.”
At the International Energy Conference and Expo Guyana 2023, Vice President Bharrat Jagdeo explained that Guyana’s vast forests play an important role in absorbing carbon from the atmosphere. Credit: Official Page of Bharrat Jagdeo.
During a forum at the recent energy conference, Vice President Jagdeo—who served as President of Guyana from 1999 to 2011—explained that his country started exploring the possibility of compensation for forest preservation in 2007.
“We thought, what if we were to deploy our forests in the fight against climate change? Would there be enough global incentives to allow us to outcompete alternate use for the forests?”
Although some would argue against cutting down any trees, he said, the fact is that people depend on the forests to make a living.
“So clearly, we had to find a balanced approach that would allow people to continue to have a decent livelihood using the forest, but at the same time preserve these forests, because if we don’t, we’d never achieve net zero,” Jagdeo said. (Deforestation and land degradation account for about 16% of the world’s greenhouse gas emissions, he added.)
Guyana commissioned a study from the global consulting firm McKinsey & Company to estimate the potential economic value to the nation if Guyana were to harvest most of its forests and put the land to alternate use, such as for mining or agriculture. The study estimated that the country could generate an annuity of close to $600 million—meaning that if it could eventually produce that kind of revenue for not harvesting the forests, that would make preservation a competitive alternative.
“That’s the only sustainable way to approach forests,” Jagdeo said.
Transporting sugarcane down a river in Guyana. Carbon credits will provide another source of income for communities in the less-developed parts of the country, called the hinterland. Credit: Kevin Snyman
Guyana sought out a bilateral partner to prove the concept, and in 2009, it signed an agreement with Norway. Under that deal, Guyana earned more than $220 million in payments from Norway for forest climate services from 2009 to 2015, according to the Low Carbon Development Strategy.
During that period, Guyana also developed what Jagdeo called a “robust” monitoring, reporting, and verification system for forest carbon, which laid the groundwork for international certification.
In December, Guyana became the first country in the world to be issued so-called TREES credits, through a global initiative called the Architecture for REDD+ Transactions (ART). REDD+ is a United Nations-created climate mitigation approach, defined as “reducing emissions from deforestation and forest degradation in developing countries, and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks.” TREES stands for The REDD+ Environmental Excellence Standard.
Frances Seymour, who chairs the ART board of directors, said the issuance of carbon credits to Guyana recognizes the country’s success in protecting its forests.
“Guyana is the first to complete the ART process for generating high-integrity, Paris Agreement-aligned carbon credits that will allow the country to access market-based finance to continue to implement forest stewardship strategies,” she said in a press release.
In his presentation at the energy conference, Jagdeo said that the funds derived from the sale of carbon credits will benefit all of Guyana’s people, along on the coast and in the hinterland, as Guyana calls the less-populated areas in the interior of the country.
Villages that are away from the coast tend to have access to fewer opportunities, Jagdeo said, and the direct allocations will allow them to fund projects of their choosing, which will be determined by each community through a village development plan. Basic infrastructure, he said, will continue to be the government’s responsibility.
“We don’t expect the Amerindian communities to fund their roads from this fund,” he said, adding that ideally, the new payments will allow villages to expand their local income-generating activities.
The National Toshaos Council—the word “toshao” refers to elected local leaders or village captains—has endorsed Guyana’s Low Carbon Development Strategy 2030, and in a panel discussion in December, several of the leaders praised the agreement with Hess.
The Chair of the National Toshaos Council, Derrick John of Moraikobai village, called it “groundbreaking” and said the new funding will help “bridge the gap” between the coastal and hinterland communities. One emerging area that will likely be a focus of investment is ecotourism, he said.
Toshao Timothy Andrews of St. Cuthbert’s Mission said the funds will give communities that depend on lumber the chance to diversify. “It gives us that opportunity, that option, to say, look, we can now develop our communities in a more sustainable way,” he said.
For his part, Shane Cornelius, from the village of Karrau, said he hoped that the funding would also allow more people to stay in the village instead of migrating to the coast.
“We have put in the work as indigenous people,” said another leader, Sonya Latchman, from Bethany village. “We have conserved, and it is a feeling of great accomplishment.”
The new funds, she said, will allow the villages to complement what the government is doing “so that we can further develop Guyana and push it to that one Guyana that we all want to see.”
The Stena Carron drillship in Guyana waters. So far, the country is estimated to have 11 billion barrels of recoverable oil resources, and exploration continues. Credit: Stena Drilling
Of course, the biggest factor driving the country’s development these days is oil. Since the first significant oil find off the coast of Guyana, in 2015, the country has become “a world-recognized petroleum producer,” as an industry news outlet, Oilprice.com, reported recently.
By the end of 2022, it said, Guyana was pumping an average of 360,000 barrels per day, with production expected to more than double in the next two years. Last year, it said, the country ranked 17th globally in offshore oil reserves, with an estimated 11 billion barrels of recoverable oil resources, and exploration continues.
The discoveries have “transformed the country’s development prospects,” as Guyana’s Low Carbon Development Strategy 2030 puts it.
At the recent conference in Georgetown, President Ali underscored his country’s “low-carbon ambition,” noting that Guyana is investing in renewable energy and working to decarbonize its domestic economy. But, he said, the reality is that the world still runs on fossil fuels.
He called for a more balanced and realistic international debate around three central challenges facing countries today: climate change, food security, and energy security.
“We don’t have to be self-righteous on this issue,” he said. “I speak to you from a position of an oil-producing country that will continue to produce oil, that will accelerate our effort to extract the natural resource we’ve been blessed with and convert it to the development of our people.”
In an interview earlier this year with the news outlet Al Jazeera, Ali said that oil and gas production will allow the country to diversify its economy; promote public and private investment in infrastructure, housing, health care, education, agriculture, renewable energy, and other sectors; and expand the middle class. Guyana will develop its resources responsibly and sustainably, he said, in the time that is left before the transition to clean energy is complete and the world stops depending on petroleum.
“There is a reality facing us. We are aware of that reality,” he said. “That is why we have to make the best use of what we have in the quickest possible time.”
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