Guyana is known for having the second-largest percentage of forest cover and the second-highest forest carbon stocks country in the world with More than 87 per cent of Guyana’s landmass—18.4 million hectares — of uninhabited forest storing approximately 20 billion tonnes of Co2 equivalent.
Guyana, a small developing country, made history by signing a multi-year agreement with Hess Corporation, a global oil, gas, and energy solution company based in the United States. This significant agreement between the Guyanese government and the multinational energy conglomerate calls for the company to purchase 2.5 million carbon credits annually for a total of US$750 million from 2016 to 2032. This includes 12.5 million legacy credits from 2016 to 2020, which account for 30% of the country’s total carbon credits.
The credits are certified under the Architecture for REDD+ Transactions (ART) Environmental Excellence Standard (TREES), a high-integrity standard for measuring, monitoring, verifying, and crediting climate progress; they are the first market-ready credits issued to a jurisdiction classified as “High Forest, Low Deforestation” (HFLD), making this the first-ever sale of its kind.
Vice President Dr. Bharrat Jagdeo claims that under the Hess agreement, Guyana’s carbon credit will be sold for $20 per tonne from 2021 to 2025, bringing in an additional $250 million for the nation. From 2025 to 2030, an additional $312 million is anticipated from the sale of the credit at $25 per tonne, bringing in a total of $750 million for Guyana.
Putting things in perspective, Dr. Jagdeo explains that, “we’re selling 30% of the credits available to Guyana over the period 2016 to 2030 for a minimum of $750 million; that’s a floor. Why do we say minimum? Because based on parameters established in the agreement, should there be a movement in prices, we will share 60% of the upside in movement of those prices. So, we anticipate the market to grow, the value of credit to grow in the future years and the agreement that we’re signing with Hess would allow us to share those upside benefits.”
During the signing, Dr. Jagdeo also revealed that local Amerindian communities in the country would benefit from approximately US$112 million under the agreement, giving natives the opportunity to actively make decisions on their development.
He said, “We made a commitment that 15% of all of the proceeds from any sale of forest carbon will go to Amerindian communities. We had a discussion at the National Toshaos’ Council (NTC). We agree that all of the communities forested and non-forested Amerindian communities will benefit in an equitable manner and they will decide on the distribution. ”
15 years in the making
Speaking of the journey, the vice president stated that the nation’s role was to draw more attention to some widely known facts, the first of which was the fact that deforestation and land degradation were responsible for 20% of emissions of greenhouse gases. And secondly, if forests are not a part of the solution, it will be impossible to limit global warming to two degrees above preindustrial levels by 2050.
He went on to say that the initial low-carbon development strategy, and now the expanded LCDs vision 2030, is now being realized in the agreement.
“Today, the vision set out in 2007 moves to the next phase where payments for forest climate services can be sourced from global carbon markets. We are pleased that the vision of 15 years ago moves forward in a major way,” expounded Dr. Jagdeo
Walking the talk
According to John Hess the Chief Executive Officer for Hess Corporation, “many companies, many countries make pledges about net zero. We are actually showing action. The country of Guyana is showing action and steps to make 2050 net-zero a reality.” He said that “the world faces a dual challenge of reaching net zero by 2050 while growing the global energy supply by about 20 per cent over the next 20 years. Governments, businesses and civil society must work together on cost-effective policies to meet this dual challenge.”
Hess says that his company’s efforts to reduce carbon emissions and commitment to achieving net zero are both supported in the inked agreement with Guyana.
During his remarks the also said: “Guyana is one of the most heavily forested countries in the world. We admire the efforts that Guyana has undertaken for years to protect the country’s forest, and provide a strong model for other countries, other businesses and other governments… We are pleased to support the country’s efforts to advance sustainable development and enhance the quality of life for its people.”
Cementing Guyana’s commitment was President Mohamed Irfaan Ali who said that, “as one of only nine national jurisdictions in the Amazon Basin, we said long ago that national or jurisdiction-scale action on forests, coupled with access to global private finance, could create solutions that benefit the peoples of forest-rich countries while also achieving global climate goals.”
President Ali elaborated on the government’s position to work with partners in mitigation and adaptation and he emphasized Guyana’s commitment to combating climate change and developing sustainably while upholding the 2050 net-zero pledge. He said, “We are committed to playing our part in this global environment. We are committed in playing our part in climate change, in providing energy security and we are equally committed to the social and economic transformation of our country and our people. And to do this, we are committed to the oil and gas sector, ensuring that we optimise the totality of benefits in this sector and bring to fuel the transformation that is required for our country. In doing so, we know how important time is.”
Funds received under the agreement with Hess Corporation will be used to fund the nation’s Low Carbon Development Strategy 2030 under a benefits-sharing framework to fund development strategies in several key areas such as renewable energy.