News Americas, NEW YORK, NY, Mon. Jan. 22, 2024: Guyana is strategically focusing on increasing its revenue from carbon credits as it strives to mitigate its environmental impact, especially in light of its burgeoning offshore oil reserves, Latin Finance reports.
In late 2022, this South American nation inked a significant agreement with US-based oil and gas producer Hess Corporation. Finance Minister Ashni Singh indicated to Latin Finance that Guyana is poised to initiate new carbon credit deals when the market conditions are favorable. The agreement with Hess, a member of a consortium involved in oil exploration in Guyana, encompasses a value of $750 million in carbon credits spread over a 15-year period.
This landmark deal accounts for approximately one-third of the total carbon credits that Guyana can offer, according to Singh. He expressed that they received multiple offers when finalizing the agreement with Hess, affirming that there is substantial interest from various parties. Singh, in an interview during the World Bank/IMF annual meeting in Marrakech, Morocco, emphasized the importance of timing to secure the best possible price, indicating that carbon credits represent the third source of income for the country, following domestic revenue mobilization and oil revenue. While Singh didn’t rule out the possibility of issuing a sovereign bond in the future, Guyana is eager to establish its reputation in the carbon credit market.
The Hess deal holds particular significance for Guyana as private companies, led by ExxonMobil, are scaling up oil production more than 100 miles off its coast. With over 25 discoveries in Guyana’s waters, the country is expected to produce approximately 1.2 million barrels of oil per day by 2027.
Guyana’s first foray into carbon credits occurred in the early 2000s when it received around $250 million from Norway for its efforts in forest conservation. Notably, two-thirds of Guyana is covered by Amazon forests, and the government, under President Irfaan Ali, aims to leverage the country’s impressive track record in averting rampant deforestation, setting it apart from other members of the Amazon Cooperation Treaty Organization. In a new category known as “high forest cover/low deforestation countries,” Guyana ranks first among 33 nations globally. The government is resolute in its stance that preserving standing forests is an efficient means of combating climate change and seeks compensation for its conservation efforts.
Furthermore, Guyana is taking proactive steps to reduce greenhouse gas emissions from its energy sector by transitioning to natural gas, hydroelectric plants, and solar power generation, while also ensuring that new transportation and agri-business infrastructure align with environmentally friendly practices. The ambitious plan includes adding 50,000 acres of new farmland equipped with irrigation and drainage systems designed to minimize environmental impact. Singh underscored that despite Guyana’s trajectory as a significant oil producer, its vast forests and minimal environmental footprint position it as a carbon-sink country. He emphasized that the story of sustainable forest management, in many ways, parallels the narrative of its oil industry and is equally crucial in addressing global environmental challenges.
The push comes as Guyana has been forced to defend its territory from Venezuela, which wants to annex its Essequibo region, home to most of the country’s forests and natural resources.
