The Government of Guyana has announced that it is in receipt of its first payment for carbon credits valued at US$75 million under the agreement made with Hess Corporation, and according to a statement released yesterday, it is the first payment in an agreement that will be worth a minimum of US$750 million up to 2030. Photo: VINO/File

It added that two further payments of US$37.5 million each will be made during 2023 – one in January and one in July – bringing the total amount available for appropriation in this year’s National Budget to US$150 million.

This is part of a multi-year agreement for the sale of high-quality carbon credits to United States energy major, Hess Corporation, to the tune of a whopping US$750 million – a significant portion of which will be injected into the development of Indigenous communities across the country.

During the sidelines of an event on Thursday, Dr Singh disclosed, “We’ve just concluded our first sale transaction of certified carbon credits, under which we’ve already earned US$75 million as a first transaction; of what will be an ongoing series of transactions over the years to come. This is just a portion of our carbon credits that have been sold.”

He added that Guyana remains consistent in its sustainable management of forest resources, and will continue to demonstrate global leadership in this regard.

“The future is very exciting across the entire spectrum of the economy but in particular in forestry…The realization of the forestry sector’s growth will be achieved in the context of continued responsible management of our forest resources.”

This deal with HESS, signed earlier this month, came on the heels of Guyana being the first country to receive certification of over 33 million carbon credits by the Architecture for REDD+ Transactions (ART) on December 1, 2022. That issuance of the REDD+ jurisdictional carbon credits paved the way for signing of the sale at State House, in the presence of President Dr Irfaan Ali.

This historic agreement will see Hess Corp, which is one of the partners operating in the Stabroek Block offshore Guyana, buying 2.5 million credits per year for the period 2016 and 2032, valuing US$750 million.

However, while the deal is for a 10-year period, that is, 2022 to 2032, the Government was able to negotiate, as part of the sale agreement, for the oil major to also purchase some 12.5 million carbon credits from the period 2016 to 2020 – referred to as “legacy credit”.

President Ali had pointed out that during the period when the People’s Progressive Party/Civic was out of office, Guyana’s credentials on climate change and the forest that were gained worldwide previously were lost.

Regarding the 12.5 million legacy credits, Hess will be paying a minimum of $15 per tonne, thus raking up the total to about US$187 million. It is anticipated that this amount will be paid in full within the next 18 months.

For the period 2021 to 2025 in the Hess deal, Guyana’s carbon credit would be sold for $20 per tonne, thus earning the country another $250 million; while another $312 million is expected during the 2025 to 2030 period when the credit would be sold at $25 per tonne.

The 33.7 million credits being sold to Hess Corp is just 30 percent of the carbon sink contained in Guyana’s vast forest cover. The country’s more than 18 million hectares of forests are estimated to store approximately 20 billion tonnes of carbon dioxide equivalent. The remaining 70 per cent of carbon credit will be put on the market for future sale agreements.

A carbon credit is a tradable permit or certificate that allows the holder of the credit the right to emit a stated tonnage of carbon dioxide or an equivalent of another greenhouse gas. Countries and companies that exceed their permitted limits can purchase carbon credits from nations that have low emissions such as Guyana.