Guyana’s Low Carbon path to be financed from ‘non-existent’ market

Nov 27, 2021 News

Kaieteur News – Head of State, President Irfaan Ali, recently unveiled an expanded Low Carbon Development Strategy (LCDS) 2030, with a plethora of projects to be financed from earnings to be had by selling carbon credits on a market that is at present non-existent.
According to the document, presented by President Ali, “revenues from market-based payments will finance LCDS activities identified within the LCDS or activities related to the principles of the LCDS and its themes – and approved by the National Assembly via the National Budget process.
It also ambitiously states a designated allocation of 15 percent of all earnings for Indigenous villages and forest-based communities, earned under a forest carbon financing mechanism that will be administered through a separate mechanism under the management of the Ministry of Finance.
Earning payments, however, will depend firstly on a market mechanism being developed that would see Guyana generating credits in accordance with that standard and marketing Guyana’s credits to potential buyers.
Once the credits are available for sale, these can be sold on the market, either directly by Guyana, or through market savvy brokers. Guyana has already inked a Memorandum of Understanding with a company to accomplish this task.
According to the document, as presented, the long-term future of forest carbon markets is expected to be underpinned through the United Nations Framework Convention on Climate Change (UNFCCC) rules and corresponding international agreements.
Towards this end, it was noted that progress on Reducing Emissions from Deforestation and forest Degradation (REDD+), plus the sustainable management of forests was made at, and since, the Paris Climate Agreement, which was finalised in 2015.
According to the expanded LCDS, “as a bridge to a long-term mechanism, Guyana may seek to access market-based mechanisms for forest carbon through integration with existing or new compliance markets.
It was specifically noted that Guyana’s significant progress on building a world-leading Monitoring Reporting and Verification System (MRVS), coupled with the recent emergence of a large voluntary market with demand supported by sovereign governments, means that from early 2022, “there is a strong possibility that Guyana’s sale of forest climate services can be structured around high-quality voluntary markets that include private, as well as international public sector financing.”
It was further noted that whether Guyana pursues such initiatives will be done in accordance with all UNFCCC safeguards, and that no binding agreements will be entered into until all safeguard related requirements have been met.
Qualifying the initiative to have earnings from the sale of carbon credits finance from the expanded LCDS projects, the document states that once the credits are available for sale, these can be sold on the market, either directly by Guyana or through brokers and that the agreements, which will set out the terms under which credits are sold, are known as Emission Reduction Purchase Agreements (ERPAs), which will be published on a Government of Guyana website, and independently audited.
Sale of carbon credits, according to the proposed policy document, “will take place in line with a process established by ART-TREES to ensure environmental integrity, in accordance with the UNFCCC rules on carbon standards.”
It was noted that buyers of credits could be sovereign governments, such as was the case with the Government of Norway, or private companies with voluntary commitments to support the maintenance of the world’s forests or to take action on climate.

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