Latest update November 5th, 2024 1:00 AM
Guyana inks 15-year pact with Hess for sale of $750M in carbon credits
Kaieteur News – The Government of Guyana (GoG) on Friday morning inked what was dubbed a “historic” agreement with U.S. oil company, Hess Corporation for the sale of carbon credits the country earned for its massive forest cover.
The signing ceremony was hosted at State House, in the presence of members of Cabinet and the Diplomatic Corps, private sector representatives and other government officials.
The multi-year agreement is for 37.5 million Reducing Emissions from Deforestation and Degradation (REDD+) jurisdictional carbon credits. This initiative is a global mechanism that was created by the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) in support of the Paris Agreement.
Hess is now Guyana’s first client, purchasing 30 percent of the country’s carbon credits for a minimum of US$750M. It was explained that the cost of the carbon credits can increase and if this shift occurs, Guyana will benefit more.
Signing the first sale of Guyana’s Carbon Credit is Permanent Secretary of the Ministry of the Presidency, Abena Moore, and Chief Executive Officer (CEO) of Hess Corporation, John Hess
Vice President Bharrat Jagdeo in remarks explained, “What is being signed here today, as the President explained, is the first sale agreement of our Carbon Credit and we’re selling 30 percent of the credits available to Guyana over the period 2016 to 2030 for a minimum of US$750M.”
He was keen to point out that Guyana had received hundreds of offers to purchase its carbon credits, however a final decision was made on the vendor only after assessing the international standards.
Based on the agreement with Hess Corporation, it will be paying US$15 per tonne between 2016 and 2020, which amounts to US$187M. In the next 18 months, the Vice President said he expects the payments to come to the country according to the schedule. Some $28M of this amount he said, will go directly to Amerindian communities.
“We made a commitment that 15 percent of all of the proceeds from any sale of forest carbon will go to Amerindian communities,” the former President reminded. This means that forested and non-forested Indigenous communities will split the value from the sale of carbon credits, he said.
Meanwhile, during the period 2021 to 2025, Guyana will be earning US$20 per tonne which is expected to rake in another US$250M for the country. For the period 2025 to 2030 Hess will pay US$25 per tonne amounting to US$312M, bringing the total to US$750M over the 10 year period. Overall, the Indigenous communities will receive approximately US$112M.
It was noted that Guyana will be seeking additional buyers in the coming months for its remaining carbon credits earned.
As it regards the oil company, Hess Corporation will now be known as one of the top funders of forest action globally. “We believe that (they) probably (are now) the top private sector funder of climate action on forest anywhere in the world. You are number one in terms of private climate action,” Jagdeo said as the Chief Executive Officer, John Hess smiled.
While delivering remarks, Hess said the agreement will add to his company’s commitment to achieve net zero by 2050. While many companies make pledges, he boasted that his is taking action.
Meanwhile, President Ali said that the sale agreement proves that Guyana can still develop its oil and gas resources and be a leader in championing the call for climate change efforts. In fact he explained that the resources from oil and gas will help the country in its adaptation efforts.
“As you are aware, in just over two years of assuming office we have commenced and accomplished much of what we had promised to ensure that our country is positively positioned to deal with oil rich resource, while protecting our traditional sectors and preserving our environmental standing in the world. We believe that there is a balance and there can be a balance with strong policies, good vision and understanding the realities that the globe face,” President Ali charged.
He went on to note, “Guyana has entered a new era. With it we will face new challenges. This Government is focussed on ensuring this age of development will bring forth an economy that is in the forefront of energy security, food security, environmental and climate services, ecological services, biological services and technological services.” These platforms he said will serve as the foundation for the growth of Guyana.
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