Min. of Natural Resources tells Parliament... “Guyana to pay US$1.8M verification fee before receiving US$187M from carbon credit sale”

Min. of Natural Resources tells Parliament… “Guyana to pay US$1.8M verification fee before receiving US$187M from carbon credit sale”

Dec 08, 2022 News

Kaieteur News – Before Guyana receives a cent from the sale of its carbon credits, the country must first pay a verification fee of US$1.8 million or GYD$360 million to the international regulatory body- the Architecture for REDD+ Transactions (ART).

This was the message conveyed to the National Assembly, by Minister of Natural Resources, Vickram Bharrat during Monday’s Sitting.

According to the Minister, “In order for countries to sell carbon credits, it must be validated, it must be checked.” To this end, he explained, “We are using ART to verify our carbon credits, otherwise, we cannot put it into the market… nobody will buy carbon credits if it is not verified.”

It was only last Friday that Hess Corporation signed a 15 year agreement with the government to purchase its carbon credits between the period 2016 to 2032.

Natural Resources Minister, Vickram Bharrat

Nonetheless, Bharrat said the now approved sum was needed to specifically cater to the payments Guyana will be receiving for the period 2016 to 2020.

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, Vice President, Bharrat Jagdeo 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.

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.

Avoiding global deforestation is foundational to the Paris Agreement’s aim of limiting the global average temperature rise to well below 2°C and was one of the major commitments made at the COP26 climate summit, where more than 130 countries, including Guyana, pledged to end deforestation by 2030. Guyana’s more than 18 million hectares of forests are estimated to store approximately 20 billion tonnes of carbon dioxide equivalent. Through Guyana’s Low Carbon Development Strategy 2030, the country has a roadmap for preserving its forests, while growing its economy and creating a development pathway that is diverse and includes opportunities for all Guyanese citizens.