Govt. snatches first carbon credit payment to prop up Budget 2023

Jan 14, 2023 News

Kaieteur News – The Government of Guyana has collected its first payment of US$75 million for the sale of its carbon credit to Hess Corporation. With two more payments of US$37.5 million each expected this year, the Government has said the sum of US$150 million is available for use in the 2023 Budget.

Vice President Bharrat Jagdeo in a statement on his Facebook page on Wednesday announced that the initial payment has been received.

“US$75 million has been paid, and is the first payment in an agreement that will be worth a minimum of US$750 million up to 2030. 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,” Jagdeo said.

The payments this year would amount to GYD$30 billion. Last year’s Budget was approved to the tune of $552.9 billion and was hailed the largest one to date. It featured revenue from the Natural Resource Fund (NRF) or oil account, for the first time.

The revenue from the first carbon credits sale have been deposited in a US dollar-denominated account held by the Bank of Guyana overseas, for onward transmission to the Consolidated Fund, which will be credited with the Guyana dollar equivalent.

A section of Guyana’s forest (Photo by: Guyana Forestry Commission)

According to Government, the National Assembly, including its Committees, will have oversight of the investment of all national revenues received from forest climate markets and managed via the Consolidated Fund through the budgetary process, in keeping with the commitments made in the Low Carbon Development Strategy (LCDS) 2030 and Resolution No. 45, adopted by the National Assembly on August 8, 2022.

The administration also assured, “Every payment and payment source will be communicated publicly at the point of payment, and at the point of transfer into the Consolidated Fund, when the payment value in Guyana Dollars will also be communicated.”

A deposit of 15 percent will be allocated to community or village-led programmes for Indigenous Peoples and Local Communities (IPLCs) as set out in Village Sustainability Plans or equivalent, put together by communities themselves while the remaining 85 percent will be allocated to national priorities outlined in the LCDS 2030. These include renewable energy, land titling, repairing canals, and protecting against climate change as outlined in Chapter Three, Four and Five respectively of the LCDS document.

In keeping with the established budgetary process enshrined in law, the Minister of Finance shall request the National Assembly to approve withdrawals from the Consolidated Fund, which shall be included in the Annual Budget Proposal.

The transactions will be appropriately tagged with a unique identifier on the Integrated Financial Management Information System (IFMIS) within the Ministry of Finance to enable the execution of annual audits.

The carbon credits received by Guyana are as a result of the country’s continued recognition of the important role that Guyana’s forests play not only the development of the country, but in combatting climate change globally.

On December 1, 2022, the Architecture for REDD+ Transactions announced the issuance of 33.47 million TREES credit to Guyana for the five-year period from 2016 to 2020. The Architecture for REDD+ Transactions (ART) is a global initiative that seeks to incentivize the reducing of emissions from deforestation and forest degradation (REDD), as well as restore forests and protect intact forests.

On December 2, 2022, the Government of Guyana entered into an agreement with the Hess Corporation for the sale of carbon credits for a minimum of US$750 million.

Based on the agreement with Hess Corporation, it will be paying US$15 per tonne between 2016 and 2020. 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.

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Carbon Development Strategy (LCDS) 2030, Government of Guyana, Hess Corporation, Indigenous Peoples and Local Communities (IPLCs), Vice President Bharrat Jagdeo

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