Guyana has received positive responses from the Lowering Emissions by Accelerating Forest finance (LEAF) coalition on its proposal to retail its carbon credits to the world, Vice President Bharrat Jagdeo says.
In an exclusive interview with the Sunday Stabroek, Jagdeo said “We have made a proposal to them and [recently] they said our proposal has been successful and now we have to go and [work out] the specifics [and come to a] purchase agreement, so we are at that stage now.”
Jagdeo, who has been leading government’s climate change initiatives, explained that since getting into government the PPP/C administration has been working with the Reducing Emissions from Deforestation and forest Degradation (REDD+) initiative to have carbon credits derived from Guyana’s forests certified. He noted that new international architecture had been put in place for the trade and adjustments on Guyana’s carbon credits plans had to be made to accommodate the changes.
President Irfaan Ali in April of this year announced that his government had signed a letter of intent with Emergent, a United States-based non-profit organisation to market Guyana’s carbon credits which will be sold to private companies around the world.
“To advance our participation in the carbon market, we have signed a letter of intent with Emergent, a US-based non-profit organisation, to sell our carbon credits through credit contract. This Agreement has the potential of earning us hundreds of millions of US dollars annually,” Ali disclosed during a press conference.
According to Jagdeo, years of progress in earning from forest conservation initiatives were lost during the APNU+AFC government. This, he said, resulted in the PPP/C government having to pick up from where they left off in 2015.
“We lost a lot from APNU inefficiency in the forest area too, not just in the almost wild pledge that they made through the Nationally Determined Contributions (at the UN climate change conference in Paris). By 2015, we were supposed to have a successor agreement to the first Norwegian (forest conservation) agreement and continue from there for the five years from 2015 to 2020,” he lamented but noted that discussions with Oslo resumed when the PPP/C got into office in August last year.
Under the Norway agreement, Oslo agreed to pay US$250 million over five years if Guyana met benchmarks for limiting greenhouse gas emissions from deforestation and forest degradation, and for progress made against governance-related indicators. The final payment was disbursed in 2019 but Guyana was also penalised in some areas and a large portion of the funds is still to be spent.
“By that time this new architecture, internationally-recognized, was put in place for REDD+ transactions and we’ve been having discussion with them,” he said.
The new programme, Architecture for REDD+ Transactions (ART), was designed to help accelerate progress toward national scale accounting and implementation to achieve emissions reductions and removals at scale and to achieve the Paris Agreement goals. The project specifies requirements for the quantification, monitoring, reporting and verification of Greenhouse Gas (GhG) emission reductions and removals from REDD+ activities at a jurisdictional and national scale, according to its website.
Additionally, Jagdeo said that the government has been working with the LEAF Coalition – which includes the US, UK and Norway – to advance their proposal and the sale of carbon credits to the world.
Under the LEAF coalition, countries have a better ranking with their products, Jagdeo noted and explained that a higher credibility is achieved since the LEAF has a more in-depth certification for credits from the forestry sector and is certified through the ART process.
“A few months back we signed a MoU with Emergent and so the deal there is that they will guarantee … US$10 per tonne, which is an improvement on what we got in the past and if they sell it at any higher price, after deducting their cost, the rest of the money will come to Guyana. For example, if they sell it for US$20 a tonne, we will get $18 out of it. So that is where we are,” the Vice President added.
Subsequent to its call for proposals between April and August 2021, the LEAF Coalition announced the names of jurisdictions that are eligible for purchase agreement discussions with Coalition participants. These are: Acre (Brazil); Amapá (Brazil); Amazonas (Brazil); Burkina Faso; Costa Rica; Ecuador; Guyana; Jalisco (Mexico); Kenya; Maranhão (Brazil); Mato Grosso (Brazil); Nepal; Nigeria; Papua New Guinea; Para (Brazil); Province of Tshuapa (DRC); Quintana Roo (Mexico); Roraima (Brazil); Tocantins (Brazil); Uganda; Vietnam and Zambia.
Initial screening
“These jurisdictions submitted proposals via the Call for Proposals, and have successfully completed an initial technical screening process led by a panel of technical experts,” the website said.
However, it was stated that despite the posting, there is no guarantee of a transaction for the purchase of carbon credits, which usually entails a country or company buying credits to offset emissions which have gone beyond what is permitted.
“LEAF Coalition transactions are conditioned on the ability of a jurisdiction to demonstrate compliance with the requirements of v2.0 (or other applicable version) of The REDD+ Environmental Excellence Standard (TREES) developed by ART and the terms of the Call for Proposal issued on April 22, 2021,” LEAF said on its website.
President Ali’s announcement in April of government signing a letter of intent to retail carbon credits was the first mention of it in the public domain. The country’s carbon credits would have to be considered a national resource, deployment of which would have to be discussed with Parliament and stakeholders and then tendered. For decades the carbon credit market has seen major volatility and previous attempts by Guyana to enter trading have not materialized.
The LEAF finance coalition is a voluntary global initiative aimed at bringing together companies and governments to provide funding for tropical and subtropical forest conservation commensurate with the scale of the climate change challenge. It is unclear whether Guyana’s oil production will factor into the price per tonne offered to this country.
The coalition was launched at the Leaders’ Summit on Climate by a group of government and private companies on April 22 of this year.
A press release issued by Emergent had said that it will serve as the administrator of LEAF and will offer support including intermediary services for transactions, as applicable, and provide post-transaction infrastructure for partners that choose to transact through it.
Following its launching, LEAF issued a Call for Proposals (CFP) to provide substantial financial support to tropical and subtropical countries that successfully reduce emissions from deforestation and forest degradation. The initial CFP is expected to help catalyse significant reductions of GhG emissions through a combination of forward purchase agreements and floor price commitments at US$10 per tonne for at least 100 million metric tonnes of CO2. It is expected that this will contribute to the rapidly expanding market for high quality carbon credits from jurisdictional REDD+ programmes.
“We then sell these credits to private sector buyers who seek to meet their climate mitigation and emissions reductions goals. This speeds-up, simplifies & standardizes the credit-buying process for both forest nation sellers and private sector buyers – which, in turn, stimulates supply as demand emerges. By bringing together donor funds to provide floor price guarantees to jurisdictional sellers, we enable them to make the necessary investments in reducing deforestation. We also ensure proceeds from transactions are reinvested according to robust financial, social, and environmental safeguards. Our business model catalyses the carbon market so that we can protect forests at pace,” the Company stated.
According to Emergent, it anticipates that its first credits will be available in 2022, initially offering several millions tonnes with volumes building from there and that suppliers will be selected based on the same criteria outlined by LEAF Coalition.
