Mirroring the financial aspect of its 2009 premier climate change initiative – the Low Carbon Development Strategy (LCDS) – President Irfaan Ali yesterday launched an expanded version of the document that proposes Guyana meeting its global commitments while earning payments for its ecological role, even as it maximises returns from its new-found oil & gas industry.
With Guyana already in “far advanced” negotiations for payments for carbon credits, according to Vice President Bharrat Jagdeo, which sources say can yield over US$300 million annually, LCDS 2030 outlines plans to achieve this while simultaneously utilising oil & gas resources.
“The context of the LCDS we launch today – LCDS 2030 – is very different to the context of 2009. But the fundamental challenge of delivering broad-based development and prosperity at home, while contributing to solutions to global problems, remains largely the same,” the President said yesterday in an address to the nation as LCDS 2030 was launched virtually.
Under the name, “Guyana’s Low Carbon Development Strategy 2030”, Ali said that the initiative advances a vision first articulated in 2008, by Jagdeo, who was then president and who has been the lead technical person on climate and environment, since the “scale of vision” captured then remains valid today.
What is different now, he posited, is that this country is now an oil producing nation, even as he quickly emphasised that as a carbon sink, it still one of the cleanest in the world and would continue to be for a long period, given policies to keep its forest intact.
“How can Guyana harness the opportunities of low carbon development to prosper at home? And two, how can Guyana lead the way to globally relevant solutions to the biggest challenges of our time, including energy security and climate change?” he said of the two fundamental questions that form the hypothesis of the document.
The LCDS 2030 sets out an updated vision for how Government intends to drive the transformation of the country, highlighting the finances that can be accrued for its under 1% deforestation.
“We now know that the Guiana Shield, one of the most pristine rainforests in the world – which we share with Suriname, French Guiana and Brazil – stores about 18% of the world’s tropical forest carbon and 20% of the world’s freshwater. Guyana alone stores about 19.5 billion tonnes of carbon in our forests. We now know that we have extremely high levels of biological diversity in our country. We have four per cent of known animal species. There are more bird species in Guyana than in the entire United States of America. We have 2.4% of known plant species. All these ecosystem services and others provide enormous value to the global economy –Guyana’s forests alone are estimated to provide global value from US$40 billion to US$54 billion annually,” Ali stressed.
“Yet – unlike oil and gas – the world does not yet recognise this value in monetary terms. This is the main reason that forests across the world are cleared for agriculture, mining, infrastructure, and other uses. In short, the world’s tropical forests are worth more dead than alive and forest areas that are the size of Greece disappear every year, causing about 16% of global greenhouse gas emissions,” he added.
He said that the capitalist world continues to make faltering progress towards recognising this value and creating alternative low carbon income streams for the communities and countries with low deforestation and pollution rates, although some progress has been made on REDD+, within the United Nations Framework Con-vention on Climate Change.
“But compare the market for oil and gas with the market for ecosystem services, and you will see what the international financial system values. This situation needs to change over the next decade if the worst extremes of climate change are to be averted, and if the world’s forests and other ecosystems are to be maintained to regulate rainfall, prevent diseases and provide the basis for much of the world’s future medicines,” he challenged.
Market mechanism
The LCDS 30 document outlines how Guyana can earn payments. “Earning payments as Guyana moves towards a market mechanism will involve: (i) integrating with the market standard; (ii) generating credits in accordance with that standard; (iii) marketing Guyana’s credits to potential buyers.”
And explaining market and ART-TREES, a voluntary international initiative that seeks to reward countries for the seven elements of REDD+, LCDS 30 said it was another revenue stream Guyana has the ability to tap into.
“By enhancing transparency and credibility, ART aims to help unlock new, large-scale financing to facilitate global sustainable land-use and, in turn, protect forests. The mechanism under ART that outlines the Standard for Accreditation is called The REDD+ Environmental Excellence Standard (TREES),” it explains.
Appendices 1 and 2 of the document describe credit generation and the methodology for calculating those credits, but says “in sum, Guyana will receive credits for (i) any reductions in deforestation against the previous five-year average (starting with 2016-2020 as the reference period); (ii) restoration of deforested or degraded forest; (iii) the long-term storage of carbon in Guyana’s standing forest, providing that Guyana’s deforestation rate does not increase significantly above historic averages.”
To generate the credits, “Guyana will submit an annual report from its MRVS, which will then be independently verified and certified to ART-TREES standard. At the same time, Guyana has submitted a Safeguards Information Report (SOI) highlighting continued adherence to agreed social and environmental safeguards. Reporting on progress/adherence to safeguards on an annual basis will be a part of ART Monitoring Reports.
Once the credits are certified, the document said that the ART-TREES Secretariat will record them on the publicly accessible ART registry, from which point they will be available for purchase by governments or companies with high emissions which they want to offset.
And when the credits are available for sale, these can be sold on the market, either directly by Guyana or through brokers.
“The agreements, which will set out the terms under which credits are sold, are known as Emission Reductions Purchase Agreements (ERPAs), which will be published on a Government of Guyana website, and independently audited. Credits can be purchased by buyers who recognise the ART-TREES Standard – and sales 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. Buyers of credits could be sovereign governments (for example, 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,” it explains.
In his address, the President assured that while LCDS 30 holds a number of proposals on revenue generation from carbon credits, no agreement will be entered into without public consultation. “There are a number of possibilities outlined in the LCDS 2030, but I want to emphasise that no agreements will be entered into until after the national consultation is completed and the LCDS 2030 is finalised. Moreover, even after the LCDS 2030 has been finalised, all agreements will involve the participation of those impacted – with a particular emphasis on adhering to a set of United Nations mandated safeguards – including a principle known as Free Prior and Informed Consent, or FPIC – for indigenous peoples and local communities.”
“We hope that progress can be made in the next six to twelve months towards the next step with forest climate services. This can bring us a step closer to a day when their true value will enable them to increase their significance as part of the domestic economy in Guyana. Guyana will support such markets, and hopes that in years to come, global markets for ecosystem services will start to rival those for fossil fuels,” he added.
Separately, Ali said that as oil is produced, revenue will also be earned from companies operating here and flaring gas, as a fee will be imposed while policies are streamlined for the overall elimination of flaring. Stricter policies will be worked on to ensure that the oil & gas sector operates to international standards while in Guyana.
