Dear Editor,
I do not wish to find fault with Guyana’s efforts to monetise all of its natural assets, but I should certainly wish for Guyana to build a good reputation in the voluntary (and compliance) carbon markets. It is in this latter spirit that I make reference to a speech by Mr. John Hess.
Not unlike someone who has just purchased a used car of dubious quality from a used-car salesman, Mr. John Hess yesterday referred to the carbon credits his company will be purchasing from Guyana as “high quality” carbon credits. Quite apart from the fact that Mr. Hess is not in any position to pronounce on the quality of carbon credits, there are a few other important issues that I’d like to mention. Before doing so, I wish to call attention to the comment made by the UN Secretary General at the launch of the report of High-Level Expert Group on Net-Zero Commitments, namely that “The report slams greenwashing – misleading the public to believe that a company or entity is doing more to protect the environment than it is…. We must have zero tolerance for net-zero greenwashing … Using bogus ‘net-zero’ pledges to cover up massive fossil fuel expansion is reprehensible. It is rank deception … The absence of standards, regulations and rigor in voluntary carbon market credits is deeply concerning. Shadow markets for carbon credits cannot undermine genuine emission reduction efforts, including in the short term.”
The points I wish to raise are as follows:
1. The same organisation, Winrock International, that has designed Guyana’s MRV system of accounting for “past emissions from forests as well as emissions reductions achieved through REDD programs,” is the organisation that “hosts the secretariat of the Architecture for REDD+ Transactions (ART),” whose standard known as “The REDD+ Environmental Excellence Standard (TREES)” was used to certify that Guyana’s “High Forest Low Deforestation (HFLD)” credits meet the criteria it has established for putting them on sale on the voluntary carbon market as potential offsets to activities that generate positive emissions.
2. There is much debate on whether these HFLD credits really satisfy the criteria of “additionality” and even “permanence” that are applied by other carbon certifying standards, such as the Gold Standard. As recently as July 2022, S&P Global Commodity Insights carried the following report:
“The Gold Standard, meanwhile, does not certify avoided deforestation credits at all – either regular REDD+ projects or HLFD projects.
“[Sarah Leugers, Chief Strategy Officer, Gold Standard, said that] “While we underscore the importance of preserving standing forests and continue to explore credible ways to incentivize the conservation of nature, Gold Standard’s position has always been that the challenges around uncertainty for avoided deforestation projects make them unsuitable for carbon crediting and a risk to the integrity of the voluntary carbon market… HFLD projects rely on a projected increase in deforestation rate to make the case of their additionality. This poses an additional layer of uncertainty to that of other REDD+ projects; that is, the deforestation baseline is not only counterfactual, but it is also based on large assumptions rather than on historical, quantifiable trends.”
“Leugers added that the HFLD mechanism was not an eligible activity for carbon credit issuance under Gold Standard due to high levels of uncertainty around counterfactual baselines of avoided deforestation/degradation projects.”
3. A significant concern is that the issuance of HFLD credits, especially in large amounts, would cause the price of even high quality carbon credits to fall, thereby making the interventions that really create additionality in the sequestration of emissions to become less viable financially.
To continue with the used-car salesman analogy, HFLD credits can have the effect of making the voluntary market a “lemons’ market ‘’ for carbon credits of uncertain quality.
These comments aside, I wish to endorse the view of President Ali that Guyana is one of the few countries that have experienced a bonanza such as the one that Mr. Hess’ own company has been participating in (as part of the EEPGL consortium), and to say further that nothing in this letter should be construed as an attempt to halt Guyana’s quest to use its natural resources to secure a better future for Guyanese.
Yours faithfully,
Thomas B. Singh
Director
University of Guyana GREEN
Institute
& Senior Lecturer
Department of Economics
University of Guyana
