Carbon credit sale: “Broad interest” from int’l aviation players – VP

With a global push by operators in various sectors to reduce their carbon footprints, Guyana is receiving broad interest from major players in the international aviation sector that are exploring buying the country’s high-quality carbon credits.
Back in April, Vice President Bharrat Jagdeo had disclosed that Guyana is one of the few credits in the forestry sector that can now be sold in the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) market, which is the compliance market for abating airlines’ emissions.
Since then, Jagdeo disclosed that major aviation operators including some in Asia have been showing interest in buying Guyana’s carbon credits.
“We have broad interests from the aviation sector,” the Vice President recently told Guyana Times.
With Guyana now being able to trade in the CORSIA market, Jagdeo noted that the value of the country’s carbon credits will attract a higher value.
He explained, “When we go into the market, people look at where the credit can be used. So, if it’s only for voluntary offsets [market] or if it can be used in a compliance market. So, that lends value to the credit itself. That’s why we got priced significantly higher than the market price.”
A carbon credit is a tradable permit or certificate that allows the holder of the credit the right to emit a stated tonnage of carbon dioxide or an equivalent of another greenhouse gas. Countries and companies that exceed their permitted limits can purchase carbon credits from nations that have low emissions such as Guyana.
There are two categories of carbon offset markets in which carbon credits are traded: the voluntary carbon market and the compliance carbon market.
In the voluntary carbon offset market, organisations or countries, in Guyana’s case, create carbon credits by lowering their own greenhouse gas emissions and sell to other organisations or countries that have high emission levels.
With the compliance market, however, there are certain caps on emission levels set by governments and other regulators as a means of achieving carbon reduction targets. This market is also known as the cap-and-trade and similarly, allows organisations that emit less to sell to high emitters but this is driven by legal mandate.

Historic multi-year agreement
In December 2022, the Guyana Government signed a historic multi-year agreement with United States energy major, Hess Corporation, for the sale of high-quality carbon credits to the tune of a whopping US$750 million.
The 33.7 million credits being sold to Hess Corp is just 30 per cent of the carbon sink contained in Guyana’s vast forest cover. The country’s more than 18 million hectares of forest is estimated to store approximately 20 billion tonnes of carbon dioxide equivalent.
Only last month, the VP said that the remaining 70 per cent of carbon credits are attracting interest from several markets, which Government is looking into.
“We’ve had several people reaching out to us and we are exploring those opportunities. When you look at the voluntary markets for forest carbon globally and you see the prices we got, these are really good prices. You will see a huge difference. We’re exploring other interests,” Jagdeo noted.
However, the Vice President pointed out last month that Government is not in a hurry to sell the remaining carbon credits as it explores which carbon offset market will attract the highest value for Guyana’s credit.
For the period 2021 to 2025 in the Hess deal, Guyana’s carbon credits would be sold for US$20 per tonne, thus earning the country another US$250 million; while another US$312 million is expected during the 2025-2030 period when the credits would be sold at US$25 per tonne.
Some 15 per cent of the US$150 million earned from carbon credits, that is, a total of $4.7 billion (US$22.5 million) is earmarked for distribution to Indigenous villages across Guyana.
Of the 242 villages which have benefitted from the grants, 160 have already submitted plans approved by the communities for the utilisation of the money. Some have already started implementing those plans.
The deal with HESS came on the heels of Guyana being the first country to receive a certification of more than 33 million carbon credits by the Architecture for REDD+ Transactions (ART) on December 1, 2022.
However, it was explained that while the deal is for a 10-year period, that is, 2022 to 2032, the Government was able to negotiate, as part of the sale agreement, for the oil major to also purchase some 12.5 million carbon credits from the period 2016 to 2020 – referred to as “legacy credit”.
Regarding the 12.5 million legacy credits, Hess will be paying a minimum of $15 per tonne, thus taking the total to about US$187 million. It was anticipated that this amount would be paid in full within 18 months of the signing.
Unlike the arrangements with the Norway deal, payments from this Hess agreement go directly into the Treasury as revenue but will be placed in a separate account for auditing and parliamentary accountability purposes as well as to allow for easy access to financing.
Being a signatory of the Paris Agreement, the former coalition Government had put forward the intention of achieving 100 per cent renewable energy by 2025.
Given that no country has been able to achieve this and the former Administration failed to make a dent, Jagdeo had stated Government will be working on the revision of Guyana’s Nationally Determined Contributions (NDCs) to make it more realistic.
“We have to resume the consultation and then submit a realistic NDC. That’s one of the things we will move forward on and hopefully, that will allow us to move closer to some of the markets that are currently available. So, as we’re exploring some compliance markets, we have to get that done,” the Vice President had stated previously. (G8)