Guyana leading way in developing ecosystem services – IDB Country Rep

– says country deserves credit for sustainable economic models

Lauding the pioneering role that Guyana has played in developing ecosystem services, Inter-American Development Bank (IDB) Country Representative Lorena Solórzano Salazar has described the country as the place to be as it continues to build a sustainable economic model.

During a recent interview on the Energy Perspectives Podcast, Salazar noted that Guyana is a pioneer when it comes to developing eco-services. This includes the sale of carbon credits, allowing Guyana to extract value from its forests without the effects of deforestation, while at the same time providing a valuable service to the world.
“In the case of Guyana, Guyana has been a pioneer. Using the efforts that Guyana has done to preserve the forests, preserve the country, and very aware of climate change. And the impact it has on the world. So, I would say that it’s a good market, that has expanded over the years. People are always aware of the impacts of climate.”
“But also, there is also a lot of interest in the decarbonisation around the world. So having this mechanism allows the country to offer a market to support the decarbonisation of the more developed countries that don’t have forests or don’t have wetlands,” Salazar said.
She noted that Guyana is one of the first to monetise its standing forests, initially in partnership with Norway and now as part of the volunteer market. According to the IDB rep, Guyana deserves much credit for how it has set out to create a sustainable economic model.
Salazar also spoke of how the bank itself can contribute, not just through lending but also through the technical knowledge and experience it brings to the table. This has already manifested in the range of programmes IDB has implemented with Guyana, from the Support for the Criminal Justice System (SCJS) programme to the Safety Nets for Vulnerable Populations programme.
Only days ago, the IDB had also approved a US$400,000 loan for the Ministry of Tourism, Industry and Commerce to bolster Guyana’s food security efforts. This funding will be used to strengthen trade and logistics at the Guyana-Brazil border and the Guyana-Suriname border. According to Salazar, Guyana is one of the most attractive destinations in the region for a reason.
“In a way, Guyana is the place to be in this region. So, I would say, it has a growth and appetite to expand. There are new businesses that are being developed. But also, in our case, we acknowledge that we have experience in other jurisdictions.”
“And that’s what we bring on board. We are not just the lending and credit rating. We also bring to the table, as a partner, knowledge. And even if you’re not ready, we can support you as an investor, to be ready,” the IDB rep added.
The IDB Group is the leading source of development financing for Latin America and the Caribbean. It contributes to improve lives by providing financial solutions and development expertise to public and Private Sector clients.
The Group comprises the IDB, which has worked with Governments for more than 60 years; IDB Invest, which serves the Private Sector; and IDB Lab, which tests innovative ways to enable more inclusive growth.
Hess Corporation, which is one of the partners operating in the Stabroek Block offshore Guyana, had agreed to buy 2.5 million credits per year for the period 2016 and 2032, valuing US$750 million.
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, while the deal is for 10 years, 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”.
The country’s more than 18 million hectares of forests are estimated to store approximately 20 billion tonnes of carbon dioxide equivalent. The remaining 70 per cent of Guyana’s carbon credit will be put on the market for future sale agreements.
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.
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.