Sale of carbon credits: $157B for investments in low-carbon development across Guyana

-LCDS Fact Sheet

With the signing of the historic carbon credits sale agreement between the Government of Guyana and Hess Corporation on December 2, Guyana anticipates issuing about 7.5 million credits per year, on average from 2021 to 2030 – so the Hess deal is for the purchase of about one-third of all Guyana’s credits (issued and anticipated) up to 2030.

The agreement will generate a minimum of US$750 million for Guyana over the coming decade and represents a major milestone on the journey towards a vision first set out in 2007. On its own, the agreement will see approximately GY$157 billion invested in low-carbon development across the country, with GY$31.5 billion of this allocated to village-led development.

Request for proposals (RFP)

A Request for Proposals (RFP) for potential buyers of Guyana’s credits was issued in March 2022.

Following the RFP, December 2 saw the announcement of the world’s first sale of jurisdiction-scale carbon credits for Guyana’s forest climate services – with Hess Corporation committing to purchase 37.5 million ART-TREES [ Architecture for REDD+ Transactions-The REDD+ Environmental Excellence Standard] credits consisting of:

− 12.5 million of the 33.47 million carbon credits issued for the period 2016-2020

− 2.5 million per annum from the credits to be issued each year from 2021 to 2030

They will pay a minimum of:

−US$15 per credit for 2016-2020

−US$20 per credit for 2021 – 2025

−US$25 per credit for 2026-2030

Each credit represents 1 tonne of Co2e [carbon dioxide equivalent], which is the standard metric used for carbon credits – while the agreed prices represent a significant increase above the US$5/t Co2e under the Guyana-Norway Agreement. 

As determined during the national consultation:

−85% of revenues will be allocated to multi-community and national programmes,

−15% of revenues will be dedicated to village-led plans for indigenous villages and communities.

Internationally recognised high-integrity carbon credits

From mid-2021 to the end of June 2022, the Government assessed potential voluntary carbon markets standards, comparing them against Guyana’s objectives, as well as current and future UNFCCC requirements. Small-scale project-based standards were not appropriate, while ART-TREES was assessed as the best standard available for Guyana.

ART-TREES credits are recognised as some of the highest-integrity credits in the market.

A statement from WRI, Rainforest Foundation Norway (RFN), Wildlife Conservation Society (WCS), and Re:wild, as members of the Forests for Life Partnership addressed the high integrity of ART-TREES credits:

“HFLD-labelled credits issued under ART-TREES 2.0 [the specific type of credits issued for Guyana] have high environmental integrity because credits fully address legitimate additionality, conservativeness and permanence, and counteract international leakage, reward forest stewardship by Indigenous Peoples, and incentivize action at scale while avoiding perverse incentives. “

These core elements of the credits’ high integrity are:

Jurisdictional scale – They represent the value of carbon stored at a country level rather than at a project level, avoiding issues of leakage and promoting outcomes that protect the ecosystem rather than just carbon storage or removal functions.

Additional – Exclusive reliance on historical baselines does not adequately represent current and future pressures that HFLD jurisdictions face. ART HFLD credits reward countries and subnational jurisdictions for acting to retain large, highly intact forests, including through monitoring, law enforcement, conservation, and regulation, among other measures.

Permanent- The insurance mechanisms required by the standard (e.g., buffer pools) ensure that the overall atmospheric benefit of these credits will be maintained, even if reversals occur in some locations.

Avoid perverse incentives. ART HFLD credits help to alleviate concerns that REDD+ can create perverse incentives by disproportionately rewarding jurisdictions that have experienced the highest rates of deforestation.

Issuance of credits

The Guyana Forestry Commission (GFC) led and managed the application to the ART Secretariat for Phase II of the LCDS vision.

The ART Secretariat is an independent Secretariat that reports to a separate independent Board, which makes the final decisions relating to the issuance of ART-TREES credits.

Adherence to the standards by a jurisdiction – such as Guyana – is validated and verified by an independent firm.  In the case of credits for Guyana for the period 2016-2020, Guyana underwent a 12-month verification and validation process before the credits were approved for issuance.