Guyana seeking to market carbon credits to airlines

Growing oil producer Guyana has started discussions with several airlines for the sale of its carbon credits, saying other efforts to transact its forest carbon are progressing slowly.

The heavily forested country in northern South America will use a compliance market in Singapore to trade its certified carbon credits with airlines, vice president Bharrat Jagdeo said.

The country faced the prospect of not being able to sell its credits after being proactive in establishing a low carbon development strategy and getting its credits certified, he said.

"We have been fighting to get our carbon sold into a compliance market, and there is a Singapore-based market that allows trading in forest carbon for airlines," Jagdeo said. "We have started discussions to see whether we can sell our certified carbon to some of the airlines and hopefully the prices will be good."

The government did not identify the potential buyers.

Guyana aims to monetize its forests' climate and ecosystem services while promoting low-carbon economic development that is guided by its low carbon development strategy, the government said.

Guyana's low-carbon development strategy is aimed at combating climate change globally, it said.

"Guyana has set out a vision for monetizing the climate and ecosystem services provided by our standing forest, while accelerating the country's economic development along a low carbon trajectory," it said.

Guyana has secured 7.14mn carbon units from Architecture for REDD+ Transaction (ART) for its low deforestation rate along with sustaining high levels of forest coverage. ART is a global initiative that encourages governments to reduce forest degradation and to restore forests.

"This achievement made Guyana the first country to be issued carbon credits eligible for use by airline operators in their efforts to reduce carbon emissions," the government said.

The credits were issued "in recognition of Guyana's successful efforts to reduce emissions from forest loss and degradation and maintain one of the world's most intact tropical forests," ART said.

Heavily forested Guyana has a population of 750,000. It is a carbon sink with forests covering an area the size of England and storing 19.5 gigatons of carbon, the government said. Guyana's deforestation rate is less than 0.05pc, it said.

Airlines have been working towards their targets in the 2024-2026 phase of the International Civil Aviation Organization's carbon offsetting and reduction scheme.

"There are some new standards required for the aviation sector and in those new standards there will have to be carbon credit offtake," Guyana's president Irfaan Ali said.

ART issued 33.47mn TREES credits in December 2022 to Guyana for 2016-2020. The credits are ART's standard for measuring and quantifying greenhouse gas emission reductions.

Guyana has had some success in transacting its carbon credits. It negotiated an agreement with Hess Corporation to sell carbon credits for $750mn. It received the first $150mn in 2023.

Hess is part of an ExxonMobil-led consortium that started producing crude offshore Guyana in 2019.

US major Chevron's planned takeover of Hess will not affect the agreement, Jagdeo said.

Norway had earlier committed to providing Guyana up to $250mn for avoided deforestation once certain performance indicators were met.

Guyana started negotiating with airlines after failing to get the United Nations Framework Convention on Climate Change (UNfccc) and some non-governmental organizations to add forest carbon to a compliance market, the government said.

But it made "no significant" progress" in the discussions, Jagdeo said.

"The UNfccc is treating the tropical countries badly," he said. "If we didn't branch out on our own since 2009, and set up our low carbon development strategy that gave us the $250mn deal with Norway, then the $750mn agreement with Hess, we would be left back like some other countries."

By Canute James