Carbon Credits

GUYANA is one of the few countries in the world that is part of an ecosystem that generates oxygen for global consumption. It has also pursued a path of low carbon development which makes it an ideal country to market its share of carbon credits on the global marketplace, especially at this time of rising global warming. Guyana forms part of the Amazon rainforest, which is the world’s largest rainforest. It comprised an area of 6.7 million square kilometers. Nine countries share the Amazon Basin and even though Guyana’s share of the rainforest may be relatively small, it still remains an important contributor to global oxygen levels and an organic part of what is known as the ‘lungs of the earth’.

According to President, Dr. Mohamed Irfaan Ali, the government has signed a letter of intent with a US-based non-profit organisation Emergent Finance Accelerated Inc. to market the country’s carbon credits through a credit contract in which credits will be sold to private companies around the world. This is done in order to advance Guyana’s participation in the global carbon market and could, potentially, earn millions of US dollars annually.

A carbon credit is a tradeable permit or certificate that allows the holder of the credit the right to emit a stated amount of carbon-dioxide or an equivalency of another greenhouse gas. Countries and companies that exceed their permitted limits can purchase carbon credits from other nations that have low emissions such as Guyana.

The carbon market was devised to increase climate ambitions and lower carbon dioxide (CO2) levels in the atmosphere by creating a financial incentive to curb emissions. Countries can trade credits with each other in a global market place. And according to Vice-President, Dr. Bharrat Jagdeo, Guyana’s carbon credits have already been listed on the Architecture for REDD+ Transactions (ART) platform.

These are indeed innovative and forward-looking thinking on the part of our leaders for which they must be given full credit.

The first global scheme dates back to the UN’s Kyoto Protocol on climate change which was adopted in 1997. It was known at the time as the Clean Development Mechanism (CDM) and became operational in 2006. Under the CDM, richer countries could reduce their emissions by paying for the development for carbon-lowering projects in poorer countries and counting these reductions as part of their own targets.

Guyana is well poised to take advantage of the new carbon credit mechanism, thanks to visionary leadership and prudent management of our forestry resources. Already, the country has benefitted substantially under an agreement hammered out between Guyana and Norway to the tune of US$250M, the first international commitment of financial support to the Low Carbon Development Strategy (LCDS) and the first partnership of its kind between a developed and a developing country.

These are indeed visionary and innovative thinking by our leaders. Both President Dr. Mohamed Irfaan Ali and Vice-President Dr. Bharrat Jagdeo have been proactive in securing the best possible deal for Guyana.

A carbon market allows for investors and corporations to trade both carbon credits and carbon offsets simultaneously. This mitigates the environmental crisis while at the same time creating new market opportunities.

The emergence and growth of carbon markets is relatively new having risen to prominence since the 1997 Kyoto Protocols. Developing countries such as Guyana with huge tracts of pristine forests and rich biodiversity must be compensated one way or the other for preserving its forests and biodiversity and in the process contribute to the lowering of carbon emissions levels. These and other issues will no doubt be further discussed at the upcoming COP26 Summit in Glasgow which is likely to set new pathways for a transition to a net zero global economy in the decades ahead.

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