GUYANA has long been one of the few nations in the world to support actual national and international policymaking to strike a balance between ambitious climate action and citizens’ reasonable desires for prosperity.

Guyana introduced its Low Carbon Development Plan in 2008, marking the first time a developing nation has done so.

President Ali presented a new version in October 2021, following a seven-month national consultation period.

The LCDS describes a non-polluting path for Guyana’s future social and economic growth.

The LCDS 2030 includes the strategy as one of its primary components. The strategy shows how to transition from the current grid-produced energy mix of heavy fuel oil and diesel to one that includes natural gas and renewable energy.

Guyana is also working to develop new, low-carbon economic sectors that take advantage of the internet economy and other contemporary opportunities to solve regional inequality and create jobs.

While this is happening on a national level, Guyana also aims to develop a model for the rest of the world to address an issue with the global market that needs to be resolved if the world is to manage the climate challenge successfully: the value of ecosystem services or nature-based solutions is still not being monetized.

A fifth of the world’s greenhouse gas emissions is primarily attributable to deforestation and related activities because of this market failure.

Every year, a tropical forest the size of Greece is lost.

The causes of this are well known: trees that are felled for use in agriculture, infrastructure, and other purposes are valuable; trees that are left standing are not.

According to Bill Gates, Amazon.com is worth US$1.5 trillion, but the remaining Amazon Forest is worthless.

Yet, the Amazon Forest generates economic value for the globe that may be quantified in trillions of dollars through watershed management, biodiversity protection, zoonotic disease prevention, and climate change mitigation.

Since 2008, Guyana has worked to develop a prototype for how this economic reality could be altered, making forests more valuable when they are alive than when they are dead.

The forest in Guyana is almost the same size as England, and the nation boasts one of the lowest rates of deforestation in the world—about 90 per cent lower than the average.

The forest has around four per cent of all known animal species worldwide, 19.5 gigatonne (Gt) of carbon dioxide equivalent, and more bird species than the United States of America.

In addition to offering all these other ecosystem services, Guyana’s forest makes it predominantly a carbon sink even if it produces oil.

Data publicly available in Guyana shows that the country is overwhelmingly a carbon sink despite being an oil producer.

Since then, Guyana has made history by receiving the world’s first jurisdiction-scale, market-ready carbon credit issuance in 2022 under the Architecture for REDD+ Transactions (ART) The REDD+ Environmental Excellency Standard (TREES) Programme, amounting to 33.47 million credits.

For successfully halting forest loss and degradation, a nation has now received carbon credits created especially for the voluntary and compliant carbon markets.

In December 2022, the Government of Guyana signed a significant carbon credits sale agreement with Hess Corporation for a third of Guyana’s carbon credits issuance from 2016 to 2030, valued at three-quarters of a billion US dollars, after immediately realising the earning potential of this issuance for the people of Guyana.

One of the most significant carbon transactions ever occurring worldwide is being marked with this.

After that, Guyana will have received a total of US$75M by the end of 2022 from this arrangement, and another US$75M will be paid in 2023, bringing the total to US$150M by the end of 2023.

In light of this, and as outlined in the revised LCDS 2030, Guyana will continue to be at the forefront of the discussion on advancing low-carbon development domestically and globally.

Guyana’s fundamental stance that global policies and action are required to stabilize world temperatures at 1.5 degrees over pre-industrial levels is unaffected by the country’s status as an oil exporter.

Of course, lone voices will always advocate for leaving the oil in the ground.

Yet, despite appearing superficially persuasive to some campaigners, voluntary supply-side initiatives like these are incorrect, possibly impossible to implement, and may even make things worse.

From three different angles, they need to be corrected.

First, demanding that a nation like Guyana keep its oil in the ground is incredibly unfair.

Guyana currently has a per capita income of around US$6,000 per year, which is lower than the US per capita income of US$36,000 in the US.

Much like inhabitants of other countries, including the United States, Guyana’s citizens have the right to hope for a brighter future for their families, communities, and nation.

Activists who advocate for leaving oil in the ground fail to realise that they are essentially advocating for the protection of the incumbents’ $4 trillion oil business, which does not include the trillions in externalities it generates.

Essentially, they are urging us to “leave new oil in the ground” so that the current producers can continue providing wealth for their people and nations.

These calls could be more economically logical.

Guyana produces oil at a lower cost per barrel than the average country worldwide and does not finance exploration.

If the world is serious about releasing capital for renewable energy and other development goals, high-cost manufacturing capability, not low-cost operators, must be discouraged.

Thirdly, and perhaps most significantly, expecting Guyana to leave its oil in the ground is illogical since different types of oil have different carbon footprints.

The carbon footprint of Guyana’s light, sweet crude oil may be as little as 25 per cent of some others, similar to a large portion of the world’s offshore oil.

So, whether this issue is seen from the angles of justice, economics, or science, the solution does not involve urging new oil producers to voluntarily leave the oil in the ground.

Instead, through these demand-side measures, it is to commit to genuine policies that will lower the demand for the most expensive, highest-carbon oil and lower consumption.

National-level demand signals from major consumer nations are crucial to altering the balance of investment towards clean energy and transportation options.

Yet, more is required, and Guyana has long backed two international policy initiatives: ending exploration subsidies and instituting a carbon price.

Many international organisations, including the G20, the IMF, the International Energy Agency, and the Organization for Economic Cooperation and Development, have backed the gradual elimination of exploration subsidies.

Yet, after considering negative externalities, the IMF estimates that fossil fuel subsidies account for 6.5 per cent of world GDP.

In addition, despite the verbal commitment to cutbacks, subsidies are rising rather than falling.

There are various methods for introducing carbon pricing, including taxes and a market-based trading system.

Both have benefits, and various jurisdictions can choose the most appropriate technique for their situation.

It’s important that the carbon is fairly priced.

How this works is demonstrated by California’s Low Carbon Fuel Standard, which drives the highest carbon oil off the market by charging certain suppliers of oil a higher carbon tax than others.

If the world transitions away from oil more quickly than anticipated, Guyana will embrace and welcome that reality. Guyana will continue to support these global policies.

Guyana pledges to develop an oil sector that benefits its residents and is a trustworthy partner for buyers, suppliers, and other industry players.

Guyana remains steadfast in supporting low-carbon development and promoting global measures that would hasten the transition to a net-zero global economy.

Guyana’s strategy won’t be based on platitudes or catchphrases but on genuine, analytically sound policies.

(This is part of a weekly series on LCDS). The author can be contacted at cparkinson0206@gmail.com