The Government of Guyana and Hess Corporation today signed a REDD+ Carbon Credit Purchase Agreement paving the way for the oil company to purchase high quality carbon credits for a minimum of US$750 Million between 2022 and 2032 directly from the Guyanese Government.
In his address at the signing ceremony at State House, President Irfaan Ali said the agreement is a demonstration of the country’s commitment to combat climate change.
“Today we are signing a historic agreement with HESS, who will buy 2.5 million credits per year. This agreement represents credit between 2016 and 2030 to a value of US$750M. It is historic for corporations, the voluntary markets, industries, country and for forested countries. Once again, Guyana has demonstrated that it can be done and it will be done with hard work, commitment, strategic planning, positioning and vision,” the Head of State said.
The multi-year agreement, for some 37.5 million REDD+ jurisdictional carbon credits, comes one day after Guyana became the first country to be certified under the ART (Architecture for REDD+ Transactions) TREE Carbon Credit Framework.
“Yesterday, December 1st, 2022, marked a major milestone in the achievement of that vision when the ART Tree Secretariat issued the world’s first jurisdiction scale market ready carbon credit to Guyana. In total, almost 33.5 million credits were issued – one of the biggest issuances of carbon anywhere in the world,” President Ali announced.
He said Guyana has long had a vision for climate service, starting with the Low Carbon Development Strategy (LCDS) which gave birth to the 2009 Guyana-Norway Agreement. He said though the country’s “credential on climate change and the forest” was known globally, the previous administration dropped the ball due to the lack of commitment. He said today’s agreement is a demonstration that the opportunity existed back then. It was pointed out that the carbon credits purchase agreement provides for 12.5 million credit – legacy credit – to be purchased for the period 2016 and 2020.
Noting that the country has entered a new era, President Ali said though challenges may come, his government will ensure that it achieves energy and food security while providing environmental, climate, ecological, biological and technological services on a global level – 2030 and beyond.
Vice President, Bharrat Jagdeo, in his address, explained that the carbon credit being sold to Hess Corporation represents only 30% of the carbon credit available to Guyana for the period 2016-2030 at a minimum of US$750M.
“Why do we say minimum? Because based on parameters established in the agreement, should there be movement in the prices, we will share 60% of the upside in movement of those prices. So, we anticipate the market to grow, the value of those credit to grow in the future years, and the agreement that we are signing with Hess will allow us to share those upside benefits,” the Vice President explained. He was keen on noting that there is still 70% of the country’s carbon credit available for sale.
It was disclosed that 15% of the revenues to be received under the agreement will go to indigenous communities.
Meanwhile, Chief Executive Officer (CEO) of HESS Corporation, John Hess said the agreement further strengthens the company’s strategic partnership with Guyana.
“Today’s landmark agreement is a result of President Ali’s and Vice President Jagdeo’s leadership and long-term vision for sustainable development. Guyana’s Low Carbon Development Strategy 2030 outlines how the country’s abundant natural resources can be used to combat global climate change while building the foundation for sustainable, low carbon economy. This agreement will serve to protect the country’s vast forest, one of the largest carbon sinks in the world.,” Mr Hess said.
The purchase of the carbon credits is an important part of Hess’ commitment to support global efforts to address climate change, and ultimately achieve net zero greenhouse gas emissions by 2050.
The agreement, importantly, forms part of the country’s revised Low Carbon Development Strategy – LCDS 2030