First payment from Hess Corporation for Guyana-Issued Carbon Credits

Last Updated on Tuesday, 10 January 2023, 18:05 by Denis Chabrol

Guyana has received its first payment for carbon credits under the agreement with the Hess Corporation. US$75 million has been paid, and is the first payment in an agreement that will be worth a minimum of US$750 million up to 2030, government announced on Tuesday.

Government said two further payments of US$37.5 million each will be made during 2023 – one in January and one in July – bringing the total amount available for appropriation in this year’s National Budget to US$150 million.

“The payment is a result of the Government of Guyana’s continued recognition of the important role that Guyana’s forests play in not only the development of the country, but in combatting climate change globally. Guided by the ground-breaking Low Carbon Development Strategy (LCDS) 2030, Guyana has set out a vision for monetising the climate and ecosystem services provided by our standing forest, while accelerating the country’s economic development along a low carbon trajectory,” government said.

On December 1, 2022, the Architecture for REDD+ Transactions announced the issuance of 33.47 million TREES credit to Guyana for the five-year period from 2016 to 2020. The Architecture for REDD+ Transactions (ART) is a global initiative that seeks to incentivise the reducing of emissions from deforestation and forest degradation (REDD), as well as restore forests and protect intact forests.

On December 2, 2022, the Government of Guyana entered into an agreement with the Hess Corporation for the sale of carbon credits for a minimum of US$750 million between 2022 and 2032 .The first payment from the Hess Corporation to Guyana for the sale of carbon credits has been made, with the total deposit of US$75 million representing:

–        US$37.5 million for 2.5 million ART-TREES credits from 2016 at a price of US$15/tonne of CO2e

–        US$37.5 million for 2.5 million ART-TREES credits from 2017 at a price of US$15/tonne of CO2e

Government says these payments have been deposited in a US dollar-denominated account held by the Bank of Guyana overseas, for onward transmission to the Consolidated Fund, which will be credited with the Guyana dollar equivalent.

In keeping with the commitments made in the LCDS 2030 and Resolution No. 45, adopted by the National Assembly on August 8, 2022, the National Assembly, including through its Committees,  government reiterates, will have oversight of the investment of all national revenues received from forest climate markets and managed via the Consolidated Fund through the budgetary process.

“Every payment and payment source will be communicated publicly at the point of payment, and at the point of transfer into the Consolidated Fund, when the payment value in Guyana Dollars will also be communicated.”
Deposits will be allocated as follows:

–        The allocation of 15 percent to community/village-led programmes for Indigenous Peoples and Local Communities (IPLCs) as set out in Village Sustainability Plans or equivalent, put together by communities themselves, and

–        the remaining 85 percent will be allocated to national priorities outlined in the LCDS 2030 (e.g. renewable energy as described in Chapter 3, land titling as described in Chapter 4, repairing canals, and protecting against climate change as outlined in chapter 5).

In keeping with established budgetary process enshrined in law, the Minister of Finance shall request the National Assembly to approve withdrawals from the Consolidated Fund, which shall be included in the Annual Budget Proposal.

All these transactions will be appropriately tagged with a unique identifier on the Integrated Financial Management Information System (IFMIS) within the Ministry of Finance to enable the execution of annual audits, government said.

Government described Guyana as a global leader in the effort to combat climate change, with the PPP/C Government’s commitment within the framework of the LCDS 2030 to tackle the climate crisis while simultaneously fostering and accelerating broad-based and sustainable growth. “The PPP/C Government remains committed to managing Guyana’s resources in a clear and transparent manner, to the benefit of present and future generations.”