Hess to buy US$750M in carbon credits from Guyana

President Dr Irfaan Ali and other officials at State House during the historic agreement signing with Hess Corporation for the sale of carbon credits

Hess Corporation, a global oil and gas firm, has committed to purchasing US$750M in carbon credits from Guyana.

Today, the Guyana Government has signed the historic agreement with Hess, who will buy 2.5 million credits per year for a 10-year period – 2022 to 2032.

However, it was explained by President Dr Irfaan Ali that this agreement also represents credit between 2016 and 2020 – a period when the People’s Progressive Party/Civic was out of office. Those backdated carbon credits are being referred to as “legacy credits”.

“Today, we have shown that the opportunity existed even then because in this agreement that we signed [on Friday], 12.5 million credit is what is termed ‘legacy credit’. We have been able to go back to 2016 and 2020 – the period we were out of Government – and get the legacy credit sold between 2016 and 2020,” the Head of State said.

This groundbreaking deal with Hess for Guyana’s first sale of its carbon credits came on the heels of the country being the first in the world to receive jurisdictional credit from the Architecture for REDD+ Transactions (ART).

A carbon credit is a tradable permit or certificate that allows the holder of the credit the right to emit a stated tonnage of carbon dioxide or an equivalent of another greenhouse gas. Countries and companies that exceed their permitted limits can purchase carbon credits from nations that have low emissions such as Guyana. Guyana’s 18.4 million hectares of largely pristine forest stores approximately 5.31 gigatons of carbon.

On December 1, 2022, ART certified over 33 million carbon credits by the Architecture for REDD+ Transactions (ART) on December 1, 2022. That issuance of the REDD+ jurisdictional carbon credits paved the way for Friday’s signing of the sale agreement by Hess Corp Chief Executive Officer, John Hess, and Permanent Secretary of the Office of the President, Abena Moore, at State House.

Hess, in his remarks, said that this carbon credit sale agreement is in keeping with his company’s efforts to lower carbon emissions as well as its commitment to achieving net-zero.

“Many companies, many countries make pledges about net-zero. We are actually showing action. The country of Guyana is showing action and steps to make 2050 net-zero a reality. The world faces a dual challenge of reaching net-zero by 2050, while growing the global energy supply by about 20 per cent over the next 20 years. Governments, businesses and civil society must work together on cost effective policies to meet this dual challenge,” Hess stressed.

Meanwhile, President Ali stated that Guyana remains steadfast in bringing awareness and the understanding globally of the economic wealth and value of Guyana’s biodiversity, ecological services, environmental services, and of course, its forests. He contended that the total value of Guyana’s pristine forests must be monetised, and that his Government is willing to work with every partner on this front.

“We are committed to playing our part in this global environment. We are committed in playing our part in climate change, in providing energy security and we are equally committed in the social and economic transformation of our country and our people. And to do this, we are committed to the oil and gas sector, ensuring that we optimise the totality of benefit in this sector and bring to fuel the transformation that is required for our country. In doing so, we know how important time is,” Ali asserted.

Back in April 2021, President Ali had announced that Guyana had signed a letter of intent with US-based Non-Profit Organisation, Emergent Finance Accelerated Inc, to market the country’s carbon credits through a credit contract – a deal that could earn the country millions of US dollars.