- Guyana has put nearly all the forests in the country on the carbon market, allowing it to sign a carbon credit deal with petroleum company Hess Corporation worth $750 million, with 15% of funds going to Indigenous communities.
- However, some climate experts have questioned how ART, the independent carbon credit issuer, calculates the emissions reductions for forests that are already intact and under little threat of deforestation, saying they’re vastly overstated and bending the rules to create money.
- There are disputes between Indigenous groups about whether communities were properly and legally consulted before all their lands were put onto the carbon market.
- ART maintains that its methodology for calculating carbon reduction is conservative and important to protect intact forests, while the government insists that it properly consulted Indigenous leaders before it included their forests in the carbon scheme.
In part of the world’s first nationwide distribution of carbon credits, the government of Guyana announced Indigenous communities will receive millions as it signed off on a $750 million carbon credit sale to petroleum company Hess Corporation. The deal, however, has spurred a series of mixed feelings and major accusations.
Some climate experts and Indigenous leaders are raising serious questions over whether the carbon credit scheme accurately accounts for carbon emissions reductions and if communities were legally consulted before nearly all the forests in the country were put onto the carbon market.
“If you offset an emission with something which is not an emission reduction then you have no climate benefit,” Charlotte Streck, director at Climate Focus, told Mongabay.
Streck is part of a coalition of climate experts who warn that the methodology used in this program to calculate the carbon storage of forests and generate corresponding credits for entities seeking to compensate for (“offsetting”) their emissions is vastly overstated. “Hess, the global oil and gas company with oil exploration concessions in Guyana, now claims the credits help the company achieve its net-zero greenhouse gas emissions by 2050.”
ART, the independent institution that issued the credits under its TREES framework, said in a statement that the process to develop the credits was rigorous, transparent, consultative, and an important means to provide climate funding for countries and Indigenous communities already protecting high-conservation-value forests.
Forest finance quickly becomes an alphabet soup that can be forbidding to the uninitiated. Here are some key terms.
REDD+ is the name of the overall strategy for “reduced emissions from deforestation and forest degradation.” The U.N.-backed initiative pays developing countries to slow forest destruction and enhance forest carbon stocks.
ART is an institution. It means “Architecture for REDD+ Transactions” and was established in 2018 to produce a viable standard for REDD+ carbon credits at a jurisdictional scale. It is backed by Norway and runs as an independent organization within the nonprofit Winrock International. It has a secretariat, a board, and technical committees staffed by many of the world’s leading experts on deforestation and forest finance.
TREES is the framework and means “the REDD+ Environmental Excellence Standard” and is ART’s reason for existing, and seeks to lay down rigorous, clear guidelines for quantifying, monitoring, and verifying carbon credits across large swaths of land.
This week, disagreements over the monumental carbon deal also reached a new height when an Indigenous human rights group, the Amerindian People’s Association (APA), filed a formal complaint to ART over Guyana’s carbon credit scheme for lack of consultation. This is contrary to the support for the carbon scheme by the National Toshaos’ Council (NTC), a representative body in the country for all toshaos (Indigenous village leaders) who are elected by their village councils.
“I think [this deal] means a lot because we only have 12% of the population, but we are getting 15% [of the money from the agreement],” said Derrick John, the NTC chair. “I don’t see any risk because the government won’t be taking back any resources, whether it’s our land or forests. So, we’re gaining from it.”
In total, Guyana will receive at least $750 million until 2030 from its deal with Hess. Of this, 15% is earmarked for Indigenous communities for Village Sustainability Plans, community-led investment plans on infrastructure, livelihood, environment and more. The first payment to communities, split in a series with more to come, is $22.5 million. Indigenous communities will also receive support through multi-community and national programs, including $13.3 million for the Indigenous land titling program.
The government announced that the country achieved net-zero carbon emissions last year through its vast swaths of Amazon Rainforest that serve as carbon sinks. Now, all the South American nation’s remaining forested areas are on the carbon market for companies to achieve their net-zero emissions and offsetting ambitions, Pradeepa Bholanath, senior director for climate and REDD+ at the Ministry of Natural Resources, told Mongabay.
Forests included in the carbon credits to be issued total 18 million hectares (44 million acres), including 2.2 million hectares (5.4 million acres) of currently titled Indigenous lands. Hess has purchased roughly a third of these credits.
Read more: Carbon offsets: A key tool for climate action, or a license to emit?
2 + 2 = 5?
Guyana has the world’s fastest-growing economy in large part due to massive offshore oil deposits discovered in recent years and the dramatic rise in oil prices. Hess has major interests in the country’s oil reserves, as does ExxonMobil, which indicated it may also consider purchasing carbon credits from the country. But the government has played down the dissonance between being a growing oil-producing nation and its emissions reduction goals, attributing it to its oil revenue that can be directed to the green economy and its vast, intact forests that capture and store carbon.
However, the problem for climate experts critiquing the credit scheme is that the country’s forests are in fact, intact.
The South American nation has some of the best-preserved forests in the world, with little history of deforestation. ART has placed it among a handful of countries, like neighboring Suriname and, in Africa, Gabon and the Republic of Congo, as states that enjoy high forest cover and low deforestation (HFLD).
Carbon credits are generated from projects that aim to prevent the loss of existing carbon sinks, often forests. The number of credits made available (measured in metric tons of CO2) is thus dependent on how much of this carbon-sequestering capacity is saved from being lost.
But as intact forests within HFLD states aren’t under imminent threat of deforestation, the experts argue that HFLD credits don’t represent additional climate action or advertised emissions reductions.
“A high-quality carbon offset project must have an exclusive claim to its greenhouse gas reductions, meaning the reductions would not have happened without the project,” Robert Nasi and Pham Thu Thuy, senior forestry scientists at CIFOR-ICRAF, wrote in a Mongabay commentary about the latest controversies surrounding the carbon market. This is known as “additionality” because the emissions reductions, in this case the protection of forests, would not have happened without carbon offset credits. Typically, this means that the project prevents imminent deforestation from occurring.
Traditionally, carbon credits issued for REDD+ efforts (reducing emissions through deforestation and degradation) estimate emissions cuts by comparing historical levels of deforestation in a region with imminent deforestation. HFLD regions, however, allocate additional carbon credits that go beyond this baseline. By crediting and counting the protection of what already exists as carbon reductions, it jeopardizes the math on true global carbon emissions, reductions and meeting climate goals, critics say.
They therefore shouldn’t be eligible for carbon market finance, otherwise they can seriously undermine carbon markets, Streck told Mongabay.
The HFLD carbon crediting approach adds a 0.05% adjustment of the forest’s carbon stock into the calculation on top of the regular crediting calculation. The ART board argues that this adjustment is very conservative and is required to consider knock-on degradation and past removals associated with forest loss.
In Guyana’s case, about 84% of the 33.5 million jurisdictional ART credits issued between 2016 and 2020 result from this HFLD adjustment, the coalition of experts has calculated. “Without the HFLD adjustment, emissions reductions would have totaled 5.3 million [credits], based solely on avoided emissions for forests under more imminent threat.”
Hess is purchasing 37.5 million ART-issued credits (the total from 2016 to 2030), with each credit representing the equivalent of 1 metric ton of CO2 emissions. To date, Hess has bought $112.5 million worth of credits from the government.
A statement by the ART board argues the situation in and near these intact forests is changing rapidly as global demand for agricultural commodities, timber and infrastructure continues to drive forest loss and degradation. These forests are therefore in need of mechanisms to ensure their continued protection and it’s important to reward the historical performance of Indigenous communities in protecting and maintaining their HFLD status, the board said.
“Market solutions must urgently begin to incentivize action to protect forests without a significant history of deforestation,” the Wildlife Conservation Society (WCS), Rainforest Foundation Norway and Re:wild said in a joint statement to Carbon Pulse on the controversy.
In line with the carbon scheme, Guyana will have to mitigate the drivers of deforestation and support the maintenance of low deforestation rates, including implementing forest monitoring systems and policies for improved forest governance.
Streck from Climate Focus said she agrees with the board that climate finance is needed to protect high-integrity forests and that there’s been an international failure in rewarding these regions. However, she said the problem arises when carbon market rules are bent to create that money.
“The integrity of carbon markets is a good that needs to be protected for this market to be solid,” she said. As a solution, projects should use a creditable, regional calculation that avoids financial and private sector incentives to inflate them. She noted the projects with higher confidence are reforestation credits by community reforestation and agroforestry projects.
Mongabay requested a comment from Hess, which responded with a December 2022 press release announcing the deal to purchase the credits from the Guyana government.
“It’s probably a little unpalatable that it’s an oil company buying the credits,” said Josh Lichtenstein, program manager at the NGO Rainforest Foundation US, which has been working in Guyana for the past 20 years and is a partner of the APA. “But the idea that there’s private sector funding going into this market, I think they [policymakers] all feel very positive.”
Lichtenstein told Mongabay that policymakers are pushing for more climate funding from voluntary carbon markets and the private sector because there’s not enough public finance to meet the Paris Agreement goal of keeping global temperatures below 1.5° Celsius (2.7° Fahrenheit) of pre-industrial levels.
“The goal … is to combat the climate change effect without undermining the rights of Indigenous peoples and local communities,” Lichtenstein said.
Read more: Forest carbon offsets are a tool, not a silver bullet (commentary)
Consulting the right Indigenous groups?
But Indigenous groups in Guyana are not all in agreement about whether their rights are being protected, sparking a tense disagreement between some of the country’s largest Indigenous bodies: the NTC, representing the country’s elected toshaos, and the APA, an Indigenous human rights organization. Even Vice President Bharrat Jagdeo has waded into the disagreement, issuing a statement condemning the formal complaint letter by the APA about the carbon scheme and bringing into question the APA’s motives and representation of Indigenous peoples.
In July 2022, all 170 elected toshaos engaged with the country’s 2030 low carbon strategy team, which included discussion on agreements like the Hess deal, said Bholanath from the ministry of natural resources.
“A resolution was passed, with no objection [by the NTC] which endorsed the [strategy] inclusive of all its elements,” she said.
Bholanath added there were consultations conducted with the government, private sector and civil society, including the APA and other Indigenous groups, on issuing and marketing carbon credits. There has also been broad support from across society for such a program, she told Mongabay.
“We are the legal representatives,” said the NTC’s John. “Our people democratically elected us in our office … the NTC have membership in all 200 and odd communities. We are directly linked to these communities through our membership.”
However, Laura George, governance and rights coordinator at the APA, said toshaos don’t have the authority to sign off on such a deal, and that therefore it can’t be said to have obtained the free, prior and informed consent of all villages in Guyana that didn’t properly engage on the deal. This authority falls under the Village General Meeting (VGM), she said, which is the highest decision-making forum of any community.
Guyana’s Amerindian Act doesn’t give the NTC any governance authority or any other authority to make decisions on behalf of Indigenous peoples and their lands, the APA said in its complaint letter sent to the ART secretariat last month. At most, its functions involve providing advice and guidance to the Ministry of Amerindian affairs, George said, disagreeing with the vice president’s interpretation of the act.
“Who decided that 15% of any royalties that we get from the carbon trade would be OK for us? Because we have not been consulted on it,” she said.
The letter requested the ART secretariat and board freeze and suspend the credits issued to Guyana that have not yet been purchased and to not issue more until the problems they raised have been addressed.
The ART secretariat told Mongabay that per its standard, this complaint process will not impact the credits already issued to the government of Guyana. However, as the agreement by the NTC is fundamental, if the NTC were to change its mind, the credits relating to Indigenous lands would be subtracted from the total carbon credits available.
Levi Sucre Romero, an Indigenous Bribri leader and co-chair of the Global Alliance of Territorial Communities (GATC), told Mongabay that he and other Indigenous leaders engaging with ART were also surprised to see the carbon credits launched in Guyana. He said they had a verbal agreement with representative at ART TREES to collaboratively build an additional layer to their standards to ensure the identification of Indigenous rights and full and effective participation of Indigenous peoples.
“They went off on their own to do certifications which then generates these kinds of problems like what happened in Guyana,” Sucre said. “And that’s exactly what we want to avoid.”
Aster Global, the auditor of the carbon credits issuing process, was not available for comment. But in an observation, the auditor said that endorsement by the NTC is a key aspect of the deal. The carbon credit deal meets all requirements of ART TREES without any qualifications or limiting conditions, it added.
Banner image: Spangled cotinga in Guyana. Image by Mathias Appel via Flickr (CC0 1.0).
Related listening from Mongabay’s podcast: We discuss what makes for successful mangrove restoration projects and the inclusion of Indigenous and local community rights in carbon offset schemes. Listen here:
See related:
Oil production or carbon neutrality? Why not both, Guyana says
Guyana gets ‘Drilled’: Weighing South America’s latest oil boom with Amy Westervelt
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