The Government of Guyana has been aggressively implementing its development agenda along a low carbon development path with its Low Carbon Development Strategy (LCDS) taking centre stage globally over the last years and prior.
Last week, Senior Minister in the Office of the President with Responsibility for Finance and the Public Service, Dr. Ashni Singh attended the International Monetary Fund (IMF)’s 2024 High Level Caribbean Forum on Managing the Green Transition where Guyana’s innovative approach to managing its forests was alluded to.
The forum brought together Government Ministers, Regional Central Bank Governors, private sector and other stakeholders, the IMF Managing Director and senior IMF officials to discuss the Green Energy Transition (GET), which entails reducing the world’s reliance on fossil fuels by shifting to a renewable energy mix while using existing energy more efficiently.
As part of the forum, Dr. Singh participated in a panel discussion under the theme “Taking Stock of the Macroeconomic Implications of the Green Energy Transition” where he reminded the forum that the Caribbean Region accounts for only 0.2 percent of Global Green House Gases and is disproportionately and highly exposed to climate change and natural disasters. He reiterated that the Caribbean Region is seven times more at risk of facing a natural disaster than larger States, is twice as prone to natural disasters as other small States elsewhere and that natural disasters impose a disproportionate extent of damage, for instance where one hurricane can impose damage of more than 200 percent of Gross Domestic Product (GDP).
The Senior Minister also pointed to the critical issue in energy transition being access to financing both for private and public sector investments to advance this transition. He, therefore, called on the multilateral community to do more to increase the volume of financing available for public and private investments in the energy transition and to reduce the cost of these investments including through the use of derisking instruments.
Meanwhile, speaking at the forum during her opening remarks, IMF’s Managing Director Kristalina Georgieva cautioned the forum that Climate change poses an acute threat to the Caribbean as she indicated that sea levels are rising, and natural disasters are becoming more frequent and intense while referencing the recent Hurricane Beryl which ravished several Caribbean Islands.
As such, she pointed out that rapid global transition to renewable energy is essential to mitigate some of these climate challenges.
The IMF official however posited that despite the challenges, she firmly believes that the Caribbean Region has tremendous opportunity with their economies showing incredible resilience through the pandemic and its aftermath.
“Now is the time to seize the opportunity provided by global developments to plan and coordinate a green energy transition that fosters inclusive, sustainable, and resilient growth across the region,” she advised.
At this point, Ms. Georgieva pointed to the substantial financial resources required for this transition as she indicated that Caribbean governments alone cannot bear the burden with the cost for resilience building in the Caribbean region estimated at a staggering US$100 billion over the next two decades.
“This is the moment to leverage innovative financial instruments such as Guyana’s sale of carbon credits,” she then advised the forum as she alluded to Guyana’s recent ambitious and innovative approach to garner funds for the country using its forests.
While attending the forum, Minister Singh also held bilateral discussions with the IMF’s Managing Director updating her on recent economic developments in Guyana and the very favourable economic prospects of the country looking ahead.
Guyana has outlined a second-generation Low Carbon Development Strategy (LCDS) as a successor to its first LCDS, which aims to reduce the country’s reliance on heavy fuel oil and transition to cleaner, more affordable energy sources as well as mobilise resources from domestic assets. Under the first LCDS, the global climate services provided by Guyana’s standing forests were mobilised to generate revenue for the country, in this instance, under a US$250 million bilateral partnership with the Kingdom of Norway.
On December 1, 2022, the Architecture for REDD+ Transactions announced the issuance of US$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. Subsequently, Government entered into an agreement whereby Hess Corporation purchased approximately a third of Guyana’s credits.
The agreement sets out that Hess will buy 2.5 million credits per year for 2016 to 2030 to a total of 37.5 million credits for a minimum payment of US$750 million to be paid to Guyana between 2022 and 2032.
On February 28 this year as well, Guyana announced the issuance of the world’s first carbon credits eligible for use by airlines in Phase 1 of CORSIA – the United Nations’ International Civil Aviation Organisation (ICAO)’s global emissions reduction programme. The credits issued were for Guyana’s 2021 performance in sustaining one of the world’s highest levels of tropical forest coverage, and one of the world’s lowest deforestation rates. A total of 7.14 million credits were issued by the Architecture for REDD+ Transactions (ART) for conformance with ART’s “TREES” standard. DPI
