Monday, February 6, 2023

Hess first oil company to enter three-quarter billion USD carbon credits deal with Guyana

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Stabroek Block stakeholder, Hess Corporation, has committed to purchasing US$750 million in carbon credits from Guyana, kicking off a major low-carbon initiative by the government, to generate revenue from forest conservation.

An event to commemorate the agreement was held at State House in Georgetown, attended by the Chief Executive Officer (CEO) of Hess Corp, John Hess.

The purchase by Hess, President Dr. Mohamed Irfaan Ali explained, will be for 2.5 million credits per year for the years 2016-2030. The President noted that the first 12.5 million credits, for the period 2016-2020, are called legacy credits, gathered from a period in which the current administration was not in office. For the full period that Hess’ commitment covers, the credits to be sold amount to 37.5 million.

The Hess CEO said the purchases will occur in the period 2022-2032. Vice President Dr. Bharrat Jagdeo noted that the government expects to receive US$187 million from Hess in the first 18 months, for credits developed from the legacy period. Of this, Guyana plans to give US$28 million to Indigenous communities, in keeping with a policy of the Low Carbon Development Strategy (LCDS) 2030 to set aside 15% of carbon credit earnings for them. However, of the amount to be paid for the full period, government expects to give at least US$112 million to the Indigenous peoples.

According to a statement from Hess, the credits will be on the ART (Architecture for REDD+ Transactions) registry and will be independently verified to represent permanent and additional emissions reductions under ART’s Environmental Excellence Standard 2.0 (TREES). So far, ART has announced the validation and issuance of 33.47 million credits on its register for the period 2016-2020.

The Hess CEO said: “We are pleased to support the country’s efforts to advance sustainable development and advance the quality of life of the people in Guyana.”

His commitment, he indicated, applies not only to oil and gas, but to environmental and social governance (ESG).

The purchase by Hess Corporation amounts to three times the payments Guyana received from the Norway partnership which formed the springboard for Guyana’s efforts in this line of business.  Discussing this effort, President Ali said the totality of Guyana’s forests must be monetised. Additionally, he said Guyana is willing to work with others by sharing its experiences.

“We are committed to playing our part in this global environment… in [the fight against climate change, in providing energy security, and we are equally committed in the social and economic transformation of our nation and our people.”

To do this, Ali said, the government is also committed to the oil and gas sector. Vice President Dr. Bharrat Jagdeo defended the government’s policy for the aggressive development of its oil and gas resources, in the face of global efforts to reduce the pace of global warming. With the scale of funding Guyana needs for climate adaptation and mitigation, he said government hopes that the energy sector will contribute significantly to meeting these. But even with the likely placement of 10 floating production units offshore Guyana, the Vice President said Guyana will remain a carbon-negative country.

Also, part of Hess’ environmental and social governance (ESG) strategy in Guyana is a major healthcare initiative being spearheaded by Mount Sinai Health System. Hess announced a commitment of US$32 million in July to a nationwide program to revolutionise public healthcare in Guyana.

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