(Reuters) – Guyana, which has jumped into the forefront of offshore oil exploration, is using its inland forests to tap carbon markets, in a business the government sees as more profitable than using the acreage for mining or agriculture, Vice President Bharrat Jagdeo said on Wednesday.
The South American country, one of the fastest growing oil producing nations after a consortium led by Exxon Mobil Corp (XOM.N) discovered billions of barrels of oil in the last decade, has 90% of its territory covered by forests.
Its sales of carbon credits could generate $4 billion to $5 billion for the country, Jagdeo told an energy conference.
Mining and agriculture sustained the economy before Guyana, among South America’s most underdeveloped nations, started producing oil in 2019.
Guyana’s more than 18 million hectares (44.5 million acres) of forests are estimated to store some 20 billion tonnes of carbon dioxide equivalent. The country aims to maintain 99.5% of its forests.
The decision was not made “based on altruism,” Jagdeo said during the second day of Guyana’s Energy Conference and Expo.
“We are monetizing these resources and we are utilizing these resources to develop our country,” he said.
In December, the government sold carbon credits worth some $750 million in a multi-year deal to Hess Corp (HES.N), one of the three companies producing oil in Guyana through the Exxon-led consortium.
Guyana would receive more if the price of carbon – currently estimated at $20 per tonne but with potential to go to $90 per tonne – rises, he said.
Indigenous communities that preserve the forests are expected to receive $22 million from the sale as soon as next week, Jagdeo said.
The agreement between Hess and Guyana was signed under the United Nations’ Reducing Emissions from Deforestation and Forest Degradation program (REDD).