Guyana has announced its energy transition strategy, known as the Low Carbon Development Strategy 2030. At the 26th UN Climate Change Conference of the Parties (COP26), President Dr Irfaan Ali announced that Guyana has a 2030 target of reducing its carbon emissions by 70 percent.
Guyana, one of the fastest-growing economies in the world, remains committed to the Paris Agreement aim of stabilising global temperatures below 1.5 degrees above pre-industrial levels. The UN Intergovernmental Panel on Climate Change (IPCC) 2018 Report on global warming expounds on the stark difference between holding the increase to 1.5°C as opposed to 2°C above pre-industrial levels.
The commitment shown in Guyana’s policy announcements, as the country undergoes a rapid economic transformation and development of an Oil and Gas Sector, provides an example to countries navigating the transition to a cleaner energy mix and the use of fossil fuel resources. Guyana has seen a meteoric rise in its oil reserves from zero in 2015 to the third-largest oil reserves in the LAC region at over 10 billion barrels. The Natural Resource Fund, the recipient of the country’s petroleum revenues, has surpassed 500 million USD in under two years of oil production.
The initial version of the LCDS, released in 2009, led the way with the combination of the Guyana-Norway Partnership in establishing a market-based mechanism for forest climate services. Guyana boasts the second largest percentage of forest cover on earth, with 85% of the country, circa 18 million hectares, of forest.
Over the 2009 to 2015 period, the country earned north of 200 million USD — earmarked for investments as guided by the LCDS. The agreement was not renewed in 2015. Less than 25% of the earnings were allocated and 15.5 million was expended on LCDS projects.
The change of government in 2015 witnessed a national strategy shift to the Green State Development Strategy: Vision 2040, launched in 2019. The GSDS establishes a near-100% generation from renewable and clean energy sources for the electricity sector by 2040. The document names natural gas as a clean energy source and component of the medium-term electricity mix. Renewable energy targets were not set for other end-use sectors; however, the GSDS, in keeping with the LCDS, aims to improve energy efficiency, such as in industry, and to incentivise the shift to a sustainable, low carbon transport sector.
The revamped strategy, LCDS 2030, breathes life into the 165 MW hydropower Amaila project — cancelled in 2017 officially due to the extent of financial risks allocated to the public sector and doubts over its feasibility. The addition of the utility-scale hydropower to the electricity mix will finally build on the 1994 National Energy Policy’s belief that hydro generation is a long-term power solution. Guyana has further progressed on its gas to shore energy project despite a change of government.
Chapter 2 of the LCDS 2030 and Appendices 1 and 2 are dedicated to Guyana’s intent on integrating with the Voluntary Carbon Markets. SPS Global Platts reported in November that the voluntary market for carbon credits has exceeded 1 billion USD for 2021 with CORSIA-eligible carbon (CEC) credit prices surging by 944%.
The private finance carbon markets represent an attractive avenue for Governments — many governments currently have little exposure to the growing area. Nature-based solutions VCM projects are particularly attractive. The Monitoring, Reporting and Verification System developed from the Guyana-Norway partnership is an indispensable asset to the Guyana’s VCM integration; the complexity of designing measurement and verification systems for emissions reduction is a challenge of VCM projects.
LCDS 2030, the applicable strategic document on Guyana’s Energy Transition, is currently undergoing a national consultation process until the end of February 2022. Governments face the challenge that a technically sound approach can be undermined if not communicated effectively via soft skills.