If Gabon’s biggest carbon credit sale works, it will change the world

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When Amazon is
AMZN
Founder Jeff Bezos visited Africa’s Congo Basin for the first time this month, falling in love with its rainforests, biodiversity and wildlife. He then pledged $35 million to Gabon to support nature conservation – part of the Bezos Earth Fund’s $110 million donation to the region. The fund has pledged to give $10 billion between 2020 and 2030 to fight climate change and preserve nature.

Bezos’ meetings in the Congo Basin came just before Gabon issued carbon credits in October to help the country protect its rainforest – the largest ever and potentially worth more. of $2 billion. The government is currently in talks with a major oil company. And Amazon may also want those credits. A successful sale would give rainforest nations and climate advocates renewed faith.

Countries and companies have pledged to be carbon neutral, in line with the Paris climate agreement. But switching to renewable energy will not take them all the way. So they buy carbon credits. If the credits are bought directly from the source, the country gets all the money and all the rainforest is safe.

Indeed, an influx of $1 billion or more into Gabon would serve as an economic catalyst that not only adds value to forests, but also creates much-needed revenue for infrastructure. It would also generate new jobs related to forest management and household furniture making – all potential avenues for an extremely young population to come out of school and need work.

“Jeff (Bezos) cares a lot about Gabon,” said Lee White, Gabon’s Minister for Waters, Forests, the Sea and the Environment, in an interview with this writer. “He was extremely committed. We have an ally for Gabon and for tropical forests and biodiversity. The experience moved him.

Gabon’s forests are part of the Congo Basin. Specifically, Gabon absorbed 1 billion tonnes of CO2 between 2010 and 2018. Under REDD+ – a financial mechanism intended to reward countries for saving their trees – Gabon is allowed to sell CO2 credits. worth 90 million tons. The Paris Agreement adopted this financial mechanism in 2015. Governments report on their forest lands and set targets to stop deforestation. The United Nations Framework Convention on Climate Change assesses these advances before approving their performance and emission reductions. If Gabon sold its credits at 25 dollars per ton, it would bring in 2.25 billion dollars.

Larger mosaic

Gabon is an 88% rainforest nation. He cuts very few trees. But the country is also home to an oil industry which accounts for 60% of its economy. While these revenues have provided some cushion, they are a shrinking asset, depending on climate change and demand for fossil fuels. Carbon credits are not a silver bullet. They are part of a larger mosaic that can generate new opportunities.

“Half of our employees are under 20,” said Minister White. “We have 800,000 children in school. We now have a total of 400,000 jobs. We need 500,000 new jobs. Without more jobs, we will have a whole generation of angry people. It’s a recipe for civil war. If carbon credits generate at least $1 billion, we can build roads, railways and a sustainable forest economy.

For example, Gabon prohibits the sale of raw wood to foreigners. Instead, it has built a high-end furniture industry and can get top dollar for the finished product. That means he doesn’t have to cut down as many trees. Those left standing are also more valuable – nature’s way of absorbing CO2, otherwise known as carbon sinks. In the meantime, the country can hire forest guards and develop tourism.

Moreover, the forests have not only endured, but have also absorbed 1 billion tons of CO2 in eight years, allowing the natural habitat to survive: Gabon’s elephant population has increased from 60,000 to 95,000 since 2000 while neighboring Cameroon lost 90% of its elephants.

Let’s assume Gabon’s holistic business model works. It would then become a model for rainforest nations, allowing them economic diversification and climate protection. For context, Europe sells carbon credits for $100 a ton. In Africa, they expect to start at $25 a tonne and $35 a tonne, although some economists say the social cost of carbon is $50 – the estimated economic damage for each tonne emitted.

“Gabon is carbon positive because we have created a forest economy that increases the value of our forests,” said Minister White. “But we need a $10 billion logging industry – far more than the sale of carbon credits will bring. Carbon credits could potentially have a big influence. These are the best carbon credits ever put on the market. But they have to be combined with something that creates jobs.

“We have reduced our emissions by 90 million tonnes,” added the minister. “We absorbed 1 billion tons. For every carbon credit someone buys, Gabon removes 10 tons of CO2 from the atmosphere. They get 10 credits for the price of 1. Plus, they help increase the population of elephants.

Intense pressure to cut down trees

Don’t underestimate the pressure to cut down trees. Many rainforest countries have no major industries and depend on their rainforests to support their economies: they are used to produce food and timber – or for tourism. But trees also absorb CO2 from the atmosphere.

Consider the Democratic Republic of Congo, with a population of 92 million: it is expanding rights to drill oil there in response to global oil demand. The lawsuits would generate revenue to build schools and hospitals. Currently, the Congo produces 25,000 barrels per day off the Atlantic Ocean. He says he could produce more oil onshore.

If the developed world wants Congo to preserve its forests, these richer countries must provide adequate compensation. And therein lies the paradox: since 2009, the Western world has pledged funding to make these trees worth more alive than dead. But that did not materialize. Germany, Norway and the United Kingdom are the most active countries on the carbon credit market.

The challenge now is to get the richest countries and multinationals to buy these credits on a large scale. That makes Jeff Bezos’ low-key visit to the Congo Basin so promising. If Amazon comes on board, corporate money could flood rainforest nations. In the meantime, Chevron
CLC
Corp., ExxonMobil
XOM
and Royal Dutch Shell are active in Africa and are in the carbon credit market.

“We are 88% tropical forests,” said Minister White. “The only way to maintain these forests is to give them value. Without a sustainable and properly valued forest industry, tropical forests are doomed to die.

Gabon’s sale of carbon credits in October is a major global event. If companies and countries pick them up at a high price, their trees will live, fighting climate change and creating jobs. Gabon could continue to prosper and become a beacon of hope for other rainforest nations.

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