Guyana, which has pioneered offshore oil exploration, is leveraging its inland forests to access carbon markets, a business that the government sees as more profitable than mining or agriculture, Vice President Bharrat Jagdeo said.
The South American country, which has 90% of its territory covered by forests, is 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.
According to Jagdeo, its carbon credit sales could produce $4 billion to $5 billion for the government.
Mines and agriculture supported the economy until Guyana, one of South America's poorest countries, began 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 intends 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.
The government sold $750 million in carbon credits to Hess Corp (HES.N), one of three businesses producing oil in Guyana through the Exxon-led consortium, in December. Hess and Guyana inked the agreement under the United Nations' Reducing Emissions from Deforestation and Forest Degradation program (REDD).
The price of carbon is now estimated at $20 per tonne but has the potential to reach $90 per tonne, meaning that Guyana would receive more if the price of carbon rise, Jagdeo explained.
Indigenous communities who protect the forests are expected to receive $22 million from the sale as soon as next week, according to Jagdeo.