If Gabon’s Largest-Ever Carbon Credit Sale Works, It Will Be World-Changing

When Amazon’sAMZN
Founder Jeff Bezos visited Africa’s Congo Basin for the first time this month, he became enamored of 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 promised to give $10 billion between 2020 and 2030 to battle climate change and preserve nature.

Bezos’ meetings in the Congo Basin occurred just before Gabon’s October issuance of carbon credits to help the country protect its rainforest — the largest ever and potentially worth more than $2 billion. The government is now 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 vowed to be carbon neutral — in alignment with the Paris climate agreement. But switching to renewables won’t get them all the way there. So they buy carbon credits. If the credits are purchased directly from the source, the country gets all the money, and the entire rainforest is sheltered.

Indeed, the influx of a billion dollars or more into Gabon would serve as an economic catalyst that not only adds value to the forests but also creates much-needed revenues for infrastructure. It also would generate new jobs linked to forestry management and domestic furniture making — all potential pathways for an overwhelmingly young population that will get out of school and need work.

“Jeff (Bezos) is very keen on Gabon,” says Gabon’s Minister of Water, Forests, Sea, and Environment Lee White, in an interview with this writer. “He was extremely engaged. We have an ally for Gabon and for the rainforests and biodiversity. The experience moved him.”

Gabon’s forests are part of the Congo Basin. Specifically, Gabon absorbed 1 billion tons of CO2 between 2010 and 2018. Under REDD+ — a financial mechanism to reward countries for saving their trees — Gabon is allowed to sell credits worth 90 million tons. The Paris agreement adopted that financial mechanism in 2015. Governments account for their forest lands and set targets to stop deforestation. The United Nations Framework Convention on Climate Change evaluates that progress before approving their performance and emissions reductions. If Gabon sold its credits for $25 a ton, it would net $2.25 billion.

Broader Mosaic

Gabon is an 88% tropical rainforest nation. It cuts down very few trees. But the country also host an oil industry that makes up 60% of its economy. While those revenues have provided some cushion, they are a dwindling asset — a function of climate change and the demand for fossil fuels. Carbon credits are not a silver bullet. They are part of a broader mosaic that can spawn new opportunities.

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

For example, Gabon bans the sale of unfinished wood to foreigners. Instead, it has built a high-end furniture industry and can get top dollar for the finished product. That means it does not have to cut down as many trees. Those left standing also have more value — nature’s way of absorbing CO2, otherwise known as carbon sinks. Meantime, the country can hire forest rangers and build up tourism.

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

Suppose Gabon’s holistic commercial model works. It would then become a blueprint 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 ton and rise to $35 a ton, although some economists say that the social cost of carbon is $50 — the estimated economic damage for every ton emitted.

“Gabon is carbon positive because we have created a forest economy that raises the value of our forests,” says Minister White. “But we need a $10 billion forestry industry — far more than what the carbon credit sale will bring in. The carbon credits could potentially be very influential. These are the best carbon credits to ever come on the market. But they have to be combined with something that creates jobs.

“We have reduced our emissions by 90 million tons,” adds the minister. “We have absorbed 1 billion tons. For every carbon credit someone buys, Gabon removes 10 tons of CO2 from the atmosphere. They are getting 10 credits for the price of 1. Plus, they are helping to increase the elephant population.”

Intense Pressure to Cut Trees

Do not underestimate the pressure to cut down trees. Many rainforests countries do not have major industries and rely on their rainforests to support their economies: they are used to produce food and timber — or for tourism. But the trees also absorb CO2 from the atmosphere.

Consider the Democratic Republic of Congo, with a population of 92 million people: it is expanding the rights to drill for oil there in response to the global oil demand. The pursuits would generate revenues to build schools and hospitals. Right now, the Congo produces 25,000 barrels a day off the coast of the Atlantic Ocean. It says it could produce more onshore oil.

If the developed world wants the Congo to preserve its forests, those richer countries must provide adequate compensation. And therein is the paradox: Since 2009, the western world has promised financing to make those trees worth more alive than dead. But that has not materialized. Germany, Norway, and the United Kingdom are the most active countries in the carbon credit market.

The challenge now is to get the wealthier nations and multinationals to buy those credits at scale. That makes Jeff Bezos’ low-key visit to the Congo Basin so promising. If Amazon gets on board, corporate cash could flood the rainforest nations. Meantime, ChevronCVX
Corp., ExxonMobilXOM
, and Royal Dutch Shell are active in Africa and are in the market for carbon credits.

“We are 88% rainforests,” says Minister White. “The only way to maintain those forests is to give them value. Without a sustainable forest industry that is properly valued, the rainforests are condemned to die.”

Gabon’s carbon credit sale in October is a major global event. If companies and countries scoop them up at a high price, their trees will live on, combating climate change and providing jobs. Gabon could go on to prosper and become a beacon of hope for other rainforest nations.

Source: https://www.forbes.com/sites/kensilverstein/2022/07/24/if-gabons-largest-ever-carbon-credit-sale-works-it-will-be-world-changing/