Climate change and global warming are among the most pressing challenges of our time. As global temperatures continue to rise, the urgency to reduce and recapture greenhouse gas emissions is paramount. Though companies must prioritize increasing energy efficiency and adopting renewable energy as primary strategies for ameliorating their impacts, carbon credits are becoming an increasingly important strategy for offsetting residual greenhouse gas emissions. If done correctly, carbon credits can significantly benefit the private sector and the Caribbean.
What are Carbon Credits? `
Carbon credits are permits that allow the holder to emit a certain amount of carbon dioxide or other greenhouse gases. They play a crucial role in carbon markets, where they can be bought and sold, incentivizing companies to reduce their emissions. As the number of companies with net zero commitments increase, it is projected that there needs to be a 15-fold increase in the size of Voluntary Carbon Markets (VCMs), or markets which companies choose to participate in, up to US$50 billion (McKinsey). Notably, it is expected that much of this shift will be towards natural carbon credits, moving away from renewable energy and other manmade sources.
Caribbean Potential for Credits
The potential for carbon credits in the Caribbean is immense and underexplored, especially for blue carbon, or carbon stored in coastal and marine ecosystems, such as mangroves, seagrass, and seaweed farms. These ecosystems not only sequester carbon, but also provide numerous other benefits, acting as both removal and avoidance offsets. For example, mangroves are a well-known Nature-based Solution (NBS), forming a barrier against storm surges and coastal erosion, while seagrass meadows support marine biodiversity.
The small islands in the Caribbean are in-fact large ocean nations with vast marine territories rich in blue carbon ecosystems. Yet, the potential for using these systems to attract carbon credits is only just being explored. The Inter-American Development Bank (IDB) is supporting the development of a Blue Carbon Credit Scheme in Trinidad and Tobago in the hopes of funding protected areas like the Caroni Swamp. In Jamaica, Kee Farms grows seaweed and seagrass for commercial use in bio-products and then sells the carbon credits. However, there are only a handful more of scattered examples of the use of credits in the Caribbean to support marine ecosystems.
Green carbon initiatives, which focus on terrestrial ecosystems, also hold significant promise for carbon sequestration through the conservation and restoration of forests. Guyana in February 2024 became one of the first countries to provide airlines the right to buy carbon credits that support its rainforest, with over 5 million credits available. The country has also received US$75 million in payments for carbon credits from the Hess Corporation in 2023, on a deal that is worth more than US$750 million over ten years. Similarly, Belize has carbon credits worth up to US$100 million from its rainforest that is part of Central America’s “Mayan Forest”. However, since the country’s announcement in 2022 that they are opening the credits, there has been no further progress.
Path Forward for the Caribbean
For the Caribbean to benefit from carbon credits, their needs to be increased awareness and knowledge around their benefits and usage. This must feed into national dialogue, especially amongst organizations in the environmental sphere, such as national trusts, marine organizations, and local ministries. There needs to be capacity building for this to happen, including support from international organization. Further, intermediaries such as brokers can help to design projects and connect buyers and sellers. The purpose overall in the Caribbean should be the identification and development of more projects which can be used to provide carbon credits.
As part of project design, ensuring independent ratings and adhered to established methodologies is essential to maintain trust and efficacy in credits. For example, Reducing Emissions from Deforestation and Forest Degradation (REDD+) i[SB1] s often used for green carbon initiatives, including in Guyana. Projects must also ensure emissions are not double counted by purchasing companies and under national commitments. Moreover, it is vital to ensure that these projects do not harm local communities but rather provide them with sustainable benefits, especially by fairly spreading/allocating profits derived from the sale of credits.
Next Steps for the Caribbean
The Caribbean stands at the cusp of a significant opportunity with carbon credits. As large ocean and forested states with rich blue and green carbon resources, the region can benefit immensely from these initiatives. By focusing on capacity building, project design, the use of credible methodologies, and ensuring benefits are shared, the Caribbean can play a pivotal role in global carbon sequestration efforts that also ultimately benefit the local environment and people.
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