If Gabon’s Largest-Ever Carbon Credit Sale Works, It Will Be World-Changing
If Gabon’s Largest-Ever Carbon Credit Sale Works, It Will Be World-Changing
Ken Silverstein, Forbes
July 24, 2022
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When Amazon’s 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, Chevron Corp., ExxonMobil, 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.