The Democratic Republic of Congo will enable carbon credit and cryptocurrency firms to bid in an oil and gas licensing round that has been criticised by environmentalists who say drilling within the nation’s rainforests and peatlands would threat releasing huge portions of carbon dioxide.
Last month, Congo put 30 oil and gas exploration blocks up for auction. Some of the exploration areas are in Virunga National Park and the Cuvette Central, the world’s largest tropical peatland, which naturally absorbs carbon from the environment.
Didier Budimbu, the hydrocarbons minister, informed the Financial Times he would settle for bids for exploration rights within the rainforest and peatlands from carbon market start-ups with no hyperlinks to oil and gas majors so long as that they had stable monetary backing.
Rather than probe for hydrocarbons, such groups suggest holding any oil and gas within the floor and as an alternative generate income by promoting carbon credit to firms wanting to offset their emissions.
“If it can help our economy and the country, why not?” Budimbu mentioned. “We’re not doing this to destroy the rainforest, we’re doing it for economic gain . . . With or without oil, what’s important is that we earn [money].”
Congo produces about 25,000 barrels a day of crude oil from a small variety of onshore and offshore blocks alongside its Atlantic coast. The authorities’s long-held ambitions to produce oil in different components of the nation’s inside have beforehand been held again by environmental issues, corruption and a scarcity of export choices.
Those challenges imply it stays unsure what number of oil and gas firms plan to take part within the licensing round. France’s TotalEnergies, which has a mission in neighbouring Uganda, and Italy’s Eni, which is energetic in different components of Africa, have each informed the FT they won’t bid.
Flowcarbon, a start-up co-founded earlier this 12 months by WeWork co-founder Adam Neumann, is among the many carbon credit groups to have expressed curiosity.
Phil Fogel, Flowcarbon’s head of cryptocurrencies, mentioned the corporate had contributed employees and sources to RedemptionDAO, a marketing campaign organised over messaging platforms Telegram and Discord and based two days earlier than the auction launched in July.
RedemptionDAO goals to purchase a minimum of one of many blocks in partnership with an oil firm or by means of crowdfunding, and use it to situation “avoided emissions” carbon credit. It hopes to increase a minimum of $50mn, however has to date solely raised $2.57mn and obtained pledges of $74,000, each in USDC, a so-called stablecoin digital currency pegged to the greenback.
Venture capitalist Thomas Annicq mentioned he had contacted the Congolese authorities individually on behalf of one other coalition of carbon market firms that wished to mount a joint bid on the blocks.
Companies have till February to submit bids. However, there’s at current no official methodology for bringing credit from foregone oil and gas exploration to market and analysts say that growing one may take up to two years.
The concept of utilizing credit on this approach was first examined 15 years in the past when Ecuador’s then president, Rafael Correa, requested the worldwide neighborhood to compensate the nation for not drilling in an oil exploration block in Yasuni National Park. But drilling went forward in 2016 after solely a fraction of the focused $3.6bn was raised.
Multinationals’ reliance on carbon offsets to meet internet zero targets or promote their merchandise have created demand for prevented deforestation credit, making any such credit a extra viable choice. Gabon, the world’s second most-forested nation, plans to situation prevented deforestation credit equal to 187mn tonnes of carbon.
Carbon credit firms sometimes agree offers with native communities or landowners to situation credit.
Ben Rattenbury, head of coverage at carbon credit ranking start-up Sylvera, mentioned the upfront value of shopping for land or exploration rights may lead to a “catastrophic cash flow problem” for a carbon credit firm until it raised funds by means of crowdfunding or different means. “I can’t imagine a traditional carbon credit developer . . . raising the funds to be able to bid.”