By NEIL HARTNELL
Tribune Business Editor
The Prime Minister yesterday suggested The Bahamas’ efforts to extract value from carbon credits will “supplant” oil exploration and extraction as a potential future multi-million dollar revenue source.
Philip Davis QC, speaking at his office’s weekly press conference, said oil drilling was “not on our radar, not in our contemplation” as his administration focused in on the potential earnings stream from “monetising” this nation’s “blue carbons” that lie in the ocean via mangroves, wetlands and coral reefs.
Affirming that approval of further oil exploration in Bahamian waters remains “a policy decision we are undergoing as we speak”, the Prime Minister also hinted that while the Government may permit drilling to determine if this nation possesses viable commercial quantities, it may not allow extraction but, instead, seek to obtain financial compensation for not exploiting such resources to the country’s benefit.
“There are mechanisms to know you can have oil and monetise it while it is still in the ground,” Mr Davis said. “At the moment we are exploring monetising our blue carbons, monetising that, and we think that will be sufficiently monetised for us to not even look at oil drilling. As I speak to you, it is not on our radar and not in our contemplation.
“What we are pursuing right now is monetising our blue carbon credits. We’ll see how that works. The way I see it working, the question of oil drilling and oil extraction will be supplanted by the monetisation of our blue carbons.”
Mr Davis’ comments yesterday are the strongest indication to-date that the Government is moving away from permitting future oil exploration in Bahamian waters, and were immediately hailed by environmental activists although they wanted the administration to go even further by legislating of announcing a permanent ban on such activities.
Rashema Ingraham, of Waterkeepers Bahamas, branded the Prime Minister’s remarks as “fantastic news” and told Tribune Business: “We would like to congratulate the Prime Minister on making such a bold statement to the Bahamian people, as well as to any investor or financial group that may be looking at The Bahamas and making determinations as to the future, and how the future will look for investing in The Bahamas.
“While I would say to the Prime Minister that this is a very strong and positive step, what would solidify that will be legislation or a stronger pronouncement that puts a permanent ban on oil drilling on the table so we know our goal is to monetise blue carbon credits rather than invest in the fossil fuel industry.
“This is the direction we would like to see the country move to. We’d like to see our country move to restoring our mangroves, seagrass and coral reefs, so we have more to monetise and just see the results of the value of our natural resources,” she added.
“We’re definitely moving in the right direction, and we would definitely like to see him [the Prime Minister] stay on that same wavelength looking at opportunities for blue carbons than industries that will be non-existent. This is an opportunity to be at the forefront and leading this new industry.”
Less pleased is likely to be Challenger Energy Group, the former Bahamas Petroleum Company (BPC), which in its latest corporate presentation last month reiterated that it is still seeking to renew the four licences it holds in this nation’s waters for another three years.
It added that this would be the third of four three-year licence terms, which collectively span 12 years, and added that it is “addressing entry into a third exploration period” with its application said to be “pending”.
The suspicion is, though, that Challenger will only drill a second exploratory well in this nation if it can find a joint venture partner to share the bulk of the financial and technical load, and that its real goal is to monetise or get a return on its long history and investment in The Bahamas after its Perseverance One well failed to strike commercial oil quantities.
Carbon credits were originally devised as a means to incentivise companies, and countries, to reduce the greenhouse gas emissions that drive the global warming thought to be behind the more frequent, and intense, hurricanes that have devastated many islands in The Bahamas over the past two decades.
Negotiators at the Glasgow COP26 climate change summit in November 2021, which was attended by Prime Minister Philip Davis and a Bahamian delegation, evolved this further by agreeing to create a global carbon credit offset market that would encourage countries to work towards their climate change targets by buying credits representing emissions reductions by other states.
Alfred Sears, minister of works and utilities, was earlier this week said to be in Gabon, west Africa, to gain an understanding of how The Bahamas can follow that nation’s lead in developing a system that can fulfill its carbon credit potential.
Gabon was the first African country to receive results-based payments for curbing deforestation of its rainforests under the Central African Forest Initiative (Cafi). It last year received $17m from Norway through Cafi because of reduced emissions from forest loss in 2016 and 2017, which were lower than the 2006-2015 targets.
The payment is part of a 2019 agreement between Gabon and Cafi that could see the former receive up to $150m for reducing emissions from deforestation and land degradation over ten years. The scheme is designed to eventually allow Gabon to sell its emissions reductions as carbon credits on the open market.