The Tribune

A Cabinet minister yesterday said the Government is “cautiously optimistic” that The Bahamas could earn $900m per year from monetising its seagrass and mangrove carbon sinks.

Michael Halkitis, minister of economic affairs, told an investor forum on Grand Bahama that The Bahamas can anticipate receiving “healthy” prices for its blue carbon credits due to increasing demand for such securities as countries and companies seek to offset their carbon emissions and reach their net zero goals.

He added that this nation could be looking at a windfall of around $900m per year, with some long-term estimates suggesting it could earn a total $60bn by 2050.

Mr Halkitis, speaking to attendees at the Forum for Impact Americas at the Garden of the Groves in Grand Bahama, said The Bahamas has led the discussion in recognising the role seagrass meadows play in absorbing carbon from the atmosphere.

As such, he said the Government commissioned research on 10 seagrass meadows in Bahamian waters to determine the density of organic carbon found within the seagrass and surrounding sediment. That research revealed averages of about 67,000 to 93,000 square kilometres of seagrass, the largest seagrass meadows in the world.

“Once the research is completed and verified, we will begin the process of evaluating and putting a price to our carbon absorbing capacity,” said Mr Halkitis. “This value will be represented by blue carbon credits we can then monetise. Based on our current pace, we could be in position to monetise by the end of next year.”

Mr Halkitis said he wanted to be conservative with the figures, adding: “The market is still being developed, so we are very, very cautious...cautiously optimistic, but also very conservative in our projections. But the projections for potential revenue are very encouraging.”

The Bahamas’ blue carbon assets are to be monetised through a public-private partnership (PPP), with 49 percent of the executing entity owned by The Bahamas.

“It is envisioned that proceeds will belong to the National Investment Fund, which will fund Family Island development, climate resilient infrastructure, renewable energy and food security initiatives,” said Mr Halkitis.

“To paraphrase all of this, let’s just say blue carbon credits are a big deal. Once fully realised, we are looking at a major revenue source that will make our economy stronger and more resilient through investments in key areas. Our ability to become more climate resilient will define our future.”

Carbon Management Ltd, a Bahamas-domiciled entity, has been charged with raising the $50m-$60m required to map all The Bahamas’ blue carbon assets. The size and value of this nation’s mangrove and seagrass bed sinks, which remove carbon dioxide from the world’s atmosphere, have to be verified by independent bodies before they can be monetised and converted into carbon credits.

Anthony Ferguson, CFAL’s president and co-founder, who is playing a key role in The Bahamas’ bid to monetise the value of its ocean-based carbon ‘sinks’ such as mangroves and seagrass beds, last year said this nation’s carbon credits will only be sold to persons working towards similar environmentally-sustainable goals.

Mr Ferguson said: “What we are trying to do is be responsible, while at the same time maximising the value that we can get so that we could be in a position by 2050 to have an endowment fund that’s probably $40, $50 or $60bn that could then be reinvested to protect ourselves.”

The CFAL chief said the revenue generated from selling these blue carbon credits will be used to further the country’s sustainable development goals (SDGs) and reduce the “tax burden” facing Bahamians.

He added: “The politicians would not be able to just arbitrarily access that… To maximise the value, those funds must be invested for those SDG goals. So whether it’s infrastructure, healthcare, back into the community’s conservation, we would have identified a number of SDGs that we believe are important to The Bahamas and to reducing the stress level, the tax burden on the Bahamian public.

“We think that, once fully operational, certainly there will be a new set of revenues that will probably be more targeted to healthcare, airports, docks, infrastructure and community development.” Mr Ferguson said that at the last valuation in 2018, total marine assets in The Bahamas were valued at about $980. Revenue earned from carbon credits can be invested to ensure future conservation efforts.

He said: “We are trying to maximise shareholder value, the Bahamian people’s assets, these protected areas that are already protected. And so, for us, if you look at the value of those protected areas, the last valuation was done, I believe in 2018. It came in around $980-something million. I think it’s a little bit higher if you look at all of the biodiversity additives.

“And so we think, conservatively, anywhere from t$750m to $1bn, but I want to be conservative. Even if it’s only half a billion, the point is we invest that back into Bahamian bonds. We take the interest and then we use that to provide the conservation efforts to protect these areas.”

Several financial services sources have privately questioned the Government’s plans to Tribune Business and whether it will generate the revenue numbers being touted. Several have suggested that, in order to be able to create and sell carbon credits, a country has to first reduce its own emissions and pollution as an ‘offset’ to what will be created by the purchaser. The Bahamas, they added, has yet to do this.

The sources suggested that while it was possible to monetise the country’s carbon sinks, via low-cost concessionary ‘blue economy’ loans and debt financing, simply issuing credits against The Bahamas’ seagrass and mangrove beds is unlikely to work.

However, Mr Ferguson said The Bahamas will be selling “carbon certificates” rather than carbon credits. These certificates will allow the purchaser to offset their carbon dioxide or greenhouse gas emissions by investing in environmental projects and assets - such as this nation’s seagrass and mangrove beds.

Mr Halkitis thanked the organisers of Forum for Impact for facilitating the discussions, adding that the dialogue allows the Government and those friendly towards the environment to highlight how The Bahamas can positively impact the world.

“It also allows us to exchange knowledge, learn from each other, and gain inspiration to continue on our mission to make the world a better place,” he added.