Suriname, one of the few carbon-negative countries in the world, is aiming to become the first nation to sell carbon credits generated by the Paris Agreement, also known as Internationally Transferable Mitigation Outcomes (ITMOs). The country’s carbon credits are based on the carbon stock stored in its rainforest, which it registers with the United Nations. Any increase in carbon stock represents a corresponding reduction in emissions, generating carbon credits that can be sold. The Paris Agreement allows nations to sell these emission reductions in the form of ITMOs to other entities looking to meet their own climate targets.
Suriname is covered by forests, which account for around 95% of the country and serve as significant carbon sinks. The deforestation rate in Suriname is only 0.05% to 0.07%, making it a carbon-negative nation. Its forests capture more carbon than the country emits. Under the UN REDD+ program, Suriname has registered an emission reduction of 4.8 million metric tons of CO2 for 2021, which translates to 4.8 million carbon credits. These credits, or ITMOs, are crucial for Suriname’s economic and environmental policies, according to President Chan Santokhi. He believes it will provide long-awaited access to climate finance. Suriname can use the ITMOs to meet its Paris Agreement targets, and companies can also purchase them to offset their own climate goals. The country can issue the ITMO credits within weeks, and around 30 companies are currently evaluating whether to buy them. However, the price and volume of the issuance have not been disclosed.
The planned sale of ITMO credits is an attempt to attract investors with government-backed carbon credits that adhere to UN guidelines. This is particularly relevant as some businesses relying on voluntary carbon markets for offsets have become wary of private projects that fail to deliver promised emission reductions. Ghana recently presented a landmark bilateral authorized project under an ITMO deal with Switzerland at COP27. Governments can use ITMOs to achieve their net-zero targets. If Suriname’s first ITMO credits sale is successful, it could encourage other countries to follow suit. Honduras and Belize have already announced plans to issue their own ITMOs, with each country set to issue 10 million credits by 2024. This could help increase demand for ITMOs.
The timing is crucial as nations attending COP28, the global climate summit in Dubai in November to December, are required to report on the progress of their climate targets. Governments have set carbon emission caps, and those that exceed the limit can sell credits to those that have not met their targets. As the cap decreases, carbon levels also fall. This works similarly to how companies use carbon offsets to achieve their net-zero targets. Developed nations, while prioritizing intensive carbon reduction efforts, may still require carbon credits. For example, the United States aims to achieve a 25% reduction in CO2 emissions by 2025 compared to 2005 levels. However, experts believe a more realistic goal would be 17%. Any remaining emissions can be offset by buying ITMOs from carbon-negative nations like Suriname.
Despite the potential benefits, there are concerns about the verification standards for the REDD+ emissions reductions that back the ITMOs. A lead policy analyst at Carbon Market Watch, Giles Dufrasne, warned that the system still lacks robust verification standards. Buyers will need to assess the credits and request further information as needed. However, current rules are deemed sufficient to facilitate the sales. Another carbon market negotiator believes that although the system is not fully established, the sale can proceed and be registered later when the system is operational. Gustavo Silva-Chavez, a REDD+ expert, commented that while the system may not be perfect, it is better than nothing, as waiting for a perfect system could take 20 years, by which time the forests may be gone.
Prior to Suriname’s announcement, Gabon had planned to issue ITMO credits in 2022 but faced criticism that its forests did not actually reduce emissions. The country’s plan was further complicated by a military coup. In contrast, Suriname’s President Santokhi recently led a ground-breaking ceremony for the country’s mangrove carbon credit and agroforestry projects. These projects are being developed in partnership with Klimat X, a provider of high-quality carbon credits from afforestation and reforestation projects. Klimat X has signed an agreement with Suriname’s national government to develop mangrove and agroforestry carbon credit projects. The company has established a presence in the country and conducts fieldwork to determine project size and feasibility. Suriname’s extensive rainforests, which serve as carbon sinks, could generate revenue from ITMOs while contributing to global climate goals. This initiative could set a precedent and offer a lifeline to countries struggling to meet their net-zero targets.