By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

The Bahamas could build a fund worth up to $60bn by 2050 to finance environmental and climate change protection if it maximises its blue carbon credits, a financial analyst predicted yesterday.

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, estimated that revenues worth billions could be generated from selling the blue carbon credits this initiative is designed to produce.

Speaking at the Bahamas Institute of Chartered Accountants (BICA) accountants’ week seminars, he 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.”

Mr Ferguson added that investing in protecting The Bahamas’ natural environment and assets is “critical” to safeguarding the country’s future. Therefore, the money generated will not be placed in a general fund or distributed to the public.

He said: “That’s going to be critical for us if we are to maintain our seagrass, our fish stocks, etc. And so that’s going to be critical and hence the reason why it can’t go into the general (consolidated) fund.

“You’re not going to get it directly in your pocket. You’re not going to get this cheque. But what you will get, or what you should get, is a more modern, well-run society where you have stable energy and good healthcare.”

Mr Ferguson said the Government and Carbon Management Ltd, the entity that will oversee the creation, listing and trading of The Bahamas’ blue carbon credits, is “in no rush” to select a stock exchange that will facilitate this after holding talks with every major platform.

The CFAL president, who is a director/adviser to Carbon Management Ltd, said the Government and its consultants are still finalising the science and documentation needed to create blue carbon credits.

“With respect to the exchange, we’ve had conversations with every major exchange in the world. They’ve approached us, and so we’re in no rush. We need to get the science right; we need to get the documentation right… and then we will worry about which exchange at the particular time we would align ourselves with,” Mr Ferguson said.

He added that The Bahamas is interested in creating a carbon credits exchange in partnership with other Caribbean and Pacific Island states, which are among those set to be impacted most by climate change but, ultimately, they will use the platform that offers the best products and value.

Mr Ferguson said: “In the big scheme the vision is we can have a CARICOM, small island, Pacific Island, exchange. There’s strength in numbers, and we have all of our carbons traded on that exchange. Whether that happens or not is another story to be determined.

“But, at the end of the day, we will list or partner with the exchange that offers The Bahamas the best liquidity, more interesting financial products, whether we do futures, swaps, whatever, and where we can maximise shareholder value.”

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.

“The Bahamas has about 97,000 square kilometres of sequence that we need to map,” Mr Ferguson previously said. “Each square kilometre is, based on our initial finding, about 500,000 carbon credits.....

“We think that once we are fully operational that we will produce anywhere from 14m to 18m tonnes of carbon a year. That’s using today’s HIS Market price of around $50, so on the low end conservatively we can see anywhere from $300m to $400m of new revenues. On the high end, we could probably see over $2bn.”

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.