By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A US infrastructure provider yesterday announced it has struck an agreement with a government-sponsored entity to monetise The Bahamas’ seagrass carbon assets through issuing its ‘sovereign carbon security’.

Laconic Infrastructure Partners, which describes itself as a for-profit entity dedicated to helping the public good since its founding in 2021, said in a statement that it has reached a deal with Carbon Management Ltd, the vehicle created to oversee and manage The Bahamas’ entry into blue carbon credits, to advance this nation’s bid to turn its ocean carbon sinks into profitable income streams.

While few details, and no financial projections, were unveiled, Laconic said the agreement will result in it providing “technology transfer, capacity building and financing of the Government’s” ambitions as set out in its commitments to the Paris climate change accords.

Anthony Ferguson, the CFAL founder and president, who was quoted in the statement in his capacity as a Carbon Management Ltd director, did not respond to Tribune Business inquiries and phone calls before press time last night. Carbon Management is structured as a public-private partnership (PPP) where the Government holds 49 percent equity ownership and receives 85 percent of all “upstream revenues” generated.

However, Laconic pledged: “This programme will finance independently-verified blue carbon removals generated by Carbon Management Ltd’s scientific management of The Bahamas’ expansive seagrass ecosystems via the issuance of Laconic’s pioneering sovereign carbon security product.

“The agreement marks the first-ever blue carbon sovereign carbon securities transaction and is set to position The Bahamas at the forefront of global climate leadership.” The announcement marks the first signs of tangible progress being made in realising the Davis administration’s long-touted carbon credit ambitions for some time.

Relatively little has been heard about the initiative for the past year, but the Government is seeking to convert The Bahamas’s seagrass meadows and mangrove forests - which act as ‘sinks’ to remove and extract carbon dioxide from the world’s atmosphere - into assets that generate multi-billion dollar income and new revenue streams for the country by monetising this benefit they offer.

Laconic, adding that its ‘carbon security’ will not require The Bahamas to provide a sovereign guarantee, said: “The programme will see verified, additional and real carbon removals generated by Carbon Management Ltd’s scientific management of up to 150,000 square kilometres of the nation’s seagrass ecosystems monetised over the next five years in full compliance with” the Paris climate commitments and accords.

“This transaction establishes a new standard for environmental finance, and sets a critical precedent for countries seeking innovative national-level solutions to meet their climate targets while sustainably growing their economies via the national level financing of approved sustainable development Goals (SDGs),” it added.

Mr Ferguson was quoted as saying: “The Commonwealth of the Bahamas is committed to becoming a full economy net-remover of atmospheric carbon by 2035.

“By working with Laconic, we will be able, for the first time, to generate sufficient development financing, technology transfer and capacity building to enable our country to make this commitment a reality – enhancing our sectoral conditional ambition under the Paris agreement to the benefit of not only our own people, but the entire global community.”

The strategy appears to be for Laconic to issue its ‘sovereign carbon securities’, whose value will be based on The Bahamas’ seagrass meadows and the amount of carbon dioxide they extract from the Earth’s atmosphere. These would then be traded by investors and companies, and potentially listed on regulated stock exchanges both in The Bahamas and around the world.

“The Bahamian commitment to blue carbon solutions is a shining example of how governments can use global capital markets to finance national level conservation and sustainable development initiatives that drive meaningful long-term economic growth whilst contributing to global decarbonisation efforts,” said Andrew Gilmour, Laconic’s chief executive.

“This partnership is proof that the capital markets are now awakening to the immense opportunities in carbon finance, and we are excited to work with The Bahamas to unlock a new source of permanent foreign direct investment (FDI) for the country’s economy.”

Besides the Government, some 2 percent of Carbon Management Ltd is held by unspecified non-governmental organisations (NGOs), with the remaining 49 percent held by the firm’s operating/management partner, Beneath The Waves.

The Prime Minister, in summer 2022, said that with a Heads of Agreement with Beneath The Waves already concluded, the Government will receive 85 percent of Carbon Management’s “upstream” revenues with Beneath The Waves gaining the remaining 15 percent.

He added that the Government would, via its equity stake, receive 49 percent of Carbon Management’s “downstream” revenues associated with the trading of Bahamian blue carbon credits on the secondary market. And Beneath The Waves’ 15 percent management fee was “the most attractive of all offers received”.

Beneath The Waves was founded in 2013 as a non-profit focused on Marine Protected Areas, threatened species, deep sea conservation and blue carbon. However, to convert this nation’s seagrass and mangrove assets into income streams, Vera, the environmental verification group, has to certify their potential blue carbon credit value.

Besides Mr Ferguson and Antoine Bastian, the Genesis Fund Services’ chief, the directors/advisers to Carbon Management Ltd also include Michael Paton, the Lennox Paton attorney and partner; Jeffrey Kerr, president and chief executive of Green Leaf Financial Services; and Dr Livingstone Marshall, senior vice-president of environmental and community affairs at Abaco’s Baker’s Bay development.

Dr Carlton Watson, from the University of The Bahamas, and Dr Alyson Myers, vice-president of development and research at Sandy Cay Development, are other members of the Bahamian scientific and environmental community named as directors/advisers to Carbon Management. The final three members - Dr Austin Gallagher, Dr Carlos Duarte and Cristina Mittermeier - are all affiliated with Beneath the Waves.

Mr Ferguson previously suggested 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. 

“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,” he added.

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.