By Neil Hartnell

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas blue carbon credits “game changer” yesterday received a significant boost from a $25m financing designed to pave the way for a potential $1bn capital raise within the next 12 months.

Anthony Ferguson, CFAL’s president, told Tribune Business that the credit facility arranged by ArtCap Strategies, a boutique investment house that focuses on capital-raising deals in Latin America and the Caribbean, will fund the mapping and scientific validation of The Bahamas’ ocean-based carbon ‘sinks’ such as seagrass meadows and mangrove forests.

The investment banker, who has spearheaded the Government’s drive to “monetise” this nation’s ‘blue economy’ assets, explained that - once the amount of carbon removed from the atmosphere by these natural features is verified - The Bahamas will seek to place between a $500m to $1bn “blue carbon bond” with international investors with the proceeds set to be drawn down over a five-year period.

Mr Ferguson told this newspaper that the funds generated “cannot be used for any political whim” but, rather, will be directed towards The Bahamas’ achieving multiple key United Nations (UN) sustainable development goals in areas such as climate change, economic growth and “decent work”, healthcare, resilient infrastructure, and environmental protection and remediation on both land and air.

Speaking after the transaction with ArtCap Strategies was formally unveiled, the CFAL chief confirmed a Bloomberg Business News report that the credit facility raised from investors is worth $25m and there are plans for The Bahamas to seek up to $1bn in blue carbon-based financing within the next year.

Mr Ferguson, who is also a director of Carbon Management Ltd, the entity formed to manage the monetisation of The Bahamas’ blue economy assets, and in which the Government holds a 49 percent ownership interest, also affirmed that the $25m loan will fund the company’s mapping and validation of this nation’s natural assets plus the amount of carbon they extract and recycle.

This a key step before The Bahamas can even think of structuring, and issuing, ‘blue carbon’ credits, and Mr Ferguson said Carbon Management Ltd now has all the necessary financing to complete this task. “We started the whole mapping exercise about a year to year-and-a-half ago,” he explained to Tribune Business.

“We have mapped a couple of [seagrass and mangrove] plots already. There are 30 plots to be mapped. We are going to go through and do all the plots and, hopefully, in 12 months we can go through how many carbon sink areas there are and, after that, look to begin monetising those assets.

“This will also set the baseline from which to measure going forward,” said Mr Ferguson of the initiative that the $25m facility will fund. “We’ve seen a lot of degradation of the seagrass over the last ten years, so once we can map everything and set the baseline we can do remediation.

“This is like the final… this takes us to the level where we can begin monitoring, oversight and put in place legislation to protect certain areas where there is run-off and quantify the carbon available for verification. This is very significant for us.”

The size and value of The Bahamas' blue carbon sinks, which remove carbon dioxide from the world's atmosphere, have to be verified by independent bodies such as Verra before they can be monetised and converted into carbon credits. Prime Minister Philip Davis KC revealed in 2022 that Carbon Management Ltd would be charged with raising the $50m-$60m required to map all The Bahamas’ blue carbon assets such as seagrass.

Mr Ferguson, yesterday confirming that the figures cited by Bloomberg are accurate, said the “multiples” on the $25m credit facility would be between 10 times’ to 40 times’ once the “blue carbon bond” is launched and placed. “We hope within the many months, we hope to issue a blue carbon bond” based on the value of these verified assets,” he added.

“It [the bond proceeds] would be drawn down over a period of five years, so it would not all be drawn down at once. Between $500m to $1bn is the expectation. We have to continue to monitor, to make sure the carbon is still there and still good etc. We are basically going to have a new industry developed out of this.

“We’re going to need divers, we’re going to need scientists, we’re going to need boat captains, people who fly drones and create a massive new industry. And, in partnership hopefully with the University of The Bahamas, we will get young scientists interested in this field. There’s a huge opportunity here for us.”

As for how the proceeds generated by The Bahamas’ monetising its ‘blue economy’ assets will be used, Mr Ferguson told Tribune Business: “These will be earmarked for the 10-15 sustainable development goals that the Government has articulated. It will be healthcare, climate infrastructure, education. These funds will be earmarked. They cannot be used for any political whim or fancy at all.

“It’s significant. It’s a game changer for us. The Government spends its capital budget, several hundred million every year, because of damage due to climate change and remediating the environment. We have had a lot of economic development where the infrastructure put in place has impacted the environment.”

ArtCap Strategies, in announcing the $25m credit facility, said the proceeds will “capitalise” an entity called Carbon Credit (SWF) Ltd. This is a Bahamas-domiciled special purpose vehicle (SPV) that will “hold The Bahamas’ carbon certificates” and be managed/overseen by Carbon Management Ltd.

It added that the SPV will “support the country's strategy to develop, certify and monetise its vast blue carbon assets, positioning The Bahamas as a global leader in ocean-based climate finance”.

The Government has previously asserted that The Bahamas is home to the world’s largest seagrass meadow resource, and ArtCap Strategies said: “The [SPV] will use proceeds from the facility to finance the initial stages of the Bahamas blue carbon programme, including ecosystem mapping, scientific validation and the establishment of carbon baselines…

“This initial investment serves as a catalyst for conservation and sustainable growth, protecting critical coastal ecosystems while unlocking a scalable, revenue-generating model that supports The Bahamas' broader development agenda. Over the next five years, the country is expected to generate substantial revenues from the sale of high-integrity blue carbon credits derived from the conservation and restoration of seagrass meadows -ecosystems estimated to represent 41 percent of the world's known seagrass coverage and sequester a substantial amount of carbon annually.

“The resulting revenues will not only reinforce The Bahamas' climate resilience and biodiversity objectives, but will also fund investments in infrastructure, social development and community programmes, creating a lasting link between environmental stewardship and national prosperity.”

ArtCap Strategies described the initiative as “a defining milestone in the country's effort to build a resilient, low-carbon economy” and for unlocking nature-based wealth.

“This transaction exemplifies how innovative financial structures can mobilise private capital toward high-impact climate initiatives," said Antonio Navarro, managing partner of ArtCap Strategies. "The Bahamas' blue carbon programme is setting a global precedent for how natural assets can be transformed into sustainable sources of national development financing. We are proud to have supported Carbon Management Ltd and the Government in bringing this visionary initiative to fruition."

"Blue carbon development is not only a climate imperative - it is a generational opportunity for The Bahamas," said Mr Ferguson. "Through this facility, we are turning our natural capital into a sustainable source of financing for national development, social programmes and climate resilience."