An Update to the UN's Carbon Emissions Framework Through the Lens of Guyana: Stricter “Managed Land” Classifications and Limiting the Allocation of Carbon Credits

Since 2020, when Guyana pumped its first oil, the South American country has become a global petroleum hotbed.[1] Last month, Exxon Mobil discovered yet another oil and gas site offshore Guyana, raising debate over how countries with extensive forests take advantage of the unclear Official United Nations carbon accounting rules to justify fossil fuel production.[2] Carbon offsetting – the “process of purchasing carbon credits on the international or domestic market to ‘offset’ carbon emissions” – allows countries with significant forestation to sell “carbon credits” to carbon emitters seeking to mitigate their climate change impact.[3] On the one hand, this market is quite lucrative for developing countries such as Guyana, as government experts estimate that the country could generate more than $3 billion from carbon credits by the end of the decade.[4] Alternatively, ambiguities in the UN accounting rules allow countries to benefit from their vast forests and still extract a substantial amount of carbon emitting fossil fuels.[5] Notably, the lack of enforcement to distinguish between managed and unmanaged rules and the principle of attributing emissions where they are burned, not where they are extracted, have allowed this dynamic to occur.[6]

The Intergovernmental Panel on Climate Change (IPCC) – the UN’s body for assessing the science related to climate change – defines managed land as “land where human interventions and practices have been applied to perform production, ecological or social functions.”[7] Policy interventions to reduce emissions from land intend to focus on managed lands. However, a large majority of countries do not distinguish between their managed and unmanaged land.[8] This distinction is significant in order to appropriately credit countries that proactively protect their forests, as opposed to countries that seek credit for unmanaged, natural, and inaccessible forests.[9] The IPCC must update the criteria to enforce the distinguishment between managed and unmanaged lands to discourage the abuse of carbon credits for unmanaged land.

Exxon now produces more than 650,000 barrels of oil per day in Guyana, but due to the general carbon accounting standards, carbon emissions from this oil are attributed to the country where the fuel is burnt, not where it is extracted.[10] Countries that burn fossil fuels deserve to be held accountable for their emissions. Still, perhaps oil-producing countries deserve some responsibility as well. A study tracking global carbon emissions from extraction to production and consumption found that “51% of global emissions were attributable to the extraction of fuels that were then used for goods and services in a different country.”[11] An update to the IPCC framework that allocates responsibility for the emissions between countries where the fuels are burned, countries where the oil is extracted, and countries home to fossil fuel companies like Exxon could strike a more excellent balance in the carbon offset system.

The IPCC should strongly consider increasing scrutiny for determining a country’s carbon credit distribution based on the managed land distinction and an update to the accounting standards for attributing carbon emissions. These two imperfect IPCC practices allow many countries to exploit the carbon offset market by exaggerating their carbon credits and understating their carbon emissions. The IPCC also must consider the effect this will have on developing countries like Guyana, which currently profits substantially from selling its carbon credits and extracting oil.[12] However, if these changes are implemented and the carbon credit supply shrinks – increasing the value and demand – Guyana could potentially shift towards a conservation-based economy to still generate tremendous profits for its development.[13] 

Matthew Haag is a staff member of Fordham International Law Journal Volume XLVII.

[1] Joe Lo, Forest Carbon Accounting Allows Guyana to Stay Net Zero While Pumping Oil, Climate Home News, Apr. 8, 2024, https://www.climatechangenews.com/2024/04/08/forest-carbon-accounting-allows-guyana-to-stay-net-zero-while-pumping-oil/.

[2] Id.; People’s Progressive Party/Civic, President Dr Irfaan Ali Talks Oil & Gas & How it is Transforming Guyana’s Economy on BBC’s Hardtalk, YouTube, Mar. 28, 2024, https://www.youtube.com/watch?v=uyOo7J18aXA&ab_channel=PeoplesProgressiveParty%2FCivic.

[3] Markus Gehring & Freedom Kai Phillips, Intersections of the Paris Agreement and Carbon Offsetting: Legal and Functional Considerations, 88 CIGI Pol’y Brief 1 (2016).

[4] Kenza Bryan & Joe Daniels, Oil-rich Guyana Tries to Tap Another Source of Cash: Carbon Credits, Fin. Times, Jan. 21, 2024, https://www.ft.com/content/e5b9d789-cb09-4dcf-a586-fe60d8defd15.

[5] Lo, supra note 1.

[6] Id.

[7] S.M. Ogle et al., Delineating Managed Land for Reporting National Greenhouse Gas Emissions and Removals to the United Nations Framework Convention on Climate Change, 13 Carbon Balance & Management 9 (2018).

[8] Id.

[9] Lo, supra note 1.

[10] Marianna Paragga & Kiana Wilburg, Exxon-led Group Strikes New Oil and Gas Discovery off Guyana, Reuters, Mar. 15, 2024, https://www.reuters.com/business/energy/exxon-led-group-strikes-new-oil-gas-discovery-off-guyana-2024-03-15/; Monica Contestabile, Attributing Carbon Emissions, 1 Nature Climate Change 442 (2011).

[11] Contestabile, supra note 10.  

[12] Bryan, supra note 4. 

[13] Id.

This is a student blog post and in no way represents the views of the Fordham International Law Journal.