The DR Congo opens oil and gas auction round for carbon loan and crypto groups

The Democratic Republic of Congo will allow carbon loan and cryptocurrency companies to be involved in an oil and gas licensing round, which was criticized by environmentalists, which say that bores in the rainforests and peat areas of the country would risk the release of large amounts of carbon dioxide.

Last month the Kongo provided 30 oil and gas exploration blocks for auction. Some of the exploration areas are located in the Virunga National Park and in the Cuvette Central, the largest tropical bog in the world, which naturally absorbs carbon from the atmosphere.

Didier Budimbu, the minister of hydrocarbons, said the Financial Times, he would assume offers for exploration rights in the rainforest and in peat areas of start-ups on the carbon market that have no connections to oil and gas companies as long as they have solid financial support.

Instead of looking for hydrocarbons, such groups suggest leaving oil and gas in the ground and instead achieving income by selling emission certificates to companies that want to compensate for their emissions.

"If it can help our economy and the country, why not?" said Budimbu. "We don't do this to destroy the rainforest, we do it for economic reasons.. Whether with or without oil, the main thing is that we earn [Money]."

The Congo produces around 25,000 barrels of crude oil from a small number of onshore and offshore blocks along its Atlantic coast every day. The long -cherished ambitions of the government to also promote oil in other parts of the country have been braked by environmental concerns, corruption and lack of export options.

Because of these challenges, it remains uncertain how many oil and gas companies plan to take part in the licensing round. The French total energy that has a project in neighboring Uganda, and the Italian Eni, which is active in other parts of Africa, both told the FT that they will not offer.

Flowcarbon, a start-up that was co-founded by WEWORK co-founder Adam Neumann at the beginning of this year, is one of the carbon credit groups that have expressed interest.

Phil Fogel, Head of Cryptocurrencies at Flowcarbon, said that the company contributed to Redemptiondao's staff and resources, a campaign that was organized via the messaging platforms Telegram and Discord and founded two days before the start of the auction in July.

Redemptiondao aims to buy at least one of the blocks in partnership with an oil company or through crowdfunding and use it to issue CO2 credits for "avoided emissions". It hopes to raise at least $ 50 million, but has so far only collected $ 2.57 million and received commitments of $ 74,000, both in USDC, a so-called stable coin digital currency that is linked to the dollar.

The risk capital Thomas Annicq said that he had contacted the Congolese government separately on behalf of another coalition of carbon market companies who wanted to make a joint offer for the blocks.

Companies have time to submit offers by February. At the moment, however, there is no official method to launch loans from the oil and gas exploration on the market, and analysts say that the development of a method could take up to two years.

The idea of ​​using loans in this way was tested for the first time 15 years ago when President Ecuador, Rafael Correa, who asked the international community to compensate the country to do not drill in an oil expansion block in the Yasuni National Park. However, the drilling continued in 2016 after only a fraction of the $ 3.6 billion was applied.

The trust of multinational companies in CO2 compensations to achieve or advertise net zero goals has created a demand for credits for avoided design, which makes this type of credit more practical. Gabon, the second most common forested country in the world, is planning to issue credits for avoided deforestation of 187 million tons of carbon.

emission credit companies generally conclude agreements with local communities or landowners to issue loans.

Ben Rattenbury, head of politics at the Carbon Credit Rating Start-up Sylvera, said that the preliminary paying costs for the purchase of land or exploration rights could lead to a "catastrophic cash flow problem" for a carbon credit, unless means by crowdfunding or other means. "I cannot imagine a traditional developer of emission certificates.. Procurement of the means to be able to offer."