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Invictus signs emissions reduction deal with FCZ


Part of the equipment for Exalo Rig 202 being assembled at Invictus Energy’s Mukuyu-1 prospect in Muzarabani ahead of the commencement of exploration drilling later this month.

Golden Sibanda

INVICTUS Energy has entered a 30-year contract with the Forestry Commission of Zimbabwe (FCZ) for the development of the Ngamo-Gwayi-Sikumi (NGS) REDD+ project, which is renewable for a further 30 years, as part of the oil and gas company’s sustainable plan to manage carbon emissions.

The Government of Zimbabwe expressed excitement at the encouraging prospects of discovery of oil and gas in the Muzarabani, as this had the potential to make the country energy self-sufficient, create employment, grow the economy and bring huge downstream benefits, President Mnangagwa said last year.

Speaking during the signing ceremony for the Petroleum Exploration Development and Production Agreement (PEDPA), which governs the roles of the State and the investor in the project, the President said Zimbabwe’s oil and gas industry represented huge, unique and competitive investment opportunities given the significant potential for value chain linkages.

The NGS REDD+ project will enable Invictus to fully offset (compensate for) all scope 1 and 2 emissions generated across the entire lifecycle of the Cabora Bassa (Muzarabani) Project, which is scheduled to commence exploration drilling at the Mukuyu-1 prospect later this month to investigate existence of petroleum deposits.

The oil and gas industry is amongst the most emissions intensive, with the production and use of oil and gas accounting for over half of global greenhouse gas emissions associated with energy consumption.

This equates to more than 17 gigatonnes of carbon dioxide equivalent per year, with about 90 percent of these emissions coming in the downstream use of hydrocarbons. Oil and gas companies are coming under increasing pressure to demonstrate portfolio resilience and adapt business models to align with a low-carbon energy transition

REDD+ was created by the United Nations under its Framework Convention on Climate Change (UNFCCC) to reduce carbon emissions from deforestation and forest degradation. It also supports local communities through socio-economic projects in line with principles on sustainable management, forest protection and nature conservation.

The NGS REDD+ project areas were awarded by the FCZ through an international tender process and cover a combined 301 565 hectares of indigenous forest in Zimbabwe’s Matabeleland North province.

A five-year pilot REDD+ project, administered and funded by the Global Environmental Facility, through the World Bank as part of the Hwange Sanyati Biodiversity Corridor, was completed in the Ngamo and Sikumi forests in early 2020, including biomass assessments, which has provided proof of concept for the NGS REDD+ project.

A study by the FCZ estimates between 1992 and 2017 approximately 6,5 million hectares of forests (~25 percent of total) were lost, land clearance for agricultural purposes, wood for fuel energy use and other unsustainable forest land use practices.

As such, Invictus and FCZ will develop the NGS REDD+ project to protect the indigenous forests in Zimbabwe by implementing programmes to mitigate deforestation activities. The resulting benefits of these programmes are quantified in the form of emission reductions which then generate carbon credits.

Invictus has created a new division, Miombo Forest Carbon Investments (MFCI), to develop and manage the NGS REDD+ project. It will also manage the carbon credits generated, with plans for them to be certified through Verra’s internationally recognised Verified Carbon Standard (VCS) programme.

Verra has developed the world’s leading voluntary, rigorous international standards to verify emissions reductions generated by carbon reduction projects, such as REDD+, are real, measurable, additional and permanent.

The VCS allows third party-validated projects to generate Verified Carbon Units (VCUs) by implementing activities that reduce deforestation against a defined baseline. This will allow carbon credits to be registered as VCUs, which can either be used by Invictus or sold on the Voluntary Carbon Market.

The company anticipates the completion of accreditation of the project and registration and issuance of the carbon credits to take approximately 12 months.

he NGS REDD+ project has the potential to generate more than 30 million carbon credits over its initial 30-year life (subject to independent accreditation), based on the biomass assessment completed in the pilot REDD+ project in Ngamo and Sikumi and comparable REDD+ projects operating in the region.

The company will undertake independent verification to determine the total carbon credit pool for the NGS REDD+ as part of the planned VCS accreditation process. The total Cabora Bassa Project Scope 1&2 emissions are estimated at less than 15 million tonnes across the entire project lifecycle, based on a hypothetical 8 trillion cubic feet natural gas development.

Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company.

Assuming a successful exploration campaign, the Cabora Bassa Project could be one of the first cradle to grave carbon neutral oil and gas projects in the world (on a Scope 1 and Scope 2 basis). The status as a full lifecycle carbon neutral project will also enhance the ability to finance the development of any discovery and broaden the range of potential financing options and lenders.

It will also allow Invictus to sell fully offset oil and gas production from its portfolio, enhancing its appeal to increasingly carbon conscious buyers.

“The award of these carbon offset projects marks a significant milestone for Invictus and will make Cabora Bassa one of the first carbon neutral oil and gas projects from the exploration phase to decommissioning, if our upcoming drilling campaign is a success. 

“We actively sought a carbon management solution that would benefit the country and communities where we operate,” Invictus managing director Scott MacMillan said.

The Voluntary Carbon Market (VCM) gives companies, non-profit organizations, governments, and individuals the opportunity to buy and sell carbon offset credits. 

The VCM is expected to play an increasingly important role that will enable companies to purchase carbon credits to offset unavoidable emissions and reach their net-zero or carbon neutral goals.

The estimated volume of carbon credits required globally is projected to increase at least 20- fold by 2035, with volumes increasing 30 to 40-fold from current levels in scenarios consistent with the Paris Agreement on climate change by 2050 (source: EY Net Zero Centre report 2022).

This is expected to result in a strong pricing outlook, but is dependent on carbon credit quality and attributes as well as the types of co-benefits generated by the project.

The NGS REDD+ project is expected to generate significantly higher volumes of carbon credits than what will be required to offset the Company’s own Scope 1 and Scope 2 emissions. Excess credits generated will be sold on the Voluntary Carbon Market, creating an additional

revenue stream for the Company. One carbon credit is equivalent to saving 1 tonne of CO2 equivalent emissions (t-CO2e).

The profits generated by the NGS REDD+ project will be shared between MFCI, FCZ and the local community to fund further protection of forests through investment in positive social, economic and environmental projects.

“The NGS REDD+ project uniquely positions Invictus and the Cabora Bassa project as one of the first cradle to grave carbon neutral oil and gas companies and projects in the world.

“This project will not only offset our emissions, but help ensure preservation of Zimbabwe’s rich biodiversity, aiding both forestry and wildlife conservation efforts, while also creating jobs and sustainable incomes for the entire region. 

Additional revenue generated from carbon credits will also aid the work Invictus is doing to improve health and education in the local communities where we operate, well beyond the initial 30-year term of the initial NGS REDD+ project.

“We look forward to partnering with the Forestry Commission and implementing this important project to protect indigenous forests in the Ngamo Gwayi and Sikumi areas,” Mr MacMilla said. ”

In an era where major corporates throughout the world are using voluntary offsets to work towards carbon neutrality, it is not surprising that Invictus will be towing a similar line given the extent of the threat of climate impact from its oil and gas project in Muzarabani.

“It is noteworthy that the company is looking to offset its own carbon emissions via a forest-based project. 

“The IPCC, that’s intergovernmental panel on climate change, says we can’t fix the climate mess without developing carbon capture and storage technologies, but the only technology proven to capture and store carbon at a meaningful scale is trees,” carbon markets analyst Jeff Gogo said

“In that sense, Invictus says that its offset programme is purely voluntary, ostensibly in pursuit of a mission to combat climate change. A cynic would say that’s just corporate posturing. But it would even be more interesting to see whether the company continues with such advocacy beyond the scope of its current project.

“The company is hoping to avoid on average one billion tonnes of carbon dioxide equivalent per year,  which would effectively completely offset its entire emissions from what it calls scope 1 & 2 phase of its project, with the excess sold on global carbon markets. We are talking of over 30 million carbon credits over 30 years.

“With the average price of forest-based credits currently at around US$7.34/ton, the project could become a large source of revenue not only for Invictus but also for local communities within which the project would be undertaken. 

“It may be the first REDD+ in Zimbabwe which provides direct income to the government through the Forestry Commission, with whom profits are to be shared.

 “However, carbon markets have historically been marred by accusations of projects selling ‘hot air’ – meaning that they sell falsified carbon credits, some which don’t even exist. 

“So, there’s still a lot of independent auditing that needs to take place to verify the credits. Also, Invictus remained vague about how it intends to work with local communities and how exactly they will benefit from its carbon offset programme.

 Ideally, REDD+ projects must be designed in a way that deliberately target direct community benefit, “ Carbon markets analyst Jeff Gogo said.

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