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Which Countries Are Carbon Neutral?

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Credit: Photo by Christine Roy on Unsplash

Climate change is one of the most pressing issues globally. To strengthen the global response to the threat of climate change, the Paris Agreement came into force in 2016. While majority of developed and developing nations have set timelines spanning over decades to go carbon neutral, a handful of small nations have already achieved the status of being negligible, neutral and negative carbon emitters.

Here's what to know about those countries.

1. Bhutan

Bhutan is a small land-locked country in the Himalayas that lies between the two most populous countries in the world—India and China. Also known as the ‘land of the thunder dragon,’ Bhutan has a small economy of $2.68 billion, which is expected to reach a size of $3.75 billion by 2028. Bhutan’s economy is primarily driven by agriculture, forestry, tourism and hydropower. India is Bhutan’s leading trading partner and main development partner. The country is known for its unique philosophy—Gross National Happiness (GNH) —which guides its policy framework.

In order to conserve the country’s natural resources and to prevent degradation of the ecosystem, its constitution mandates the government to maintain a minimum of 60% of its total land under forest cover. The Himalayan kingdom is not only carbon neutral but also carbon negative.

2. Suriname

The Republic of Suriname is a small, natural-resource rich country in South America. Suriname’s economy is dependent on commodity exports, which exposes it to external shocks. Geographically, Suriname is the most vulnerable nation to flooding. Mining accounts for nearly half of public sector revenue while gold represents more than 80% of total exports as per World Bank estimates. Suriname witnessed sharp contraction in 2020, and continues to struggle amid high unemployment, poverty, and inflation. The discovery of several offshore oil deposits in 2020 could provide a growth stimulus in the years to come. Suriname’s GDP for 2023 is estimated at $3.47 billion, which is expected to expand to $4.68 billion by 2028.

Suriname has the highest percentage of forest area (93%) as percentage of land area. In addition, the country is classified as a HFLD nation, which stands for ‘High Forest cover, Low Deforestation.’ Suriname is working on carbon financing for the country by selling carbon credits to high emitting nations.

3. Panama

Panama is home to the famous Panama Canal that connects the Atlantic and Pacific oceans. Panama forests cover around 64% of the country’s total area. Panama’s GDP size grew from $12.7 billion in 2001 to $29.44 billion by 2010 on the back of public and private investments. The period 2011-2017 witnessed fast pace of growth as large public infrastructure projects, including the expansion of the Panama Canal, were undertaken. Growth continued hitherto at a lower rate till the COVID led to 17.9% contraction in its GDP. Panama lost its “high-income” classification to become a “upper-middle-income” country by the World Bank in July 2021. IMF estimates Panama’s economy at $77.23 billion in 2023, which will expand to cross $100 billion by 2028.

In 2020, Panama enhanced its mitigation ambition from the first NDC which “provided specific greenhouse gas emissions targets for the energy and forestry sectors, committing a 24% reduction in total emissions from the country's energy sector by 2050, and the restoration of 50,000 hectares of forest by 2050 nationwide.”

In November 2021, during COP26, Panama, Bhutan and Suriname announced an alliance of carbon-negative countries.

4. Guyana

Covered with dense forests, Guyana is home to fertile agricultural lands and abundant natural resources. Back in 2000, the U.S. Geological Survey identified the Guyana-Suriname Basin as the second highest resource potential among unexplored oil basins in the world. ExxonMobil made the first commercial discovery in Guyana in 2015 and started production in December 2019, turning Guyana into an oil producing nation. Oil is now Guyana’s engine of growth, which led its economy to grow by 62.3% in 2022 with IMF’s projected growth rate of 38% for 2023.

A compact population and rise in GDP have placed Guyana in the group of high-income nations by the World Bank from a middle-income nation in the past. Guyana’s offshore oil development is expected to produce 1.2 million barrels of oil per day (bpd) by 2027. At the COP26, President Irfaan Ali said, “We will decouple economic growth and emissions through a progressively cleaner energy mix, with the aim of reducing our carbon emissions by 70% by 2030.”

5. Gabon

Gabon is among the most prosperous and stable nations of the Central African region. With 88% of its land covered with forests, Gabon has the world’s second percentage of forest cover in the world. The country has vast petroleum reserves, which led to its inclusion as member of OPEC in 1975. Gabon terminated its membership in 1995 and rejoined the consortium in July 2016. Gabon’s largest industries are petroleum, minerals, and timber. Gabon is the world’s second-largest producer of manganese. Overall, Gabon is a $20.33 billion economy, and is expected to reach a size of $23.9 billion by 2028.

The United Nations has called Gabon a “model of environmental conservation.” Gabon is the first country in Africa to receive results-based payments for “reduced emissions from deforestation and forest degradation.”

6. Niue

It is among the smallest nations in the world and is the world’s least populated nation states. Niue is self-governing in ‘free association’ with New Zealand. The U.S. has recently recognized Niue as an independent state. On September 25, 2023, President Biden announced that “the United States recognizes Niue as a sovereign and independent state and will establish diplomatic relations between our two nations.”

Niue faces high risks from tropical cyclones and droughts as well as earthquakes and tsunami. Niue’s economy is largely dependent on overseas aid with agriculture, fisheries, and forestry only at subsistence levels.

Niue submitted its first NDC in October 2016. Niue aspires to meet 80% of its electricity needs from renewable energy sources by 2025 as laid out in its Strategic Energy Road Map 2015-2025.

7. Comoros

The archipelago of the Comoros is situated in the Indian Ocean. It is a very small open economy with a GDP size of $1.34 billion with high dependence on imports of goods and services. It has a limited export sector, mainly of cloves, ylang-ylang, and vanilla. Agriculture is the main occupation and contributor to GDP; the sector represents nearly half of the GDP and 80% of jobs.

In its revised NDC submitted in November 2021, Comoros committed to an emissions reduction target of 23% (excluding land use, land use change and forestry) and an increase of carbon absorption by 47% by 2030. 

8. Madagascar

Madagascar, the fourth-largest island in the world, represents one of the most diverse ecosystems. Madagascar is the world's largest producer of vanilla and has large reserves of minerals such as nickel, gold, titanium, cobalt and precious stones. However, despite being rich in natural resources, Madagascar has struggled with slow growth and persistent poverty amid political instability and poor governance. The situation is exacerbated due to the multitude of climate hazards such as tropical cyclones, droughts, and floods. Madagascar’s GDP is estimated at $16 billion for 2023 and is projected to expand to $23.8 billion by 2028. Madagascar has one of the highest rates of deforestation in the world, which threatens not just its unique fauna and fauna but also its status as a net zero carbon emitter.

Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional. GDP data on World Bank and IMF WEO April 2023. Gross domestic product is in current prices (U.S. dollars). The inclusion of nations to the list is based on insights by Energy Monitor, NDC, World Economic Forum, and UNDP Climate Promise.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Prableen Bajpai

Prableen Bajpai is the founder of FinFix Research and Analytics which is an all women financial research and wealth management firm. She holds a bachelor (honours) and master’s degree in economics with a major in econometrics and macroeconomics. Prableen is a Chartered Financial Analyst (CFA, ICFAI) and a CFP®.

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