The report emphasizes the potential for the country to invest in sustainable practices, particularly in the forestry sector. By utilizing hydrocarbon tax revenue, the RoC has the opportunity to strengthen forest preservation while driving sustainable economic development.

Anticipated Developments in RoC’s Hydrocarbon Sector

In 2024, the contribution of the hydrocarbon sector to the RoC’s GDP declined slightly due to the maturation of several oil fields. However, starting in 2025, it is expected to grow by 4%, driven by increased investments from oil companies in new oil fields and the rehabilitation of existing assets, which falls in line with the government's goal of reaching 500,000 barrels per day. New oil fields, including independent hydrocarbon producer Perenco's M’Boundi, Nene and Emeraude fields, are set to begin production in 2024, thereby contributing to projected growth in the sector.

The country's ambitious gas policy will also play a key role in boosting the hydrocarbon sector's share of GDP, with the forthcoming Gas Master Plan set to encourage and develop the exploitation of the RoC’s 284 billion cubic feet of gas reserves and use of associated gas. Investments in the gas sector have already led to the first shipment of LNG from energy supermajor Eni's Marine XII project in February 2024, with production expected to peak at 2.5 million metric tons by 2025. This increase in hydrocarbon-related fiscal revenue opens the possibility of reinvesting these funds into non-oil sectors, such as forestry.

Potential Economic Benefit of Forest Preservation

The Congo Forest, spanning 23 million hectares and covering two-thirds of the country, is not only a vital carbon sink – absorbing around 130 million tons of carbon annually – crucial for climate stabilization at a global level, but also holds economic potential with the rise of the carbon credits market. Under the 2005 Kyoto Protocol, two types of markets were established, the regular market, which involves only industrialized countries; and the voluntary market, which includes developing countries like the RoC. The latter serves as a mechanism to combat climate change by allowing companies, governments and individuals to purchase carbon credits to voluntarily offset greenhouse gas emissions. These credits are generated by projects that reduce or eliminate emissions, such as multinational energy company TotalEnergies' Bacasi project, which aims to conserve 55,000 hectares of Congolese forest and plant an additional 38,000 hectares over 10 years.

In 2024, the RoC received its first payment of approximately $8 million in carbon offsets for its achievements in forest conservation and carbon emission reduction as part of a 2021 agreement with the World Bank. This agreement unlocks a total of $41.8 million for reducing deforestation, forest degradation and enhancing carbon sequestration. By 2025, the country is expected to have reduced its carbon emissions by 8.4 million tons.

Redirecting Hydrocarbon Revenue to Boost Sustainable Forestry

While carbon finance, public development aid and private sector mobilization have been proposed as means to invest in the sustainable use and management of these vital forests, the resources allocated remain modest. Nevertheless, effective use of economic instruments for forests is particularly relevant for countries heavily dependent on oil revenues, such as the RoC. By redirecting revenue from hydrocarbon taxes, the RoC could subsidize forest conservation initiatives.

The RoC can also implement intelligent tax strategies that incentivize good environmental practices while penalizing harmful ones. For instance, the “bonus-malus” system, which is used in Gabon’s forestry sector, could be adapted for companies in high carbon-emitting industries, such as the extractive sector. Under this system, companies that adopt sustainable practices and invest in forest conservation projects would receive tax breaks, whereas those that damage the environment would face higher taxes.

In the long term, using gas for power in the RoC has the potential to reduce the country’s reliance on wood for energy, particularly for cooking. Currently, two-thirds of wood energy production in Central Africa comes from deforestation. To achieve sustainable forest management, the country could eventually strengthen its regulatory framework by integrating sustainable extractive practices with environmental preservation, creating a positive cycle in the economy.