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Blue carbon: What is it and how can it help the climate?

By News

For millions of years, marine and coastal ecosystems have been silently removing carbon from our atmosphere. As natural carbon sinks, the world’s mangroves, seagrasses and tidal marshes have shielded us from the full impacts of our own greenhouse gas emissions. Yet, these ecosystems are under threat; human activity is undermining their ability to draw carbon from the atmosphere. If we fail to invest in the conservation and restoration of these species, we could almost be accused of shortsightedness. In the face of climate emergency, we must use every tool at our disposal to mitigate environmental risk. The time is now – we must preserve and scale blue carbon climate change solutions if we are to secure a liveable future for all.

 

The brilliance of blue

Mangroves, seagrasses and tidal marshes are the most established blue carbon climate solutions. To varying degrees, these solutions are already available and able to receive funding through carbon markets.

Mangroves

As natural environmental cleaners, mangrove forests bring an impressive array of climate-positive benefits. They absorb and store CO2; process chemical runoff, including chromium and lead, and even help to break down the toxins in raw sewage dumped into the ocean.

Not only do these forests remove more carbon from the atmosphere than any other type of tree, but also reduce the impact of storm surges by up to 50% in at-risk, developing countries. Given that climate change is predicted to increase the frequency and severity of extreme weather events, investing in effective, natural barriers has never been of more importance.

In this way, people are gradually realising the value of these saltwater trees. Taking into account their ability to counteract anthropogenic carbon emissions, their capacity for disaster risk reduction and their existing worth as richly biodiverse ecosystems, their value is estimated to be in the region of $462 billion to $798 billion per year. 

Seagrass

Seagrass has also received an increasing level of attention for its potential as a blue carbon climate solution. As one of only three seawater flowering plants, seagrass is found in shallow, coastal waters. As carbon dissolves in the sea, seagrass absorbs it to use as a building material for new roots and shoots. This process is extremely rapid, taking in carbon 35 times faster than a tropical rainforest. Even when seagrass dies, carbon is (if undisturbed) stored securely in sediment on the ocean floor. Although seagrass carbon capture projects can be expensive, the UK, Sweden and the US are all currently investigating the future potential of this solution. 

Tidal marshes

Tidal marshes are among the world’s most effective carbon sinks. These grassy wetland habitats flood during high tide, absorbing seawater and quickly capturing the dissolved carbon it contains. Yet, these ecosystems are in need of our conservation. Pollution and degradation can disrupt the nutrient balance of water and reduce the capacity of tidal marshes to sequester carbon. Looking to the future, the Blue Carbon Initiative has committed to focus on the conservation of tidal marshes as well that of mangroves and seagrasses.

 

Case study: Delta Blue Carbon, Pakistan

blue carbon project

Delta Blue Carbon mangrove plantation, Pakistan. Picture credit: Indus Delta Capital

Mangroves are estimated to cover between 12 and 15% of the world’s coastlines. While this may sound substantial, it actually translates to only 0.1% of the planet’s surface. Coastal mangrove cover decreased by over one million hectares between 1990 and 2020 due to illegal logging; raw sewage dumping; chemical run-off and pollution from rapid urban development. You can monitor the state of the world’s mangroves using this tool from Global Mangrove Watch. 

It is not all doom and gloom for mangroves. In Pakistan, the tide is turning and forest cover is beginning to increase. As one of the biggest mangrove-restoration programs in the world, our flagship portfolio project, Delta Blue Carbon, has certainly played a part in reforestation efforts. To date, the project has planted nearly 100 million trees. Over a 60-year time period, it expects to sequester 142 million tonnes of CO2 and generate 128.5 million high-quality, nature-based carbon credits. For more information on nature-based carbon credits, please refer to this article. 

On paper, mangrove restoration may sound simple. However, it is essential that any trees planted are region-specific if they are to bring genuine, lasting benefits to the local area. Indeed, the success of Delta Blue Carbon is a testament to the project’s commitment to working with local stakeholders. Throughout its lifespan, Delta Blue Carbon will offer full-time employment to at least 21,000 people, many of whom bring extensive knowledge of the region’s local environment.

 

What’s next for blue carbon?

Blue carbon climate solutions, like Delta Blue Carbon are certainly gaining traction. Just last year, Respira collaborated with Climate Impact X on a landmark, oversubscribed auction for blue carbon credits. With 250,000 tonnes of carbon removal credits selling for USD $27.80 per tonne, the auction was a promising indication of future demand for high-quality, nature-based solutions.

As such, we should look with interest to prospective blue carbon solutions under investigation. McKinsey writes on the ‘emerging’ and ‘nascent’ blue carbon solutions such as seaweed forest plantations, kelp farming or a move away from sea bottom trawling as this fishing method disurbs stored carbon that could otherwise be secured for millenia. Reef-based blue carbon initiatives are in an even earlier stage of research but there is hope that the carbon sequestered throughout the lifespan of shellfish is of a greater volume than that which is released during the formation of the reefs themselves. 

While much remains uncertain regarding the futures of these emerging blue carbon solutions, we know one thing for certain: we must take action now to unlock the full mitigation potential of our coastal and marine ecosystems. To learn more about blue carbon and other nature-based climate solutions, please refer to our flagship portfolio projects on our website: https://www.respira-international.com/portfolio/ 

14 March 2023
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International Women’s Day: Climate solutions need female voices

By News

Evelyne Ligoberth Kapaya is a carbon champion. From her home in Katuma Village, Tanzania, she spends much of her time discussing deforestation and climate change. She sits down with local residents to raise awareness, not only of the impacts of tree felling, but also of solutions to the crisis. She is one of the many women around the world working to safeguard the future of our environment and is very much deserving of our celebration this International Women’s Day.

Every year on the 8th of March, we have an opportunity to acknowledge female achievements around the globe. However, at the same time, International Women’s Day is also a call to action. We need to better recognise women from history; we need more women in leadership positions and we urgently need more female voices, like Evelyne’s, in climate solutions.

Women are disproportionately affected by climate change

While the impacts of climate change undeniably touch the whole community, 68% of the 130 studies reviewed by Carbon Brief found that women and girls face more climate-related health risks than men and boys. Indeed, the article reports how women and girls are more likely to be adversely affected by harvest loss and are often the ones walking further to collect water during times of scarcity. Overall, the report concludes that existing gender inequalities tend to be exacerbated by changes to the climate and although women are not always experiencing the worst health outcomes of climate change, they are disproportionately affected.

Climate mitigation will be stronger with women

Given this disproportionate impact, women must be actively involved in the development and implementation of climate solutions for they have lived experience of the unique risks climate change presents for them in their area. This is especially important when the allocation of carbon revenue is decided.

Faraja Oswald Alberto works as a Finance Officer for Carbon Tanzania’s Ntakata Mountains project. Developing short and long term accounting plans with her local community, she has seen first hand how carbon finance has changed the area:

“Before the start of the Ntakata Mountains forest protection project, there was an invasion and massive clearing of forest areas. Our lands were badly damaged. After that, the community decided to make a plan for the best use of land and implemented a forest carbon project. Gradually, the environment began to improve as the community received carbon finance to support sustainable projects and forest conservation.”

This forest conservation has been supported by the growing number of female Village Game Scouts trained in Tanzania. Faraja continues:

“Village Game Scouts are now fully employed by their respective villages to protect the forests and are paid a monthly salary from the carbon credit revenue. Groups of entrepreneurs benefit from small loans made possible by carbon finance from Cocoba (Community Conservation Banks) to run their various wealth-producing activities. This is improving the local, community economy.”

Tatu Amani Mwita is a female entrepreneur who has benefitted from Cocoba finance. She owns a small restaurant in Kapanga Village which received loans from Cocoba to purchase equipment and expand the size of her restaurant. Now, Tatu employs six other women and her restaurant can run independently of loans. 

Equity is essential

This year, the  theme of IWD is equity. It was chosen to show how offering equal opportunities can still be exclusionary. On the face of it, an equality of resources and opportunities seems positive. Such a state is, afterall, an improvement when compared to much of the inequality we see today. However, equality does not allow for difference – everyone receives the same regardless of circumstance. Equity, on the other hand, recognises differing situations and allocates resources and opportunities accordingly. Understanding these differences is an essential first step to building, and facilitating, effective, equitable, climate solutions.

Equality-based solutions and equity-based solutions

What do these differences look like in practice? Well, equality-based solutions tend to be founded in impartiality whereas equity-based solutions consider the diverse and varying experiences of individuals and tailor solutions to account for these differences. As a result, equity-based solutions are more long-term for they address issues on a deeper level than those founded on equality. For women, this distinction is key. For instance, the women affected by climate-induced floods in California will have a radically different experience to women facing extreme flooding in Pakistan. Therefore, solutions must be context-specific if they are to be effective.

For climate, we must ensure that nature-based solutions are also equity-based solutions which actively involve and seek the participation of women. And this need not be confined to one day a year. Every day you can consciously amplify the voices of women, share their work with your networks and celebrate the achievements of your female colleagues. See our flagship portfolio projects to find out how carbon finance supports women.

 

Picture credit: Carbon Tanzania and Roshni Lodhi.

8 March 2023
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6 questions to resolve in order for carbon markets to deliver more for nature

By News

By Ed Hewitt, Director of Natural Climate Solutions. First published by Carbon Pulse, 7th February 2023.

The latest debate arising from the Guardian’s recent article criticising ‘rainforest carbon offsets’ has brought the topic firmly to the forefront of public attention again. My position remains that carbon markets can be an incredibly important tool to finance nature-based solutions (NBS) at the scale required to be meaningful on a global scale [1]. However, there are some serious questions which must be resolved as soon as possible if verified (not just voluntary) carbon markets are to deliver their full potential for nature.

Context

Despite accounting for what seems like 99% of the conversations about financing nature, carbon markets still account for less than 1% of total global spend on NBS [2]. However, carbon markets are heralded by many (myself included) as a much-needed way to bring significantly more private finance to the sector. Estimates range as to precisely how much [3], but assuming Mark Carney’s projection of $100 billion per year by 2030 is a reasonable figure, directing half of that to nature could provide 12.5% of the total NBS financing required by 2030 [4] (i.e. not the panacea, but a very material contribution).

Unlocking this potential is hard though. The last 12 months have presented what many would observe to be a perfect storm of challenges for the market – notably a global economic downturn, continued debate over claims and quality (which has resulted in continued negative publicity in mainstream media) and uncertainty about the specific implications of Article 6 for nature-based projects. Demand in 2022 for retirements from nature-based credits in the voluntary carbon market dropped by 30% (53 mln in 2022 vs. 76.7m in 2021 according to AlliedOffsets’ data) and prices for the benchmark nature-based traded contract (the Xpansiv CBL N-GEO) fell by two thirds from over $14/tonne in December 2021 to below $5/tonne in December 2022.

We shouldn’t lose hope despite these concerning headlines. There are some specific technical reasons [5] accounting for the price falls in the N-GEO and, in contrast, there were a number of promising signs for the longer term in 2022. Despite the tough macro conditions, OTC sale prices for ‘high-quality’ NBS projects held up relatively well. Respira had first-hand experience of the Delta Blue Carbon project in our portfolio achieve a price of $27.80 for 250,000 tonnes in the auction conducted with CIX. This is at last a meaningful price for a meaningful volume. Market infrastructure and guidance further advanced; the first drafts were published of the Integrity Council on Voluntary Carbon Market’s (IC-VCM) Core Carbon Principles (CCPs) and the Voluntary Carbon Market Integrity’s (VCMI) corporate claims code of practice, and there was progress on Article 6 which could prove a huge market stimulant for nature-based projects. Further, a recent Abatable report showed that although nature-based credit retirements decreased in 2022, investment into ‘upstream’ (i.e. future supply of) nature-based carbon projects and developers reached record levels [6]. These represent some encouraging signs, but what specifically remains to be resolved in order to truly unlock the potential?

I believe there should be 6 questions at the top of everyone’s mind for the VCM in 2023:

1) Will there be agreement about what nature-based carbon credit ‘quality’ looks like and will this build widespread trust?

As highlighted by the recent Guardian article and the following debate which has ensued, ‘trust’ in the climate (and social + biodiversity) integrity of nature-based credits is not as high as it needs to be. Some of this criticism is justified whilst some is based on a misunderstanding of the methodologies and on the ground realities of the projects. Either way, many people are confused, which is never good for scaling a market. The recent rise of carbon ratings agencies (such as Sylvera, Be Zero and Calyx) are useful attempts to make sense of ‘quality’ (although should be viewed as risk assessment tools rather than the ‘unquestionable truth’) and the IC-VCM’s attempt to develop CCPs is a needed attempt to address these concerns and ensure an underlying and consistent benchmark of ‘quality’. My hope is that the CCPs can be accepted by communities, developers, buyers and financiers alike in 2023. However – the principles do need to also be workable in practice – especially for nature-based projects – and that was one of the biggest areas of pushback with last year’s draft guidance which will need to be resolved in 2023.

This topic of trust is particularly an issue for forest conservation projects which were the specific subject of the Guardian article which called into question their ‘baseline’ integrity (the amount of deforestation which would have occurred in the absence of the project). Confusion also abounds with the mind boggling different uses of the term REDD(+) and whether it is carried out at project, jurisdictional, or national scale. This has all contributed to demand for forest conservation credits not increasing as expected (REDD retirements in 2022 saw the biggest drop off of any credit type). The accuracy of some of the more sensational negative headlines on baselines have been robustly challenged, but uncertainty still reigns. The hope is that new Verra methodologies which require projects to use national ‘nested’ baselines should ensure that new projects coming onto the market don’t suffer the same credibility issues. Similarly, due to the increased jurisdictional and national scale of the pending ART TREES credits, baselines should also be less of an issue with these credits too. It’s not inconceivable that a new crediting standard and mechanism may also emerge. But importantly – it’s crucial that these different crediting mechanisms, operating at different scales can exist side by side and reinforce, rather than undermine, one another. When these issues are resolved, then trust in the climate integrity of forest conservation credits can be regained. Let’s not forget that deforestation and degradation causes 10-15% of global GHG emissions and that rewarding communities, private landowners and governments for protecting forest under threat with results-based payments from corporates is one of the best tools available to halt deforestation.

2) Will corporate claims guidance be agreed and gain widespread acceptance?

It’s a crazy situation where corporates are currently ‘greenhushing’ for fear of making the wrong claim. Or simply withdrawing from and not entering the market because of a fear of reputational scandals. Claims drive the market in the short term, and we need clarity and consistency ASAP. In particular, specific guidance will be needed about whether ‘carbon/climate neutral’ can still be used. That’s the most widely used claim and drives near-term demand, but it’s also one of the most controversial and poorly defined (it’s currently the subject of a court case in Germany). If it’s continued to be allowed (or is replaced by a different term with clearly beneficial implications for the buyer), specific guidance will be needed about whether it can be met with avoided emissions credits (which are still by far the most common form of nature-based credit) and whether a Corresponding Adjustment will be required. If this is done well, we could see the emergence of a semi regulated market here where corporates are required to disclose the specific credits they are retiring and the associated claims they are making – further taking this out of the ‘voluntary’ only space.

My hope is that the two most influential external bodies in this space – SBTi and VCMI – will be aligned in their guidance here. Different bodies recommending different things is never helpful for markets and we all seek consistency and clarity.

If quality and claims are both fully agreed and accepted, I think that ‘greenwashing’ accusations can be put firmly to bed.

3) Will Article 6 of the Paris Agreement be friend or foe for nature-based credits?

Whilst it looks on first glance as though Article 6, which enables the trading of emissions reductions between countries under the Paris Agreement, will be a good thing for nature-based credits, the devil is of course in the detail. Specifically:

  • Which specific nature-based credit types and methodologies will be eligible under 6.2 or 6.4? This will be key for establishing whether existing or new nature-based projects currently being designed will be able to benefit or whether new crediting mechanisms for nature-based projects will need to be developed. It currently looks like 6.2 will have more flexibility to use existing standards, whereas 6.4 looks like it will be a replacement for the CDM which may require new methodologies to be written.
  • Will there still be demand for voluntary credits which do not fit within the Article 6.2 or 6.4 framework? It would be a huge shame to throw away all the impactful climate mitigation projects which don’t end up complying with Article 6, so hopefully a thriving voluntary market with clear quality and claims guidance can continue outside of the Article 6 framework. However, very clear guidance from VCMI (and others) will be needed into what specific claims can be made with these credits (specifically related to what you can and can’t claim with or without a Corresponding Adjustment (CA). The big issue right now with Article 6 is timing. It’s not clear exactly when any of these questions will be fully resolved, yet it makes no sense for the planet to hang around until they are sorted. Climate action can’t wait for perfection.

4) Will compliance programmes allow in more nature-based credits?

Currently, the vast majority of nature-based credits are not eligible for compliance markets. They are under voluntary standards and mainly transacted on the voluntary market. Yet it’s in compliance markets where the real scale lies and high price points can be found ($850 bln market size for compliance markets globally vs just over 1$bn for voluntary in 2021, according to Refinitiv). There are of course some exceptions – California, South Africa & Colombia are good examples where a limited number of domestic nature-based credits are allowed in and the airline scheme CORSIA has approved a limited selection of methodologies for international nature-based credits. However, these are currently small in scale and are all markets with low prices. Article 6 does give rise to the prospect of more international trading for compliance markets, but ultimately policy makers (especially for the largest market – the EU ETS) are going to be unlikely to allow in more nature-based credits until debates about quality are settled. Once they are, it opens up a whole new window for finance to flow – a good reason why we are seeing an evolution of the VCM terminology from ‘voluntary’ to ‘verified’ carbon market.

5) Will biodiversity credits gain traction? And if they do, what will be the implications for nature-based carbon credits?

It finally seems that biodiversity crediting is gaining traction on the back of the Montreal biodiversity COP. ‘Nature positive’ is gaining momentum as a term corporates can use and a few practical frameworks for measuring a standardised unit of biodiversity have now been proposed. Plan Vivo has developed the first crediting methodology. Similar initiatives are also underway at Verra and other standard bodies. My feeling is that these will be developed and adopted very quickly given the urgency and momentum, although it is worth acknowledging that we are still at a very early stage in their development vs carbon markets and the market infrastructure (including safeguards and MRV systems) is yet to be built. Although this a great development for nature-based projects, it could be a long-term risk to the premium price currently enjoyed by nature-based carbon credits with high biodiversity co-benefits (particularly those co-certified by CCB)

6) Will macro-economic growth return?

Of course, this is beyond the control of nature- and carbon-market actors, but it was a large contributor to the downturn in 2022. When growth returns, budgetary constraints for corporate buyers should ease and demand should return. The 2022 macro-economic conditions particularly hit nature-based carbon project retirements as voluntary nature-based credits still tend to trade at a significant premium (+50%) to other common credit types such as renewable energy and household devices. Indeed, 2022 saw a trend for corporates turning back to cheaper technology-based credit types (retirements of renewable energy credits increased from 90 mln in 2021 to 105 mln tonnes in 2022 according to Allied data).

Due to the severity of the climate emergency, we need to act at speed and scale. Nature-based solutions hold the key to one third of the climate mitigation needed between now and 2030 and come with a myriad of co-benefits for biodiversity and people when done right. We need new and increased ways in which to fund them. Carbon markets may not be perfect, but they are improving all the time, and can be a critical way of channelling private capital into nature-based solutions. We know the challenges, and by working collaboratively to solve them we can unlock this puzzle. Resolutions to these questions are within reach. Let’s make the next series of Guardian articles be about how the challenges were addressed successfully!

 

[1] (around $400 bln of investment is needed annually by 2030 according to UNEP, delivering over 10 bln tonnes per year of CO2e reductions and removals by 2030)

[2] Primary demand in voluntary carbon market in 2021 was around $1 bln of which around half was for nature based credits according to Trove Research. UNEP estimate $133 bln annually was spent on NBS in 2021

[3] Trove estimate $296 bln by 2035 in high demand tight supply scenario, BNEF show a scenario of $1 trillion by 2037

[4] UNEP state of finance for nature estimates $400 bln annually needed for NBS by 2030. $50 bln is 12.5% of that.

[5] The N-GEO is an illiquid contract with tiny volumes traded and no control over which project you end up with

[6] Abatable’s report shows over $10 bln of VCM deals were announced in 2022, with a further $16 bln estimated deals completed but undisclosed. It is estimated that just under half are for nature-based deals.

7 February 2023
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