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Voluntary Carbon Market

PRESS RELEASE: Spinnaker Capital makes strategic investment in carbon finance pioneer Respira International

By News

London – December 22, 2023, Spinnaker Capital, a prominent emerging markets investment management firm, announced a proprietary strategic investment, alongside existing investor Capricorn’s Sustainable Investment Fund, in Respira International, the impact-driven carbon finance business.

Investment Overview

Since its establishment in 1999, Spinnaker Capital has been a pivotal player in the evolution of emerging markets financial instruments. 

Respira operates with an innovative offtake and profit share model which reinvests back into project stakeholders. Respira’s high-quality carbon credits allow corporations and financial institutions to mitigate their environmental impact. Respira channels private capital into climate solutions ensuring long-term relationships with trusted carbon project developers that enable its clients to build sustainable, climate-positive businesses and portfolios. 

Strategic Implications

This investment reflects Spinnaker Capital’s commitment to the environment and its recognition of a strategic market opportunity. It marks a significant step in the firm’s sustainability journey and positions it to capitalize on the burgeoning voluntary carbon credit market. The collaboration envisages combining Spinnaker’s financial acumen with Respira’s innovative carbon finance strategies, promising future synergies and expanded market opportunities.

 The investment will also allow Respira to access core emerging markets, including Brazil where Spinnaker Capital has a physical presence, as well as providing additional funds to enhance new deal capacity and enable the on-boarding of large corporations and financial institutions.

Statements from Principals

Alexis Habib, founding principal of Spinnaker Capital, remarked: “These projects are beneficial for the environment and for communities in our strategic focus areas – the emerging markets. The voluntary carbon markets today are reminiscent of the EM financial markets of three decades ago, characterized by limited liquidity and lack of standardization. This investment allows us to apply our skills and experience to foster, and benefit from, the evolution of this market.”

Robert Schultz, partner at Capricorn, added: “We believe that the Respira team have the best voluntary carbon markets origination team. The addition of Spinnaker Capital as a strategic investor, with deep domain expertise in emerging markets, allows Respira to gain access to new markets and opportunities.”

Ana Haurie, Respira co-founder and CEO, said: “Scaling the carbon credit market is a prerequisite for any successful journey to Global Net Zero – there is no credible scientific pathway without it. This investment will help Respira reach more of the corporate institutions which hold the influence and – most importantly, the financial power – to deploy rapid and at scale solutions which support business efforts to decarbonise and turn the tide against climate change.”

 ENDS

Kana in Action: How Andy Creak is scaling investment in nature-based solution

By Tech in Action

Andy Creak is a keen cyclist. Such was his love of riding through London, that he was inspired to launch Hedkayse – a cycle helmet company in 2013. But this was not the end. Cycling continued to lead Andy to unexpected places. When he decided to reduce emissions throughout his Hedkayse’s supply chain, Andy learned more about carbon markets. In his search for UK-based carbon projects, he realised something was missing. There was no central hub where he could find information on project developers and their credentials. Spying an opportunity for climate action, Andy’s idea for Kana was born.

Can you introduce yourself and explain why you founded Kana?

The idea for Kana was born when I decided to make my cycle helmet business carbon neutral. We calculated our emissions, reduced where we could, and the final step was to counterbalance our residual emissions with carbon credits. 

As a British business with a UK-based manufacturing facility, we wanted to invest in nature close to home. However, I soon realised how difficult this would be. Not only was it a challenge to find UK-based carbon credits for sale, but that there was no central place to source information about the carbon projects, the developers or their credentials.

After an arduous search, I found myself on a hill in the north of Scotland. Here, I met with a peatland project developer, examined their site and discussed the potential impacts of my investment. I found this experience was invaluable, but the effort to get there got me thinking – I was sure there must be an easier way.

Throughout my search, I naturally learned more about carbon markets. Having founded multiple technology businesses in the asset management sector, I began to see parallels between carbon markets and the financial markets with which I was familiar. Soon, I saw a massive opportunity – a new, green asset class that could help the planet and deliver sustainable returns.

Could you say more on the problem you seek to solve?

The UN Environment Programme estimates that, by 2050, we must invest $8.1 trillion in nature if we are to tackle the interlinked crises of climate change, biodiversity loss and land degradation. A substantial percentage of this capital must come from the private sector, but right now the infrastructure and assurances are not in place to facilitate such large-scale investment.

At Kana, we conducted more than 150 workshops with market stakeholders to tap into their knowledge and insights. From these conversations, it became clear that nature markets are held back by multiple barriers, ranging from outdated systems to a serious, systemic lack of funding.

Although I became aware of parties creating scientific frameworks for natural capital or focused on market intelligence, I realised something was absent from the UK market. To scale, the UK market needed a platform to improve supply and streamline the demand, in essence bringing both sides of the equation together.

Enter Kana. Since 2021, we have made natural capital an accessible, efficient asset class and facilitated private investment in nature. Our purpose is to increase investment in nature’s recovery and would like to see natural capital become a staple asset class in every ESG and impact fund portfolio.

Let’s get technical: How does your product work?

To create the infrastructure to scale investment into nature-based solutions we have broken our product down into two parts: Kana Hub and Kana Seed. Kana Hub caters to the supply-side of the market while Kana Seed will serve the demand.

Kana Hub: Improving the supply of high-quality carbon and biodiversity projects

Kana Hub is a platform for project developers, landowners, validation and verification bodies (VVBs) and codes. Within Kana Hub, users can manage their work and collaborate on the project development lifecycle. Here, processes that were traditionally completed in endless email chains and complex spreadsheets are fully-digitised. Because this massively improves efficiency and reduces overheads, it means more projects can get off the ground quicker. 

What’s more, Kana Hub makes a project’s life cycle fully-auditable, offering buyers greater assurance of quality and integrity. We have also built a directory which invites project developers and landowners to publicly showcase the quality and integrity of their schemes. This window into the market will make it easier for buyers to find projects, while giving them a snapshot of the real-life impact their investment can make.

Kana Seed: Streamlining and facilitating demand

Kana Seed is a tool for asset managers, businesses and sustainability consultancies. With our product, they can gain advanced oversight of their natural capital portfolios and manage their projects and investments. Whether developing their own project or investing in one already in existence, our platform will allow users to track the performance of their assets over time, analyse risk and trade units with advanced modelling and targets.

Kana Seed will have exclusive access to the auditable project data on Kana Hub. This symbiotic relationship between Seed and Hub will help rapidly accelerate capital flows to nature-based solutions.

Could you share a story of success?

Since we launched Kana Hub one year ago, we have onboarded 44 percent of woodland and peatland carbon projects in the UK. Today, of our 2,251 projects, 997 are in the categories of UK-based woodland and peatland.

We are proud to have worked with top project developers to tailor our product and build new functionality to improve our Kana’s efficiency. For instance, we recently launched a new function allowing users to carry out on-platform project activities. This means that project validations, verifications, loss events or disputes can now be completed digitally on Kana Hub. All compliance documentation can be generated at the click of a button. 

Although some of these processes only take place every 5 to 10 years, they can use huge amounts of resources to complete and take months to complete. Since we launched this new function, project developers have started at least 20 project activities on Kana Hub.

And finally, what’s next for Kana?

For the last year and a half, we’ve been working on Kana Hub and improving the supply of carbon and biodiversity projects. Since launching to market we’ve had great traction and are proud to be continuously onboarding new projects. Now, we’re kicking off initiatives to drive traffic to the public project directory and to put the UK natural capital market on the map.

 In terms of our product, we’re well into the process of building Kana Seed and have already developed the baseline functionality that will form the foundation of the platform. We’re currently working alongside a number of pioneering asset managers to build out their requirements and enable them to launch natural capital funds. This will be ready by the end of Q1 2024. Within a rapidly evolving market landscape, our business is accelerating. We’re excited to see what the next year holds.

Disclaimer: Respira International does not have any undisclosed affiliation with Kana. Read more about Kana here.

Removal in action: How Antti Vihavainen is growing the engineered carbon removal market

By News, Tech in Action

Antti Vihavainen is certain. He is sure that hope alone will not solve the climate crisis. For Antti, hope must always be accompanied by action if a true impact is to be made. It is on this firm belief that his company, Puro.earth, was founded in 2018. Ever since, Puro.earth has been actively expanding the tech-based carbon removals sector with a carbon crediting program dedicated to engineered carbon removal. 

Engineered carbon removal differs from nature-based carbon removal. Rather than investing in natural carbon sinks, such as forests and soil, engineered carbon removal uses technology to draw and store greenhouse gases from the atmosphere. Methods including carbon capture and storage (CCS) and direct air capture (DAC) store the emissions they remove securely, often in vast underground geologic formations. 

In the past five years, Puro.earth has validated the technological removal activities of more than 50 companies and facilitated the sale of verified credits to corporate stakeholders to support their decarbonisation strategies. Here, Antti shares his motivations and reveals how Puro.earth is scaling the engineered carbon removal market.

Can you introduce yourself and explain why you decided to found Puro.earth?

In 2017, it became apparent to me. I realised the concentration of atmospheric carbon dioxide (CO2) was already too high. Although I’ve always been interested in the climate, this was a pivotal moment for me. I realised that our emissions reduction efforts were simply not fast enough and that humanity faced an unprecedented, runaway climate catastrophe.

Yet, there was something else I recognised. While emissions soared, more and more research was being conducted into technological methods for removing carbon from the atmosphere. But something was missing – these engineered climate solutions were not being sufficiently commercialised. With the climate crisis at our door, I wanted to explore the commercialisation of tech-based carbon removal with the aim of facilitating the growth of new, net-negative carbon industries. So in 2018, I co-founded Puro.earth, the first carbon crediting program focused exclusively on technology-driven carbon removals.

Could you say more on the problem you seek to solve?

Puro.earth solves the very same issues that first drew me to the world of engineered carbon removal. With such extensive research into these technologies, I had identified a real need for commercialisation. So, first and foremost, Puro.earth is a platform dedicated to harmonising the climate effects of different carbon removal methods. In this way, Puro.earth assists in the overall scaling of engineered carbon removal. We want to help the removals market grow in efficiency and enable more companies to embark on a science-based pathway to reach a state of net-zero emissions. 

Since we launched, Puro.earth has pioneered several of the world’s first crediting methodologies for engineered carbon removal. While we bring together a range of removal activities, our criteria always remains the same. We look for methods which can be scientifically verified; that durably capture and store CO2 for 100+ years and which have the potential to scale industrially. We believe that in facilitating corporate engagement with engineered carbon removal, we can drive the development of a strong, carbon net-negative economy. It’s our aim to galvanise further investment in these technologies. 

Let’s get technical: How does your product work?

Our Puro.earth platform brings together suppliers of carbon net-negative technologies and climate-conscious companies. We have developed our own Puro Standard with which to verify CO2 Removal Certificates (CORCs). Each CORC represents one tonne of CO2 that has been removed from the atmosphere via an engineered method and stored long-term in carbon net-negative processes or products. 

We are particularly proud of our Puro Standard for it is the first to assess carbon credits generated exclusively from such tech-based removal activities. The methodologies of the Puro Standard are science-based and durable, meaning that companies can depend on them for precise emission compensation. To maintain independence, the Puro Standard is managed by an Advisory Board which oversees any proposed changes to its rules and requirements.

On our platform, buyers can browse the available tech-based carbon removal suppliers and explore purchase options. However, buyers do not purchase CORCs through Puro.earth. Instead they negotiate an agreement directly with an accredited CORC supplier or via our network of carbon marketplaces connected to our registry. CORCs can either be bought as a spot purchase or as an advance market commitment. In the latter, the buyer agrees to purchase CORCs that will be verified in the future. Known as Pre-CORCs, these are certificates that allow companies to pre-pay for validated projections of engineered CO2 removal. Only after such a carbon removal has been independently verified are Pre-CORCs converted into CORCs.

Can you share a story of success?

In the five years since our launch, we have grown to be the world’s leading crediting platform for engineered carbon removal. Now, more than 50 companies have issued CORCs and are selling them directly to corporations or via the carbon marketplaces connected to our registry. 

It is hard to choose just one story of success because throughout 2023 we have formed numerous partnerships and made agreements with other companies in the engineered removals space! In July, we announced our CORCs would be available on Xpansiv’s CBL Spot Exchange platform, while in September  we signed an agreement with the carbon capture company, Climeworks. Moreover, we are working to develop Africa’s first DAC facility with Octavia Carbon and Cella. We consider such collaborations to be essential in the expansion of the tech-based removals market.

And finally, what’s next for Puro.earth? 

There’s so much innovation happening within the climate space that we are constantly impressed with the suggestions we are given the opportunity to assess. Amid so much fast-paced transformation, we expect to jump one order of magnitude in the next 18 months and make a second leap by 2027.

 

Disclaimer: Respira International does not have any undisclosed affiliation with Puro.earth. Read more about Puro.earth here.

Respira founding member of Kita’s Carbon Supplier Pool as market develops

By News

We are pleased to announce that Respira is a founding member of Kita’s Carbon Supplier Pool. Taking a new, innovative approach, the carbon insurance specialist now offers clients of its Carbon Purchase Protection Cover the option to receive claims in carbon credits. We welcome such professionalism in the voluntary carbon market, viewing these developments as clear, positive markers of growth for the industry.

As a Lloyd’s of London coverholder, Kita’s Carbon Purchase Cover insures buyers of forward-purchased carbon credits against under-delivery. Kita’s new approach highlights its commitment to scaling the carbon markets and to supporting client’s high integrity net zero goals. 

Kita will work closely with lead capacity provider, Chaucer, to review and assess claims and offer replacement carbon credit payment. Cash payment for eligible claims will also remain an option. Any replacement carbon credits for eligible claims will be distributed from Kita’s proprietary Carbon Supplier Pool. Respira is proud to join Everland, Pachama and Vertree as the founding members of this pool.

Speaking on the new developments, Kita’s CEO and co-founder, Natalie Dorfman, said:

“Kita’s mission is to drive more financing to scale high-integrity carbon projects, and we believe insurance is a key enabler to do this. We are proud to be leading the field when it comes to paying claims in carbon, and look forward to working with, and expanding, our Carbon Supplier Pool as we move forward.”

Kita shares more in a press release here. Read more about Kita’s products here and more about Respira’s portfolio of carbon credits here.

Biomass in action: Why CEO Marco Albani founded Chloris Geospatial

By Tech in Action

In the first of our Tech in Action  series, we speak to Marco Albani, the Co-Founder and CEO of Chloris Geospatial. Established in 2021, the company is operating at the intersection of space-tech and nature-tech. Using advanced machine learning, artificial intelligence and sensor-fusion, the team at Chloris Geospatial can directly measure vegetation dynamics on earth, from space.

Can you introduce yourself and explain why you decided to found Chloris Geospatial?

Although I trained as a forest scientist, I spent much of the last 20 years working in sustainability and on climate change solutions for business. Time and again, I saw action hindered by a shortage of good operational-scale data and by a lack of understanding of how changes in land use impact the volumes of carbon stored in the earth’s vegetation. Businesses needed greater awareness of the impacts of their activities on the natural world. So, not only did I know there was space, but also a pressing need for a solution. 

I knew that Dr. Alessandro Baccini, Chief Scientist and co-founder of Chloris Geospatial, had been working on the science side of this issue for over 20 years. He was using remote sensing data to directly estimate the carbon stored in vegetation and forest. While we each came to the challenge from a different angle, we both recognised the importance of making this science available to the market – both at scale and at the speed of business. 

With a growing number of companies starting to take responsibility for their impact on climate and nature, we knew we needed to make our Chloris accounting system easy-to-access and reliable. In this way, we could help new players understand and visualise the carbon stored in forests and vegetation. This was the belief on which we founded Chloris Geospatial.

Could you say more on the problem you seek to solve?

Fundamentally, healthy economies are underpinned by natural capital, such as our forests and grasslands. So, for the global economy to strengthen and achieve a state of net-zero carbon by 2050, we must comprehensively conserve and restore these ecosystems.

At Chloris Geospatial, our mission is to accelerate the transition to a net-zero and nature-positive future. The way we do it is by making it easier for businesses to understand their impact on nature. We are aware that all businesses and corporations are facing the challenge of transitioning to a net-zero and nature-positive economy, which is why we are determined to make access to carbon data, and its insights, both fast and easy. 

At present, our primary focus is on companies operating in the voluntary carbon market and supply chain companies in the food, land use and agriculture sector. Here, the Chloris technology is enabling a real paradigm shift for the measurement of forest carbon. It brings unprecedented integrity, speed and scalability to the voluntary carbon market and to the measurement of the climate performance of forest carbon projects. In just a few hours, we can generate biomass predictions for anywhere in the world.

Our logic at Chloris Geospatial is that if business leaders can access high integrity accounting on natural capital, they need no longer question the carbon calculations on which their investments are based. Equipped with reliable, trust-worthy data, they are free to focus on taking effective action for climate and nature by accelerating investments in nature-based solutions while, at the same time, being able to cost effectively monitor impact with confidence. 

Let’s get technical: How does your product work?

Today, we are the leading company in the market to deliver what is referred to as direct measurement of above-ground carbon stock and change from space. The data we deliver is empirical, spatially explicit, wall-to-wall and comes with quantified uncertainty at the pixel-level. This means, we do not use the average emission factors and area-based estimates that standard remote-sensing approaches are reliant upon. 

Unlike those standard approaches – and thanks to our scientific, machine-learning and software innovations – we see all above-ground carbon changes over very large areas. We can spot carbon emissions from large-scale deforestation, degradation, disturbances and fires. More encouragingly, we also observe the carbon removals as a result of reforestation or restoration. That is why we say that ‘we see what the atmosphere sees’. 

When you unpick this statement, it means that we measure (and annually update) the volume of carbon in and carbon out, for every pixel on the planet, since the year 2000. This is what really matters for the credible carbon accounting that a credible transition to net-zero requires.

As I mentioned, the Chloris Platform is built on the work and experience of Dr. Alessandro Baccini. As a pioneer in measuring forest carbon stock and change from space, he has been instrumental in building our technology. Our data products are based on the fusion of datasets from public Earth Observation missions, including data from NASA’s ICESat GLAS and GEDI instruments, from the European Space Agency’s Sentinel-1 and Sentinel-2 satellites, and from the United States Geological Survey’s Landsat satellites. 

To provide global coverage that incorporates geographic variation in vegetation types and structure, our models are trained at continental scale and capture geographic variations in allometry (the relationship between size and characteristics). Our models also capture the relationships between above ground biomass and remote sensing measurements. Once collected, our data is processed and delivered via the Chloris Platform, which is our cloud-native software infrastructure that deploys data at the speed of business, in a scalable and cost-effective manner. To ensure these high standards are maintained, we make both automated and manual assessments using proprietary benchmarks and publicly available data products.

As a result of the machine-learning and advances in artificial intelligence made by our science and engineering teams, our Platform provides accurate data and insights quickly and at large scale. Our machine learning models are anchored in state-of-the-art data science. They filter and pre-process input data for both quality and representativeness, and create novel predictive features that underpin our mapping algorithms. 

Arguably there is nothing new to use satellites to observe and measure forests, but the current standard approaches have serious limitations. We are pleased to overcome these at Chloris Geospatial and to bring to the market a solution that is able to visualise changes in biomass not only from degradation and deforestation, but also by the slow, steady re-growth of trees.

Can you share a story of success?

From very early on in our start-up journey, Permian Global was a dedicated adopter of our technology, trusting our data for their project development and MRV work in Indonesia. Gaining the trust of such a leading project developer was very encouraging. 

More recently, we have expanded our customer base for large scale work in the voluntary carbon market and in the food, land use and agriculture sectors. The opportunity to demonstrate our technology at these very large scales has been extremely positive for us.

On the product and science side, we are delighted to have achieved a big milestone this year. Since June 2023, we have been able to deliver spatially explicit, annual above-ground biomass stock and change data at 30 m resolution going back to the year 2000. Not only is this data extremely comprehensive, but also has full temporal and spatial consistency and scalability. This longer time series means we can gather more robust data on degradation and growth trends of above-ground biomass. As a result, we have significantly improved our ability to meet the needs of project developers and other actors who are screening and assessing high quality opportunities for avoidance and removals projects. 

Finally, what’s next for Chloris Geospatial?

We are not resting on our laurels! At the moment, we are continuing to develop our product to make it an even greater turnkey solution for REDD+ and ARR applications – both for developers and investors.

But, as a data company fully-focused on tracking natural capital performance over time, our attention isn’t limited to carbon. We see the measurement of biodiversity and water as viable, future opportunities for us and believe that such data would truly help communicate the value of nature conservation and restoration to businesses. Indeed, we see such measurements as essential if we are to build a net-zero and nature-positive economy.

 

 

Disclaimer: Respira International does not have any undisclosed affiliation with Chloris Geospatial, we are just interested admirers of their work and the way it aligns with ours. Find out more about Chloris Geospatial here.

How can the voluntary carbon market support Indigenous Peoples?

By News

Are you an urban person or a nature person? This binary distinction is one with which we readily self-categorise. While in reality it is unlikely any one of us is entirely one or the other, there is no denying that some of us live more deeply connected to the natural world than others. With each passing generation, globalisation has allowed city-dwellers of the Global North to grow increasingly detached from the land on which we all depend. However, for many of the world’s 476 million Indigenous Peoples, ancestral ties to the natural world remain strong. 

The best custodians of nature

While culturally and geographically disparate, Indigenous Peoples tend to have in common a close connection ‘to the land where they live or from where they have been displaced.’ As much as 22 percent of the earth’s land is traditional Indigenous territory including 11 percent of global forests are legally owned by Indigenous Peoples and local communities. In the Amazon, research shows deforestation rates within securely held Indigenous land is on average 50 percent lower than outside of these territories.

These areas are home to an abundance and a richness of species, making them extremely biodiverse. In fact, 80 percent of the planet’s remaining biodiversity can be found within Indigenous territories – a testament to the holistic, sustainable manner in which Indigenous communities live in tandem with the natural world. Indeed, with generations of knowledge, Indigenous Peoples the world over describe working with the land as opposed to on it. It therefore makes complete sense that those with grounded, intergenerational experience of an area are the best equipped to conserve it. 

A challenging landscape for Indigenous Peoples

While several studies report Indigenous Peoples to be the best custodians of nature, all too often these communities fail to receive the recognition, rights and representation they deserve. 

Lack of representation

Indigenous People continue to be unfairly underrepresented in international decision making. While the UNFCCC tallied more than 49,000 attendees at COP27, only around 250 Indigenous people were able to join the conference in person. The inaccessibility of climate decision making demands that greater effort be made to help Indigenous Peoples and local community members take their seats at the table.

Lack of formal land rights

Nearly one quarter of all land is Indigenous territory. However, a systemic lack of formal land rights threaten the security of many Indigenous Peoples. Without secure land rights, it is far harder for these communities to conserve nature and biodiversity as they have done for generations.

Undelivered pledges

At COP26 in Glasgow, a total of $1.7 billion was pledged to support Indigenous land rights. While this sounds positive, only 7 percent of this sum has so far been delivered. 

Misdirected funding

Supposedly $270 million of funding is allocated to Indigenous-led forest conservation every year. However, only a meagre 17 percent arrives in the hands of a named Indigenous-led organisation. 

The voluntary alternative

Amid such lack of delivery and serious under-representation, the voluntary carbon market can provide an alternative form of funding for Indigenous-led conservation. High quality carbon credits, generated from nature-based projects, can be sold to corporates seeking to voluntarily compensate for their hard-to-abate emissions. The proceeds of these sales must be shared equitably with the Indigenous and local communities working to conserve forests. Not only does this recognise and reward efforts, but can also fund further forest conservation activities.

The projects in our portfolio are high-integrity. We conduct our own due diligence to ensure positive impacts on communities is an integral part of the project design. Once we onboard a project to our portfolio, we use our balance sheet to support project developers through long-term offtake agreements. Consequently, they can concentrate on running their projects rather than fundraising and local people have a reliable and consistent source of revenue.

How does this work in practice?

Two of our flagship portfolio projects are developed by Carbon Tanzania. As a social enterprise, Carbon Tanzania counters the prevalent conservation notion that to protect ecosystems and biodiversity, humans must be excluded from the area. Instead, Carbon Tanzania helps Indigenous and local communities to protect nature and biodiversity under fair, equitable economic conditions.

In Tanzania, the Hadza, Datooga and Masaai people have, for generations, lived with the land. Yet, as more people move to Tanzania and demands on resources increase, many communities are finding their way of life to be threatened. Indeed, the territory of the Hadza, Datooga and Masaai is frequently used by migrant farmers. Informed by entirely different life experiences, new arrivals are likely to farm in a way entirely contradictory to that of the Indigenous communities to whom land belongs. 

In response, Carbon Tanzania recognises that strengthening land rights and resource tenure is vital. Ensuring that the Hadza, Datooga and Masaai retain rights to their ancestral land not only safeguards their way of life, but protects naturally forested areas from destruction. This conservation model provides a powerful template for attributing appropriate value to nature and ensuring those responsible for its stewardship are fairly compensated. 

What guidance is already in place for Indigenous Peoples?

Free, Prior and Informed Consent

UNDRIP’s framework on Free, Prior and Informed Consent should form the foundation of any carbon project working with Indigenous Peoples and members of local communities. Let’s look a little closer at what this means

Free 

Consent for a project’s operations must be offered voluntarily and ‘without coercion, intimidation or manipulation.’ When consent is sought, communities should also not be placed under stressful timelines that could force or rush their processes of decision making. 

Prior

Developers should seek consent prior to it becoming ‘necessary’ for a project’s operations. In the very beginning stages of a project, information should be given to local people and should take into account the time needed to understand and analyse potentially new ideas.

Informed

The project information provided to Indigenous and local people should be clear, accurate and entirely transparent. Moreover, information should not cease if and when consent is given. Instead, information should continue to pass between developers and locals throughout a project’s lifespan.

Consent

Consent should be discussed collectively among the holders of land rights and local stakeholders. Any decision to grant or withhold consent should be informed by a participatory process, not the will of a minority.

Embedding Indigenous Knowledge

In January, a new report from the World Economic Forum outlined ways in which Indigenous knowledge could be better included in carbon projects. It states, “‘Respecting Indigenous peoples’ cultural knowledge, rights and responsibilities will boost the resilience and long-term impact of landscape conservation and restoration projects.”

Before establishing a carbon project, the report recommends developers consider likely power imbalances between themselves and Indigenous Peoples. It also advises developers not to underestimate the challenges of trust building and to acknowledge they may carry a cultural load, informed by generations of potentially inequitable interactions. 

The report also advocates for greater Indigenous involvement and participation in leadership roles. This can include increasing understanding of unmet community needs, presenting a range of project options and, crucially, an equitably sharing project benefits.

Tropical Forest Credit Integrity Guide 

The Tropical Forest Credit Integrity (TFCI) Guide speaks extensively on the role of Indigenous Peoples as custodians of the world’s forests. It sets an expectation that the equitable inclusion of Indigenous Peoples should be considered a ‘hallmark’ of a high quality, forest conservation project. Rather than considering Indigenous communities members as beneficiaries of carbon finance, projects should form equal partnerships with interested local people. The Guide itself had input from Indigenous stakeholders. 

How could carbon projects be improved for Indigenous Peoples?

In Global North carbon market criticism, we have observed that many opponents neglect to seek the perspectives of the Indigenous people and local communities on the frontlines of climate change. Of course, opinions will not be homogenous – some people will always be in favour while others stand firmly against. However, there are many Indigenous Peoples who see great potential in carbon finance to support global conservation efforts.

At the beginning of May, more than forty Indigenous-led groups and organisations published an open letter asking the global finance and climate communities to support forest protection, or REDD+, carbon credits. The letter highlights the ways in which REDD+ can provide financial resources and help to safeguard ancestral lands. At Respira, we stand alongside the Indigenous-led groups and organisations calling for immediate support to ensure continued funding to the Global South via REDD+ carbon credits. 

As global temperatures continue to rise and deforestation continues to hit record highs, we must listen to and champion Indigenous voices. We are calling for Indigenous voices to finally be uplifted in conversations about climate finance and for private capital to be channelled, at scale, to Indigenous-led forest conservation efforts.

Retired carbon credits explained

By News

When we hear the word ‘retirement’, most might imagine a pension, large quantities of free time and perhaps a new-found love of gardening. Given these connotations, it is perhaps unsurprising that used in the context of the voluntary carbon market, the concept of retirement can create confusion.

In the carbon markets, retirement has a different meaning. In its essence, a retired carbon credit means its buyer has ‘redeemed’ the one tonne of carbon reduction it represents and claimed it against their own emissions which they have not yet been able to cut. 

When a buyer retires a credit they have purchased, the credit is removed from the market. This means no one else is able to counterbalance their emissions based on the carbon reduction the credit represents. 

To put this in context, 196 million carbon credits were retired overall in 2022. If these retirements had been evenly distributed throughout the year, more than 500,000 credits would have been retired every, single day. Although this represents a 1.3 percent decline on the previous year, the most recent market sentiment survey from the IETA found optimism among its respondents. Based on the responses from market participants the survey predicts that the market will soon return to a positive upward trajectory.

Wait, how are credits generated?

To truly understand the concept of a retired carbon credit, let us first refresh ourselves on the basics of credits.

What? A carbon credit represents one tonne of carbon dioxide or an equivalent volume of another greenhouse gas (CO2e) that has been either removed from, or prevented from entering, the atmosphere. 

However, historically not all credits have been created equally. Learn more about the criteria for a ‘good’ credit with this article from our archives.

How? A credit can be generated from nature-based projects, technological climate solutions or even renewable energy generation. The volume of CO2e avoided or removed from the atmosphere is calculated and a corresponding number of carbon credits is conservatively calculated. 

The calculation process involves following established methodologies, baseline allocation and verification. Find out more about this process here.

Why? Carbon credits are sold to individuals and businesses to support their decarbonisation strategies. The carbon finance generated from these sales funds further climate mitigation activities and can even support the delivery of impactful, non-carbon benefits for people and nature.

For an example of carbon credits in action, please see this case study of the Gola Rainforest Conservation Project. And to learn more about the responsible purchase of credits, see this flyer on the mitigation hierarchy.

But why do you need to retire credits at all?

In this section we will cover why carbon credits need to be retired, including:

  • Confirming impact
  • Claims
  • Double-counting

When a buyer purchases carbon credits in line with the mitigation hierarchy, the positive benefits of those credits are not automatically attributed to that individual or company. Rather, the buyer ‘holds’ these credits until they wish to retire them. However, once a retirement has been executed, the buyer is free to claim the positive impacts the credits represent. This effectively ends the credit’s ‘life’ for it cannot be reused or reclaimed.

In this way, retirement stops the benefits of credit from being claimed multiple times. In the industry, this is known as preventing double-counting. Only the stakeholder who retires the credit can claim the emission reduction it represents towards its climate targets and they can only do so once. Retirement is extremely important for driving credibility and traceability when using carbon credits to achieve net zero.

What’s the process for retired carbon credits?

Before a carbon project can issue credits, it will complete a process of verification which happens within a framework set up by a programme, such as VCS by Verra or Gold Standard. Only after verification are credits issued in a dedicated registry. Credits are always marked with a unique serial number which allows them to be tracked and accounted for.

Carbon credits can be owned by a number of market participants – the project developer, financing institution, intermediary or a company wishing to use them to counterbalance their own emissions. They can be traded, sometimes several times, among the market participants. This means that carbon credits can exist, unretired, for some time. However, at the point of retirement carbon credits are permanently removed from circulation and cannot be resold. This prevents any double-counting of emission reductions. Information on historic retirements is stored in publicly accessible emission registries, driving transparency for the market.

The future of retired carbon credits

As technology advances, stakeholders across the voluntary carbon market are working to better the carbon markets including the retirement process itself. Blockchain, Tokenization and Distributed Ledger Technology (DLT) all hold great potential for scaling of the voluntary carbon markets. These technologies can boost the overall transparency of credit retirements and support the overall integrity of the markets. We look forward to engaging with new innovations as the world of credit retirements develops and interacts with these emerging technologies.

Carbon Credits

“We are not a broker, we’re a carbon finance company”

By News

Traditionally, carbon credits have been bought and sold by brokers on a spot basis, but at Respira, we operate differently, and have helped to shift towards a carbon finance model of carbon credit trading. We recognise that the broker approach creates little long-term certainty for carbon communities, and, at times, even curtails the development of high-quality projects. This is why we offer an alternative – a model prioritising the overall stability of our flagship portfolio projects. 

Respira is not a broker. Rather, we are a source of non-dilutive private capital. We offer revenue certainty for project developers through a guaranteed floor price for carbon credits and use our balance sheet to support them with long-term offtake agreements. Not only does this enable project developers to expand with confidence, but also creates greater certainty for our buyers who can lock-in future prices. 

 

The Respira model

The Respira ethos 

Respira International was co-founded by Ana Haurie and Robin Bowie in 2019. They saw the urgency with which we must address the climate crisis and recognised the role the private sector must play in these efforts. To drive the necessary levels of corporate action, the voluntary carbon market offered great potential. Speaking of the role of high-quality carbon credits in mitigation, Robin said:

“Buying voluntary carbon credits provides an engaging and impactful way for companies to compensate for residual emissions whilst on the pathway to reducing internal emissions. It enables corporations to go beyond what they are mandated to do through regulation.”

He continues:

“Through integrated plans which combine value chain emissions reductions with appropriate use of carbon credits, corporations can set a powerful and engaging example for others to follow.”

Now, four years later, Respira International continues to expand. Our diverse team combines a 30+ year track record in global financial markets with a deep understanding of carbon project development in leading international conservation organisations. 

Reflecting on the Respira team, Chris Villiers, Director of Portfolio Management, said:

“Respira has brought together a team with the network and experience to develop products in the voluntary carbon market that can attract institutional capital at scale that will be used towards reducing emissions globally and deliver significant climate impact.”

The time is now

Our team knows we cannot delay climate action. In the next seven years, we must significantly decarbonise our economies if we are to meet the targets set by the Paris Agreement. Eva Weightman, Director of Corporate Client Relations, said: 

“With 2030 fast approaching, there is no time to sit idle. The world needs business leaders to act with urgency and curb their companies’ emissions if we are to limit global temperature increase to 1.5°C above pre industrial levels. ”

Chief Technology Officer, Jon Mulder agrees:

“The time to act on decarbonisation and nature restoration has never been more critical. The solutions exist today and must be scaled and deployed more rapidly. We all have a role to play and carbon credits provide a vital service in protecting and restoring nature.”

If we are to achieve our 2030 ambitions, Finance Director, Peter Christie, argues that businesses must take voluntary action on climate mitigation.

“In the absence of direct regulation by governments, companies need to voluntarily ramp up their decarbonisation efforts so we can collectively solve the climate crisis. Carbon credits are an essential part of the business toolkit.”

Respira is committed to nature

However, carbon credits are not uniform in the benefits they deliver. Credits can be generated from activities which remove carbon from the atmosphere or from projects that prevent additional carbon emissions from release. But regardless of whether a project focuses on removal or avoidance, they can deliver a great many benefits for people and nature. It is with these projects – those with measurable impacts, aligned with the UN Sustainable Development Goals – that Respira partners.

This is why our flagship portfolio focuses predominantly upon nature-based projects such as forest conservation or mangrove restoration. Director Natural Climate Solutions, Ed Hewitt, further explains Respira’s investment rationale.

“There is a critical need to attach a monetary value to services that nature provides such as carbon capture, water quality, clean air and biodiversity.”

Ed continues:

“Carbon is really the first to be monetised at scale. By doing this we can financially incentivise the conservation and restoration of forests, soils and wetlands, helping us address the twin challenges of climate change and nature loss.”

Josh Schaefer, our Portfolio Director, explains that climate change and nature loss are inseparable challenges.

“Global emissions reductions can’t be achieved without tackling nature loss, because the earth’s natural ecosystems absorb roughly half of man-made carbon emissions – as well as providing numerous other benefits for people and biodiversity. Verified carbon credits have proved to be an effective way to finance the protection of natural ecosystems.”

Our CEO, Ana Haurie, concludes with a call to action:

“The time for the financial sector to act on climate is now. The predicted growth of the voluntary carbon market, with an increasing focus on nature-based solutions, provides a unique opportunity for institutional investors to benefit from this new asset class, while also supporting sustainable development goals and making a positive impact,” she said.

We encourage you to view our introductory video to learn more of our non-broker approach. And if you would like to find out more about our team, you can read more here.

Leakage: What does it mean for carbon credits?

By News

When a government declares one forest protected, who’s to say it won’t grant a logging concession for another? If a forest can no longer be cleared for subsistence agriculture, then where do these family farmers go? If carbon project developers are not careful, the answer can simply be: to the forest ‘next door’.

In the voluntary carbon market, this is known as leakage – a situation in which deforestation activities are not prevented, merely shifted from one area to another. It is a conundrum with which the market has grappled for years. Yet, despite making progress on leakage limitation, the ways in which project developers tackle the issue are not generally well understood. Cue this explainer.

What is REDD+?

But first, we must lay the foundations. Without a solid understanding of REDD+, you will likely be lost when it comes to the matter of leakage. Broadly, REDD+ refers to forest conservation activities but it also has a more specific meaning. According to UNFCCC, REDD+ activities work to “reduce greenhouse gas emissions from deforestation and degradation while promoting the sustainable management of forests and the conservation and enhancement of forest carbon stocks.”

REDD+ can occur at different scales. There is project level – usually tens to hundreds of thousands of hectares and normally run by NGOs or social enterprises – and there is the jurisdictional level – typically millions of hectares and can be run by a project developer under national or subnational frameworks. For every type of REDD+ project, it must ensure local people have the chance to give their free, prior informed consent to its activities and that is before it is verified by the industry’s standards bodies.

Whatever the scale, REDD+ can address different types of deforestation and degradation. There is avoided planned deforestation and avoided unplanned deforestation. Unplanned deforestation is inherently local, driven mainly by subsistence agriculture whereas planned deforestation usually takes place under government approved logging or agricultural development concessions. However, concessions need not always be destructive – they can be granted for conservation activities too.

When does leakage occur?

The risk of leakage presents differently depending on the project type. In avoided unplanned deforestation projects, leakage occurs when subsistence farmers stop clearing trees inside the conservation area but instead cut the trees outside of it.

In avoided planned deforestation projects, leakage can occur if the government hands out a concession for an NGO or social enterprise to conserve one area of forest while simultaneously granting a different concession to a company to log another. However, if a project operates on a jurisdictional level, the risk is that the deforestation or degradation activities are shifted to the neighbouring jurisdiction.

But whatever the project type, when leakage does occur, it underlines the level of pressure facing forests. If there is leakage, there is clearly a need for more conservation activities in an area. 

What can be done to address leakage?

There is a misconception in carbon markets that leakage from REDD+ projects continues unaddressed. Yet this perception is outdated –  leakage limitation has always been considered and incorporated into a project’s design. 

Whether it operates at a project level or a jurisdictional level, developers assess leakage risk as part of their verification processes and to monitor deforestation in its ‘leakage belt’ – an area outside of the project’s own conservation remit. Based on these calculations, it is standard practice for a project to set aside between 10 and 20 percent of the credits it produces as insurance against forest damage or leakage. This is known as a buffer pool.

What’s more, project’s often work to tackle the underlying drivers of deforestation and degradation in the surrounding landscape. In avoided, unplanned REDD+ projects, leakage can be addressed by offering alternative income streams to subsistence farmers and educating local people on agricultural practices.

It can also be tackled through the sustainable intensification of agriculture. While this might sound like an oxymoron, it is actually a clever conservation strategy. It shifts agricultural expansion away from standing forests and towards marginal lands or to areas historically cleared.

On the other hand, addressing leakage from planned deforestation usually requires government cooperation. If logging is identified as a major cause of emissions, market leakage is one way to reduce risk. Developers would use a national timber extraction figure and calculate the percentage of forest potentially lost to logging across the project area.

Indeed, if deforestation reduction targets are set at a jurisdictional level, it can incentivise conservation across the whole country for governments, bound by national commitments, are less likely to offer conservation concessions in one area and logging concessions in another.

At the same time, it must be acknowledged that coordinating all the political, economic and social actors in a jurisdictional REDD+ project can be a challenge. This role sometimes falls to NGOs, but there is a case to be made that this should be a government’s own responsibility. 

Regardless of whether a project works to prevent planned or unplanned deforestation, if leakage persists the developers will take precautionary action. They will reduce the overall number of credits issued by the project to prevent instances of over-crediting. 

Case study: Leakage limitation success

Makame Savannah, a project developed by Carbon Tanzania, has been successfully working to address the drivers of unplanned deforestation around its expansive conservation area. Spanning more than 360,000 hectares, this Wildlife Management Area has become a safespace for trees and wildlife. Indeed, since the project began in 2016, more than one million trees that would otherwise have been cut continue to stand. Based on Makame’s conservation work, 517,000 carbon credits have been verified and issued, including 330,00 to Respira.

Carbon Tanzania has woven leakage accounting into the very fabric of Makame Savannah’s project design. Taking a conservative approach to calculating leakage and issuing credits, 28 percent are not sold on the market, withheld instead as a buffer. At the same time, Carbon Tanzania operates proactively, engaging in specific leakage mitigation activities to reduce overall risk. 

What’s more, Carbon Tanzania works directly with local communities to address the underlying drivers of deforestation. The foundation of this approach is to reduce the daily cost of living to individuals and therefore reducing the financial necessity to fell trees for short-term economic gains.

Therefore, Carbon Tanzania ensures that revenues from these credit sales are distributed to members of the local community. So far these funds have been predominantly allocated to education and healthcare. Children have benefitted from scholarships, which has simultaneously lifted financial pressure from their families. Many individuals have received health insurance cards which, funded by the project, allow them to be treated in local hospitals for free. And in October 2022, more than 60 students had their university fees entirely covered by carbon revenue. 

Makame Savannah also employs local people for surveillance. Together, the team monitors the area for signs of poaching and agricultural expansion, catching some of the underlying activities driving deforestation early on. These holistic approaches adopted by Makame Savannah work to reduce leakage around the project area and clearly demonstrate how leakage can be minimised if effectively factored into a project’s design.

Projects like Makame Savannah give us confidence that the risk of leakage is taken seriously by project developers. However, while efforts are made to tackle the underlying drivers of unplanned deforestation and degradation, we also understand that occasionally leakage can still occur. Standard practice in the market provides assurance. In the event of leakage does occur, less credits are issued and a projects insurance buffer pool prevents any over-crediting from taking place.

 

 

 

When are carbon credits most effective?

By News

It is often said that a bad workman blames their tools. As with many old proverbs, this saying does contain a morsel of truth, especially when applied to the voluntary carbon market. 

Recently, we have seen more cases of criticism directed at carbon credits and those who use them. But this is not always justified; it is not the credits themselves which are to blame. They are simply a mechanism which – when used wisely – can drive action for climate and nature. 

So while critics are busy accusing companies of using carbon credits to avoid meaningfully reducing emissions, a study has been quietly investigating the reality of this claim. Its findings revealed this statement to be far from the truth – it reported a positive correlation between an investment in carbon credits and the speed with which a company decarbonises.

So if it’s not the carbon credits themselves, then what can go wrong? Issues can arise during both the supply and the demand stages, so it’s important to understand what constitutes best practice. Choosing the best solution is challenging, particularly if you are new to the market, so here we outline the key traits which define high quality supply of, and high integrity demand for carbon credits. 

High-quality supply

In many ways, the success of including carbon credits within a corporate net zero strategy is determined long before a company decides to counterbalance their emissions. Ultimately, success is reliant upon the original quality of the credit supply which places a lot of responsibility on the shoulders of carbon project developers.

Firstly, developers must ensure that their project – be it forest conservation or mangrove restoration – would not have been possible without carbon finance. Only if credits are generated from an activity that would not otherwise be possible, can a project be classed as ‘additional’. When searching for high quality, it is essential that buyers check if a project’s additionality is verified.

Project developers should also take every precaution to ensure the benefits of their project are long-lasting. This applies, not just to its potential for climate mitigation, but also to any beyond-carbon benefits it offers to local people and the surrounding biodiversity. If a project’s impacts are short lived, it is not possible to consider its credits high quality.

The good news is that the voluntary carbon market is increasingly regulated. Buyers should always look to see if carbon credits are verified before they purchase. This means that any advertised emissions reductions have been measured and accounted for by an independent third-party agency. This includes analysis of the scientific methodologies used to calculate project baselines and regular surveillance of project areas. Emerging ‘nature tech’ is already paving the way for increasingly reliable verification across the carbon markets. 

There is also increasing guidance available to help buyers understand the characteristics of high quality carbon credits. For example, earlier this year, the IC-VCM released the much-anticipated Core Carbon Principles to set a minimum criteria for high quality carbon credits. This will help corporates to evaluate credits prior to purchase and ensure that they are engaging with climate solutions which bring genuine, long-lasting benefits.

 

High-integrity demand

However high the supply-side quality, credits cannot drive meaningful climate action unless the demand side operates with integrity. Corporates are encouraged to follow the mitigation hierarchy when considering using carbon credits to support their environmental action. This model advises that carbon credits are purchased only after every effort has been made to cut emissions from across the company’s value chain.

 

A diagram of the mitigation hierarchy which shows carbon credits as the fifth and final measure companies should consider in their net zero strategies. First they should avoid, minimise, rectify and reduce.

Recent years have seen growth, both due to mandatory disclosure and reporting initiatives such as the TCFD, and from the voluntary carbon market. More than 3,000 corporations have so far set net zero targets and are increasingly motivated to demonstrate their climate credentials to end consumers. This means many more are opting to voluntarily purchase credits to counterbalance their residual emissions in the near to medium term.

As more corporates are turning to carbon credits, organisations such as the VCMI focuses on regulating the environmental claims which can be made following purchase. Its work on the Provisional Claims Code of Practice is designed to address allegations of greenwashing and to ensure any claims made are entirely science-based and credible. 

Speaking of the growing body of regulation and guidance, our Director of Business Development Will Close-Brooks said: 

“If we take all of these together, we see an increasingly robust foundation from which the market can grow with integrity over the coming years.”

Indeed, operating under these guidelines, carbon credits are truly a mechanism to celebrate. Sourced from high quality projects and implemented with integrity, they hold enormous potential to drive climate action.

 

For more information on what makes a good carbon credit, please consider our previous article here.