Natural Climate Solutions (NCS) play an important role in addressing climate change, yet they currently receive just 3 percent of total climate investment globally, which has prevented these solutions from reaching their full potential. By contrast, NCS have the potential to deliver a third of the emissions reductions needed by 2030 to keep global warming below 2 degrees. To address this gap, Verra is identifying and prioritizing approaches to scale up financing for such approaches through the evolution of existing standards and the development of new frameworks and tools.
Natural Climate Solutions (NCS) can reduce emissions and remove large quantities of carbon from the atmosphere at comparatively low cost, while simultaneously delivering a host of co-benefits. One aspect that makes NCS approaches particularly valuable are the additional “beyond-climate” benefits they offer, such as biodiversity conservation, sustained water supplies, enhanced agricultural productivity and livelihood opportunities. These benefits are the reason that NCS are often considered part of the more comprehensive category of Nature-Based Solutions (NBS) which the IUCN defines as “actions to protect, sustainably manage, and restore natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits”. The IPCC’s 2018 Special Report on Global Warming of 1.5°C and the IPCC’s 2019 Special Report on Climate Change and Land also both highlighted the importance of urgently implementing NBS.
Some types of NCS projects have been gaining considerable traction in the voluntary carbon markets. Carbon offsets from forestry and land use activities increased by more than 250% between 2016 and 2018 according to Ecosystem Marketplace’s State of Voluntary Markets 2019 report. Within that category, offsets from REDD+ (Reducing Emissions from Deforestation and Forest Degradation) projects increased 187%, from 10.6 MtCO2e in 2016 to 30.5 MtCO2e in 2018.
A subcategory of NCS, biosequestration-based projects are those that capture and store carbon in living organisms, such as plants, or in biotic systems, such as agricultural soils and wetlands (“blue carbon”). In spite of their unique ability to draw down atmospheric carbon which will be critical in establishing a healthy climate, these projects have struggled to reach their full potential.
Some of the challenges biosequestration projects face include their frequently smaller size which can hinder scalability; the complexity and high cost of monitoring and measurement (which may be addressed through new models and technologies); the need for streamlined approaches to additionality and permanence; as well as requiring upfront investment to finance implementation of enhanced management activities — which can often take years to generate verifiable carbon removals and associated carbon credits (e.g., VCUs).
In the case of soil carbon projects, upfront investment is needed to transition farms to regenerative agricultural land management practices that mitigate GHG emissions while providing a host of other environmental and social benefits. Blue carbon projects often face the challenge of identifying and mitigating upstream drivers of ecosystem loss.
In addition, a number of governments explicitly include biosequestration activities, primarily related to afforestation and restoration, in their Nationally Determined Contributions, the national climate goals that are at the center of the Paris Agreement. However, implementing these activities to reach these emission reduction goals will require financial resources that are beyond the means of national governments, and other ways to mobilize financing for these approaches are needed.
A possible way to increase funding for biosequestration activities is to connect them to additional sources of finance through the sale of carbon credits in voluntary or compliance markets. Non-carbon crediting standards and/or “softer” carbon accounting approaches (e.g., for general climate claims or “insetting” purposes) may also play a valuable role in scaling up these activities where clear sources of demand for these claims can be tapped. It is also possible to “stack” or “bundle” carbon and non-carbon benefits, which can help to obtain enough investment to maintain the full suite of ecosystem services in a given area.
To explore these and other opportunities for incentivizing and scaling up biosequestration activities, while addressing existing barriers and challenges, Verra launched an internal working group in early 2019. This internal working group has been focusing on the following biosequestration categories that have the potential for high impact both in terms of emissions removals and co-benefits such as climate adaptation, biodiversity conservation, soil health, and improved water quality and quantity:
- forest land restoration (e.g., VCS ARR),
- regenerative agriculture (e.g., VCS ALM) and
- blue carbon (e.g., VCS Wetland Restoration and Conservation (WRC)).
Verra has also established two external working groups of expert stakeholders to scope out the potential role of standards and supporting methodologies and tools in NCS. Later in 2020 Verra expects to launch a similar expert working group to focus on forest-based sequestration, including forest restoration and agroforestry.
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