Harnessing the power of nature to restore our planet

Globally, “ecosystem services” - such as clean air to breathe, healthy water to drink, habitat for biodiversity, and sequestration of carbon dioxide (CO₂) - are worth an estimated $125 trillion annually. And more than half of the world’s gross domestic product (GDP) is dependent on nature and its services. Moreover, approximately 1.2 billion jobs in sectors such as agriculture, fisheries, forestry, and tourism are dependent on the effective management and sustainability of healthy ecosystems. In short, natural systems underpin economies and society on numerous levels. But our planet is facing a climate and biodiversity crisis.

If we don’t change course, up to one million known plant and animal species could disappear by mid-century. At the same time, sea levels are rising - increasing the risk of flooding and tropical storms in coastal regions across the globe. And sustained droughts paired with warming air temperatures are drying forests and vegetation - creating the perfect conditions for wildfires that threaten wildlife habitats, crop yields, and water security. In the last half-century, roughly a quarter of the world’s land area has been degraded, costing an estimated $6.3 trillion a year in ecosystem service value. And by 2050, natural disasters and other ecological threats could displace more than a billion people. 

Source: nytimes.com

With this in mind, we are at a critical inflection point for the future longevity of the planet. And keeping global temperature increases under 2°C, and, ideally, to 1.5 °C, will require a paradigm shift towards a net-zero economy. To reach the ambitious 1.5 °C scenario by 2030, annual gigaton (Gt) emissions must be slashed from 41Gt to 25Gt. (1 Gt is equal to 1 billion metric tons.) But because emissions from industries like transportation, industry, and agriculture cannot be driven to zero any time soon, it will be impossible to achieve the necessary reduction in peak warming solely through curbing greenhouse gases (GHG). In reality, we must also remove GHG emissions from the atmosphere on an unprecedented scale.

Source: e360.yale.edu

Luckily, there are several options for accomplishing this task. For instance, when biomass is burnt for energy, the emitted CO₂ can be absorbed and stored underground. Although, this technique, commonly referred to as bioenergy with carbon capture and storage (BECCS), requires vast areas of land, which compromises food security and biodiversity. Another technology-enabled option involves industrial direct air capture machines that absorb CO2 from the air. Overall, these nascent, engineered solutions are innovative but often provide a single benefit (i.e., emissions reduction) and do not offer long-term answers to climate change. If we want to insulate our planet for the future, we must identify cost-effective carbon drawdown solutions that also safeguard biodiversity and improve human wellbeing. And it’s becoming clearer that nature must be at the center of these efforts.

Source: nature.org

In contrast with many engineered solutions, nature-based climate solutions (NCS) harness the power of natural ecosystems as infrastructure to address both climate mitigation and adaptation challenges while delivering multiple additional co-benefits for society and the environment. By conserving, restoring, and responsibly managing forests, wetlands, grasslands, and marine ecosystems, we can create “carbon sinks” - areas that absorb more carbon than they release - that simultaneously enhance biodiversity, soil health, food security, etc. Moreover, new research led by The Nature Conservancy demonstrates how protecting nature can deliver over one-third of the carbon emission reductions needed between now and 2030 to stabilize warming to below 2°C. As of 2020, more than 130 countries have included NCS in their national climate plans under the Paris Climate Agreement.

However, the path to scaling NCS, which receives a mere 3 percent of funding allocated to emissions capture, is not devoid of obstacles. Today, carbon credits (often referred to as “offsets”) are increasingly relied on to finance NCS. This project category has contributed significantly to the voluntary carbon markets growth trajectory - accounting for 53 percent of total issuances in 2019. To put it simply, an offset is an accounting mechanism representing the reduction, removal, or avoidance of 1 tonne of stored CO₂. The basic idea is that a business, government, or an individual emitter - such as Microsoft, Amazon, and Shopify - can support decarbonization beyond their own environmental footprint by paying for emission reduction efforts.

Source: mckinsey.com

Offsets are important because they create the financial incentives that shift conventional economic motivations to protect, improve, and expand the potential of a natural ecosystem. But as it stands, carbon credit monitoring, reporting, and verifying (MRV) solutions are expensive, high-touch, and time-consuming. And to make a reliable NCS offset, there are three key principles to consider: 

• Additionality: A carbon project is considered “additional” when its impact, emission reductions/removals, would not otherwise occur. For example, would a landowner preserve an area of grassland anyway without the proceeds from the sale of carbon credits? 

• Permanence: In order for an NCS to be effective, it must not re-release its stored carbon back into the atmosphere, thereby reversing its positive effects. The current thinking is that the benefits of an offset should persist for at least 100 years. But this is difficult to guarantee and forecast because natural systems are increasingly vulnerable to global warming, pests, and disease. 

• Leakage: In the case of offsets, leakage can occur when efforts to reduce CO₂ in one place shift emissions to another location or sector where they remain uncontrolled and uncounted. For instance, protecting a specific section of forest may cause loggers to go elsewhere.

In conjunction, all of these factors have historically limited the eligible pool of NCS projects that are eventually financed and implemented. But this does not mean that nature-based offsets and carbon removal should be dismissed as impractical solutions. Instead, we need a new suite of tools to unlock the power of nature and diversify our toolkit for addressing the climate and biodiversity crisis. For ecosystem services markets to succeed, new solutions must add transparency and validity to carbon projects while driving down overhead costs and increasing market participation. In doing so, we can decarbonize our economy and better align heavy-emitting industries with sustainability goals. At ReGen Ventures, we are identifying and scaling technologies that have the ability to catalyze whole systems transformation. If this sounds like something you are working on, get in touch!