Beyond Carbon -
Financing Biodiversity

The trajectory of the carbon offset market looks set, with the launch sequence initiated.  The global voluntary carbon market doubled between 2017 and 2019 and with the likes of visionary Microsoft founder Bill Gates and ex-Bank of England Governor Mark Carney collaborating on a taskforce aiming to scale this market, some estimates put the value of the voluntary carbon market growing from around $300 million today to $25 billion by 2030.  When you combine this with general market sentiment (barely a day goes by without another corporate or financial institution announcing their net-zero strategy) the outlook for those able to help produce these in-demand carbon credits is positive.

Based on today’s carbon price, and that which is forecast, it is not a stretch to say that the effects on how we manage the land will be transformative.  Activities like large-scale native woodland creation and degraded peatland restoration - which were previously nice to do but financially prohibitive - can now been seen as cash-generating and capital-enhancing activities.  If the carbon price continues to ramp up as expected it will bring into play more “productive” areas of land and, in relation to forestry, may change the dynamic and objectives of new woodland creation.  The fastest growing trees in the UK, usually the exotic conifers grown in timber producing plantations, are currently not rewarded in carbon credit generating terms when compared to slower growing native trees.  The recognised carbon credit standard in Britain does not recognise the multi-rotation nature of timberland forests or the downstream benefits of timber as a low-carbon product which can displace higher emission materials such as concrete, steel and plastic. But it does encourage new worthwhile biodiverse native woodland and peatland restoration schemes, which is no bad thing.

It is not just in the UK where the fastest growing trees (and therefore fastest at soaking up atmospheric carbon), often tend to be plantation grown non-natives.  The same can be said for say pinus radiata in New Zealand or eucalyptus in Brazil.  These trees can be seen as crops, primarily grown with timber production in mind. But let’s not forget we do need sustainably grown timber to feed the global demand for this product which is set to triple over the next 30 years. Nonetheless, a balance needs to be struck when producing any raw material with enhancing and restoring biodiversity and it does not need to be an either / or scenario.

Cairngorm sunrise

Although the focus is largely on carbon finance at present it must be remembered that we are also in the midst of a biodiversity emergency.  As the recent far-reaching Dasgupta Report highlighted, half of global GDP is dependent - in one form or another - on nature, yet over the decades we have been increasingly drawing down on this stock of nature and not replenishing the inventory. 

As the worlds of nature and finance continue to collide, the intersection of ideas is fascinating.  Opportunity can be seen in Nature-Based Solutions or Natural Climate Solutions which do more than “just” sequester carbon.  With the melting pot of new ideas being generated as people from different backgrounds such as the more “traditional” land-based primary industries, financiers and green-tech collaborate, further progress and financial models will be unlocked.  In the short to medium-term it is not too difficult to hypothesise that we will move beyond generating just one carbon credit to delivering one biodiversity credit too.  This will benefit projects which may utilise slower growing natural solutions, which are not such prolific carbon sequesters but do deliver multiple other benefits such as water catchment improvements, reducing desertification and biodiversity enhancement. If we can work to mobilise the flow of society’s capital around the world to places in need of environmental restoration and where sustainable raw materials can be produced in tandem, then, in my view, we will be forging a worthwhile path to the more sustainable future we all need.

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