Forest Trends’ Ecosystem Marketplace report, "Fertile Ground: State of Forest Carbon Finance 2017," has been released. Natural Capital Partners’ Global Markets Manager, Christiaan Vrolijk, commented on the findings in a webinar hosted by Ecosystem Marketplace.

Fertile Ground: State of Forest Carbon Finance 2017

If tropical deforestation was a country, its emissions would be the third-largest in the world, behind China and the United States. Halting deforestation and encouraging replanting practices could contribute more than one third of the emissions reductions required by 2030 to limit global warming to 2°C, as stipulated in the Paris Agreement.

This statement sets the scene for the annual report from Ecosystem Marketplace, which provides an update on the status of global forest carbon finance projects, as well as which companies are buying offsets from them, where from, how much for, and why. The report states that more than half of projects reporting on their funding sources received their entire revenue from the sale of forest carbon offsets.

Christiaan Vrolijk commented: “This report demonstrates that voluntary carbon finance continues to be an important funding mechanism for preventing deforestation and forest degradation around the world. We are pleased that many of our clients have harnessed the opportunity to purchase offsets from a variety of forest conservation projects, which avoid emissions while contributing to sustainable development.

In fact, the report found that almost all forest carbon projects provide benefits beyond emissions reductions, with the most-cited co‑benefits being the employment and training of local people, the provision of community services, and the protection of biodiversity. “Each forest project is unique,” said Christiaan. “Some of our REDD+ projects contribute to 16 of the 17 Sustainable Development Goals (SDGs), and this is very attractive to companies seeking to demonstrate climate action and leadership.”

Indeed, 92% of the offsets sold from forest projects in 2016 were purchased by end-buyers for whom project co-benefits had “some” or “major” influence on their decision to enter the market.

Key report findings include:

Carbon finance directed at forestry projects goes towards keeping trees standing, replanting previously deforested areas, and adjusting farming and land management techniques to increase the land’s ability to remove carbon from the atmosphere. Standards like the VCS certify that these projects are additional, and have mechanisms in place to ensure the trees remain standing and sequestering carbon.

Looking forward, the report states that the largest potential source of future demand lies with the aviation industry group, which will be in part driven by the Carbon Offsetting Scheme for International Aviation (CORSIA) in 2021. It also states that private sector support will be necessary to bridge the gap between country commitments and the Paris Agreement’s goals.

We are seeing increased commitment and demand from our clients for carbon credits, which is reflected in the Ecosystem Marketplace report showing more retirements compared to previous years, with clients reporting under various schemes such as the GHG Protocol and CDP, and taking on voluntary targets such as Science Based Targets,” commented Christiaan.

The full report is available here.