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Ahead of the 2019 International Day of Forests, Jonathan Shopley reflects on two decades of Natural Capital Partners’ work within the private sector to finance the establishment and conservation of forests around the world - from the seeds of an idea around a Glastonbury campfire to a global movement in support of natural climate solutions.
The global response to climate change took root when the UN Intergovernmental Panel on Climate Change (IPCC) published its first report in 1990. It stated: “We calculate with confidence that: ...CO2 has been responsible for over half the enhanced greenhouse effect; long-lived gases require immediate reductions in emissions from human activities of over 60% to stabilise their concentrations at today's levels...” So began three decades of complicated inter-governmental negotiations that delivered the flawed Kyoto Protocol, and tee’d up its successor - the yet to be implemented Paris Agreement. During that time global greenhouse gas (GHG) emissions have almost doubled.
The roots of our business track back to the mid-1990s, inspired by a heady mix of IPCC findings and rock music. Sitting around a backstage campfire at the UK’s Glastonbury festival, our founders bemoaned the cloying and climate warming emissions from diesel generators powering the event – a blot on an otherwise bucolic scene. When someone said “we should plant a forest to soak up the CO2 and clean up our act,” the seed of our business was planted. Future Forests was founded in 1997, the same year in which the United Nations Framework Convention on Climate Change adopted the Kyoto Protocol.
The tree became a powerful icon for action on climate – a nature-based machine that turns CO2 into wood and oxygen. We calculated the tonnes of CO2 sequestered by forestry projects in the temperate UK and retired those tonnes to support the claims of individuals paying to make their holidays, lives, weddings and more carbon neutral.
Before the Kyoto Protocol came into force in 2005, voluntary action, ahead and beyond climate policy and regulation, shot to prominence. For us, those halcyon days were driven in part by celebrity support that stemmed from the Glastonbury moment. Many bands made their CDs (remember those?) carbon neutral; Glastonbury Festival supported the establishment of two forest projects to offset diesel emissions from the 2002 event; and Roland Emmerich, director of the Day After Tomorrow, made the production of that signature climate disaster movie carbon neutral. These early adopters were joined by progressive businesses which took their operations carbon neutral to signal commitment to mitigating their climate impacts to their customers.
In 2001, countries supporting the Kyoto Protocol adopted the Marrakesh Accords – effectively an operating manual setting out how countries could implement the provisions of the Protocol. Important within the Accords were flexible mechanisms by which countries could collaborate to accelerate emissions reductions around the world. The Clean Development Mechanism (CDM) set out how developed economies could fund climate mitigation in developing economies and provided the master plan for carbon offsetting.
The CDM established methodologies to measure and verify emissions reductions. However, concerns about the permanence of emission reductions through forest sequestration (how to guarantee that trees would remain standing, holding the carbon, over the long term) meant that such approaches were very limited. It was left to independent third-party standards to use the approaches of the CDM to develop methodologies that were used to support forestry projects with carbon finance.
In the absence of independent standards, we had relied upon periodic reviews of our forest projects and our third-party audited buffer to manage the permanence issue. However, as the voluntary carbon markets evolved and standards such as the Verified Carbon Standard (VCS) developed, we stopped including forestry in our portfolio of emission reduction projects until we were confident that they had a robust process for guaranteeing permanence in place.
In 2007, the VCS (since rebranded as Verra) launched its Agriculture, Forestry and Other Land Use (AFOLU) programme, and most importantly, backed it with an independent buffer to address the permanence issue. That enabled us to offer our clients the forestry solutions that many valued highly within their emission reduction programmes: Companies understood forestry’s vital importance as a carbon sink able to remove carbon dioxide from the atmosphere at scale; and, that unchecked deforestation is responsible for between 10 and 15% of annual GHG emissions.
Forestry initiatives like the VCS AFOLU programme stimulated some compliance regimes (including California, Quebec, Colombia, South Korea) to accept forest credits within their cap, trade and offset programmes. And the importance of forestry, agriculture, and landscape management as both a source of and a sink for carbon dioxide has been increasingly recognised in the Paris Agreement. However, the scale of financial flows to forest and, more broadly, landscape protection and enhancement (including agricultural lands, grasslands, peatlands, forests at scale), do not yet make a dent on the full potential of natural climate solutions to mitigate global GHG emissions.
Natural climate solutions could provide in excess of 30% of the cost-effective GHG emissions reductions needed by 2030 to meet the Paris Agreement goals. Despite our recognition of the importance of natural climate solutions to climate, we are still struggling to find adequate sources of funding for their protection and development at scale.
Forests and Landscapes
The IPCC’s last report, published in October 2018, examined the global emission reduction trajectories required to stabilise global warming at or below a rise of 1.5°C. It calls for net zero GHG emissions from the global economy by 2050, and it highlights the essential role that carbon dioxide removal (CDR) will play in achieving that stretching target. Three decades of experience in CDR through carbon finance for forestry has proven that it is a viable and important part of the solution:
- NGOs such as the Environmental Defense Fund are building the case for carbon finance in support of large-scale forest protection projects that contribute to natural climate solutions.
- The Nature4Climate coalition of conservation NGOs promotes the role of nature as a climate solution.
- Carbon finance methodologies that have been developed by independent third-party standards such as the American Carbon Registry, the Gold Standard for the Global Goals and Verra provide a robust approach to channelling private sector funds to CDR.
Canopy – the top storey
The canopy or top storey of a mature forest is the crowning glory of a complex natural ecosystem – that nature-based machine which protects biodiversity, sequesters carbon, maintains nutrient cycles and plays an important role in progressing a number of the Sustainable Development Goals (SDGs).
From very humble beginnings, experience and expertise built up through hundreds of reforestation, afforestation, forest improvement and forest conservation projects around the world have laid down a solid foundation from which landscape-scale programmes that support resilient ecosystems can be built.
We are nowhere near the super, organic efficiency of a rainforest canopy. However, I am optimistic that business’s innate instincts to protect and enhance the natural systems that provision our global economy will ensure that natural climate solutions realise their potential and flourish.