An online interactive mapping dashboard that enables simple assessment of carbon mitigation potential and associated return on investment in forest areas has been launched.
- A research-based tool showing benefits of carbon projects from mapped forest areas has been launched by the Centre for Nature-based Climate Solutions (CNCS).
- It is intended to catalyse carbon finance projects around forest and mangrove protection.
- With the growing swell of financial service providers looking to align their capital with biodiversity and climate change projects, the tool could trigger interest and investment.
The carbon prospecting product is a result of ongoing research by the Singapore-based Centre for Nature-based Climate Solutions (CNCS) who has developed it with ST Engineering Geo-Insights.
It combines multi-layered geospatial information with data on values for carbon projects and works with a range of inputs to model financial project costing scenarios with projected carbon price assumptions.
The geospatial data and models presented in the dashboard are based on peer-reviewed science published by CNCS researchers in international scientific journals. Forest carbon project benefits, co-benefits and ROI are indicative values based on simplifying model assumptions.
The datasets address the following areas: Investible and profitable forest carbon, investible and profitable mangrove carbon, nitrogen retention for water quality regulation, pollination services and key biodiversity areas protected.
Profitability of forest carbon quantified – carbon price needs to increase
The climate mitigation potential (in tCO2e ha-1yr-1) and relative profitability of forest areas globally were modelled, based on their Net Present Value (in $ ha/-1yr-1), if protected. The cost of project establishment and maintenance, price appreciation, price of carbon, the discount rate and the duration of carbon project are factored in.
The researchers found that 1.8 (±1.1) GtCO2e/ year globally could be garnered by investing in carbon through tropical forest protection and that a total figure of $46 billion/ year in net present value could be generated. Split geographically, Asia Pacific would account for $24.6 billion/year of this, Americas $19.1 billion and Africa $2.4 billion/ year. However at current carbon prices, around 80% (1.24 billion hectares) of forest carbon sites would not break even over the project lifetime
Natural capital service provider
The nitrogen retention model is a measure of the forest’s ability to retain pollutants. It is another case of the forest providing a regulatory service of value. The same scientific research is applied to the other areas with financial benefits attached. Here natural capital has found a medium.
As a simple to use dashboard available to anyone, it invites broad access and may incentivise engagement with REDD (reducing emissions from deforestation and forest degradation) projects.
“This made-in-Singapore dashboard could be a game-changer for nature-based climate solutions globally. Carbon finance has the potential to channel much-needed funding to forest and mangrove conservation to tackle climate change and safeguard precious biodiversity. However, the lack of timely access to reliable data on the costs and benefits of prospective projects has been a major obstacle for many nature-based carbon projects to get off the ground. With this platform, policymakers and investors have the information they need at their fingertips,” said Professor Koh Lian Pin, Director of NUS CNCS.
Investors looking for biodiversity products
Voluntary carbon markets which currently occupy a fraction of capital compared to regulated carbon markets are poised for explosive growth as corporates struggle under the obligation to meet ever stricter net zero targets.
David Antonioli, CEO of Verra, said at a Climate Transformed conference on the 13th September that the most important thing in the evolution of the voluntary carbon markets “was the recognition that natural carbon solutions were a key part of the solution.”
Nature based solutions (NBS) are gaining popularity among asset managers. Institutional investors are increasingly carrying out climate screening in their investment portfolios. What is the case currently is that commitments are outpacing actions as found by Canadian financial services firm Manulife who analysed 75% of the MSCI All Country World Index’s bank sector weight.
Some asset managers such as AXA are setting up biodiversity exchange traded funds. All of this demonstrates that the scope is large for financial products based on the conservation of biodiversity and carbon. Green bond issuance has also escalated.
Another impetus comes from a group of major global financial institutions calling on finance ministers to commit to significant biodiversity commitments, to have an ambitious Global Biodiversity Framework.
The dashboard is a product of ongoing research conducted at CNCS, partly supported by the Singapore National Research Foundation, Temasek, MAC3 Impact Philanthropies; and in collaboration with partners including HSBC, RGE and the World Economic Forum.