Unlocking the planet-saving potential of crediting natural climate solutions

With contributions from Julia Paltseva, senior analyst, Britta Dosch, analyst, and Christine Gerbode, senior research analyst, all at Environmental Defense Fund. 

Gardens of the Queen archipelago off the coast of Cuba

Earth’s forests, oceans, wetlands and other natural landscapes have the power to pull carbon out of the atmosphere and to store it – making well-managed ecosystems key resources in the fight to halt climate change. The latest report from the Intergovernmental Panel on Climate Change found protecting these resources offers one of the highest mitigation potentials.

Efforts to keep healthy ecosystems intact, restore those that have been cleared or degraded, and improve how these landscapes are managed can have huge benefits to people and the planet, like improving water quality or protecting biodiversity. When these efforts also increase carbon storage or avoid greenhouse gas emissions, they are known as natural climate solutions, or NCS.

Healthy ecosystems around the world are disappearing rapidly, as more of the planet is degraded or converted to other uses. This continued loss could have dire consequences for the entire globe through its effect on climate, while doing particular harm and injustice to the Indigenous and local communities who have historically stewarded many of these crucial environments.

Scaling up global funding and support for NCS activities is an opportunity to limit climate damage while enhancing and protecting the enormous good these ecosystems provide – and benefiting the local people carrying out these important tasks.

One way to do this is to incorporate NCS activities into global carbon markets by crediting emissions. Environmental Defense Fund is now leading a collaborative process to lay out the key considerations and challenges of supporting NCS with the potentially powerful tool of crediting emissions reductions and removals—and of making sure the systems to support this tool are ethical, equitable and effective at the much larger scales of ambition needed to meet the moment.

Enabling climate ambition through NCS crediting and trading

Natural climate solutions have the potential to fill the gap between the globe’s GHG mitigation needs and what is possible through fossil fuel reductions alone – around 20% of the emissions reductions needed to keep the planet below 1.5 or 2 C degrees of warming.

Well-designed NCS crediting and trading systems can help close this gap at a lower cost and at a faster pace because emissions reductions and removals achieved through NCS are often less expensive per unit of CO2 equivalent than those achieved by other means. NCS have the potential to vastly increase the scale of mitigation ambition possible in the near future, especially if the international community can fund them through a well-designed crediting market.

A 2019 study by EDF researchers demonstrated that international carbon trading markets could allow the world to achieve nearly double the climate mitigation from 2020 to 2035 for the same cost as countries achieving these targets on their own; nearly half of these simulated gains came from international trading of forest-based NCS activities.

Recognizing the many benefits of forest conservation and other NCS to climate mitigation and beyond, many countries, sectors and companies wishing to meet their climate goals by protecting nature have shown an increasing interest in providing finance for NCS through carbon credit markets.

The total annual value of voluntary credits sold last year broke $1 billion for the first time. Over half of this volume ($544 million) came from trade in credits based on forest conservation and related activities. The price of these NCS-based voluntary credits also rose by a third between September and December alone.

High integrity NCS crediting is an important complement to the world’s broader decarbonization efforts. Done fairly and well, it can empower companies, governments and local stakeholders to continue to increase funding for climate mitigation and ecosystem protection, while supporting social, environmental and economic benefits (such as strengthened land tenure and recognition of self-determination) for the Indigenous and local communities at the heart of these goals. But the details of the complex technical and political aspects of designing and deploying NCS crediting systems can be a challenge to navigate – and those complicated details matter immensely to ensuring that crediting is effective and fair.

Shedding light on the NCS crediting landscape

There currently is no single universally accepted framework for ensuring integrity in NCS crediting systems. Confusion and conflicting opinions on best practices and standards of quality for credits are pervasive in the NCS space, creating obstacles for companies and governments interested in participating in the NCS carbon credit marketplace.

To help remove these obstacles, EDF and partner organizations are exploring the key issues at play, articulating critical questions and proposed solutions in a series of briefs that will culminate in an NCS Crediting Handbook and Briefing Series.

The handbook and the briefs will address mistrust and confusion in the sector by providing accessible guidance for potential NCS credit buyers, sellers and other stakeholders to seek and support high-integrity NCS credits. These resources will also be useful as a training textbook and reference manual for government officials, consultants, academics and civil society actors.

Advancing the integrity of credits, along with ensuring the ethical and meaningful inclusion of local communities in the development and management of these systems, is foundational to increasing confidence and ultimately participation in the NCS credit marketplace—and thereby harnessing market forces to increase potential funding for NCS worldwide.

Clearing the path toward action

Successful implementation of NCS at global scales will require carefully designed systems, built on a nuanced understanding of many different technically complex topics.

The NCS Crediting Handbook will introduce the main considerations necessary to achieve positive outcomes through well-designed crediting systems; in the process, these resources will help unlock the potential of NCS crediting to equitably enhance global climate efforts.

Visit our NCS Crediting Handbook and Briefing Series page for upcoming briefs, and to get the latest on our work in the NCS crediting space.

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