Despite the pandemic, corporate commitments to net zero greenhouse gas emissions continue to grow. Seventeen companies made such commitments last month during Climate Week, and now countries such as China, Japan and South Korea have made this commitment as well. A recent study by Vivid Economics examined how getting to net zero emissions can be accomplished and what role investors can play. The report demonstrated the necessity for the development and deployment of Negative Emissions Technologies (NETs), which fell into three groups: nature-based solutions (NBS) direct air carbon capture and storage and bioenergy paired with carbon capture and storage. Of these threepathways,NBS stands out as a significant and cost-effective NET that can be immediately deployed. The startling conclusion from this report for investors is the net present value of NBS revenues in 2050 is $1.2 trillion, which is comparable to the current market capitalization of the major oil and gas companies. The current statistics bear this conclusion out asNBS have played a major role, particularly in the voluntary market which generated two-thirds of all offsets in 2019; up from just 17% in 2015. The market for NBS will continue to grow as the report notes in 2020 alone the commitments of just 38 companiesequate to an offset demand of 90 million metric tonnes; up 50% from 2016. Others have taken note of this immense opportunity, as the former Bank of England Governor Mark Carney is calling on more standardization in the carbon market to help it scale in a credible manner.This represents a huge opportunity for investors, but also new risks to understand and manage. But the bigger story is the multitude of benefits climate driven efforts can bring the restoring and enhancing natural ecosystems on a large scale.
Groups have already shown interest and began developing carbon offset projects based on the new methodology. Indigo Ag has announced prospective buyers for these offsets that will be certified under CAR’s methodology. The announcement of these commitments demonstrates the high interest from companies in offsets that provide payments to farmers. Once demonstrated that the reduction in barriers have resulted in economically viable agricultural carbon offset projects- increased adoption can be expected.
With Big Oil Declining, Carbon Removal Could Take Its Place
Akshat Rathi and Todd Gillespie Bloomberg Green,October 27, 2020
South Korea joins Japan in making 2050 carbon-neutral pledge
KIM JAEWON, Nikkei Asia, October 28, 2020
Former Bank of England Governor Mark Carney leads task force to scale global market for CO2 offsets
Michael Holder, GreenBiz, September 10, 2020