Carbon markets, corporate mitigation strategies and forest-based offsets

By Gabriel Labbate, UNEP REDD+ Team Leader

This subject will be the topic of a UNEP-hosted session at GLF Luxembourg on 30 November. Learn more on how to join here.

The science

The science behind global warming is now unequivocal – and its effects are becoming increasingly clear. Last year, the Intergovernmental Panel on Climate Change (IPCC) painted a stark picture of the crisis that the planet faces. Likewise, a recent global assessment by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) found around 1 million species at risk of extinction.

The scale of action required

UNEP’s 2018 Emissions Gap assessment shows that the world will need to triple its original level of ambition to stay within 2 degrees Celsius warming – or increase it fivefold to limit warming to 1.5 degrees Celsius. While these goals are still achievable, they will require significant measures to prevent and reduce greenhouse gas emissions. These include rapidly reducing the share of fossil fuels in the global energy mix, increasing the use of non-carbon energy sources and improving land-use practices such as agroecology and improved forest management.

The need for carbon sequestration

An increasing number of experts, though, are saying that’s not enough – and that large amounts of carbon dioxide (CO2) will need to be actively removed from the atmosphere. This could be done using unproven hi-tech solutions such as direct air capture or enhanced weather technologies. But there are already proven nature-based solutions that enhance natural carbon sinks, such as afforestation, reforestation and restoration. In fact, forests are currently the only proven means of removing and storing atmospheric CO2 at a scale that can meaningfully contribute to limiting global warming. There is a growing consensus that such natural climate solutions can provide about one-third of the greenhouse gas (GHG) emissions reductions needed by 2030.

Finance for forest restoration

REDD+ activities like forest restoration and enhancement of carbon stocks present some of the greatest opportunities for mitigation at the scale required. In addition, they could also deliver substantial co-benefits, including conserving biodiversity, building sustainable livelihoods, and facilitating climate adaptation, thereby addressing both the Paris Agreement on climate change and the Sustainable Development Goals (SDGs). However, large-scale forest restoration will require new financing models, including private-sector financing – particularly because of the sheer amount of resources needed. A target of 350 million hectares of restored land could need total investments above USD 837 billion between now and 2030.

Forest restoration as a transitional strategy

For some industries, ambitious mitigation goals will require over a decade to be achieved. These include aviation, cement, steel and transport, all of which will need transitional mitigation strategies while variables like technology, the energy matrix and finance evolve to make low-carbon business models feasible. For these industries, direct investment in forest  restoration can serve as a transitional strategy: a company commits to restore a given area of land and retains a share of the carbon offsets generated. These carbon offsets must have solid social safeguards and environmental integrity so that transactions are compatible with Article 6 of the Paris Rulebook and aligned with the Warsaw Framework (REDD+).