Back to all friday 5
Friday 5
Credit where credit is due
4 November, 2022
Forest-based carbon credits, though popular, continue to generate controversy – how do you ensure the forest will still be there in a hundred years? What about the fact that a tree planted today will take years to make any real contribution to carbon removal? Are they the right trees, in the right place, supporting rather than damaging biodiversity? And trees are still worth more dead than alive. But that could be about to change. Enter, ‘sovereign credits’.
‘Sovereign credits’ can be issued by forested nations, providing financial assets to empower them to keep their trees standing and attract financing. The proceeds from sovereign carbon credit sales are used to further cut emissions and build climate resilient infrastructure.
Gabon, on Africa’s west coast, is 88% rainforest. It has recently completed the verification of 90m sovereign national carbon credits under the UN programme to reduce emissions from deforestation and forest degradation (REDD+). And Papua New Guinea will follow soon.
Sovereign credits trade on the global market, so unlike normal carbon credits, businesses are paying for an asset rather than incurring an expense. Even better, through purchasing soverign credits businesses and other investors can align their net zero targets with the Paris Agreement.
This initiative is even more important in light of a new analysis by the University of Melbourne, revealing that countries’ climate pledges are dangerously over-reliant on inequitable and unsustainable land-use to capture and store carbon. Stopping deforestation in the first place would help prevent this.
As we enter the COP27 launch weekend, Gabon’s announcement demonstrates climate innovations being led by governments of the global south. We cannot underestimate the pressure to cut down trees. Many countries rely on deforestation to support their economies, from oil drilling, timber to agriculture. Sovereign credits could offer a solution for voluntary markets to channel urgently needed finance to protect countries against the worsening climate and continue reducing emissions.
By Alice Railton