WEF, McKinsey see natural climate solutions boosting emission reduction

The World Economic Forum and McKinsey believe the adoption of natural climate solutions (NCS), could provide up to one-third of the emissions reduction needed to achieve a 1.5-degree pathway at a lower cost than other methods of emissions abatement, while also stemming the loss of nature.

Based on a recent report from the Forum and McKinsey, it is believed that NCS offers so much potential, and in particular, is scalable, thereby accounting for the rise in demand for such natural solutions.

According to the promoters, NCS consists of conservation, restoration, and land-management actions that either prevent emissions or remove carbon dioxide from the atmosphere.

Under the Paris Agreement, the rise of global temperatures should not exceed 1.5 degrees Celsius above preindustrial averages, which will require cutting net emissions of greenhouse gases roughly in half by 2030, and to zero by 2050.

This environmental priority is converging with another one: the protection of nature, which sustains over half of the global economy. Both priorities, while formidable, can nevertheless be met with various solutions.

Current analysis by the World Economic Forum and McKinsey suggests that in 2020, the carbon credits from NCS that were purchased on voluntary markets accounted for the abatement of about 32 MtCO2 of emissions. “That amount represents about 40 per cent of all the voluntary carbon credits that were retired—considerably more than the five per cent of carbon credits, equivalent to 0.35 MtCO2, that NCS yielded in 2010.

The analysis also revealed that the increase in demand for NCS credits could continue. Net-zero commitments by companies have more than doubled in the past year, and the scale of NCS and offset pledges is rising accordingly. Based on net-zero pledges from more than 700 large companies, there are already commitments to buy about 0.2 GtCO2 of carbon credits by 2030.

Specifically, companies such as Unilever and PepsiCo have committed to using NCS to satisfy demand for carbon credits. Some are also investing directly in nature. For example, Amazon is investing $10 million to restore 1.6 million hectares of forest in the United States, and Nestlé is investing in ending deforestation and forest restoration in Ghana and Côte d’lvoire.

Promoters also argued that abating emissions with NCS typically costs less than technological solutions such as carbon capture, utilization, and storage. “In most cases, NCS cost between $10 and $40 per ton of CO2, with variations between geographies and project types. Avoided deforestation has the greatest abatement potential overall, but also some of the highest costs (for example, approximately $30 per ton of CO2 in Brazil and Indonesia).”

Furthermore, they said NCS deserve attention because investments in nature can, if made well, produce an array of co-benefits in addition to emissions abatement.

In particular, analysis carried out by the Woodwell Climate Research Center shows that the three largest NCS, by emissions-abatement potential, also have environmental co-benefits for biodiversity, soil health, and water quality.

The Center estimates that “Scaling up natural climate solutions can therefore help close the biodiversity–finance gap, which was recently estimated at between $722 billion and $967 billion per year over the next 10 years. At 7 GtCO2 in annual potential by 2030, at an illustrative price per ton of $20, capital flows toward NCS could exceed $100 billion.”

It is also believed that opportunities to deploy these funds exist across the world, especially in the Global South. “Rural communities, in particular, can benefit from the climate resilience that NCS can create. Restored coastal wetlands, for example, can absorb incoming wave energy, reduce flood damage, and provide protection from storms; healthier soil increases the resilience of cropland; and fire management can mitigate the risk of catastrophic wildfires.”

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