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Can we sweep our CO2 emissions under the rug?

How businesses can contribute to carbon sequestration

Gabriella Cevallos, Senior Consultant at Deloitte
On May 26th, 2021 |
3 mins reading time
5
How businesses can contribute to carbon sequestration

    Gabriella Cevallos
    Gabriella Cevallos
    Senior Consultant at Deloitte
    Key takeaways
    • Nature-based carbon sequestration solutions could contribute as much as a 0.4°C reduction in temperature under a +1.5°C global warming scenario by 2100.
    • In the agricultural sector, for example, the implementation of certain practices could sequester 0.8 GtCO2/year globally (compared to about 42 GtCO2 emitted in 2017).
    • However, if temperatures were to rise by 3°C, this would decrease the capacity of natural ecosystems to store carbon.
    • For Gabriella Cevallos, there is a real interest for companies to invest in the implementation of carbon sequestration practices.

    As the Inter­gov­ern­men­tal Pan­el on Cli­mate Change (IPCC) remind­ed us in 2018: lim­it­ing glob­al warm­ing to +1.5°C by 2100 will require a rig­or­ous decrease of our emis­sions but also the devel­op­ment of mea­sures to increase car­bon seques­tra­tion. Yet, it should be not­ed that only car­bon seques­tra­tion poten­tials asso­ci­at­ed with the use of bioen­er­gy with car­bon cap­ture and stor­age (BECCS) as well as plant­i­ng new trees were con­sid­ered in these models. 

    Accord­ing to Cli­mate Action Track­er, we are cur­rent­ly still on track for a rise in tem­per­a­ture of 2.7°C–3.1°C1. In this con­text, var­i­ous recent pub­li­ca­tions high­light the cru­cial role of tech­no­log­i­cal2 advances and nature-based solu­tions. Data sug­gests that, if imple­ment­ed, nature-based solu­tions could help reduce tem­per­a­ture by 0.4°C in a glob­al warm­ing sce­nario of +1.5°C by the year 21003.

    How­ev­er, these nature-based solu­tions would not be able to con­tribute this much in the case of a +3°C tra­jec­to­ry. Indeed, the capac­i­ty of car­bon seques­tra­tion in bio­mass would be altered by rise of tem­per­a­tures that is too high. And, con­trary to cur­rent mod­els, the range of nature-based solu­tions is much broad­er than just the use of BECSS and afforesta­tion (i.e. plant­i­ng trees). Oth­er nature-based solu­tions avail­able fall into three cat­e­gories: (1) con­serv­ing cur­rent car­bon stocks (e.g., by stop­ping defor­esta­tion), (2) restor­ing degrad­ed ecosys­tems, and (3) imple­ment­ing new prac­tices that store car­bon. In this arti­cle I will focus on this third solution. 

    Increas­ing car­bon seques­tra­tion

    As an exam­ple, imple­ment­ing new farm­ing prac­tices in the agri­cul­tur­al sec­tor, such as cov­er crops or reha­bil­i­tat­ing degrad­ed soils, would make it pos­si­ble to cap­ture approx­i­mate­ly 0.8GtCO2/year4 on a glob­al scale (com­pared to ~42GtCO2 emit­ted in 2017)5. Fur­ther­more, a nation­al-scale diag­nos­tic per­formed in France con­firmed the exis­tence of a max­i­mum poten­tial6 of 29 MtCO2/year – equiv­a­lent to 39% of French agri­cul­tur­al emis­sions in 2016 (exclud­ing land use). To roll this out on a nation­wide scale would involve imple­ment­ing new mea­sures such as extend­ing the use of inter­me­di­ate crops, agro­forestry prac­tices, adding tem­po­rary mead­ows and increas­ing the dura­tion of their use. 

    More­over, vol­un­tary car­bon mar­kets are one of the main ways to pro­mote car­bon seques­tra­tion efforts. The word “mar­kets” is used in the plur­al because exchanges between project lead­ers and buy­ers are done at dif­fer­ent scales – either inter­na­tion­al or local. At the inter­na­tion­al lev­el, car­bon projects are backed by labels and record­ed in a reg­istry sys­tem to ensure the trace­abil­i­ty of cred­its and trans­ac­tions between sub-nation­al actors (com­pa­nies, pri­vate indi­vid­u­als…) locat­ed in dif­fer­ent regions of the world. 

    Between 2018 and 2020, 401MtCO2 of car­bon cred­its were issued on the inter­na­tion­al vol­un­tary mar­kets7. The aver­age price observed for these car­bon cred­its, across all cat­e­gories, is 2.7€/tCO2 while projects involv­ing car­bon stor­age in the for­est indus­try hold the top posi­tion with an aver­age price of 7.5€/tCO2. These prices remain low, how­ev­er crit­ics often point out the lim­its of such invest­ments in these projects. Par­tic­u­lar­ly when they are used as an easy, low-cost way to demon­strate an ambi­tious cli­mate strat­e­gy with­out tak­ing sig­nif­i­cant CO2 reduc­tion measures. 

    Mobil­is­ing car­bon label certifications 

    One of the trends iden­ti­fied for vol­un­tary car­bon mar­kets by 20308 is a rise in demand for local car­bon projects – mean­ing ini­tia­tives devel­oped in the buyer’s coun­try – which res­onate more with the expec­ta­tions of com­pa­nies. The price of car­bon cred­its com­ing from these mar­kets could vary between 40€/tCO2 and 75€/tCO29 which would be more in line with the iden­ti­fied costs for the devel­op­ment of car­bon seques­tra­tion projects. This is par­tic­u­lar­ly true for the French agri­cul­tur­al. Half of projects would gen­er­ate costs esti­mat­ed at ~49€/tCO2. These pro­jec­tions are in line with the dynam­ics observed in recent years which show a rise of car­bon label cer­ti­fi­ca­tions at the nation­al lev­el in Europe but also on oth­er con­ti­nents10.

    Thus, the devel­op­ment of cer­ti­fi­ca­tion labels, like the Label Bas-Car­bone in France, are a chance for com­pa­nies to explore poten­tial oppor­tu­ni­ties that already exist in their val­ue chains. These mech­a­nisms make it pos­si­ble for com­pa­nies to ini­ti­ate projects while han­dling poten­tial risks asso­ci­at­ed with these (non-per­ma­nence, addi­tion­al­i­ty, uncer­tain­ty). In oth­er words, it makes it pos­si­ble to take action, while pro­vid­ing a frame­work to make the most of these efforts. 

    The advan­tages asso­ci­at­ed with an invest­ment in such projects are numer­ous: bet­ter upstream man­age­ment of the val­ue chain, a reduc­tion of emis­sions out­side a company’s strict perime­ter but still with­in its val­ue chain, con­tri­bu­tion to glob­al car­bon neu­tral­i­ty, strength­en­ing ties with raw mate­r­i­al pro­duc­ers and devel­op­ing a ter­ri­to­r­i­al foothold. Upstream knowl­edge of a company’s val­ue chain is also a pre­lim­i­nary step to face anoth­er chal­lenge: increas­ing its resilience in the face of cli­mate change, through adap­ta­tion measures. 

    We must remain real­is­tic: the access to vol­un­tary car­bon mar­kets to sup­port the fund­ing of car­bon seques­tra­tion projects is not a mir­a­cle solu­tion to align all com­pa­nies on a track of 1.5 °C. Nonethe­less, this frame gives com­pa­nies the oppor­tu­ni­ty to strength­en their val­ue chain and to han­dle the risks asso­ci­at­ed with such prac­tices. This is part of a wider range of levers that com­pa­nies have at their dis­pos­al to begin the tran­si­tion towards a low-car­bon mod­el. We must cap­i­talise on this!

    1Accord­ing to the Cli­mate Action Track­er (CAT), from the Intend­ed Nation­al­ly Deter­mined Con­tri­bu­tions (IND­Cs) sub­mit­ted by States to the Sec­re­tary of the Unit­ed Nations Frame­work Con­ven­tion on Cli­mate Change (UNFCCC). Updat­ed in May 2021.
    2Tech­no­log­i­cal solu­tions range from direct air cap­ture and stor­age of CO2 (DACS) in geo­log­i­cal reser­voirs to car­bon cap­ture and util­i­sa­tion (CCU) to recy­cle car­bon diox­ide and use it as a raw mate­r­i­al, for exam­ple in the chem­istry sec­tor.
    3Girardin & al, Nature-based solu­tions can help cool the plan­et — if we act now (2021)
    4Roe & al, Con­tri­bu­tion of the land sec­tor to a 1.5°C world (2019)
    5IPCC, Glob­al Warm­ing of 1.5°C (2018).
    6Max­i­mum poten­tial involv­ing the imple­men­ta­tion of all the stor­age prac­tices on all the agri­cul­tur­al land avail­able in France.
    7Ecosys­tem mar­ket­place car­bon off­set dash­board
    8TCVSM, Task­force on scal­ing vol­un­tary car­bon mar­kets – Final report (2021)
    9Indica­tive prices from a mod­el­ing exer­cise, to be con­sid­ered cau­tious­ly.
    10In Europe (Label Bas-Car­bone in France, Reg­istro Huel­la de Car­bono in Spain or Wood­land Car­bon Code in the Unit­ed-King­dom), in North Amer­i­ca and oth­ers are under devel­op­ment in Asia and in Latin Amer­i­ca.

    Contributors

    Gabriella Cevallos
    Gabriella Cevallos
    Senior Consultant at Deloitte

    Gabriella Cevallos assists companies in integration and deployment of issues around climate into their business strategy. A graduate of Sciences Po Toulouse and AgroParisTech, she has worked in Ecuador to support local governments on environmental projects and within the think-tank I4CE on issues related to the land sector and the voluntary carbon market.