Why the market for 'blue carbon' credits may be poised to take off
Off the shores of Virginia, vast meadows of seagrass sway in the shallow waters. Over the past two decades, conservation scientists have spread more than 70 million seeds in the bays there, restoring 3,600 hectares (9,000 acres) of an ecosystem devastated by disease in the 1930s. The work has brought back eelgrass (Zostera marina) — a keystone species that supports crustaceans, fish, and scallops, and is now absorbing the equivalent of nearly half a metric ton of CO2 per hectare per year.
Now, the Virginia Nature Conservancy is aiming to turn those tons into carbon credits that it can sell for cash.
The program, run by the Virginia Institute of Marine Science (VIMS) in conjunction with the Nature Conservancy, is the first seagrass project in the world to apply for carbon credit certification with the Washington-based nonprofit Verra, the world’s largest overseer of carbon credit projects. “It’s proof of concept — that’s the important part here,” says Christopher Patrick, director of the VIMS seagrass restoration and monitoring program. “We’re not going to change global climate with this one project. But we can show it’s a viable approach.”
If successful, it will join a handful of other blue carbon credit projects around the world, the vast majority of which are mangrove restoration efforts — a trickle of blue that many anticipate will soon become a flood. So far, Verra has issued a grand total of just under 970,000 credits (representing 970,000 metric tons of CO2 equivalents) to blue carbon projects. But mangrove projects are now ramping up dramatically in scope, with one alone aiming to soak up millions of tons of CO2 equivalents a year. And scientists are working hard to account for the carbon in other ecosystem types — seagrasses, salt marshes, seaweeds, and seafloor sediments — so they, too, can enter the market.
The rules to allow these other ecosystems to claim credits are new. In 2015, Verra published its first methodology to give credits to tidal wetland and seagrass restoration, but only last September did Verra expand its rules to cover wetland conservation. That was “a very big deal,” says Jennifer Howard, marine climate change director for Conservation International. “I know of at least 20 different projects right now that are all trying to get developed and on the market in the next two years. I think we’re going to see a big explosion.”
“The market is small but growing exponentially,” agrees marine ecologist Oscar Serrano at Edith Cowan University in Perth, who has helped to catalog the capacity for Australia’s blue carbon reserves in mitigating climate change.
Amy Schmid, ecologist and manager of natural climate solutions development for Verra, says, “there’s a lot of demand for blue carbon credits.” Companies in shipping and tourism are keen to put money back into conserving the landscapes they have an impact on, she says, while offsetting their own emissions. And many of these projects offer win-win-win stories for people, biodiversity, and carbon, which boosts the price that organizations can get for their credits on the open market. Corporations, including Geneva-based MSC Cruises and Apple, have been very vocal about their blue carbon purchases and projects.
Carbon credits have been around since the late 1990s; it has long been possible to offset, say, the emissions from your wedding in California by buying carbon credits from planting trees in the Amazon. Along with Verra, other nonprofits that have sprung up to write the rule book and keep registries of carbon credit projects include the Geneva-based Gold Standard and Edinburgh-based Plan Vivo.
The carbon market in general has a checkered past, with problems surrounding double-counting of carbon cuts, the failure to channel the money to local communities, or the creation of perverse collateral damage along the way, like razing one crop to plant another for credits. These are the issues that the methodologies published by entities like Verra attempt to avoid. The Taskforce on Scaling Voluntary Carbon Markets, set up last September, is working hard to ensure future carbon credits — including blue ones — are sound. And experts agree that both companies and nations need to work hard to decarbonize first before turning to offsets for their remaining emissions.
That’s especially important since the market for all forms of carbon credits is growing fast. More than 1,600 projects registered with Verra account for 620 million tons of CO2-equivalent, enough to counteract the emissions from about 150 coal-fired power plants, with trading staying strong despite the pandemic. When parties to the UN Convention on Climate Change meet this November in Glasgow, they will hash out the notoriously thorny Article 6, which governs how countries can use carbon markets to meet their government-mandated targets. That’s expected to help guide and boost the voluntary carbon credit market.
The Taskforce’s January 2021 report concluded that demand for carbon credits will likely increase by a factor of 15 by 2030, making the market worth $50 billion. Blue carbon project planners are hoping to get their slice of that pie. UNESCO, for example, noted in its blue carbon report last month that its 50 marine Heritage Sites, which together account for 15 percent of the planet’s blue carbon assets, could finance at least part of their conservation work by claiming and selling carbon credits.
So far, though, marine-based efforts have lagged behind land-based forestation projects that offer easier, cheaper, and larger-scale operation. But the ocean’s capacity for keeping global warming in check — while also providing food, boosting biodiversity, and protecting local coasts from storms and tides — is huge. “The ocean has long been seen as a victim of climate change, but it’s also a big part of the solution,” says National Geographic explorer-in-residence Enric Sala, who studies blue carbon.
Three types of marine ecosystems have so far garnered the most attention — salt marshes, mangroves, and seagrasses. These make up only a thin blue line on global maps, but each sequesters more carbon per hectare per year than do tropical forests. Disturbing a hectare of mangroves, for example, has been estimated to produce as much emissions as plowing down 3 to 5 hectares of tropical forest. Preventing or reversing that destruction is not only good for the planet but provides a lot of “bang for bucks” in terms of investment, says Howard.
According to a 2019 High Level Panel for a Sustainable Ocean Economy report, protecting and restoring these ecosystems globally, alongside seaweed farming, could reduce emissions by as much as 1.4 billion tons of CO2-equivalent emissions annually by 2050. That’s just a few percentage points of the total cuts the planet needs to make in order to hit net zero by 2050. But for some countries, it’s huge. “For Indonesia, up to 20 percent of their national emissions come from mangroves,” notes Howard, as mangroves are converted to aquaculture and their carbon sinks are lost.
Mangrove restoration is the best studied and most advanced kind of blue carbon credit project to date. A recent assessment concluded that about 20 percent of the world’s mangrove forests are ripe for such projects, and about half of that could be affordably protected with inexpensive carbon credit prices of $5 per ton or more.
So far, only a scattering of mangrove projects are underway or in development, including in Kenya, Senegal, Sumatra, India’s Sunderbans, and Colombia, as well as a couple of marine protected areas in Madagascar and Kenya. Most aim to reduce emissions by thousands to hundreds of thousands of tons of CO2 equivalents per year. But such projects are just now hitting their stride.
“All of a sudden in the last year really we’ve gone from these very small, very few projects to a real scaling up,” says coastal geomorphologist Steve Crooks with the San Francisco-based consultancy Silvestrum Climate Associates. He points to one massive project he has been helping with to reforest more than 200,000 acres of mangroves in the Indus Delta in Pakistan. It aims to absorb 2 million tons of CO2-equivalent per year, selling 1 million credits in 2021, says Crooks — a scale that will “blow other blue carbon projects out of the water.”
Seagrasses may have more carbon mitigation potential than mangroves simply because there are so many of them, and they’re rapidly disappearing at about 2 to 7 percent per year. (According to the High Level Panel, seagrasses alone might account for half of the 1.4 billion tons of blue carbon greenhouse gas-mitigation potential.) The Virginia project has pioneered efforts to quantify the carbon soaked up by seagrasses, doing the hard work of monitoring both the CO2 absorbed by the plants as well as the emissions of other greenhouse gases like methane. In 2020, researchers published a paper showing that the carbon credits generated by one part of the meadow, 700 hectares in South Bay, should offset about 10 percent of that project’s restoration costs of $800,000.
The Virginia project is special, however, notes project leader Patrick, because that ecosystem hasn’t been degraded by climate change or pollution, making it easier to successfully restore the grasses. “A lot of seagrass restorations fail because you’re planting grass or putting in seed where the environmental drivers that caused the collapse haven’t been fixed in the first place,” he says. Although the VIMS project will hopefully pave the way for other seagrass programs to earn credits, many of those other projects will likely involve more work and be more expensive. For those reasons, says Howard, conservation might be an easier target for seagrass credit projects than restoration.
There is also ample scope for restoring and protecting salt marshes, especially in Australia, home to about a third of the planet’s tidal marshes. But the years of required data on carbon storage and release aren’t there yet, says Crooks. Intensive research into wetlands by the Pacific North West Coastal Blue Carbon Working Group has shown that although these landscapes hold a lot of carbon, some naturally release so much methane that carbon credits may not be a viable long-term financial option. Monitoring a wetland involves a lot of “walking through a lot of mud and muck,” says Schmid, and emissions of gases like methane can be highly variable from spot to spot and over time, making monitoring onerous.
A big shakeup to the blue carbon-credit movement could come if the doors are opened to one particular new carbon source: seaweed. Seaweeds — like the massive kelp forests in Australia — are a major stock of blue carbon under threat in many parts of the world. The High Level Panel highlighted seaweed farming as a viable emissions mitigator and a way of producing sustainable food. But there are still doubts about exactly where all the carbon from seaweed farms goes, says Howard.
“How much falls to the seafloor, how much is eaten by fish, and how much they poop, how much carbon is being moved — we just don’t know,” she says. Verra is actively watching this realm with interest, says Schmid; if the science behind the carbon accounting holds up, seaweed could be added to the nonprofit’s carbon credit methodologies within a couple of years. Crooks says he is helping to develop a credit-for-seaweed-farming project now in British Columbia.
Organic-rich sediments on the seafloor are also contenders for credits. Sala and colleagues estimate that fishing boats dragging nets along the seafloor are kicking up 1.47 billion tons of CO2 — about as much as released by the aviation industry today, and more than the 1.4 billion-ton mitigation potential of mangroves, salt marshes, seagrasses, and seaweed farming combined. The science on where this carbon goes is highly uncertain, says Howard. It’s not clear, for example, if the carbon kicked up from the seafloor makes it all the way up to the air, or stays dissolved in the water, making it more acidic.
Like land-based carbon credit projects, blue carbon projects face issues, says Serrano. Many of these projects are expensive, he notes, which makes it hard for carbon credits to make a dent in project costs. And ensuring permanence of the carbon stocks can be hard in the face of storms or marine heatwaves.
Carbon credits are just one way to finance these nature-based solutions for carbon sequestration; there are also philanthropic donations and government-funded grants or subsidies. However, says Howard, “the [carbon credit] market is good, because the private sector has all the money. We need long-term, sustainable finance to keep our projects going.”