Using Native Species for Afforestation, Reforestation, and Revegetation Carbon Projects
GO2 Markets
We are in the business of combating climate change while offering comprehensive climate and energy solutions.
NBS (Nature-Based Solutions) projects employ natural processes to remove carbon from the atmosphere, store it in natural ecosystems, and prevent the emission of CO2. One of the most common types of NBS activities is the Afforestation, Reforestation, and Revegetation (ARR)?projects.
ARR activities establish new forests or restore degraded land by planting trees and other species to assist natural regeneration. The projects vary widely as project developers select the methods and species that better suit their objectives, such as planting native species, introduced/exotic species, or a mix of both. The project developers select the appropriate mix of trees, shrubs, and herbaceous species for the project area based on scientific?knowledge, experience in restoration, and -occasionally- traditional or indigenous knowledge.
Raising the bar for quality in the Voluntary Carbon Markets
The demand for high-integrity carbon credits is rising due to recent scrutiny of carbon projects and the public’s pressure on companies to improve their carbon compensation schemes. In a previous article, we outlined the factors determining high-quality carbon credit . They include demonstrating unique, measurable, and verifiable reductions, ensuring additionality and permanence, and contributing to the UN’s Sustainable Development Goals.
These principles apply broadly to carbon projects across technologies, including renewable energy (RE), community-based, carbon dioxide removal (CDR), and Nature-Based Solutions (NBS). However, each project category has specific characteristics and challenges, and their assessment requires additional considerations. Using native species is one crucial factor in evaluating carbon projects using NBS.
Making a case for native species in ARR
Out of the 212 ARR projects listed and/or issued credits since 2015, only 44% use native species. This proportion has increased in the past few years; however, the role of native species in ARR demands more attention and concerted effort in the market. Carbon Standards, such as Plan Vivo and Social Carbon, emphasize using native species. Their opinions echo that of the FAO and UN as expressed in the UN Decade on Ecosystem Restoration Strategy .
A high-quality ARR project ensures environmental integrity and restores degraded or deforested ecosystems to their original condition. Restoration has additional benefits to the project area, such as the recovery and revitalization of the local biodiversity and the ecosystem services the forest provides. High-integrity ARR projects have quantifiable additional benefits for the climate, biodiversity, and communities.
Using native species to restore degraded areas is critical to achieving ecological restoration. This approach prioritizes the quality of credits over the quantity, and it has become increasingly common. It is contrary to the many projects using only exotic species introduced by the projects – often as monocultures.
Despite the cost and logistical challenges of using native species only, the VCM (voluntary carbon markets) must support and prioritize quality and integrity. ARR carbon projects that use native species have significant benefits beyond carbon storage and climate mitigation. Some of the additional advantages of this approach are:
The benefits contribute to the health of the ecosystem and climate, improve the well-being of the surrounding communities, and contribute to the UN’s Sustainable Development Goals. Many projects in Latin America plant native trees that produce non-timber forest products, such as Acai, coffee, and cacao. Commercializing these products provides income to the communities , in addition to the income they receive from participating in the planting and monitoring activities .
In practice, project developers such as re.green have uncovered the benefits of native species in restoration efforts, as echoed here by Lygia Faiman, Key Account Manager:
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“re.green 's dedication to ARR projects with at least 80 different native species in the Brazilian Atlantic Forest and the Amazon underscores our commitment to combating climate change while prioritizing community engagement and biodiversity conservation. By focusing on these multiple co-benefits, we ensure that our efforts have tangible contributions to nature and people."
Financing high-quality ARR removals in the Voluntary Carbon Markets
According to a report by BeZero, only 8% of the total credit issuance from NBS projects in the voluntary carbon market is produced by ARR . However, the number of ARR projects has increased by 160% since 2010 , as the voluntary market is moving towards financing carbon removal, especially ARR projects.
Project developers, investors, off-takers, and many stakeholders in the voluntary carbon market are shifting interest from avoidance projects such as the REDD (Reducing Emissions from Deforestation and Forest Degradation in Developing Countries). Some reasons for this shift include the fact that NBS removal credits have longer permanence and can be more accurately quantified than conservation ones. Updates in carbon standards, such as the ARR VERRA methodology , have also facilitated the uptake of ARR projects.
The opportunity for ARR with Native species
While native species in ARR restore valuable ecosystem services and can improve the livelihood of local communities, these projects have higher upfront costs. Specialized knowledge to meticulously design a project using Standard methodology is a prerequisite that can represent an initial high cost. Even when project developers optimize costs in the early phases, projects still require substantial investment before any carbon credit is issued, sold, and revenue generated. Given this, in most cases, external private investment is needed to kick off the project.
However, the high project costs for ARR with native species are not the only explanation for the financing gap. Trees take a few years to grow, and other regenerative practices may take some time before showing significant carbon sequestration. This delayed realization of ROI (return on investment) contributes to the financing gap.
The ROI for such projects is not in the short or medium term. Moreover, the earlier an investor is involved in the project, the less specific the forecasts will be.? The earlier in the project, the more risk it could represent for a conventional investor looking for a return. The presented data in the project proposal and data collected throughout the project’s lifecycle will increase the investors’ confidence.
Fortunately, there are many types of private investors. Beyond a diversity of investors, bridging the financing gap also requires a combination of investment structures to address risks.
The upside is that the VCM already has multiple private actors willing to finance carbon projects. The key stakeholders are off-takers who commit to purchasing a certain number of carbon credits over a given period for their use. Whether they take the total or partial volume of carbon credits from a project, the assurance that the credits will be or have been sold to off-takers provides confidence to other financiers who could provide the much-needed capital for these projects.
The GO2 Origination team is committed to developing and supporting high-integrity projects. Our team has assembled a portfolio of opportunities focused on the revegetation and restoration of forests with native species. We work closely with project developers and owners to develop investment and commercial structures to funnel capital into their ARR efforts. We also bridge the financing gap by representing projects to various private investors and off-takers based on their needs and interests and supporting them in making informed and impactful investments in the Voluntary Carbon Market.
Further Reading