Yu Lin Foo
The Future of Blue Carbon Credits – Challenges and Prospects
By Jacquelin Huang | 27 October 2021
The capture and storage of blue carbon have generated quite a buzz recently. However, the number of blue carbon credit projects currently under development globally is very few compared to other carbon projects. Mana Impact spoke with Associate Professor Daniel Friess to learn more about what is needed to accelerate and create a healthy blue carbon credits market. Professor Friess is the Deputy Director for the NUS Centre for Nature-based Climate Solutions, head of the Mangrove Lab, and a passionate advocate for protecting coastal ecosystems.
What is blue carbon?
Blue carbon is carbon captured and stored in coastal and marine ecosystems such as seagrass meadows, marshes, and most prominently – mangroves. As fringing ecosystems, mangroves do not cover a large area of the world, however, its per hectare carbon sequestration ability is truly remarkable. Within the oxygen-sparse and waterlogged soils of mangroves are huge amounts of carbon hidden away, storing almost three times the amount of carbon as compared to tropical forests – the poster child of carbon sequestration. In addition to their carbon sequestration ability, mangroves also provide a wide range of ecosystem services including being a nursing site for many species, a unique habitat for rich biodiversity, and coastal protection from floods and other disasters. As a result, mangroves are increasingly seen as valuable and important ecosystems that we need to conserve and restore, due to their potential to mitigate climate change – at least on a regional level. This is especially true for Southeast Asia, where a large portion of mangroves worldwide are located, with Indonesia having about 20% of the world’s mangroves.
Source: IUCN – Blue Carbon
Unfortunately, mangroves are being rapidly lost due to coastal development. Mangroves are being removed for a wide range of activities including agriculture, aquaculture, urban development, tourism, and more. Many see voluntary blue carbon credits as a key solution to preserving mangroves. Blue carbon credits have the potential to not only protect mangroves and their accompanying ecosystem services but also uplift the livelihoods of coastal communities. Along with a growing global demand for carbon credits in general, demand for blue carbon credits is increasing too. Organizations like Verra and Tenaka have programs to satisfy some of this demand in the voluntary carbon market, with several mangrove restoration and conservation projects that have contributed meaningfully to coastal environments and local communities. However, financial, social and political constraints continue to persist, hindering the generation of a large supply of verifiable blue carbon credits.
“It is getting projects off the ground that is the real stumbling point right now.” – Professor Friess.
While many corporations have voiced their interest in blue carbon, the current market price is not high enough for many blue carbon credit projects to be financially viable. In our interview, Professor Friess states that not only does the price of carbon have to break even with true project costs, but it also needs to make up for the opportunity cost of the alternative threatening land use.
Furthermore, the implementation of blue carbon projects at the community level, as well as the registration and verification of carbon storage in the ground is costly, which further requires the need for a higher price per ton of blue carbon. Costs associated with registration, verification, and issuance of credits cost around USD 300K based on past projects developed under the Verified Carbon Standard (VCS) by Verra, the most widely used standards for verifying carbon emission reductions.
Another implication that has been hindering the expansion of blue carbon projects are the contentious rules surrounding Article 6 of the Paris Agreement – which prevents double counting of carbon offset. Article 6 indicates that the amount of carbon offset cannot be both counted by the country selling it and the country buying it. There has been little agreement on these rules and as such, many countries have stopped the sale of commercial carbon credits in order to reserve the carbon credits to be counted exclusively toward their Nationally-Determined Contributions (NDCs) under the Paris Agreement. These decisions prevent foreign organizations and NGOs from working with countries to develop blue carbon projects.
In addition, Professor Friess also shares that land tenure and carbon rights are very unclear in most countries. Mangrove restoration projects have to maneuver through an unclear legal landscape for land ownership. In many areas, mangroves can be exploited without restriction. Families or individuals also claim ownership of land covering scattered mangrove sites. Complex ownership rights and lack of land management by governments make mangrove conservation projects very difficult to implement.
As with any project that engages local communities, a wide range of socio-economic challenges are to be overcome. Many target communities rely on fishing and aquaculture for a living. These livelihoods and lifestyles are also connected to a communal sense of belonging and have great cultural value. If the development of blue carbon projects entails a threat to their current type of livelihood, then the benefits of conservation have to be communicated very clearly and transparently. The outcomes of conservation must outweigh the existing economic prospects and deliver attractive levels of improvement. Furthermore, alternative livelihood opportunities and capacity-building programs need to be well designed and implemented for projects to build sustainable livelihoods.
Kickstarting and accelerating projects
Despite these challenges bringing mangrove restoration and conservation to scale needs to be a priority in order to leverage nature-based solutions as a viable climate mitigating solution, especially in the countries where mangroves are abundant. Furthermore, the returns from investing in mangrove conservation encompass a host of positive outcomes for the affected areas, including building resilience, enhancing fisheries, and needless to say, preserving mangroves as a biodiverse and unique landscape.
We therefore look forward to COP26 in Glasgow this year, where a resolution for Article 6 of the Paris Agreement is a key priority with the growing urgency for climate action. Without a resolution, many carbon offsetting projects, including blue carbon in this region - remain on hold.
We also think that the creation of more financial facilities such as the Blue Natural Capital Financing Facility and the Blue Carbon facility by Mirova can provide the initial capital involved in developing blue carbon projects. This includes the costs of conducting feasibility studies, implementing capacity-building programs, and creating an alternative livelihood program that will support local communities in order to accelerate the number of blue carbon projects and thereby the growth of the blue carbon market.
Lastly, we believe that it is of utmost importance that blue carbon projects are designed using an inclusive lens, not only in terms of ensuring that all project stakeholder inputs are considered, but engaging organizations with strong ties and trust in the community and setting up transparent governance structures to assure that the benefits of blue carbon projects are fairly shared within the local and indigenous communities.
Argus Media, 2021. Key issues for Cop 26: Article 6 rulebook. (Link)
Goldberg L, Lagomasino D, Thomas N, Fatoyinbo T, 2020. Global declines in human‐driven mangrove loss. Global change biology. (Link)
Zeng Y, Friess DA, Sarira TV, Siman K, Koh LP, 2021. Global potential and limits of mangrove blue carbon for climate change mitigation. Current biology. (Link)
Mongabay, 2020. In mangrove restoration, custom solutions beat one-size-fits-all approach. (Link)
Timothy R. H. Pearson, Sandra Brown, Brent Sohngen, Jennifer Henman & Sara Ohrel, 2014. Mitigation and Adaptation Strategies for Global Change. Transaction costs for carbon sequestration projects in the tropical forest sector. (Link)
Friess DA, Thompson BS, Brown B, Amir AA, Cameron C, Koldewey HJ, et al. Policy challenges and approaches for the conservation of mangrove forests in Southeast Asia. Conservation biology. (Link)
The Blue Carbon Initiative, 2019. (Link)