2021-10-25-KPMG_Global-The_blue_wealth_of_nations_14页_1mb

Summary of The (blue) Wealth of Nations

Core Content

This report emphasizes the growing importance of blue carbon solutions in achieving Net Zero and Net Negative emissions goals. While decarbonization remains central to climate change mitigation, it is insufficient to meet the scale and urgency of global emissions targets. The report argues that carbon removal from the atmosphere, particularly through blue carbon ecosystems, is essential to achieve these goals in a cost-effective and scalable manner.

Main Points

1. Net Zero Ambitions and the Need for Carbon Removal

• Over 68% of global GDP is under Net Zero targets, but these targets will require carbon removal to be achieved.
• Carbon removal is necessary for:
  • Meeting interim targets (e.g., 2030) where decarbonization may not be feasible.
  • Achieving Net Negative emissions for more ambitious strategies.
  • Addressing natural emissions that increase due to climate change impacts on ecosystems.

2. Carbon Removal vs. Carbon Reduction

• Carbon reduction involves decreasing emissions directly.
• Carbon removal involves taking carbon out of the atmosphere.
• Carbon removal is more complex and indirect, requiring:
  • A baseline for measuring additionality.
  • Permanence of the removal.
  • No leakage of emissions elsewhere.
  • Additionality ensuring the project would not occur without financial support.

3. Carbon Market Dynamics

• Two main mechanisms exist:
  • Carbon allowances (cap-and-trade systems) incentivize direct emissions reductions.
  • Carbon offsets allow indirect mitigation through projects that avoid, reduce, or remove emissions.
• Voluntary markets are more flexible and cheaper than compliance markets, but lack standardization.
• Compliance markets are likely to increase demand for carbon removal due to tighter rules on double-counting and additionality.

4. The Role of Blue Carbon

• Blue carbon refers to carbon stored in marine ecosystems such as mangroves, seagrass meadows, and tidal wetlands.
• These ecosystems are more efficient, permanent, and scalable than terrestrial ones.
• Seaweed can sequester up to five times more CO₂ than land-based plants.
• Blue carbon projects can provide additional revenue streams for developing nations, especially those with sovereign seas.

5. Supply and Demand for Carbon Offsets

• Carbon offset demand is expected to increase by at least 15 times by 2030.
• The Taskforce on Scaling Voluntary Carbon Markets (TSVCM) estimates the value of carbon offsets could reach $5–$50 billion by 2030.
• Carbon removal projects are likely to command higher prices due to their premium status and greater environmental integrity.
• Supply constraints may limit the availability of carbon credits, particularly for removal.

Key Information

• Blue carbon ecosystems are underrepresented in current carbon offset markets.
• Only 0.0015% of the market is currently blue carbon credits.
• Mangrove forests are the most common and 'shovel-ready' blue carbon project, with:
  • Carbon stock: 738.9 Mg C / hectare
  • Sequestration rate: 179.6 gC / sq.m / year
• Tidal and salt marshes are also highly efficient:
  • Carbon stock: 53.8–94.9 Mg C / hectare
  • Sequestration rate: 146 ± 102 gC / sq.m / year
• Seagrass meadows store up to 18% of the carbon sequestered by the ocean, with:
  • Carbon stock: 51 ± 7 Mg C / hectare
  • Sequestration rate: 23.2 ± 3.2 gC / sq.m / year

Recommendations

• Governments should recognize and incentivize blue carbon projects to unlock their economic and environmental value.
• COP26 negotiations could influence the scale and standardization of blue carbon offsets, particularly through Article 6 and the introduction of ITMOs (Internationally Transferred Mitigation Outcomes).
• Investor and stakeholder pressure will likely drive demand for genuine, credible carbon removal projects.
• Blue carbon projects can provide co-benefits such as coastal protection, biodiversity enhancement, and food security.

Conclusion

• Blue carbon is a critical but underutilized tool in the fight against climate change.
• It offers greater efficiency, permanence, and scalability compared to terrestrial solutions.
• As carbon removal demand grows, blue carbon projects will become more commercially viable and politically significant.