Navigating Carbon Projects To Success

Behind The Tech: The Juggling Act of Nature-Based Carbon Projects

As the world grapples with the urgent need to reduce atmospheric carbon dioxide levels, nature-based solutions have emerged as a promising and cost-effective approach.

Restoring natural ecosystems, such as forests and wetlands, can sequester significant amounts of carbon while providing numerous co-benefits for biodiversity and sustainable development.

According to estimates, nature-based solutions could contribute up to 30% of the needed carbon reductions globally. In terms of costs, IHS Markit analysis revealed that for agriculture, forestry, and land-use (AFOLU) projects, the average development cost ranges from US$4 to US$50/tCO2e, significantly lower than technology-based solutions ranging from US$17 to US$180/tCO2e. Hence, making nature-based solutions highly cost-effective and attractive.

As the world grapples with the urgent need to reduce atmospheric carbon dioxide levels, nature-based solutions have emerged as a promising and cost-effective approach.

Restoring natural ecosystems, such as forests and wetlands, can sequester significant amounts of carbon while providing numerous co-benefits for biodiversity and sustainable development.

According to estimates, nature-based solutions could contribute up to 30% of the needed carbon reductions globally. In terms of costs, IHS Markit analysis revealed that for agriculture, forestry, and land-use (AFOLU) projects, the average development cost ranges from US$4 to US$50/tCO2e, significantly lower than technology-based solutions ranging from US$17 to US$180/tCO2e. Hence, making nature-based solutions highly cost-effective and attractive.

The Potential of Nature in Asia

In Asia, nature-based solutions hold remarkable potential, with estimates from ASEAN Focus 2018 suggesting they could account for nearly 40% of the necessary carbon dioxide capture by 2030.

It isn’t all sunshine and roses, though. In many Southeast Asian countries, carbon exchanges are in their infancy/ pilot phase. Regulatory frameworks are under various stages of development and vary across the region. The path to carbon reductions remains complex, highlighting the need for collaborative efforts with landowners and developers to initiate carbon-sequestering projects.

So… how can we start the ball rolling for nature-based solutions?

Money Doesn’t Just Grow On Trees

Developing a successful and effective carbon project in nature is not a simple task. It involves a staged process with stringent checks and verifications, requiring the involvement of various stakeholders and technical expertise.

Project tenures are typically long, with minimum 30 or 40 years, necessitating sustained commitment and investment, often running into millions of dollars. Quantifying and monitoring changes in land cover and biomass accumulation must be done in a scientifically rigorous and transparent manner throughout the project’s lifespan.This may seem like a daunting task.

Mitigating Risk to Reap Rewards

Given the complex interplay of factors such as environmental risks, regulatory landscapes, and stakeholder dynamics, project development and implementation are never devoid of challenges. From the spectre of natural calamities like floods and fires to navigating the labyrinth of land rights, potential jurisdictional red tape and revisions to methodologies, a comprehensive approach to risk management is indispensable.

Amidst these challenges lies the opportunity for proactive intervention. Collaborative efforts with local communities, characterised by transparent communication and genuine engagement, can serve as a bulwark against potential setbacks. By fostering a sense of ownership and shared responsibility, these partnerships not only mitigate risks but also lay the groundwork for sustainable, long-term success.

Central to these efforts is securing and  establishing land ownership and/or land rights for project development. This is fundamental to  instilling confidence for developers to embark on initiatives like reforestation, whilst facilitating harmonious agreements with stakeholders. Clear and unequivocal land rights not only mitigates conflicts, and amplifies the efficacy and sustainability of projects by ensuring the integrity of the project area and its outcomes.

Going to Market: Selling Credits

Current carbon pricing remains low after reaching highs in 2023. The Xpansiv market CBL, the world’s largest spot carbon exchange, saw prices of carbon offsets fall by over 80% in an 18-20 month period. Hence, developers must explore de-risking strategies like diversifying funding, long-term contracts, and hedging to insure against pricing concerns.

Navigating the fragmented carbon market presents additional challenges, especially in regions like Asia where carbon exchanges are still emerging. Direct off-take agreements with corporations provide long-term multi-year revenue potential but may face delays until carbon sequestration efforts mature. This necessitates an interim strategic approach to ensure project viability and financial stability.

To mitigate financial risks, developers need to consider:

  • Bundling carbon credits with other revenue-generating activities such as agriculture, ecotourism, real estate, or sustainable timber production can enhance project attractiveness to investors and ensure a more stable cash flow

  • Exploring different sales models, such as selling carbon rights contracts to corporate offtakers, to further de-risk the venture

Arkadiah: Scaling High Quality Projects With Technology

Arkadiah’s NatureOS platform is designed to revolutionise how natural carbon sink projects are evaluated and executed.

#1: Mission Control for Nature Restoration Projects

Consider the vast array of datasets that need to be analysed when recording information about an entire forest — from topographical maps and soil composition to historical land use records – is a gargantuan task. By consolidating disparate data sources into one centralised platform, NatureOS enables rapid analysis, allowing clients to seamlessly access and analyse various metrics about their project area from a sleek birds-eye view.

#2: Rapid Assessment and Instant Carbon Calculation

Our instant feasibility assessment tool contains a diverse dataset considers critical scientific attributes of your project area. NatureOS can even advise the appropriate methodology: like ARR (afforestation) or REDD+ (avoided deforestation).

Knowing how arduous it can be to manage multiple data sheets of equations to calculate carbon, we’ve developed our Carbon Calculator: an all-in-one tool that allows instant and customisable inputs, saving you precious time and effort.

#3: Ground Truth At Our Core

Beyond remote sensing, NatureOS integrates on-site ground measurement to train our AI-model to improve accuracy. With advanced digital measurement capabilities, our team conducts baseline assessments directly on-site using state-of-the-art tools such as multi-scale LiDAR capabilities with ArkVantage. Each geotagged tree is assessed for different parameters (wood volume, diameter at breast height, etc.) to calibrate carbon estimations. We’ve also covered this in our previous article on ground truth.

#4: Access to Funding

We recognise the significant funding gap in nature-based solutions, a challenge underscored by the UN Environment Programme’s urgent call for increased investments. To meet our collective carbon and nature neutrality goals, current investments of US$200 billion need to triple by 2030 and quadruple by 2050.

Arkadiah connects project developers seeking funding with donors/investors, such as our partnership with STTOKE and Heroica Coffee to grow climate resilient coffee in the Philippines. STTOKE has contributed 1% of their sales towards this agroforestry project.

As another means to address this funding gap, Arkadiah has collaborated with Terraformation on their Seed to Carbon Forest Accelerator program, offering communities and forestry teams in Asia technical expertise, technology and funding to quickly and responsibly restore biodiverse forests while delivering high-quality carbon credits.

What’s Next?

Nature-based carbon projects undoubtedly present challenges, from navigating regulations and securing financing to overcoming logistical hurdles. Arkadiah’s NatureOS platform is designed to streamline the complex process, providing a comprehensive suite of technology tools and services to support project developers every step of the way.

Start a project with us, today and discover how we can help bring your vision for a thriving, nature positive ecosystem to life.

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