Why carbon markets should focus on funding Indigenous and natural solutions

Long considered a backdoor for big polluters to avoid addressing real change, carbon markets can fund innovation when used properly.

On the traditional territories of the Squamish Nation and Lil’wat Nation in British Columbia, the Cheakamus Community Forest Carbon Offset Project is reducing greenhouse gas emissions by some 10,000 tons of CO2 each year through modified forestry practices.

These practices, like improved logging and increased protection of wildlife habitats, ensure that more carbon is sequestered, and earned the project 12,500 carbon offsets at $25/ton through the BC Emission Offsets Regulation – funds to be reinvested in the forest.

It’s one of many projects that are created and maintained independently through startup funding, investment, and an assortment of government subsidies. One such source of funding comes from the sale of carbon offsets.

“This additional tool allows the Lil’wat Nation a way to balance protecting culturally important areas and serves our people today and for future generations,” Lil’wat Nation Chief Dean Nelson said in a statement.

Carbon markets and offsets can be confusing, and some climate analysts consider them a way for industrial polluters to pay even less than what they shell out for the federal carbon price.

A new national carbon emissions market launched last month, the Greenhouse Gas Credit Offset System, fell under similar scrutiny.

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The new system would allow registered participants like farmers or cities to sell CO2 reduction credits to bigger emitters. For every one ton of emissions participants remove from the atmosphere, they would earn one credit to sell to other polluters.

Man looking at beef cattle grazing in a field on a summer morning in southwest Scotland. (John F Scott/ E+/ Getty Images)

Man looking at beef cattle grazing in a field on a summer morning in southwest Scotland. (John F Scott/ E+/ Getty Images)

The announcement has once again raised questions as to how effective carbon markets are in the fight against climate change.

“The government’s decision to double down on carbon offsets is a major step backwards for Canada’s climate ambitions,” Shane Moffatt of Greenpeace Canada, said in a statement.

“Offsetting doesn’t stop carbon from entering the atmosphere and warming our world, it just keeps it off the books of big polluters responsible,” Moffat added.

But there’s another line of thinking that suggests that carbon offsets could become a way for companies to fund sustainable innovation, rather than a way for companies to get to Net Zero.

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A recent Bloomberg Green article suggested that “allowing investments in new, green technologies to count as credit for offsets … would unleash billions of dollars to flow into research and development aimed at reducing carbon in the atmosphere and creating meaningful funding for the expansion of renewable energy.”

New research sponsored by the Institute for International Finance (IIF) determined that demand for carbon credits would increase by upwards of 15 times by 2030 and 100 times by 2050, resulting in a market worth as much as $50 billion in the coming decade.

High-integrity voluntary carbon markets could be an important source of funding to projects designed to fight climate change. A key beneficiary of this funding would be projects involving natural solutions and those in developing countries.

“The reason why this is a great idea is that climate projects cost more in the developed world than in less-developed or developing countries,” Teresa Hartman, Climate and Nature Lead with the World Economic Forum, told The Weather Network (TWN).

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A report published last year by the World Economic Forum found that natural solutions to climate change “play a critical role in supporting the future of both climate and nature.”

The research determined that natural climate solutions (NCS) could provide fully one third of the climate mitigation required to meet climate goals by 2030.

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Several NCS projects are underway in Canada, many of them run by Indigenous communities, such as the Cheakamus Project, as well as organizations like Nature United, which has instituted NCS programs focused on conservation led by Indigenous groups. The latter established a 6.5-million acre protected area with the Łutsël K’é Dene First Nation.

“Money from the sale of carbon offsets enables the Community Forest to implement ecosystem-based management forestry practices that increase protection around creeks and rivers, protect more old growth management areas and biodiversity-rich areas,” Joseph Pallant, Director of Climate Innovation at Ecotrust Canada, told TWN.

“Without this carbon finance, the forest would have to be logged in a more damaging, status quo fashion,” Pallant added. “Natural Climate Solutions are so clearly integral in beating climate change and sustaining a healthy environment.”

If well-implemented, carbon markets continue to offer much potential in directing the flow of capital away from emission-producing and toward emission-reducing.

Thumbnail image: Sunset in Toronto, Ontario. The characteristic Toronto skyline with the famous CN tower graces the horizon. As seen from Riverdale Park East, Broadview. (Katrin Ray Shumakov/ Moment/ Getty Images)