Could Asia boost its climate change fight with biodiversity credits?
As the world debates a path to a cleaner future at the ongoing Cop28 summit, tucked away in the proceedings is a topic that has not grabbed headlines - biodiversity credits.
The system of biodiversity credits puts a value on unspoilt nature such as forests that can act like giant carbon sinks. The units can be traded to offset damage being done to habitats elsewhere, just like carbon credits are given for keeping out greenhouse gases.
On the face of it, the proposal being spearheaded by Britain and France may appear attractive to developing nations in Southeast Asia to fund the development of degraded rainforests that have suffered damage from years of plantation agriculture.
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But critics warn that the Global South will need to weigh the consequences as it could easily open up a treacherous path, where rich countries may unload their burden of emissions reduction to poorer nations where lands are cheap and forests can be plentiful.
That could potentially mean developed nations, which have historically spewed the most emissions to industrialise their economies, have a freer hand to power ahead with the same industries with minimal blips despite their commitments to net zero emissions.
Proponents of the biodiversity offsets credit mechanism, however, argue that carbon credits have proved to be one of the most effective means of financing clean transition in developing countries, which ultimately moves the world closer to keeping earth's warming cumulatively by all nations below the Paris Agreement's goal of 1.5 degrees Celsius.
By the same coin, they reckon, the new mechanism should open up the purse strings from private creditors to galvanise forest development in poorer nations.
The tempting argument overlooks a fundamental premise - the destruction of forests contributes to global warming here and now, whereas their restoration may take from 15 years up to 100 years.
There is also a danger of biodiversity offsets being used to compensate for industrial expansion of carbon-intensive industries. But every tonne of carbon belched out cannot be equated to growing more trees because industrial emissions tend to remain in the atmosphere for far longer - up to a century or more, climatologists say.
Another dimension to the problem, already experienced in parts of Africa, are instances where purchasers of carbon credits in their zeal to protect their investment in forests have often virtually cut off their access to indigenous communities.
Asian nations are at a nascent stage of developing carbon credits, and will therefore do well to put in adequate safeguards to green habitats. Voluntary carbon credits have been launched on Asian exchanges, generated by activities as diverse as renewable energy to sustainable forestry and farming, which are largely not standardised.
By their nature, biodiversity credits are hard to set a single global standard, simply because the flora and fauna differ vastly from place to place and so does their impact on the environment.
Carbon credits are relatively easier to define because there are often measurable equivalents, such as electricity units generated through renewable energy. Even so, the carbon market has been hit by scandals over credits being dubiously measured and handed out to industrial buyers over the past months.
Supporters of the system have argued for more regulation rather than throwing the baby out with the bathwater.
It is true that the vast potential of forest conservation in fighting climate change has largely remained untapped. This is because 97 per cent of climate finance goes toward energy transition, says Glenn Hurowitz, founder and CEO of Mighty Earth, an organisation that works on nature conservation.
"Shifting to renewable energy is incredibly important, but 37 per cent of the solution to climate change is in nature conservation and restoration, and it does not get anywhere near commensurate funding or attention," he said.
Is there a viable solution?
Carbon-intensive industries should be encouraged to decarbonise as fast as possible along with supporting nature conservation, says Hurowitz. Asian governments ought to also remove red tape that impede investments in conservation, he added.
Only those companies with strong track records may be offered the opportunity to buy and sell credits. On the whole, this year's heatwaves have made it clear that the Global North and South need to work together to develop their forest wealth.
This article originally appeared on the South China Morning Post (SCMP).
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