U.S. climate envoy John Kerry set off a firestorm after nonchalantly telling a congressional committee that this country would not pay reparations to developing countries coping with the climate crisis. The remark undercut the central theme to emerge from last year’s Egyptian climate summit. But it also triggered a new set of questions centering on how to reward net carbon removers.
After traversing the globe seeking an answer to this inquiry, the most common expressions are ones of futility — that carbon finance will never come. Notably, the affluent countries have benefited while emerging ones have plodded along — left to deal with the aftereffects of global warming.
At some point, though, the Global North will pay in some form. Climate negotiators will ask at least 192 nations to present their progress when they meet in Dubai in December. Warning: most are off the mark to hit their so-called nationally determined contributions.
But the good news is that 17 countries are either net carbon removers or close to it— and thus, they could potentially sell carbon offsets to those that can’t meet their targets. A net carbon remover is a country with fewer net emissions than its removals. It’s the highest calling countries aspire to under the Paris Agreement.
As the editor-at-large for the Coalition for Rainforest Nations, representing about 65 countries worldwide, I research and write about the progress of countries that could potentially issue and benefit from these financial instruments.
“Countries can and should aim to become carbon negative, sequestering more carbon than they emit,” says Diego Saez Gil, founder of Pachama, providing artificial intelligence and satellite technologies, in an interview. “By investing in zero-carbon energy and restoring natural ecosystems including forests and oceans, a nation can become part of the solution to climate change.”
According to the United Nations Framework Convention on Climate Change, Belize, Central African Republic, Congo, Gabon, Madagascar, and Nambia, are among the countries that are net carbon removers. Soon, they could start trading “internationally transferred mitigation outcomes” or ITMOs — money to help them save their rainforests, which are natural carbon dioxide vacuums.
Will Credits Replace the Loss-and-Damage Fund?
Illustration of Carbon Negative Countries
Governments set emissions limits, and those that exceed them can sell credits to those unable to do so. As the ceiling lowers, CO2 levels fall.
That regiment may be the best available option for net carbon removers. The loss-and-damage concept is undefined and fledgling — especially since John Kerry’s remarks. But carbon credits are not without controversy: If a country buys credits instead of deploying more renewables, activists will accuse them of “greenwashing.”
However, they will miss their net-zero targets if they don’t buy credits after trying other things to cut their emissions. Meanwhile, the rainforest nations grow even more dispirited.
Take Switzerland, which has discovered that it is 2 million tons out of balance and must now buy credits. It will purchase them from a net carbon remover. But at what price? In December, when countries reveal their “global stocktakes” — their climate progress — the demand for those financial vehicles should rise. That will put upward pressure on prices that theoretically should be greater than the cost of buying new technologies.
Suriname may soon start selling those ITMOs or financial vehicles: it will have about 4.8 million credits to offer. Practically speaking, the price has to be greater than the alternatives. Most of its land is maintained and used for tourism. About 93% is rainforest, and the South American country has one of the lowest deforestation rates in the world. Many countries and companies want to pay for their natural gas: Exxon Mobil and Hess
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The United States and others are at a crossroads: this country aims to reduce its CO2 emissions by 25% by 2025 using a 2005 baseline. However, 17% appears more realistic. After that, its goal is to cut its CO2 levels by 50% by 2030.
“Climate change increases the challenges of energy resilience, flexibility, and security of energy systems, but renewable sources have become more competitive, stable, and secure,” says César Santos, managing partner of Magnetar Global Partners, in an interview. However, “low-lying countries need access to carbon finance to preserve their green forests and deploy expensive adaptive solutions.”
Can Going Green Get Us to Net Zero?
A farmer carries a chainsaw at a coca plantation after cutting down trees to plant coca in Guaviare … [+]
The United States will first up the ante for renewables and electric vehicles. To make up for the shortfall, it can either make direct investments or buy carbon credits. President Biden has promised to make a $50 million direct payment to Brazil to save its rainforest — an uncommon move and a small number relative to the billions necessary to do the job. It’s part of the Amazon Fund, started by Germany and Norway, and the contributions count toward net-zero pledges.
Direct payments are few and far between. According to the Rainforest Foundation Norway, the rainforest countries got about $2.7 billion between 2011-2020 from bilateral and multilateral donors and private philanthropies, equating to $270 million annually. That’s a drop in the bucket. And there aren’t many options left.
The goal of the Paris Agreement is carbon neutrality by 2050. And affluent and emerging countries must catch up. Because the possibility of reparations is remote, they could buy ITMOs from net removers — primarily low-lying countries subject to rising tides, eroding shorelines, and heatwaves. The United States and Europe can take a leadership role.
“While carbon-negative and low-emission countries are most suited to sell ITMOs, we need to strengthen the monitoring and verification process,”says Cesar Abrill Caceres, a geologist with the Dominican Republic’s Ministry of Environment and Natural Resources, in an interview. The goal is transparency and integrity — to not exaggerate results. “Once we establish these processes, we are a step closer.”
The Global South’s patience has run out — a situation that sets up a fateful dilemma: it can allow timbering and agriculture greater access to its lands, or the advanced nations can pay up and keep the trees alive and soaking up atmospheric CO2. The credits may be a win-win — a move that rewards rainforest nations while giving countries a greater chance of hitting their net-zero goals.