New report: “An Ocean of Potential” exists for Blue Carbon finance, an essential yet largely untapped climate mitigation strategy

Analysis published by Ecosystem Marketplace and the Katoomba Group finds there is vast potential for investment in coastal and marine habitats to stem degradation and maximize the potential of these ecosystems to mitigate climate change.

These Blue Carbon (BC) habitats sequester carbon at high rates—even higher than terrestrial forests, by some estimates. However, these critical ecosystems are also highly degraded worldwide. Significant investment will be required to conserve and restore them, both in terms of scaling up existing projects and expanding efforts to new geographies.

“The Blue Carbon space is still emerging with lots of potential to address both the climate and biodiversity crises. I remain optimistic about the variety of finance streams already at our fingertips to catalyze and expand conservation and restoration of Blue Carbon ecosystems,” says Tundi Agardy, the report’s author and Founder and Executive Director of Sound Seas.

“At present, there is global demand from the private sector and countries looking to include Blue Carbon in their nationally determined contributions,” says Agardy. “Getting these groups on the same page may be what is needed to drive up supply.”

Key findings from the report:

• BC remains a small, “boutique” slice of the overall voluntary carbon market, comprising less than one percent of overall credit transactions per year. Most demand comes from corporates and investors purchasing credits, as well as governments interested in BC for national climate policy. Current supply constraints include high upfront costs and a lack of available verifiers.
• However, BC credits are also sold at a significant premium over current carbon market rates, a reflection of steep initial project costs and the space’s niche appeal to buyers who are attracted to the multiple environmental and social benefits of BC projects.
• A large variety of revenue streams and technical support for marine conservation and restoration already exist, such as “blue bonds” that can support marine conservation and restoration. Carbon markets can also channel additional private sector finance to help realize BC’s potential, so long as carbon finance is carefully planned and executed with social, environmental, and economic sustainability in mind.
• Opportunities to scale BC finance include using terrestrial REDD+ as a framework to shift from small-scale demonstration projects to jurisdictional approaches and catalyzing public and private investments via development banks and multilateral agencies.

“We are at a critical juncture in our transition to a nature-positive economy,” says Michael Jenkins, Forest Trends Founding President and CEO. “Protecting and restoring our coastal and marine habitats is an essential part of this work. The research in this report is critical to raise awareness of Blue Carbon’s unique potential and inspire nature-positive action.”

Download the full report here.

Register for our webinar on the State of the Blue Carbon Market.

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Ecosystem Marketplace is an initiative of the non-profit organization Forest Trends, and a leading global source of information on environmental finance, markets, and payments for ecosystem services. For nearly two decades, EM has run the world’s first and only globally recognized and standardized reporting and transparency initiative for carbon market credit pricing data, news, and insights. EM is also a leading convener in the sector, bringing together experts to provide technical insights that cover emerging policy and key trends across environmental markets for decisionmakers, policymakers, market actors, and observers.  

The Katoomba Group is an international working group led by Forest Trends that brings together unusual cross-sector coalitions to solve the hardest problems in bringing value to nature. Katoomba events addresses key challenges to developing markets and payments for ecosystem services, from enabling legislation through establishment of new market institutions, strategies of pricing and marketing, and performance monitoring. The Group works through strategic partnerships for analysis, capacity-building, information-sharing, investment, market services, and policy advocacy.