Forest-related carbon removal could generate $800bn in annual revenues by 2050

New analysis commissioned by the UN-supported Principles of Responsible Investment (PRI), predicts that technologies to remove carbon from the atmosphere could create trillion dollar upside opportunities for investors as more and more countries, cities and corporates make ambitious plans to become net zero.

Nature-based solutions (NBS) to the climate crisis focused on reforestation and afforestation could generate $800 billion in annual revenues by 2050 with assets valued well over US$1.2 trillion, surpassing the current market capitalisation of the oil & gas majors.

As part of the PRI-commissioned Inevitable Policy Response programme, the latest report concludes that an entire new industry may emerge that values carbon stored in vegetation and soil, unlocking new business models and investment opportunities for avoided deforestation, reforestation and afforestation, and land restoration.

Big tech and big oil have already started to channel their resources into forest-related natured based solutions to achieve new net-zero targets — and in turn this is driving demand for NBS carbon credits, say PRI.

Thanks to its low-cost and potential for large-scale implementation, reforestation and afforestation looks likely to emerge as the earliest feasible investment opportunity.

Investments in avoided deforestation will present additional opportunity as measuring, reporting and verification (MRV) mechanisms and compensation schemes reach scale. However, reputational risks may dampen investor enthusiasm unless forest laws are vigorously enforced or tightened to end deforestation. Technical solutions, such as Direct Air Carbon Capture, Use and Storage (DACCS) and bioenergy with CCS (BECCS), could generate an additional annual revenue of US$625 billion by 2050.

Fiona Reynolds, CEO UN PRI said: “We can’t achieve net zero without nature-based solutions. The pandemic has supercharged the investment case, especially in forestry, and this new analysis shows the magnitude of the opportunity.

“Forest finance has historically been small and largely the purview of the public sector. But policy and business momentum have now advanced to a critical mass for forests to begin emerging as a new asset class. Investors can act now to unlock investment opportunities and to take an increasingly leading role in financing.”

Read the full report here.

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30 October 2020

Climate Action