A Balanced Approach
by William Flederbach, President & CEO | September 30, 2020
Life is about balance.
Our fight against climate change must also be balanced.
At ClimeCo, we balance our investments on all types of projects that mitigate greenhouse gas (GHG) emissions. From sequestering carbon with nature-based solutions (NBS) like grassland preservation, reforestation, and mangrove re-establishment, to destroying it at manufacturing sites before it ever gets emitted into the atmosphere, we strive for a balanced approach to addressing climate change.
Our first focus as a company is on destroying GHGs before they ever have a chance to be emitted into the atmosphere. This results in a permanent, non-reversible reduction that offers assurances to our clients. So why is this approach to climate change not as popular in the marketplace? Why does the market prefer to sequester GHGs from the atmosphere after they have already been emitted than trying to prevent them from making it that far in the first place? Imagine how much easier it would be to knock it out at its origin than to chase it down later. To us, the proper approach requires a balance of both – destroying the GHG molecules before they are emitted to the atmosphere and then sequestering any unavoidable emissions that occur.
The Facts
The USEPA publishes world-wide sources of GHG emissions by major economic sector. The USEPA reported that destructive patterns of land use account for 24 percent of human-caused GHG emissions (See Figure 1). Of this, deforestation and forest degradation account for 17 percent of global GHG emissions.
Figure 1 – Sources of GHG Emissions (USEPA)
At the same time, studies by the Global Carbon Project revealed that 45% of the GHGs emitted to the atmosphere are retained there, with only 55% being sequestered by land and oceans (See Figure 2).
Figure 2 – Fate of Carbon Emissions (Global Carbon Project)
Since nearly half of all GHGs will remain in the atmosphere for long periods of time, never to be sequestered, this supports the absolute need for a balanced approach: stop what you can from entering the atmosphere while increasing land-based solutions to enhance sequestration for the rest. It’s that simple… right?
Nature-Based Solutions
NBS has become the buzz phrase recently but these practices, such as proper forest stewardship and regenerative agriculture, are not new and have been in place at some level for decades. In fact, at the heart of the Chicago Climate Exchange (CCX), which was founded in 2003, was the Continuous Conservation Tillage and Conversion to Grassland protocol. I grew up in the country where farmers would rotate crops between corn and soybeans, and we understood this helped to keep the soil healthy (not to mention its positive impact on our corn maze adventures!). Now, this solid farming stewardship is considered fundamental to regenerative agriculture.
Today, there has been a renewed focus on at-scale reforestation efforts (such as ClimeCo’s partnership with Restore the Earth), grassland preservation and restoration, mangroves re-establishment, regenerative agriculture, and more. These all play a critical role in combatting climate change.
Reversal Risks
California, under the Assembly Bill 32 Cap-and-Trade program, has issued over 151 million tonnes of carbon offsets (in the forestry sector) since its inception 8 years ago. The California Government Wildfire Report, states that, as of September 28, 2020, there have been over 8,100 fires this year that have consumed more than 3.7 million acres. According to the European Centre for Medium-Range Weather Forecasts, as of September 13, 2020, CO2 emissions from wildfires have reached about 83 million metric tonnes. That is the highest level recorded since recordkeepings began in 2003. The forest fires on the west coast are certainly exacerbated by climate change, as they are being fueled by two common contributors – dryer conditions and stronger winds. Unfortunately, this will only get worse in the years ahead. It is a sad story that highlights natural reversal risks in fire-prone areas of the country.
In addition to wildfires and other natural disasters, the intentional and illegal reversal of forests also occurs within countries wrought with political risk and unclear land rights. For example, one only needs to look to Brazil, where a horrific tale of illegal deforestation is occurring. According to conservation groups, deforestation in this region has soared since the Brazilian President, Jair Bolsonaro, took office last year. Numbers released by the Amazon Deforestation Satellite Monitoring Project, a high-resolution system operated by INPE that produces Brazil’s official deforestation data, showed that 10,100 km2 of forest were cleared between August 2018 and July 2019, a 34% increase from the previous year. Imagine being an investor in forest carbon offset projects in Brazil; would you feel comfortable that you had made a sound investment, an investment that was going to help combat climate change?
Do the risks of accidental or intentional reversal mean that we should not pursue forest or other very important NBS projects? No, I would argue that these examples are more reason to invest in projects to enhance NBS carbon sequestration. That said, when making your investments, understand thoroughly how the methodologies account for reversal risk, and be sure to identify both the geographical and political risks.
Permanent GHG Removal
Removing GHGs at the point of origin has always been a major focus for ClimeCo. We like this approach because of the permanent, non-reversible solution it provides us in the fight against climate change. To-date, ClimeCo has stopped over 20 million tonnes of CO2e from entering the atmosphere, and we are just getting ramped up! Our expertise includes nitrous oxide abatement at nitric acid plants, ozone-depleting substance (ODS) destruction, methane capture and use, methane avoidance (composting), and more. These projects have no reversal risks and are of the highest quality. ClimeCo has recently leveraged its N2O experience to lead the development of the Climate Action Reserve (CAR) Adipic Acid Protocol, which was approved by the CAR Board on September 30th. This project type will abate an additional 5-10 million tonnes of CO2e annually in the United States. Adipic acid is used to produce high performance plastics, including plastics contained in automobile airbags and light weight plastic in electric vehicles. ClimeCo is also designing and building additional nitric acid (primarily used in fertilizer production) N2O abatement projects across North America. We will soon exceed 15 million tonnes per year of CO2e abatement.
Imagine if these projects had not happened and this GHG loading had entered the atmosphere. This would mean that, in the absence of ClimeCo’s efforts, to-date there would be an additional 20 million tonnes of CO2e in the atmosphere and, over the next decade, another 150 million tonnes or more impacting our climate. If we were to rely only on sequestering, like as in a reforestation project, to reverse 170 million tonnes of CO2e, it would require in today’s marketplace a total of 850,000 acres at an average price of $12/tonne (forestry credit prices currently range from $8-15/tonne), resulting in a total cost of around $2,040,000,000. By comparison, the same impact could be realized for far less cost with no reversal risk from ClimeCo’s GHG abatement technologies.
So, my point is that there needs to be a balance of both permanent destruction of GHG molecules and sequestration in the marketplace for us to achieve our climate goals. Relying on just one method will not get us there but finding the balance between the two can.
About the Author
William “Bill” Flederbach cofounded ClimeCo in 2009 and has grown the business rapidly over the past 10 years. Before starting ClimeCo, Bill managed the air quality practice at O’Brien and Gere (OBG), and worked and managed the international carbon markets at MGM International and AgCert. He is a graduate of Pennsylvania State University and the Smeal College of Business at Penn State.