Look to the trees: How carbon markets can help countries achieve their climate targets

As of June 2022, countries with announced net-zero targets cover more than 80 percent of global emissions and account for more than 90 percent of the world’s GDP (PPP) and 80 percent of the world’s population. Countries are applying a variety of market and nonmarket mechanisms to accelerate progress toward their goals to curtail emissions.

Nature-based solutions (NBS)—projects that aim to increase carbon sequestration in the natural environment—could be a key element of this effort. Projects receive carbon credits commensurate to the amount of emissions either removed from the environment or prevented from being emitted into the environment when executed in line with methodologies prescribed by carbon standards. These include restoring degraded forests, mangroves, and peatlands and increasing the amount of carbon sequestered per hectare of land through better land management practices.

According to McKinsey Nature Analytics, these are the top 10 countries for their carbon crediting NBS potential (%):

• Brazil and Indonesia, 15% each

• Democratic Republic of Congo 5%

• Peru 4%

• Bolivia, Papua New Guinea, Malaysia, Russia, United States, 3% each

• Venezuela, 2%

• Rest of the World, remaining 44%

According to McKinsey, there are signs of growing global demand for carbon credits from companies that have committed to mitigation and net-zero targets. Recent studies forecast a 15-fold increase in demand by 2030, to 1.5–2.0 metric gigatons of CO2 equivalent (GtCO2e) a year.

As indicated, the report focus on Malaysia and be accessed by clicking at the graph below.

And here you can recall our early December post "Malaysia to launch Voluntary Carbon Market Exchange".