A biodiversity registry based in Colombia is aiming to incorporate five standards and as many as 40 credit-issuing projects in the next three years as it seeks to become a global example for nature crediting, several senior members told Carbon Pulse.

The Biotrust registry, headquartered in Medellin, was established by XM – Colombia’s independent system operator and wholesale energy market administrator – and registered its first credit-issuing nature project last December during the UN’s biodiversity COP 15 summit in Montreal.

The registered project, based in the El Globo Natural Reserve of Colombia, is currently Biotrust’s only live biodiversity activity, but it has been issued more than 62,000 credits via a voluntary biodiversity protocol developed by Colombian environmental firm Terrasos, and supported by Partnership for Forest.

Of these units, just over 100 have been retired, mostly by individuals and small companies, sold via intermediary Climate Trade and Terrasos, with all units hosted on the blockchain, meaning they are traced from issuance to retirement.

AMBITION TO SCALE

The Biotrust registry was initially conceived to be solely a project registry platform, but has since built within its offering interoperability with exchanges and other registries with the aim of being ready to scale as fast as possible once supportive regulation has been put in place and the biodiversity market begins to mature.

“Our idea is not to have just one standard but to develop and include many protocols,” Camilo Trujillo, a former environmental markets analyst at XM and former leader of the Biotrust project, told Carbon Pulse.

“There are many projects in the pipeline, but we are waiting for a third-party to verify the impact according to the protocol,” he continued, with multinational auditing company KPMG carrying out the work.

The Protocol for Issuing Voluntary Biodiversity Credits takes into account the restoration and protection of nature within a 10-square metre area and also takes into account number of years projects will be in place, such as a 20 or 30-year timeline, and then issues credits accordingly.

The configuration of the area is based on the protocol rules according to a methodological assessment, and the currently-registered project protects 340 hectares in the Bosque Humedo-Montano Bajo zone which includes 154 plant species, 120 birds species, and 21 types of mammals.

XM hopes that bodies active in the voluntary carbon or biodiversity markets will eventually specify and provide a guidance towards a standardised metric for biodiversity protection and restoration, which would allow the number of projects and domestic market to scale.

“There is no regulation for biodiversity yet but in the near future we expect some regulation to come out,” Trujillo said.

UNDER CONSTRUCTION

A report published by the Taskforce on Nature Markets this week outlined several recommendations for how best to create robust regulations for unit-based nature crediting markets, calling on national governments and bodies to be proactive in how they engage in such markets.

Rules are currently being considered and in the future, if there is a consensus, the number of projects could grow fast, according to Mariana Gonzalez, an analyst at XM.

“Our aim is to add in standards and protocols, and with them more projects. By 2025, we are hoping to have five standards and 30-40 projects,” she told Carbon Pulse.

“Overall, we are aiming to become a global example for registries to grow biodiversity projects and credits. Our challenge is to grow the market and to help other parts of the world,” she added.

At present, the registry has two standards, its voluntary biodiversity protocol and another involving tree planting. Across these two, Biotrust has four projects registered.

The challenge with scaling biodiversity markets is that, while in the carbon market there is in theory a clear metric in a tonne of CO2, for biodiversity a hectare is not necessarily a hectare around the world, with different species of flora and fauna in every country and region.

“Biodiversity markets are similar to carbon in some ways, but a lot different in terms of how we account for the impact,” said Francisco Charry, a manager at XM, referring to monitoring and measurement challenges.

“For this reason, we are trying to create a registry that can incorporate multiple actors – not just one registry or protocol – and then we can bring on more projects and credits,” he continued, adding that it was important that the many different stakeholders could interact and did not simply create different approaches in silos.

“There are many different markets around the world at a very early stage and no clear definitions yet, but once we realise we are growing the same market and see some regulation and possibly a standardised unit, then we can see real growth.”

“For now, biodiversity credits are at the normal, early stage for a nascent market,” he told Carbon Pulse.

PRICE IS COMING

In the meantime, the challenge is convincing stakeholders that they should come on board and invest in nature even at this early stage of the market, as the time to act is now, given the challenges ahead if the world wants to meet the targets agreed in Montreal at COP15 as part of the Global Biodiversity Framework (GBF).

The 23-point agreement outlined a key role for the financial sector in meeting the “30 by 30” target of protecting 30% of nature by the end of the decade.

Investors have also been urged to buy up biodiversity credits if quality has been assured, with the GBF including a goal of hitting $200 billion per year in finance by 2030.

Once the currently-nascent market reaches a new level of maturity, perhaps then a clear picture of price will emerge, according to Charry, with the value of a hectare of nature very hard to ascertain at present.

“The market is evolving and the price is coming,” he said.

For now, scaling private finance towards biodiversity is more about making agreements between stakeholders to ensure everyone is moving towards the same goal, he added.

By Roy Manuell – roy@carbon-pulse.com

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