Biodiversity credits have a slim chance of becoming a global market larger than the voluntary carbon markets, according to an executive at a global carbon and biodiversity credit firm.

Despite the attention on biodiversity credits, demand for them has yet to be proven, according to Stephen Edwards, global director of biodiversity at South Pole.

“The likelihood that we’re going to have a global market for biodiversity credits is, I would say, low,” Edwards told Carbon Pulse on Friday.

The total value of the market will not reach a similar level to voluntary carbon markets, he predicted.

“There seems to be an appetite – quantify that.”

His comments conflict with optimistic forecasts for the market from organisations, such as non-profit Inevitable Policy Response, which said it could be worth $18-43 billion around 2050.

A strong nature positive movement is underway, but the willingness of the market to follow through with investment is unclear, according to Edwards.

“While there is a lot of desire to jump into deeper discussions, we also need to manage expectations. My suspicion is that there are going to be more regional bespoke marketplaces for biodiversity credits,” he said.

The international global biodiversity credit market is developing as a way for corporations to contribute to the protection and restoration of nature, though a number of critics have said it will inevitably develop into a mechanism that allows companies to offset or compensate for damage they do, in which case the credits they buy will be related to the type of ecosystems they degrade or damage.

Due to the social, cultural, and spiritual associations with nature, “there will be a lot of resistance” to its monetisation, Edwards predicted, adding that biodiversity credits are a more complex landscape than carbon due to the individuality of each project.

“My tagline is not that biodiversity markets will never be a global market, but reaching the scaling required will be quite challenging,” he said, speaking on the sidelines of the Corporate Investments into Forestry & Biodiversity conference this week.

Nevertheless, there will be opportunities for buying biodiversity credits on a small scale around the world, Edwards said.

South Pole would like to work with biodiversity credits regardless, he said.

The company will consider engaging in standalone biodiversity credits, as well as projects that generate both carbon and biodiversity credits, he said.

“We are really keen to understand that dynamic in terms of the stacking and bundling with carbon,” Edwards said.

“We want to play a role. We see a lot of potential in this space. It’s going to bring a lot of much-needed resources towards conservation.”

BIODIVERSITY CREDIT DEMAND?

Meanwhile, Tim Coles, CEO of biodiversity credit firm Replanet, said biodiversity markets have a “much greater appeal” than carbon for certain buyers, such as small businesses and individuals, because “nobody loves a tonne of carbon dioxide, it’s just not sexy”.

The main barrier to scaling the biodiversity credit market is disagreement around what one unit represents, he said during a panel discussion at the conference.

However, market players are converging around a credit representing a percentage gain in biodiversity per hectare, he said.

Plan Vivo used such an approach in a second consultation on a methodology for generating biodiversity certificates that closed last month.

Verra shortly after launched a consultation on nature credit standards linked to habitat quality in hectares. Some 179 projects have applied to pilot the framework so far, according to Sinclair Vincent, director of sustainable development innovation and markets at the company.

“I’m confident there are enough projects in the pipeline to help generate credits and hopefully meet demand,” Vincent said.

By Thomas Cox – t.cox@carbon-pulse.com

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