Swedish company Qarlbo Biodiversity has revamped the methodology that saw a local bank last year pick up Europe’s first voluntary biodiversity credits and on Thursday announced five new pilot projects along with plans to invest in projects globally.

A founding member of the Swedish Biocredit Alliance (SBA), Qarlbo develops biodiversity crediting methodologies as well as investing in projects globally, company ecologist Martin Pilstjaerna, told the World Forest Forum 2024 in Sweden Thursday.

At the event, Pilstjaerna presented five pilot projects Qarlbo has developed in rural Sweden – four of them spanning a total area of 42.4 hectares, while the fifth covers a 3-8 kilometre stretch of forest road, home to more than 50 species of butterflies.

“We have chosen relatively small projects because the market is at an early stage, and we don’t quite know how big the buy interest is,” Pilstjaerna said.

Qarlbo first hit the biodiversity market limelight last year, when its CEO Aleksandra Holmlund had led a team at the Swedish University of Agricultural Studies (SLU) in developing a crediting methodology for boreal forest that saw Swedbank pick up 91 credits in a first-of-its-kind transaction in Europe.

The methodology has been refined since then, partly in line with the approach taken by other initiatives globally to design methodologies and credit standards. Qarlbo is a founding member of the UN-led Biodiversity Credit Alliance (BCA).

Each of the pilot projects will be generating credits per hectare of project area according to its success in meeting a set of pre-defined indicators, which can range from the amount of dead wood to the number of birds and bats at each project site.

Qarlbo’s approach allows for three project types – protection, restoration, and activities that lead to a greater variety in biodiversity. The five pilots all cover one or a combination of several of those, and are all located in production forests, Qarlbo’s main focus.

The project locations. Source: Qarlbo

Each project is subject to independent verification and must run for a minimum of 20 years, with Pilstjaerna stressing the need to get these early-days activities right in order to avoid criticism amid great public scrutiny, referring to various criticisms directed at the carbon market over the past couple of years.

“We have to take great care in ensuring the quality in everything we do,” he said.

“The first projects will be closely followed, and might be subject to criticism.”

The company’s position on biodiversity credit claims is aligned with that of the BCA – it does not want its credits to be used as a direct compensation for negative impact businesses’ activities are having, but is taking a more lenient view when it comes to the broader value chain.

PUSHING FOR A START

Qarlbo and the World Forest Forum launched the SBA last year along with two forest-owner groups, and last week secured a fifth member – Umeaa municipality, a city in eastern Sweden.

Its ambition is to bring together potential buyers and sellers of biodiversity credits as well as various service providers such as MRV experts.

While Thursday’s event was designed with the pilot project launches as the highlight, the group will arrange a buyers event in August, hoping to fan demand for credits, as the well-covered Swedbank purchase last year has not been followed up with further transactions.

The majority of biodiversity projects globally are located in biodiversity hotspots like in the Amazon rainforest and valuable wildlife regions in Africa, or have emerged in consequence of government policies and incentives, such as the Biodiversity Net Gain scheme in England and Scotland’s emerging voluntary market.

However, the Swedish initiative is partly banking on potential buyers of credits will want to look at local options that may have a positive impact on biodiversity near where their operations are.

Even so, Qarlbo is looking abroad as well, and have already made investments in projects in Scotland, Louisiana in the US, and Uruguay, with more to follow, according to Pilstjaerna.

TRADING PLATFORM

Meanwhile, Adam Aljaraidah Mashagbeh, CEO and co-founder of Swedish digital timber marketplace Treebula, told the event his platform was seeking the role as a trading platform for biodiversity credits.

Treebula, which counts around 70,000 forest-owners among its members, is currently only offering timber trade, but wants to expand that to all sorts of transactions forest-owners are involved, which would include allowing them to buy carbon credits to compensate for harvested forests and to sell biodiversity units they develop.

It has developed a system that provides the technology, traceability, and scalability of the biodiversity credit market, Mashagbeh said, and has won the rights to sell credits from three of Qarlbo’s five pilot schemes.

Among its options for market participants would be to let buyers such as Swedbank make available on its website every detail from the projects they buy credits from, including MRV documentation, transaction fees, project location, pictures, and so on.

He said it will also use its far-reaching data on Swedish forests to notify forest-owners whose properties may have credit generating potential.

By Stian Reklev – stian@carbon-pulse.com

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