By Maxx Dilley

Just when the need to reduce greenhouse gas emissions and avert a global climate meltdown has become critical, what we get instead is a US Administration intent on pouring more gas on the flames.  Extreme heat, sea level rise, wildfires and wild swings in precipitation and temperature are already affecting large areas and entire sectors of the economy. Impacts on supply chains and investments will become increasingly devastating, stranding some assets and devaluing others, pouring additional risks into an already destabilized global financial system. There will be consequences not just for Americans but for everyone. Despite what anyone believes, or says, climate change is not going away. We are on the verge of pushing the planet past the point of no return, it is time to assess what tools and levers are left with which to slow its progress.

A government set not just on pulling out of the Paris Agreement but also on redirecting energy and environmental policies to increase emissions accelerates dangerous interference in the climate system and the erosion of the natural environment.  Beyond the MAGA world, however, a new economic dimension – a global carbon economy – backed by the Paris Agreement, is forming. The terrestrial biosphere absorbs 440 billion tonnes of CO2 annually, approximately 11 times current annual anthropogenic emissions. Until now, conservation of ecosystems that remove carbon from the atmosphere has been largely a non-profit undertaking. As the imperative for increasing such removals increases, the value of forests, mangroves, wetlands and other carbon-scrubbing ecosystems as financial assets is becoming evident.

In a carbon market, each ton of CO2 equates to a carbon credit. In 2023 nature-based credits were trading in the European carbon market at $25.  At that price, the CO2 removed from the atmosphere by the terrestrial biosphere is worth $11 trillion annually.   Major carbon “sinks”, such as the Amazon and the Congo Basin are coming to be seen as increasingly valuable assets, giving countries with large areas of forest and other ecosystems that remove carbon a tremendously valuable resource.  Since 2024, however, scandals and mistrust have driven the price of a nature-based carbon credit on the voluntary carbon market to well below 1 US dollar.

A root cause of this devaluation has been the failure of the carbon accounting rules currently in use to accurately quantify not only nature-based removals, but also oil and gas production, agriculture, urban and solid waste emissions – all major contributors to the global carbon balance. Lack of trust in credit quality has reduced demand for nature-based removals in particular, suppressing credit prices. Low prices, in combination with expensive and inaccurate carbon accounting processes, have become major barriers to investment in conservation and expansion of natural ecosystems.  Yet such investment is essential for increasing the proportion of ever-rising emissions that such ecosystems remove from the atmosphere and slowing the accumulation of heat-trapping greenhouse gases.

Fortunately a solution to this dilemma has emerged: The realization that atmospheric monitoring instrumentation, developed over decades of scientific research, can be deployed to measure the exchanges (“fluxes”) of greenhouse gases between the earth’s surface and the atmosphere for verifying carbon credits. This instrumentation is commercially available and its use has been extensively documented.

Precision atmospheric-based greenhouse gas flux measurements from on-site instrumentation are a game changer for carbon markets and particularly for nature-based carbon projects. Accurate quantification establishes a basis for a carbon economy with proper oversight, increased trust, and transparency. Increased trust promotes investment, which increases demand, pushing up carbon credit prices. Higher prices in turn, increase the financial incentives to invest in natural removals and emissions reductions. It all hinges, however, on trustworthy monitoring, verification and reporting. In the case of uncontrolled emissions sources and nature-based removals, this entails a shift from current activity-based carbon accounting methods to site-specific atmospheric-based measurements.

Many landowners – be they jurisdictions, companies, or private individuals – have an untapped financial resource on their hands. This may take the form of a mature healthy forest, degraded lands that can be rehabilitated, or agricultural areas in which emissions can be reduced. With the right on-site real-time monitoring and verification, investors wishing to diversify and de risk their portfolios have access to an emerging asset class whose value can bear fruit for many years to come. Climate change is not going away and neither is the Paris Agreement.  As countries gear up to participate in, and benefit from, the carbon economy of the future, the only question will be, how much untapped capital is the US willing to sacrifice?

Maxx Dilley was formerly a climate research scientist at Columbia University and Director of Climate Services at the United Nations World Meteorological Organization. He currently serves as Director of Atmospheric Monitoring Services at Hyphen Global AG.

Any opinions expressed in this commentary reflect the views of the authors and not of Carbon Pulse.