GHG-R Flagship Destination

Risk-Proofing Scale
New frameworks and technology for natural climate solutions

Team: Chris Field

Risk Management Framework for Terrestrial Nature-Based Climate Solutions - Nature-based techniques must account for one-third to one-half of the carbon dioxide removal (CDR) required to keep the global temperature increase below 2˚C by mid-century, according to climate scientists. Unfortunately, the nature-based CDR pathways with the greatest potential impact—afforestation, reforestation, and revegetation (ARR)—constitute only 3 percent of today’s voluntary carbon market. The potential to scale ARR via public and private investment depends on our ability to manage risks. Inadequate risk management has caused legacy nature-based carbon credits to lose their value due to inadequate scientific backing. 

In this project, we propose to explore key risks that span the ARR project lifetime (e.g., carbon calculation risk, project failure risk, and carbon storage durability risk). We will also assess factors such as changes in accounting standards, inaccurate model projections, political risk, developer capacity, and risks of carbon storage reversal. We plan to evaluate solutions that mitigate these risks with management tools such as buffer pools, insurance mechanisms, discounting credits, “stacking” credits, portfolio securitization, and ways to replace carbon credits and repair damage in the event of adverse outcomes. Our ultimate goal is to ensure that investments in ARR lower atmospheric CO₂ by billions of tons. We will develop relationships with industry leaders to reach buyers, developers, and subject matter experts who can help us refine and validate our framework.