Key to addressing the climate crisis is changing the balance in the so-called carbon cycle. At present, every year we are adding roughly 5 gigatons of carbon to the atmosphere*. Since atmospheric carbon acts as a greenhouse gas this increases the energy that’s retained rather than radiated back into space which causes the earth to heat up. Given that we are already above a sustainable level in the atmosphere and that CO2 remains in the atmosphere for a very long time we need to work actively on drawing it back down.
There will be many ways such drawdown occurs and we will write about different approaches in the coming weeks (such as direct air capture and growing kelp in the oceans). One way that we understand well today and can act upon immediately are forests. The world’s forests today absorb a bit more than one gigatons of CO2 per year out of the atmosphere and turn it into biomass. We need to stop cutting and burning down existing forests (including preventing large scale forest fires) and we have to start planting more new trees. If we do that, the total potential for forests is around 4 to 5 gigatons per year (with some estimates as high as 9 gigatons).
To date, however, the market for maintaining and improving forests is extremely limited. It consists primarily of two parts: a timber market for industrial usage (paper, construction) and a nascent market in carbon offsets. In the latter, forest owners receive payments with a view towards the carbon captured by their trees. This market has suffered from a number of issues, including a fundamental measurement problem: what is actually happening to a forest? Is it healthy and growing or decaying or even being logged?
Historically that question has been difficult to answer as manual inspections of forests (which are often in remote locations) are costly and time consuming. One of the many benefits of cheaper satellites and launch systems has been a profusion of space based imagery. Several companies are now working to use such images to automate the measurement of forests.
Automated high quality measurement can provide the basis for a continuous and efficient market in forest maintenance and growth. This is crucial not just from a carbon perspective, but also with regard to other contributions made by forests, such as biodiversity and wildlife. We are excited to be backing the team at SilviaTerra, which has been working on this problem for a decade and is just now launching their Natural Capital Exchange (NCAPX). This is the first investment from our new Climate Fund.
Anyone who owns or maintains a forest, even a relatively small one, will be able to participate as a supplier in NCAPX. And on the other side of the market companies and governments will be able to register as purchasers. Importantly, the market settles annually on the basis of measurement. Suppliers will get paid only if their forest was actually maintained or grew. NCAPX will be launching initially in the continental US, but SilviaTerra has plans for extending their approach globally in the coming years.
* This happens mostly in the form of carbon dioxide. Since 1 ton of carbon corresponds roughly to 3.66 tons of carbon dioxide, the other number you may see is 18 gigatons of CO2.