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Hartree Partners to channel $2 billion toward new carbon credits

Rainforest creek in the Colombian Amazon. Photo by Rhett A. Butler for Mongabay.

Rainforest creek in the Colombian Amazon. Photo by Rhett A. Butler for Mongabay.

  • Global energy and commodities trading house Hartree Partners has pledged to channel more than $2 billion of private sector investments toward creating new carbon credits.
  • Companies can purchase carbon credits from sources that are protecting or restoring natural carbon sinks to offset their carbon emissions. However, as more companies move toward voluntary carbon markets, the demand for carbon credits is expected to outpace the supply.
  • Hartree Partners will be working with Wildlife Works, an established conservation organization, to create 20 million voluntary carbon credits a year, beginning in 2023 — representing a 40% increase in the availability of verified, avoided-deforestation projects.
  • The voluntary carbon market has been the subject of much criticism and debate, with advocates arguing that it is a means to reduce emissions through safeguarding nature. Critics say the market is hard to regulate and may allow companies to avoid the equally crucial work of reducing emissions.

Global energy and commodities trading house Hartree Partners has pledged to channel more than $2 billion of private sector investments toward creating new carbon credits.

Under the threat of climate change and increased pressure from consumers, many companies are trying to reduce their greenhouse gas emissions. But for those unable to eliminate emissions, voluntary carbon markets (such as REDD+) offer an opportunity to offset emissions.

In the marketplace, companies can purchase carbon credits from sources that are protecting or restoring natural carbon sinks such as forests. These credits are meant to ensure that the carbon emitted by the company is offset, or balanced out, by the carbon captured by nature. However, as more and more companies move toward voluntary carbon markets as a solution, the demand for carbon credits is expected to outpace the supply.

In response to this problem, Hartree will be working with the conservation organization  Wildlife Works to create 20 million voluntary carbon credits a year, beginning in 2023. According to Hartree, this will represent a 40% increase in the availability of verified, avoided-deforestation projects and reduce emissions from deforestation by 20 million tons each year, the equivalent of removing 4.3 million cars from circulation. No specific financial details of the deal have been shared.

The Gabonese and Congolese forests store and capture carbon and help to create rainfall. Image by Axel Rouvin via Flickr (CC BY 2.0).

“The scientific community agrees that the world cannot keep the increase in global temperature below 1.5 degrees [Celsius, or 2.7° Fahrenheit] without significant support from global businesses,” Ariel Perez, partner at Hartree Partners, said in a press release. “We’re delighted to be working with such experienced partners as Wildlife Works to ensure that these projects reduce emissions, protect highly threatened species, and enhance the wellbeing of thousands of people in these forest communities who hold the key to stopping deforestation.”

Wildlife Works supports and develops forestry projects in Africa, Asia and Latin America. Carbon credits produced from the projects (and funded through Hartree) will be verified using third-party certifications such as the Voluntary Carbon Standard and the Climate, Community and Biodiversity standard. According to Wildlife Works, these projects are to be developed with local communities and will have benefits that extend far beyond carbon capture, such as protecting biodiversity, improving public health, and creating jobs.

“While those in the Global North continue to debate what they want from climate action, our partners in the Global South urgently need just and effective solutions now,” Mike Korchinsky, founder and CEO of Wildlife Works said in the press release. “With Hartree Partners’ financial backing and carbon market expertise, we can implement our just and inclusive climate, community, and biodiversity solutions in many more forest communities where they’re desperately needed.”

The voluntary carbon market has been the subject of much criticism and debate. Advocates argue that it is a means to reduce emissions through safeguarding and expanding nature and that it channels financing to projects in developing economies that might otherwise struggle to get off the ground.

Critics of carbon markets say that while it is critical to protect and expand natural carbon sinks, the market may allow companies to avoid the equally crucial work of reducing emissions. It is also difficult to guarantee that emissions reductions from protected or planted forests will be permanent, as fires, droughts, pests, and other extreme events related to climate change are damaging ecosystems and releasing carbon at unprecedented and unpredictable rates.

With more fires happening, the permanence and carbon benefits of forests are not guarnteed. Shown here are heat spots in the Amazon in 2020. Image by Christian Braga / Greenpeace.

Another criticism is that, for local communities, farmers, and landowners, the price of protecting the forest has to outweigh the price of destroying it.

“Deforestation happens because it’s profitable for someone,” Arild Angelsen, an economics professor at the Norwegian University of Life Sciences and a senior associate at the Center for International Forestry Research (CIFOR), Indonesia, said in a July 2020 interview with Mongabay. “There’s good money in chopping down trees, mainly to convert the land to agriculture. And the idea that REDD [carbon markets] should change that equation by making a living tree more valuable than a dead tree — it will cost a lot of money if you really want to do that.”

Nature-based carbon offsets currently trade at around $5 a ton, but, Perez said in an interview with Reuters, he expects that under increased demand inflation will drive prices up to anywhere from $9 to $30 a ton, further incentivizing farmers not to chop down trees.

Banner image of a rainforest creek in the Colombian Amazon by Rhett A. Butler.

Liz Kimbrough is a staff writer for Mongabay. Find her on Twitter: @lizkimbrough_

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