In order to limit global temperature rises to 1.5 degrees Celsius, companies must invest in technologies to remove emissions.
The Principles for Responsible Investment (PRI) has issued a report on negative emissions technologies. The group has described this area as the “next investment frontier”, offering “trillion-dollar upside” opportunities.
A new industry may emerge, the PRI said, valuing carbon stores. Corporates have already started moving in this direction, including in the oil and gas space. As more commit to net zero targets, interest in negative emissions will grow.
The first port of call is forestry, attractive because of its low cost.
Eni, Shell, BP and Total have all made commitments to forestry projects. For instance, Eni has plans for 20 million acres of forests in South Africa, Zimbabwe, Mozambique and Ghana.
PRI called for companies to do more to tackle deforestation, rather than just focusing on reforestation. Reducing the rate at which trees are cut down is harder, though, and would require “more complex compensation mechanisms”.
Forest-related projects could provide US$800 billion per year in revenues by 2050, PRI said. Reforestation could account for $190bn by that point, while tackling deforestation would generate the remaining $610bn.
PRI’s CEO Fiona Reynolds said net zero could not be reached without “nature-based solutions. The pandemic has supercharged the investment case, especially in forestry, and this new analysis shows the magnitude of the opportunity.”
There is a critical mass for forests as a new asset class, Reynolds said. “Investors can act now to unlock investment opportunities and to take an increasingly leading role in financing. With more and more companies setting net zero targets, investors also need greater transparency about the negative emission technologies businesses will rely on to get there.
“Afforestation activities are the most viable first move, but to ensure success actors must simultaneously focus on ending deforestation. The report also highlights that an overreliance on bioenergy could have terrible consequences for the planet, biodiversity and food security.”
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