Ecosphere+ has been set-up as part of the Althelia Climate Fund, which has already invested €101million into land-use projects around the world.
Walker describes the business model as “aligning economy with ecology”. It involves everyone from the farmers who have to live among the rainforests we must preserve (environmental assets), to high emitting companies and, thanks to the arrival of new technologies like blockchain, consumers like you and me.
Nick Breeze (NB): In simple terms, what does Ecosphere + actually do?
Lisa Walker (LW): So at Ecosphere +, our job is two-fold: One is to create the market for those environmental assets, which, are mainly in the form of carbon credits. Secondly, as sustainable commodities come online within the fund, we hope they will actually get a premium in the market.
At the moment there isn’t really recognition in the market that anybody would pay a premium for, for example, coffee, that’s produced deforestation-free in a really sustainable way. So we are really out there trying to create a market where one doesn’t really exist.
NB: Can you explain how all this is supposed to contribute to action to reverse climate change?
LW: The land-use sector is absolutely vital to climate change and to the climate targets we have set ourselves. The latest science says that 37 percent of cost-effective reductions have to come from the land-use sector. The potential is huge, so at less than $10 per tonne of carbon reduced, there is over 2 gigatonnes of potential available, just from avoiding the conversion of forests.
And many more gigatonnes available from different parts of the land-use sector, whether it is reforestation, peat land protection, wetlands, savannah, etc. So the opportunity is absolutely huge and it is really cost-effective.
It is also obviously important from a water, food, ecosystem services and sustainable development perspective. We can’t reach our sustainable development goals (SDG’s) if we don’t take action in the land-use sector.
So never mind that the fact that it is absolutely critical from a climate perspective, it is also completely vital to the SDG’s. But for something that is such a huge chunk of the potential solution, it doesn’t get anyway near the same sort of attention. So it gets less than 5 percent of public climate finance investment.
The majority of the public climate finance, for example, is going into infrastructure and energy. Otherwise there would be lots of companies and lots of funds investing in this space.
NB: Is any of this possible without proper regulated carbon markets?
LW: I think our job would be much easier if there was a regulated price on carbon, or a global price on carbon. That’s a long way off. Are we ever going to get there? It’s unlikely.
Where we are, is that we are starting to see more ambitious targets being set with a price on carbon, or trading mechanisms by sector.
We are hoping we will see more voluntary action. We’ve started a coalition of companies in Netherlands who are willing to voluntarily put a price on carbon, and to pay a price on carbon. There are lots of companies that have an internal price for carbon, but that doesn’t necessarily mean they are investing in emissions reduction.
NB: Is it really feasible to expect companies to take the lead on this ahead of regulation?
Even if we meet all the targets set out by governments in the Paris Agreement, which is a big if in itself, there is still a huge gap. So whether you are aiming for 1.5 degrees or 2 degrees there is a 12-17 gigatonne gap. That is additional emissions reductions that need to be found!
For me there is a very strategic conversation with companies to say, 'now you are going to be transparent with investors [because] your investors are much more engaged’. That is where, I think, companies will have more license now to say, ‘well okay, we may have our emissions going up for a period of time but we are going to have to take really credible steps to compensate those emissions and have a net emissions pathway that is safe.’
So that companies in the private sector can demonstrate to their investors that they have a plan that aligns to 2 degrees. Particularly for companies who have very high cost of transition and a long time to transition.
The fact that we have a lot more attention now from the real economy, from investors, from the finance sector, that makes us far more likely to be successful. We are starting to have the right conversations and I think we are creating a supporting environment for companies to take the right steps.
The numbers are still terrifying. The concentration of carbon in the atmosphere is the highest it has been for 800,000 years, so it is absolutely vital now that we step up action in all those areas.
NB: How do you capture and store large amounts of carbon in land-use projects?
LW: Where Althelia has been very successful, is working in Peru. The Tambopata Project is an example where there is the creation of a really important biodiversity reserve and national park, coupled with an agroforestry system.
What the Althelia Climate Fund has done is that they lend money on the ground into communities that have these environmental opportunities but also have environmental degradation as another competing force locally.
The ultimate premise is that we put a value on the trees left standing and then we also invest in sustainable agroforestry systems which relieve the pressures long-term on that forest, because you have alternative livelihoods.
The way it works is that the low-cost loans are collatoralised by carbon credits. That is quite innovative of itself. Those environmental assets have a value and ultimately have to be bought by somebody to sustain that value but they are also investing in sustainable production alongside the forest. You really move that community onto a more sustainable footing for the longer-term.
NB: You’ve talked about consumers being involved in this, but how could that work?
LW: The part that is really exciting for Ecosphere + is the use of blockchain and we think this can make a huge difference in the whole of the carbon market! We believe it is essential. Given there is a carbon derivative to pretty much every decision and every financial transaction we make, this should be the biggest market in the world, you would think… but it is not.
It is nothing like that. There is a real lack of trust in the market. The point of pollution is completely disconnected from the point of sale or purchase of a carbon reduction, or payment for carbon services rendered.
It is also quite an inefficient market. So, at the moment it takes a long time to go through, manually, all of these checks and balances, and verifications. It can take years before the assets have actually come to the market. That’s obviously not good.
And Blockchain can change that. It can make the process of generating carbon credits much much more effective.
The part that is really personally exciting to me is the fact that you can have micro carbon pricing transactions. In the same way that blockchain is really disruptive to fintech because at the moment, sending a dollar to a farmer in Africa will cost me more than a dollar, so why would I do that? I wouldn’t, its insane!
But in the same way, when I drink my cup of tea, there is a carbon consequence to this, positive or negative, depending on the origin of the tea, whether or not I have milk, the energy used to boil the kettle, etcetera. There is no way to easily compensate that in an efficient way and that is multiplied across everything that I do.
Up until now that is. We’ve been working in partnership with a new venture called the Poseidon Foundation that has just launched, and really hopes to deliver end to end digital solutions using blockchain and smart wallets that will make this kind of micro carbon pricing possible.
So that, as a consumer, whether I am filling up at the pump, or I am buying my cup of coffee, or whatever, maybe there is half a cent in there that is being reinvested into carbon reductions, either within that project, or equally it could be invested into all these different other areas, that we know have huge potential for emissions reductions but that are currently horrendously under financed.
Through smart phones and through technology, we can actually see the impact on the ground, end to end with blockchain. My ten cents, or ten pounds, or whatever it is that was needing to be invested, I can see it actually in practice.
That is a huge leap forward. That wasn’t ever possible before and that put people off. How can you really trust the system? Blockchain creates trust!
Nick Breeze is a climate change journalist and cofounder of Cambridge Climate Lecture Series (#ccls2018). You can follow him on twitter at @NickGBreeze.