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The emerging market in nature protection was all over Cali during the just-ended COP16 UN biodiversity summit, with new guidelines for biodiversity credits launched on the sidelines and campaigners pushing back against the idea.
The so-called “biodiversity market” has risen in importance since the landmark Global Biodiversity Framework pact, adopted at COP15 in Montreal in 2022, which calls on countries to “stimulate” innovative finance options for nature including “biodiversity offsets and credits”.
Some experts told Climate Home the hype around an unregulated biodiversity market could repeat the mistakes of the voluntary carbon markets, whose reputation is in tatters after being plagued with revelations of exaggerated emissions reductions and social problems. Others consider the new biodiversity market as a viable way to channel private finance into nature protection and restoration.
COP16 hands power to Indigenous people but fails to bridge nature finance gap
At COP16, platforms to support the “biocredit” market were launched. An advisory panel led by the UK and France presented a framework to transact “high-integrity” credits, while carbon-offset registry Verra launched its own framework for developing nature credits.
Biodiversity credits finance projects that conserve, manage or restore key ecosystems. One in Ireland sold €2 million ($2.15 million) worth of credits by planting 600,000 native trees, for example, while another in Australia sold an undisclosed amount of credits to the global bank HSBC for improving water quality in the Great Barrier Reef.
A new report by market research company Morningstar Sustainalytics shows that global assets held in funds aiming to boost biodiversity have more than doubled over the past three years, reaching $3.7 billion in 2024. The market is still small compared to climate-related assets estimated at $520 billion.
“Nature-positive”
Unlike in the carbon market, there is a difference between biodiversity credits and offsets. In the biodiversity market, biodiversity credits are “nature-positive”, meaning that companies pay for contributions to protecting nature without necessarily compensating for harmful impacts from their own supply chains. They get a reputational benefit in exchange, such as being able to brand their products as biodiversity-friendly.
But the Campaign for Nature has warned that such credits could detract from a pledge by governments to provide $20 billion by 2025 for nature conservation in developing countries, if they believe that “somehow ‘innovative finance’ from the private sector will play a significant role” in meeting that goal. In a paper, the NGO said voluntary private finance would not be enough.
Another part of the fledgling market – biodiversity offsets – came under even more fire from activists at COP16. These are used when a company does damage to biodiversity in one place, and makes up for that impact in a different place – for example by planting native trees or reducing pollution in ecosystems.
At the start of the second week of COP16, multiple green groups staged a demonstration against biodiversity offsetting and crediting, arguing that it “destroys nature and undermines the rights of peoples”.
Nele Marien, from Friends of the Earth International, said the system is seen as deeply flawed, because proper restoration of ecosystems would take too long. She also questioned whether there is enough available land with the right conditions for offsetting.
“You are destroying one ecosystem and you’re rebuilding something somewhere else, which takes decades and which really is never going to be up to the level of the original ecosystem,” Marien said.
At COP16, countries clash over future of global fund for nature protection
International guidelines
Anna Ducros, a researcher at the International Institute for Environment and Development (IIED), said offsets are a “distraction” from biocredits, which – if designed correctly – can be “genuine impactful investments” by the private sector.
The International Advisory Panel on Biodiversity Credits (IAPB), launched by the British and French governments, is one of the main initiatives aimed at achieving “high-integrity” biocredits.
The body presented its first results at COP16, announcing a set of guidelines for transacting credits in the biodiversity market. One of the key recommendations is that Indigenous people should be co-owners of projects, and participate in their design and delivery.
Asked about potential similarities between the carbon and biocredit markets, Amelia Fawcett, co-chair of the IAPB, said the new framework for biocredits builds on lessons from carbon-offsetting, adding that conversely “the carbon market can learn a great deal” from work on the biocredit market so far.
The biodiversity market has quickly developed ways to assess the impact of projects, at times collaboratively with Indigenous people. Measuring the benefits of biodiversity credits is “complex but feasible”, noted Sylvie Goulard, another IAPB co-chair.
The IAPB’s framework advises against adopting a one-size-fits-all unit for biodiversity markets – unlike carbon markets which use tonnes of CO2 as their standard measure. “Biodiversity is not fungible,” the IAPB framework reads. “So projects will be funded based on specific circumstances and outcomes.”
In COP16 host Colombia, for example, local carbon-offset verifier Cercarbono recently approved a methodology to rewards conservation projects that can demonstrate the health of “indicator species” – plants and animals that only thrive in healthy ecosystems.
Fossil fuel transition pledge left out of COP16 draft agreement
Marien from Friends of the Earth argues that a biodiversity offsetting market would be impossible in practice because with carbon “you can still have some kind of measurement”, while with biodiversity “there is none”.
“What we see is that there are so many different projects, so many different measurements. And each organisation, each company which wants to do the offset, they choose their own measurement – cherry-picking of indicators,” Marien told Climate Home News.
Small but growing
The biodiversity market is still relatively small. A report by the Compensate Foundation, a carbon-offsetting non-profit, shows that the eight most developed biodiversity credit schemes covered just 800,000 hectares of land, with only $8 million pledged in May 2023. The market is still “immature” but evolving fast, it added.
At least 11 large project developers are already working with biocredits to help pay to protect species, ecosystems and habitats: Savimbo, CreditNature, ValueNature, Replanet, Terrasos, Ekos, South Pole, Environment Bank, Wilderlands, CarbonZ and Orsa Besparingsskog.
Around 30 governments are also working on their own schemes. Some are focused on delivering net gains – meaning ecosystems must end up in a better state than when they started. The UK’s Biodiversity Net Gain approach and Australia’s Nature Repair Bill fit into this category.
New Zealand has also developed a biodiversity credit system known as Aotearoa, which sells credits to companies through voluntary contributions, certifying them as having a “nature-positive” impact in the local area. The actual conservation work is done by landowners and Indigenous people.
The apparent popularity of biodiversity credits at COP16 suggests the market could grow rapidly, experts said. IIED’s Ducros noted that one reason for the high level of interest is that under the UN nature negotiations, not much public money has yet been pledged from countries to a global biodiversity fund.
The outcomes of COP16 did little to buck this trend, as negotiators were unable to reach an agreement on scaling up biodiversity finance and only around $163 million in fresh contributions were added to a scarce pool in the Global Biodiversity Framework Fund.
Ducros added that voluntary initiatives such as the IAPB are likely to become a reference for additional efforts to ensure quality in the biocredit market.
“There needs to be supporting regulation at the national level as well as the financial architecture, which refers to standards or verification,” the researcher said.
(Reporting by Mariel Lozada; editing by Sebastián Rodríguez, Joe Lo and Megan Rowling)
The post Biodiversity market takes off at COP16, in shadow of carbon credit chaos appeared first on Climate Home News.
Biodiversity market takes off at COP16, in shadow of carbon credit chaos
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Countries have completed the first “global review” of their progress towards reversing nature loss by 2030 at the COP17 biodiversity talks in Yerevan, Armenia.
The review “notes with deep concern” that, unless action is “rapidly accelerated”, the goal to reverse nature loss and meet a set of 23 targets by 2030 “will not be achieved”.
It “urges” countries to accelerate action, including by “increased ambition in addressing the gaps”.
Much of the discussions in Yerevan focused on how to raise the necessary funds to help developing countries protect nature.
Some major economies pushed to expand the range of nations that are expected to provide finance, with countries agreeing at the end of the two weeks of talks that non-donors that want to contribute can “signal interest” before COP18.
This came after developed countries failed to meet a target to significantly ramp up nature finance over the last few years.
It also came as a landmark fund agreed at COP16 in Colombia to pay communities for the genetic resources derived from nature stands nearly empty two years on.
The Yerevan talks marked the halfway point of the “Kunming-Montreal Global Biodiversity Framework” (GBF), the “Paris Agreement for nature” first made in 2022 and due to be achieved by 2030.
During the nearly 12-hour-long final plenary, countries voted for Quito, Ecuador, to host the COP18 nature talks, which will be held in 2028.
Countries managed to sign off on all the major negotiation texts, marking a stark contrast to COP16, which ran so far over time that the Colombian presidency lost “quorum”, forcing talks to resume in Rome months later.
Below, Carbon Brief has detailed analysis of all of the key outcomes from COP17.
Formal negotiations
Finance
Finance, predictably, was at the heart of the discord and deadlock at the Yerevan talks.
At COP17, discussions on finance had to achieve several outcomes.
The first part – to take stock of biodiversity finance mobilised so far to meet the nature deal’s goals – fell under the global review.
As the global report noted, developed countries failed to meet their commitments to raise “at least $20bn a year by 2025” for nature. Delegates pointed to falling aid levels and a sharp 27% decline in environmental funding for the 2026-30 period.
The second part was to agree on how to mobilise resources for the next four years, to meet the GBF’s goals and targets.
Calls to “broaden the contributor base” of who pays to protect nature – and whether that should include emerging economies – became the most fraught element of the talks.
Eventually, countries agreed on what Switzerland described as a “super, mega-delicate” text. It hinged on major “political compromises”, with “no major winner or loser”, according to Kenya.
Per the decision, countries that want to be included on a list of developed country donors can “signal interest” through bilateral, confidential consultations before COP18 and every alternate COP after.
Finally, countries also agreed on criteria to shape and resource a new, permanent financial mechanism to protect nature after 2030.
However, this did not immediately take the form of a new fund under the COP that biodiverse countries have demanded since 2022, deferring the mechanism’s institutional structure to COP18.
Resource mobilisation discussions at the GBF’s halfway mark were supposed to agree on how to close the “biodiversity finance gap” and to “increase resources from all sources” to “at least” $200bn per year by 2030, as set out in target 19 of the GBF.
The talks were largely dominated by a push, led by the JUSCANZ bloc of developed countries, to “broaden the contributor base”. This could see emerging economies, such as Qatar, China, Saudi Arabia and India, being added to the list of countries that pay to protect nature.
Article 20 of the UN Convention on Biological Diversity (CBD) states that developed countries “shall provide new and additional financial resources” to developing countries to meet the costs of implementing measures to protect nature.
The text states that other countries – including emerging economies – may “voluntarily assume” these obligations to pay. However, it adds that this list of developed countries “shall” be reviewed periodically and amended “if necessary”.
The list was last amended in 2006.
(See this “jargon buster” which explains the specific meaning and legal weight of various terms and verbs used in UN formal documents.)
Discussions around this fraught subject had reached a dead end at intersessional talks this year, but resurfaced in Yerevan.
The first “non-paper” had four different options for expanding the contributor base. These ranged from using the World Bank’s country income groups “as a proxy” to identify high-income countries, to commissioning a study on the impacts of being included on the list.
By 21 October, the number of options swelled to eight, including two from Saudi Arabia and one from Peru.
Some countries “expressed concern” that certain options were based on a CBD secretariat study on “what constitutes a developed country”, Earth Negotiations Bulletin reported.
By the end of the first week, it was clear that the finance deadlock would have to go into informal ministerial consultations for any consensus to emerge.
At a press conference on 28 October, Christopher O’Sullivan, Ireland’s nature minister and representing the EU delegation, told Carbon Brief:
“Our position isn’t that we want to pull back in terms of contributing…but it’s been 20 years since that list was added to, times have changed and there are new realities. We just simply want those new realities reflected. I don’t fully understand why there’s so much opposition to that.”
The EU chose not to comment on which countries it would like to see on that list.
Lim Li Ching from the Third World Network, meanwhile, called the push for others to “assume the obligations” of developed countries “sheer hypocrisy”, adding that any country could make a voluntary contribution. She told Carbon Brief:
“At a forum like the CBD, this linking of income status with finance does not take into account where historical and current responsibilities lie. If you want to generate more funding for biodiversity, let’s look at sovereign debt burdens and rules, which are inequitable for developing countries. But if you can fund wars, and provide resources for your defence industry, then you know where the priorities are.”
On 29 October – at a plenary meant to adopt final texts for the most contentious subjects – Norway’s Gaute Hanssen announced that resource-mobilisation discussions would go into a smaller “friends of the chair” meeting.
Facilitated by Carolina Caceres from Canada and Imèn Meliane from Tunisia, the meeting would discuss the most contentious elements of a draft decision that had swelled to 112 brackets, denoting areas of disagreement on specific details in the text.
While the meeting was open to all, countries that were called to be present included Brazil, Canada, Chile, China, the EU, Fiji, Norway, Russia, Switzerland, Saudi Arabia, South Africa and the UK.
At the same time, a “non-paper” text by finance and environment ministers laid out countries’ red lines and compromises.
At the end of COP17, countries welcomed a final compromise text, with Kenya thanking the “strong women” co-chairs who strove to strike a “delicate” balance.
China, Saudi Arabia, Switzerland and Fiji cautioned against any further interventions, with Brazil warning: “If we open this text, we will never close it again.”
While the final decision “recognises” that “contributions from more parties would improve the mobilisation” of biodiversity finance, it steered away from issuing criteria to expand the list of donor countries.
The text makes it clear that no additions to the list would be made without inviting and confidentially consulting with interested countries, to secure their explicit consent.
Instead, the CBD secretariat “invites” countries keen to be on the list and “assume the obligations” of developed countries to “signal interest” before COP18 and at every alternate COP thereafter.
At the same time, developing countries can contribute to meeting the GBF and biodiversity convention’s goals on a “voluntary basis”, with contributions not implying inclusion on the list.
A negotiator for China told Carbon Brief at the closing plenary:
“We welcome this balanced document. It was a very long discussion that has gone [on] since [2022 nature talks in] Nairobi. But actually this time, there were a lot of sensitive issues, [there were] a lot of critical things we