Published

3 years ago

October 9, 2023

Alice Rush

As global temperatures persist in rising to concerning new highs, national governments, multinational corporations, small businesses, and individuals are all urgently exploring ways to substantially reduce greenhouse gas emissions and mitigate climate change risks. One increasingly popular and impactful method that is gaining significant traction is the use of carbon credits to provide powerful financial incentives for businesses and consumers to cut emissions and support the rapid development of renewable energy sources.

This informative post is the 4th installment in our acclaimed new series based on our organization’s highly regarded 2023 Climate Change and Carbon Markets Annual Report.

The previous posts in this illuminating series so far have been:

In this post, we will take a closer look at various energy sources and strategies, emphasizing the importance of diverse solutions like fuel switching, renewables, nuclear energy, and carbon capture to combat climate change and achieve a sustainable energy future..

The Wedge Theory – A Portfolio Approach to Emissions Reductions

Climate experts propose a “wedge theory” framework to conceptualize the portfolio of solutions needed to reduce greenhouse gas (GHG) emissions and stabilize the climate. This approach requires deploying diverse technologies and strategies, each providing a “wedge” of avoided emissions adding up to the total reductions needed. The original theory called for 7 wedges, but emissions have continued rising, so 9 are now required. Wedges include renewables, nuclear energy, fuel switching, energy efficiency, forests and soils, and carbon capture and storage.

Understanding Fuel Switching

Fuel switching entails replacing carbon-intensive fuels like coal and oil with less carbon-intensive ones like natural gas. For example, switching from coal to gas can decrease power plant emissions by 60% per kilowatt-hour.

Coal: 25 metric tons carbon per terajoule
Oil: 20 metric tons carbon per terajoule
Natural Gas: 14 metric tons carbon per terajoule

So switching to gas provides a “bridge” to zero-carbon energy systems. The shale gas boom enabled by hydraulic fracturing accelerated this trend in the United States. However, the environmental impacts of techniques like fracking cannot be disregarded.

Nuclear Energy: A Renewable Source?

Nuclear energy, often hailed as a clean energy source, is derived from the process of splitting uranium atoms through fission. This fission process heats water to produce steam, which in turn spins turbines, ultimately generating electricity. The entire procedure emits no greenhouse gases, making it an attractive option in the fight against climate change. However, the question of whether nuclear energy can be classified as “renewable” remains a topic of contention among experts and environmentalists. While it offers a more sustainable alternative to fossil fuels, concerns about radioactive waste, the finite nature of uranium resources, and potential safety risks make its categorization as a renewable energy source debatable.

Harnessing Inexhaustible Sources: The Role of Renewables

Renewable energy derived from inexhaustible natural sources like sunlight, wind, and water offers immense potential with little to no GHG emissions. Growing renewables is crucial for climate change mitigation.

Solar Energy: Ever Improving Technologies

Solar energy, a cornerstone of renewable power sources, harnesses the abundant energy radiated by the sun. This is achieved primarily through two technologies: photovoltaics (PV) and concentrated solar plants. Photovoltaic cells, commonly known as solar panels, are designed to directly convert sunlight into electricity. They achieve this transformation using specially crafted semiconductor materials that capture photons and initiate an electric current. One of the standout features of solar PV systems is their adaptability. They can be installed on a grand scale for utility purposes, powering entire communities or even cities. Alternatively, they can be set up in smaller, distributed configurations, such as on rooftops of individual homes, allowing homeowners to generate their own electricity and even feed excess power back into the grid. As technology continues to advance, the efficiency and applications of solar energy are bound to expand, making it an even more integral part of our energy landscape.

Geothermal Energy: Tapping into Earth’s Heat

Geothermal energy is a remarkable form of power that taps into the Earth’s innate thermal energy stored beneath its crust. This energy originates from the radioactive decay of materials deep within the planet and the original heat from Earth’s formation. In regions with pronounced subsurface temperatures, often marked by volcanic or tectonic activity, the potential for generating geothermal electricity is especially high. The typical process involves accessing hot water reservoirs located below the surface. This water, when pumped up through specialized wells, transforms into steam due to the pressure difference. This steam then propels turbine generators, converting the Earth’s heat into usable electricity. As a sustainable and environmentally friendly energy source, geothermal power offers a consistent and reliable alternative to more conventional power generation methods.

Hydro and Wind: Leveraging Flowing Resources

Hydropower converts the kinetic energy of flowing water into electricity using turbine generators. Dams with reservoirs
offer reliable large-scale hydro electricity, while run-of-river systems have lower impact.

Wind power harnesses the kinetic energy of wind, again turning turbines to produce power. Onshore and offshore wind farms are rapidly expanding as costs plummet.

But hydropower and wind face challenges in location constraints, transmission needs, and intermittency. Still, they are vital and growing pieces of the renewables puzzle.

Bioenergy: Leveraging Natural Carbon Sinks

Bioenergy stands out as a unique form of renewable energy because it taps into the chemical energy naturally stored within organic materials. This energy is derived from both living organisms, like plants and animals, and those that have recently died. A diverse range of sources, including forest biomass, residues from agricultural activities and livestock, as well as various waste streams, can be converted into renewable electricity, fuels for transportation, and heat for homes and industries.

However, it’s essential to approach bioenergy with a discerning eye. While it holds great potential, not every form of bioenergy is environmentally beneficial. For instance, clearing vast expanses of forests to cultivate energy crops can lead to significant carbon emissions and disrupt delicate ecosystems. This not only negates the carbon benefits but also poses threats to biodiversity. Looking at the positive aspects, bioenergy can be obtained from waste biomass or cultivated on lands that are not suitable for other agricultural purposes. This not only provides a sustainable solution, but also has a positive impact on the climate. Such practices ensure that greenhouse gas emissions are minimized, making bioenergy a viable and eco-conscious energy alternative.

Waste-to-Energy: Capturing Landfill Gas

Landfill gas (LFG) projects prevent methane emissions from landfills by capturing methane for flaring or energy use. Methane is a potent greenhouse gas, so converting it to CO2 via combustion provides immediate climate benefits. LFG projects also reduce local air pollution.
Captured LFG can be used onsite for electricity, heat, or even vehicle fuel. These projects provide environmental and socio-economic benefits to communities near landfills.

Sequestering Carbon: Storing Away Emissions

Carbon capture, utilization, and storage (CCUS) aims to balance continued fossil fuel use with equivalent carbon storage elsewhere. CCUS removes CO2 from large point sources like power plants or directly extracts CO2 from ambient air. The carbon is then stored via injection into geologic formations, old oil and gas reservoirs, or chemical conversion into stable solids.
While technologically feasible, CCUS still faces challenges with scaling up infrastructure, ensuring permanent storage, and lowering costs. More investment is needed to develop CCUS into a viable wedge.

The All-Out Effort Needed

Bending the global emissions curve downwards requires urgent economy-wide action across all sectors. Intelligently leveraging fuel switching, nuclear energy, renewables, bioenergy, and eventually carbon storage provides paths to a carbon-neutral future. But the clock is ticking. Successfully activating these climate wedges demands policies, partnerships, and funding on a massive scale. Our future depends on rising to this great challenge.

To learn more about the role fuel switching plays in fighting climate change contact us for the full report.

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Photo by Jason Blackeye on Unsplash

Related Topics:climate change risks switching fuels

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Carbon Footprint

The real cost of 1 tonne of CO2: Translating carbon into hectares

Published

2 weeks ago

May 28, 2026

Alice Rush

Every business carbon footprint report ends with a number, the amount of carbon emissions produced by the business, less the amount of carbon reduced and offset, given in tonnes of CO₂. Many of the people who sign off on that number, including those who paid for it, cannot picture what it represents on the ground. A tonne is a unit of mass. CO₂ is invisible. The link between the amount offset in the report and a real piece of restored forest somewhere in the world is almost never indicated.

Carbon Footprint

Finding Nature Based Solutions in Your Supply Chain

Published

3 weeks ago

May 20, 2026

Alice Rush

“…Protecting nature makes our business more resilient…”

Julie Brown, Chief Financial Officer, GSK, and Co-Chair, A4S CFO Leadership Network (Europe)

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For companies with land, water, food, fiber, or commodity exposure, the supply chain may be the most practical place to turn nature from a risk into an operating asset.

Your supply chain already has a nature strategy. It may be undocumented. It may live in procurement files, supplier contracts, commodity maps, and one spreadsheet nobody opens without coffee. But it exists.

If your business depends on farms, forests, water, soil, packaging, rubber, timber, fibers, minerals, or food ingredients, nature is part of your operating system. The question is whether you manage that system with intent, or discover it during a disruption, audit, or difficult board question.

That is why more companies are asking how to find Nature-Based Solutions in Your Supply Chain. Do not begin by shopping for offsets. Begin by asking where nature already affects cost, continuity, emissions, regulatory exposure, and supplier resilience.

What Nature-Based Solutions in Your Supply Chain Means

The European Commission defines nature-based solutions as approaches inspired and supported by nature that are cost-effective, deliver environmental, social, and economic benefits, and help build resilience. They should also benefit biodiversity and support ecosystem services.

In supply-chain terms, that becomes practical. Nature-based solutions in your supply chain can include agroforestry in cocoa, coffee, rubber, or palm supply chains. They can include soil health programs for food ingredients, watershed restoration near water-intensive operations, mangrove restoration linked to coastal sourcing regions, and avoided deforestation in forest-linked commodities.

The key test is business relevance. If your procurement team relies on a landscape, watershed, crop, or supplier base, that is where opportunity may sit. The best projects do not hover outside the business like a framed certificate. They plug into the system that already produces your revenue.

Why the Boardroom Should Care

For many companies, the largest climate and nature exposure sits outside direct operations. The GHG Protocol Scope 3 Standard gives companies a method to account for and report value-chain emissions across sectors. Purchased goods, land use, transport, supplier energy, and product use can make direct emissions look like the visible tip of a very large iceberg.

The Taskforce on Nature-related Financial Disclosures notes that many nature-related dependencies, impacts, risks, and opportunities arise upstream and downstream. That is why nature-based supply chain investments matter to boards. You are managing supply security, audit readiness, investor confidence, and regulatory preparedness.

For companies exposed to EU markets, this also connects to rules and expectations such as CSRD, CSDDD, EUDR, and SBTi FLAG.

Step One: Map Where You Touch Land, Water, and Living Systems

Finding Nature-Based Solutions in Your Supply Chain starts with mapping, not marketing.

Begin with procurement and Scope 3 data. Which categories carry high spend, high emissions, or high sourcing risk? Which suppliers depend on agriculture, forestry, mining, water-intensive processing, or land conversion? Which regions face water stress, heat, flood risk, soil degradation, deforestation, or biodiversity pressure?

The Science Based Targets Network uses a clear process for companies: assess, prioritize, set targets, act, and track. That sequence keeps companies from treating nature as a mood board. You identify where the business has exposure, then decide where intervention can create measurable value.

Step Two: Look for Operational Value Before Carbon Value

This is the center of CCC’s Dual-Value Model. A nature-based supply chain investment should do useful work for the business before anyone counts the carbon.

Agroforestry may improve farmer resilience, shade crops, protect soil, and reduce pressure on forests. Watershed restoration may reduce water risk for beverage, textile, or manufacturing sites. Soil health programs may improve the stability of agricultural inputs.

Carbon and sustainability value can still be created. In some cases, the project may support Scope 3 insetting. In others, it may generate verified carbon credits. Sometimes the main value may be resilience, readiness, and better supplier data.

The IPCC has found that ecosystem-based adaptation can reduce climate risks to people, biodiversity, and ecosystem services, with multiple co-benefits, while also warning that effectiveness declines as warming increases. That is a sober argument for acting early.

Step Three: Separate Insetting, Offsetting, and Resilience

Nature-based solutions in your supply chain are not automatically carbon credits. They are not automatically Scope 3 reductions either.

An insetting opportunity usually sits inside or close to your value chain. It may support Scope 3 reporting if the accounting rules, project boundaries, supplier connection, and data quality are strong enough.

An offsetting opportunity usually involves verified credits outside your value chain. High-quality credits can still play a role for residual emissions, but they should not distract from direct reductions or credible value-chain work.

A resilience opportunity may deliver business value even if you cannot claim a Scope 3 reduction immediately. That may include water security, supplier capacity, land restoration, biodiversity protection, or regulatory readiness.

Gold Standard’s Scope 3 value-chain guidance focuses on reporting emissions reductions from interventions in purchased goods and services. Verra’s Scope 3 Standard Program is being developed to certify value-chain interventions and issue units for companies’ emissions accounting. The direction is clear: stronger evidence, tighter boundaries, and more disciplined claims.

Step Four: Design for Audit-Readiness From the Beginning

Weak data is where promising nature projects go to become expensive anecdotes.

Before public claims are made, you need to know the baseline. What would have happened without the project? Who owns or manages the land? Which suppliers are involved? How will outcomes be measured? How will leakage, permanence, and double counting be addressed?

The GHG Protocol Land Sector and Removals Standard gives companies methods to quantify, report, and track land emissions, CO2 removals, and related metrics. This matters because land projects are rarely neat. Farms change practices. Suppliers shift volumes. Weather changes outcomes.

What Recent Corporate Examples Show

Recent case studies show that supply-chain nature work is becoming more serious, and more scrutinized.

Reuters has reported on insetting to reduce emissions within supply chains, including examples linked to Reckitt, Danone, Nestlé, Earthworm Foundation, and Nature-based Insights. The same article highlights familiar problems: measurement, double counting, supplier incentives, and credibility.

Reuters has also reported on companies using the Science Based Targets Network process to examine nature impacts. GSK, Holcim, and Kering were among the first companies with validated science-based targets for nature.

The Financial Times has covered the promise and difficulty of soil carbon in corporate supply chains, including a PepsiCo example in India where yields reportedly increased while greenhouse gas emissions fell. The lesson is that carbon, soil, biodiversity, farmer economics, and measurement need to be handled together.

A Practical Screening Checklist

A supply-chain nature-based solution deserves deeper review when you can answer yes to most of these questions:

Does it sit in or near a material supply-chain hotspot?
Does it address a real business risk?
Can you connect it to supplier behavior, land management, or sourcing practices?
Can the outcomes be measured?
Are the claim boundaries clear?
Does it support Scope 3 strategy, SBTi FLAG, CSRD, CSDDD, EUDR, or investor reporting needs?
Are permanence, leakage, land rights, and community issues addressed?

Build the Asset, Then Make the Claim

Finding Nature-Based Solutions in Your Supply Chain is about identifying where your business already depends on living systems, then designing interventions that make those systems more resilient, measurable, and commercially useful.

For companies with material Scope 3 exposure, the right project can support supplier resilience, emissions strategy, regulatory readiness, and credible climate communication. The wrong project can become a glossy story with a weak audit trail.

Carbon Credit Capital helps companies design nature-based carbon and sustainability assets that embed directly into corporate supply chains. Through CCC’s Dual-Value Model, you can assess where sustainability investment may support operational resilience, Scope 3 insetting eligibility, regulatory readiness, and high-quality carbon or sustainability value.

Schedule your consultation with the carbon and sustainability experts at Carbon Credit Capital to explore how nature-based supply chain investments can support your next stage of climate strategy.

Sources

Carbon Footprint

How Climate Change Is Raising the Cost of Living

Published

3 weeks ago

May 19, 2026

Alice Rush

Americans are paying more for insurance, electricity, taxes, and home repairs every year. What many people may not realize is that climate change is already one of the drivers behind those rising costs.

For many households, climate change is no longer just an environmental issue. It is becoming a cost-of-living issue. While climate impacts like melting glaciers and shrinking polar ice can feel distant from everyday life, the financial effects are already showing up in monthly budgets across the country.

Today, a larger share of household income is consumed by fixed costs such as housing, insurance, utilities, and healthcare. (3) Climate change and climate inaction are adding pressure to many of those expenses through higher disaster recovery costs, rising energy demand, infrastructure repairs, and increased insurance risk.

The goal of this article is to help connect climate change to the everyday financial realities people already experience. Regardless of where someone stands on climate policy, it is important to recognize that climate change is already increasing costs for households, businesses, and taxpayers across the United States.

More conservative estimates indicate that the average household has experienced an increase of about $400 per year from observed climate change, while less conservative estimates suggest an increase of $900.(1) Those in more disaster-prone regions of the country face disproportionate costs, with some households experiencing climate-related costs averaging $1,300 per year.(1) Another study found that climate adaptation costs driven by climate change have already consumed over 3% of personal income in the U.S. since 2015.(9) By the end of the century, housing units could spend an additional $5,600 on adaptation costs.(1)

Whether we realize it or not, Americans are already paying for climate change through higher insurance premiums, energy costs, taxes, and infrastructure repairs. These growing expenses are often referred to as climate adaptation costs.

Without meaningful climate action, these costs are expected to continue rising. Choosing not to invest in climate action is also choosing to spend more on climate adaptation.

Here are a few ways climate change is already increasing the cost of living:

Higher insurance costs from more frequent and severe storms
Higher energy use during longer and hotter summers
Higher electricity rates tied to storm recovery and grid upgrades
Higher government spending and taxpayer-funded disaster recovery costs

The real debate is not whether climate change costs money. Americans are already paying for it. The question is where we want those costs to go. Should we invest more in climate action to help reduce future climate adaptation costs, or continue paying growing recovery and adaptation expenses in everyday life?

How Climate Change Is Increasing Insurance Costs

There is one industry that closely tracks the financial impact of natural disasters: insurance. Insurance companies are focused on assessing risk, estimating damages, and collecting enough revenue to cover losses and remain financially stable.

Comparing the 20-year periods 1980–1999 and 2000–2019, climate-related disasters increased 83% globally from 3,656 events to 6,681 events. The average time between billion-dollar disasters dropped from 82 days during the 1980s to 16 days during the last 10 years, and in 2025 the average time between disasters fell to just 10 days. (6)

According to the reinsurance firm Munich Re, total economic losses from natural disasters in 2024 exceeded $320 billion globally, nearly 40% higher than the decade-long annual average. Average annual inflation-adjusted costs more than quadrupled from $22.6 billion per year in the 1980s to $102 billion per year in the 2010s. Costs increased further to an average of $153.2 billion annually during 2020–2024, representing another 50% increase over the 2010s. (6)

In the United States, billion-dollar weather and climate disasters have also increased significantly. The average number of billion-dollar disasters per year has grown from roughly three annually during the 1980s to 19 annually over the last decade. In 2023 and 2024, the U.S. recorded 28 and 27 billion-dollar disasters respectively, both setting new records. (6)

The growing impact of climate change is one reason insurance costs continue to rise. “There are two things that drive insurance loss costs, which is the frequency of events and how much they cost,” said Robert Passmore, assistant vice president of personal lines at the Property Casualty Insurers Association of America. “So, as these events become more frequent, that’s definitely going to have an impact.” (8)

After adjusting for inflation, insurance costs have steadily increased over time. From 2000 to 2020, insurance costs consistently grew faster than the Consumer Price Index due to rising rebuilding costs and weather-related losses.(3) Between 2020 and 2023 alone, the average home insurance premium increased from $75 to $360 due to climate change impacts, with disaster-prone regions experiencing especially steep increases.(1) Since 2015, homeowners in some regions affected by more extreme weather have seen home insurance costs increased by nearly 57%.(1) Some insurers have also limited or stopped offering coverage in high-risk areas.(7)

For many families, rising insurance costs are no longer occasional financial burdens. They are becoming recurring monthly expenses tied directly to growing climate risk.

How Rising Temperatures Increase Household Energy Costs

A light bulb, a pen, a calculator and some copper euro cent coins lie on top of an electricity bill

The financial impacts of climate change extend beyond insurance. Rising temperatures are also changing how much energy Americans use and how utilities plan for future electricity demand.

Between 1950 and 2010, per capita electricity use increased 10-fold, though usage has flattened or slightly declined since 2012 due to more efficient appliances and LED lighting. (3) A significant share of increased energy demand comes from cooling needs associated with higher temperatures.

Over the last 20 years, the United States has experienced increasing Cooling Degree Days (CDD) and decreasing Heating Degree Days (HDD). Nearly all counties have become warmer over the past three decades, with some areas experiencing several hundred additional cooling degree days, equivalent to roughly one additional degree of warmth on most days. (1) This trend reflects a warming climate where air conditioning demand is increasing while heating demand generally declines. (4)

As temperatures continue rising, households are expected to spend more on cooling than they save on heating. The U.S. Energy Information Administration (EIA) projects that by 2050, national Heating Degree Days will be 11% lower while Cooling Degree Days will be 28% higher than 2021 levels. Cooling demand is projected to rise 2.5 times faster than heating demand declines. (5)

These projections come from energy and infrastructure experts planning for future electricity demand and grid capacity needs. Utilities and grid operators are already preparing for higher peak summer electricity loads caused by rising temperatures. (5)

Longer and hotter summers also affect how homes and buildings are designed. Buildings constructed for past climate conditions may require upgrades such as larger air conditioning systems, stronger insulation, and improved ventilation to remain comfortable and energy efficient in the future. (10)

For many households, this means higher monthly utility bills and potentially higher long-term home improvement costs as temperatures continue to rise.

How Climate Change Affects Electricity Rates

On an inflation-adjusted basis, average U.S. residential electricity rates are slightly lower today than they were 50 years ago. (2) However, climate-related damage to utility infrastructure is creating new upward pressure on electricity costs.

Electric utilities rely heavily on above-ground poles, wires, transformers, and substations that can be damaged by hurricanes, storms, floods, and wildfires. Repairing and upgrading this infrastructure often requires substantial investment.

As a result, utilities are increasing electricity rates in response to wildfire and hurricane events to fund infrastructure repairs and future mitigation efforts. (1) The average cumulative increase in per-household electricity expenditures due to climate-related price changes is approximately $30. (1)

While this increase may appear modest today, utility costs are expected to rise further as climate-related infrastructure damage becomes more frequent and severe.

How Climate Disasters Increase Government Spending and Taxes

Extreme weather events also damage public infrastructure, including roads, schools, bridges, airports, water systems, and emergency services infrastructure. Recovery and rebuilding costs are often funded through taxpayer dollars at the federal, state, and local levels.

The average annual government cost tied to climate-related disaster recovery is estimated at nearly $142 per household. (1) States that frequently experience hurricanes, wildfires, tornadoes, or flooding can face even higher public recovery costs.

These expenses affect taxpayers whether they personally experience a disaster or not. Climate-related recovery spending can increase pressure on public budgets, emergency management systems, and infrastructure funding nationwide.

Reducing Climate Costs Through Climate Action

While this article focuses on the growing financial costs associated with climate change, the issue is not only about money for many people. It is also about recognizing our environmental impact and taking responsibility for reducing it in order to help preserve a healthy planet for future generations.

While individuals alone cannot solve climate change, collective action can help reduce future climate adaptation costs over time.

For those interested in taking action, there are three important steps:

Estimate your carbon footprint to better understand the emissions connected to your lifestyle and activities.
Create a plan to gradually reduce emissions through energy efficiency, cleaner technologies, and more sustainable choices.
Address remaining emissions by supporting verified carbon reduction projects through carbon credits.

Carbon credits are one of the most cost-effective tools available for climate action because they help fund projects that generate verified emission reductions at scale. Supporting global emission reduction efforts can help reduce the long-term impacts and costs associated with climate change.

Visit Terrapass to learn more about carbon footprints, carbon credits, and climate action solutions.

The post How Climate Change Is Raising the Cost of Living appeared first on Terrapass.