Zelal Aktas
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A Summary of McKinsey & Co Blue Carbon Report

Sep 30 2022 | 4 MINS READ

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two crabs on a sand beach in the seychelles

“In reversing damage to ocean environments, there is little time to waste”

states the latest McKinsey & Company report on blue carbon. The report comes at a time where we are seeing an increase in conversations around leveraging blue carbon solutions to tackle our climate crisis. Having such discussions, research and reports around this topic is critical now more than ever as we are realizing the true, untapped potential of our ocean ecosystems in supporting our efforts of reversing and preventing further damage to our planet.

The crux of conversations around blue carbon center around the lack of investment of our resources in understanding and defining ways in which we can leverage our oceans and coastal ecosystems to bring meaningful and scalable results. Blue carbon restoration could offer 1.2 GtCO2 of annual abatement with the necessary investment. Yet we are causing $25,000 billion USD in damages every year, to our coastlines alone. The McKinsey’s report outlines the issues around our oceans and offers meaningful insight for both the public and private sphere, for us to take action and begin investing more of our time and resources into Blue Carbon solutions.

There are three tiers of blue carbon solutions as the report outlines:

  1. “Established Solutions”: consisting of mangrove forests, salt marshes and seagrass. According to McKinsey, these are well established in the scientific community and have sound implementation potential. In fact, the report predicts that “in aggregate, conserving and restoring mangroves, seagrass, and salt marshes could account for about 40 percent of the total blue carbon potential”.
  1. “Emerging Solutions”: which are kelp forests and fisheries. Emerging solutions are defined as having developing peer-reviewed research but with questions yet to be answered and lacking a sound methodology in regard to VCM applicability and scalability. Research shows that kelp and seaweed forest (notorious for their growth potential) productivity can rival land-based rainforests in terms of carbon captured per area. Whereas with fisheries, improving our fishing systems away from carbon emitting activities like bottom trawling can a solution that comes at a negative marginal cost.
  1. “Nascent Solutions”: linked to biodiversity restoration and protection: is marine fauna. The report reveals how marine fauna can support vegetated coastal carbon stocks and sinks by maintaining ecological balance, support deep-sea sequestration by exporting biomass from surface layers and support deep-sea sequestration by enhancing phytoplankton carbon absorption. However, the setbacks of nascent solutions involve challenges such as: quantifying their impact, establishing permanence, preventing leakage, and proving additionality.

The challenges facing the three tiers of blue climate solutions are causing a lag in the scaling of such NbS, especially when compared to other NbS asset classes, due to inadequate financing. However, McKinsey believes that

“There is no reason why companies and organizations should not now consider blue-carbon, nature-based solutions as a potential way to meet their net-zero targets”

The report thus highlights what the private sector, including financial institutions and businesses, can do to finance blue carbon solutions. The keys to unlocking these markets according to McKinsey can be summarized as follows:

  1. Financial institutions should tackle bottlenecks by layering these asset classes  into their portfolio allocation frameworks. While the risks may be higher than other NbS, an increased risk appetite coupled with infrastructure return timelines will propel blue carbon projects as well as position investors to reap the benefits as the solutions scale and timelines see major improvements.
  1. Corporates should also increase their risk tolerance and create early momentum by partnering with leading and local NGOs to fund project development and provide technical support. Supporting project leads at every stage of development and communicating early successes will establish a track record and incentivize growth in the market.

The message is evident: the risks of inaction far outweigh the risks of investing and supporting blue carbon solutions. McKinsey’s message is heard loud and clear:

“There is work to do, but the direction is clear: consideration of blue-carbon solutions is both merited and recommended”

Our purpose is aligned with McKinsey’s message, and this report clearly outlines the work we do here at goodcarbon: supporting early-stage blue carbon projects and engaging in high-level scientific research with our Institute for Abundant Oceans, our collaboration with Oceans 2050 and world leading marine ecologist, Professor Carlos Duarte. Our goal is to achieve exactly what this report highlights: establishing a track record to motivate others to follow suit and collaborate, so that together, we can unleash the untapped potential of blue carbon Nature-based Solutions. We encourage businesses and investors to drive their net-zero targets by investing in high-impact Nature-based Solutions and our Platform provides access to a portfolio of projects including established blue carbon solutions.