Net-zero progress overblown by inconsistencies in land carbon accounting

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Key points:

  • Nationally Determined Contributions (NDCs) – which outline national governments’ commitments to emissions reduction – account for land-based carbon removal using different methods to the IPCC. 
  • When the methods are harmonised, NDCs reduce the budget for limiting warming within Paris Agreement goals by 15-18%, equivalent to bringing forward the deadline for net zero by five to seven years. 
  • This means governments need to set far more ambitious mitigation targets to achieve net zero as defined by the IPCC, than covered by their current methods.
  • Differences in how emissions are reported from managed and unmanaged land in NDCs compared to the IPCC introduces opportunities for bias or misrepresentation, obscuring countries’ true climate impacts.
  • The amount of land designated for land-based removals in NDC pledges – about 1 billion hectares or the equivalent of around two-thirds of global arable land – is also impossible without complex trade-offs for food security, biodiversity and human livelihoods.
  • IPCC models give unrealistically optimistic estimates of land-based removal potential because they don’t consider land availability constraints, conflicts and human rights issues, or the erosion of land carbon sinks.
  • By comparison, a recent analysis modelling the social and ecological risks of land-based carbon removal potentially reduces the amount of land available for carbon removal by up to 79% compared to IPCC estimates.   
  • This discrepancy suggests that status quo estimates of land-based carbon removal used to inform global and national climate ambition may be overblown and misleading.

Emissions reduction in NDCs

Under the Paris Agreement, adopted in 2015, countries around the world agreed to submit climate action plans called Nationally Determined Contributions (NDCs) every five years starting in 2020 to address greenhouse gas emissions.1Each new NDC submitted needs to be more ambitious than the last. NDCs translate global agreements into specific national targets and are the key mechanism for countries to show their commitment to reducing emissions – through, for example, phasing out fossil fuels, deploying renewable energy, decarbonising industries and electrifying transport.

Another approach to reducing emissions involves harnessing the ability of landscapes to capture and store carbon – a greenhouse gas inventory sector referred to as land use, land-use change, and forestry (LULUCF) by the Intergovernmental Panel on Climate Change (IPCC).2LULUCF excludes non-carbon-dioxide agricultural emissions, such as methane from livestock. Natural landscapes around the world store significant amounts of carbon in plants and soil – global forests absorb an average of 7.6 billion metric tonnes of carbon dioxide per year, equivalent to around one and a half times the annual emissions of the US. 

In the LULUCF component of their NDCs, countries pledge to plant new forests (afforestation), restore degraded forests (reforestation), protect existing forests and implement sustainable forest management and soil conservation techniques. To a much lesser degree, they also project the use of bioenergy with carbon capture and storage (BECCS), whereby trees, crops or algae will, in theory, be grown to capture carbon dioxide from the atmosphere and then converted into energy, such as biofuels, with the emissions stored below ground.

These forms of carbon dioxide removal are appealing to governments and industries because they don’t necessitate immediate, large-scale changes to a country’s industrial and energy sectors.  However, although most IPCC pathways that aim to limit warming to Paris Agreement targets of 1.5°C or 2°C include carbon sequestration in land sinks, enhancing these sinks alone is insufficient to achieve the necessary carbon reductions. Ambitious and timely NDC commitments this decade could close the emissions gap needed to keep temperatures within targets but require a rapid shift away from traditional fossil fuels in addition to land-based removal. 

Due to several scientific and political reasons outlined below, the potential contribution of land carbon sequestration to emissions reductions is significantly overestimated in NDCs and scientific models. This overestimation renders the commitments outlined in NDCs unrealistic and endangers the goals of the Paris Agreement. While several publications have explored this issue, no comprehensive, easy-to-read resource has been created to synthesise the findings. The goal of this briefing is to provide a concise summary of the various reasons NDCs disproportionately rely on land for carbon removal and to outline the potential implications for the Paris Agreement.

Land carbon fluxes are the most uncertain component of the global carbon budget

Countries annually report their progress on the emissions reductions pledged in their NDCs through National Greenhouse Gas Inventories (NGHGIs), following guidelines established by the United Nations Framework Convention on Climate Change (UNFCCC). 

Collective progress towards the Paris Agreement goals is assessed every five years in the Global Stocktake, which provides benchmarks for countries for their NDC submissions. If NDCs are insufficient or lack ambition, there is a significant risk that the world will exceed the Global Carbon Budget – the total amount of carbon dioxide that can be emitted while keeping within global temperature targets, leading to temperature increases beyond the targets agreed upon in the Paris Agreement.

Because of the complex interactions of various human-driven effects on greenhouse gas fluxes from land – such as deforestation for agriculture – land carbon fluxes are the most uncertain component of the global carbon budget. At the national level, accurately tracking changes in forests and other land uses is also challenging due to variations in the quality and scope of land-use data, different reporting methods used, and difficulties in separating the influence of humans and climate on the environment as well as in reporting carbon movements in different ecosystems, with estimates relying significantly on simplified models. This means that estimates of emissions from LULUCF are less precise than those from fossil fuels, which are grounded in empirical data.

As a result, the Paris Agreement allows flexibility for countries to determine how they account for emissions and removals from the LULUCF sector, such as the use of different accounting and monitoring methods or different definitions of land-use types in their climate targets. In addition, developing countries are encouraged to gradually adopt economy-wide emission reduction targets depending on their economic and developmental needs. In comparison, developed countries are required to specify a specific, measurable and economy-wide reduction in overall emissions – for example, a 40% emissions reduction compared to 1990 levels.

NDC net-zero may not mean net-zero global emissions

The use of different carbon accounting methods for land-based removal between NDCs and model-based methods, such as those used by the IPCC, makes it hard to measure the emissions and temperature outcomes of current national commitments under the Paris Agreement. 

While both NGHGIs and the models used by the IPCC to assess the pathways necessary to achieve specific climate targets aim to identify greenhouse gas fluxes from land, they differ in how they account for the role of human activity in these fluxes. This affects the extent to which each approach attributes these fluxes to a country’s mitigation efforts.3One outcome is that estimates of land-use change due to afforestation or reforestation are in close agreement between NGHGIs and IPCC models, but differ for managed forests.

This is especially problematic for countries that rely heavily on the land sector and forest management to achieve their NDCs, leading to over- or under-estimating true emissions and creating inconsistencies between national inventories and the global carbon budget.

A recent analysis illustrated how current NGHGIs for NDCs can make national emissions appear lower than the method applied by the IPCC in assessing alignment with the Paris Agreement. It concluded that once the methods are harmonised – such as by adjusting fluxes from land use – our overall carbon budget is reduced by 15-18%, which is equivalent to bringing forward the deadline for net zero up by five to seven years. What this means is that governments need to set far more ambitious mitigation targets to achieve net zero, as defined by the IPCC.

Unmanaged land is a blind spot in carbon accounting

Discrepancies in the LULUCF emissions estimates between IPCC models and NDCs arise partly because countries are not required to report emissions from unmanaged land – such as emissions from wildfires in remote forests where human intervention is minimal or absent – as these are considered natural rather than human-caused emissions. This has resulted in some highly forested countries designating large areas of forest as unmanaged. But as emissions are still released from these unmanaged areas, excluding them leads to an incomplete picture of the carbon cycle and a country’s total emissions.

This has introduced opportunities for bias or misrepresentation. For example, Canada does not include emissions from forest wildfires in its inventory, as around 34% of its forests are classified as ‘unmanaged’. This means that emissions from natural disturbances, such as wildfires, in these forests are not accounted for.4The Canadian government does not have a database for the net carbon flux in unmanaged lands in the country, making it difficult to track carbon emissions and evaluate whether Canada’s landmass is sequestering enough carbon to offset its emissions. Additionally, fires within its managed forests are also classified as natural disturbances rather than human-caused disturbances, and so are also excluded from the inventory.

This oversight leaves significant emissions unaccounted for, obscuring Canada’s true climate impact. Around 114 million metric tonnes of emissions was excluded per year from its inventory between 2005 and 2021 – equivalent to around half the total carbon dioxide emissions from gas in Canada in 2023.5This is compounded by the fact that Canada classifies removals from mature forests as human-caused. In 2023, a year of record-breaking wildfires, natural disturbances released an estimated 640 million metric tonnes of carbon from Canada’s forests, which is more than Canada’s carbon dioxide emissions from fossil fuels in 2022.

Managed land can lead to overestimates of climate progress 

Flexible guidelines also mean that there is variation in what constitutes managed and unmanaged land. Under the Kyoto Protocol adopted in 1997, countries agreed to count greenhouse gas emissions and removals from land activities towards their climate targets only if they result from direct human actions. However, the IPCC later noted that as human activities and environmental changes are closely linked, they are not practical to separate in greenhouse gas inventories – for example, forest loss from both logging and climate-induced drought. Therefore, ‘managed land’ was introduced as a proxy for human effects in NDC guidelines, with all greenhouse gas fluxes occurring on managed land being counted regardless of whether they are driven by humans or the environment. This is not a feature of the IPCC’s models that are used for estimating carbon fluxes, which clearly distinguish between emissions from managed and unmanaged forests. 

This means that countries can classify natural forests as managed land in their NGHGIs, enabling them to report natural carbon removal as emissions reductions. Including natural land as managed land can also give a misleading picture of a country’s actual climate efforts by overestimating carbon removals and making progress seem greater than it is. This is further aggravated by the fact that some countries – particularly those that are afforded flexibility in emissions accounting – also report implausibly high forest sinks, have incomplete assessments or have inconsistent estimates across reports. Some forest-dense countries are claiming credit for the carbon that their unmanaged forests are sequestering, using this as a means to justify fossil fuel extraction while also making net-zero claims.

Land-based removal plans are unrealistic

The lack of stringent accounting guidelines has led to a significant over-allocation of land for carbon removal in NDC pledges, beyond what is technically feasible or safe. The Land Gap Report calculated that there is about 1 billion hectares of land for land-based carbon removal included in NDC pledges to 2060 – equivalent to around two-thirds of the world’s arable land and a land area bigger than China. Such large-scale commitments would be impossible without catastrophic impacts, including the displacement of food production and threats to biodiversity. 

Pledges for land-based removal in NDCs rely heavily on planting new forests or plantations, with about half of the land proposed for carbon removal in NDCs requiring changes in present land use. Land-use change is already the biggest driver of biodiversity loss, which is essential for ecosystem resilience and the provision of ecosystem services such as food and water security and carbon sequestration.6Agricultural land is already under significant pressure from rising global food demand, expanding populations and the need to balance land use with biodiversity conservation and climate mitigation efforts. A 2022 analysis estimated that afforestation and bioenergy production could place an additional 41.9 million people at risk of hunger by 2050 due to higher food prices and displacement of agricultural land

In addition to the risks around increased competition for land use, estimates suggest that the ‘safe limit’ for expanding agriculture has already been passed, resulting in ecosystem degradation. Figure 1 shows that global cropland already exceeds the planetary boundary for sustainable land use, with land-use changes in pledges and current and projected BECCS projects adding nearly an extra two-thirds to the current land-use change area. There is very little land left that can be used for carbon dioxide removal without complex trade-offs. To be genuinely effective, carbon removals plans need to factor in ecological limits and support biodiversity.

Figure 1. Land for mitigation crosses planetary boundary thresholds
Source: The Land Gap Report, 2022.

Even if the estimates of removal potential from land in NDCs were technically feasible, a 2023 analysis calculated that current NDCs are insufficient for meeting Paris Agreement targets – actions outlined in NDCs are due to result in warming of 2.5-2.9°C by 2100.

Limitations in IPCC models of future land carbon removal 

While NDCs focus on near-term actions to reduce greenhouse gas emissions, Integrated Assessment Models (IAMs) used by the IPCC project long-term scenarios for achieving climate goals. IAMs assess the interactions between climate, energy, land use and economic systems to understand the long-term implications of different policy choices and emissions trajectories, offering different pathways that illustrate how various strategies can achieve climate targets. IPCC pathways offer a framework for countries to set their emissions reduction targets and to align their NDCs to demonstrate their commitment to international climate agreements.

However, recent research argues that the methodologies in IPCC models are over-relying on land-based removal by building in assumptions about land use that are unrealistic. The models do not reflect real-world conditions such as land availability, lack nuance by failing to capture the complexities of human systems and ecosystems, and expose vulnerable communities to avoidable risks. As IPCC reports are the primary mechanism informing the UNFCCC, inappropriate models have the potential to lead to misguided policies and ineffective climate action, ultimately hindering efforts to reduce greenhouse gas emissions and meet international climate goals.

Hidden assumptions mean models over-rely on land

A key challenge with the representation of land-based carbon removal in IAMs is the assumption that significant emissions generated in the near term will be offset in the distant future through decades of land-based removal. 

Because of their emphasis on cost-effectiveness, least-cost pathways and supply-side technologies, IAMs often assume that large-scale BECCS and afforestation projects can be implemented easily, without considering competing demands for land. This leads to overestimations of the amount of land available for future carbon removal in the LULUCF sector. To demonstrate this, a 2018 study assessed the rate at which land uses change in IAMs and found that in scenarios limiting warming to 2°C by 2100, cropland for BECCS is projected to expand by 8.8 million hectares per year. This expansion rate is more than three times as fast as the historical expansion of soybean, which is currently the fastest-growing commodity crop and a significant driver of deforestation in the Amazon. 

IAMs also have idealised assumptions that do not fully consider the technical, social and economic barriers to scaling up such efforts, such as land tenure issues, governance challenges, the potential for conflict over land use​ and human rights issues, including rights to food, water and a healthy environment. 

IAMs are built on assumptions of ‘empty land’ that do not consider nomadic or Indigenous lifestyles or non-forest ecosystems, such as savannas, and also broadly assume that forests can be converted to cropland for bioenergy. BECCS only features in the NDCs of seven countries, totalling 80 million hectares of land, but it is much more prominent in modelled IPCC pathways, with a median land demand of 199 million hectares (ranging from 56 million to 482 million hectares) in 1.5°C-consistent pathways. However, given such a significant land demand for BECCS from a small number of countries in current NDCs, a land demand of 199 million hectares in future pathways is likely to be an underestimate if BECCS becomes as widespread as in modelled pathways.

The models have also been criticised by researchers for being opaque, with specific value judgments about the future buried in the mathematics of the model. By assuming that the financial costs of mitigation technologies will fall in the future – through applying a high discount rate in the model – solutions like BECCS, which has not yet been proven to work at scale, can appear more cost-effective than proven, readily implementable actions. As BECCS is considered ‘carbon neutral’ in the models, many IAMs also favour large-scale BECCS over renewable technologies to meet the requirements of one of the more ambitious climate pathways that assumes significant reductions in greenhouse gas emissions.7The RCP 2.6 emissions pathway in the IPCC’s Sixth Assessment Report.

A 2024 analysis found that a high discount rate in IAM models favours high overshoot scenarios – where global average temperatures temporarily exceed a warming target before dropping back down to, or below, the target in the future – rather than scenarios that would mitigate long-term warming effects. This is because of the short timescale over which economic adaptation is assessed in the models. These high overshoot scenarios result in a heavy reliance on land-based carbon dioxide removal in the future as emissions are not reduced fast enough to limit warming. Overshoot is estimated to be cheaper than longer-term solutions and is therefore favoured by the models. However, overshoot comes with various risks and uncertainties, such as species extinction and ecosystem collapse, and has potentially irreversible consequences. Overshoot also raises moral concerns, as climate-related impacts disproportionately affect vulnerable populations, especially in low-income countries.

Reliance on land carbon removal raises sustainability risks

A recent analysis proposed thresholds for land-based sequestration that account for social and ecological risks, thereby developing realistic and sustainable estimates for land-based CDR while accounting for environmental and resource limits (Table 1).​ The analysis estimates that the sustainable potential of LULUCF measures for carbon removal, including limited reforestation, forest restoration, reduced forest harvest, agroforestry and silvopasture, and BECCS is  3.3 billion-3.8 billion tonnes per year.8Values obtained from Supplementary Table S1 in the report.

The study finds that at high sustainability risk – the point at which multiple ecological and social sustainability limits are likely to be overstepped with potentially irreversible consequences – the value is 6.4 billion tonnes per year. These estimates of sustainable – and hence feasible – removal potential are more conservative than the average estimates in the IPCC’s Sixth Assessment Report – 15.6 billion metric tonnes of carbon dioxide per year between 2020 and 2050 for BECCS, forest and ecosystem protection, restoration and management, and agroforestry, as well as the Emissions Gap Report which included estimates of 5.9 billion tonnes per year by 2030 and 8.4 billion tonnes by 2035 for forestry-related land management,9Values obtained from Table 6.2: Sectoral mitigation potentials in 2030 and 2035. and the State of CDR Report at 7 billion-9 billion metric tonnes by 2050 from forestry-related removal, BECCS, ecosystem restoration and novel technologies such as direct air capture. Compared to IPCC estimates, a low sustainability risk scenario potentially reduces land available for carbon removal by around 79%.10This is a rough calculation assuming a direct comparison between land-use footprint in the IPCC technical mitigation potential and the analysis in Deprez et al. (2024) and was calculated as the difference between the IPCC estimates of 15.6 billion metric tonnes and the lower sustainability risk estimate of 3.3 billion tonnes.

Overall, the greatest risks are linked to scenarios with slower emission reductions and higher reliance on future carbon removal technologies. This highlights the need to reduce emissions quickly and significantly and not rely on future carbon removals – including from land – in order to avoid the worst outcomes.

Table 1. Sustainability risks for land-based carbon dioxide removal for the five IPCC Illustrative Mitigation Pathways compatible with the Paris Agreement.
Data source: Sustainability limits needed for CO2 removal, 2024.  
A/R refers to afforestation/reforestation. BECCS & A/R larger footprint assumes a low capture rate and conversion efficiency, while BECCS & A/R medium footprint assumes a medium capture rate and conversion efficiency.
Models do not account for land’s declining ability to store carbon

As IAMs are global in scale, their assumptions are simplified and generalised, and therefore they can miss key local dynamics, leading to ill-suited projections at the regional level​.11The IPCC recommends that these models are interpreted in the context of their assumptions. IAMs often oversimplify ecosystems, which do not always behave linearly in response to human activities or climate change. For instance, land-use changes can trigger feedback loops that are difficult to capture accurately in simplified models. A 2024 analysis found that IAMs tend to underestimate the risks associated with the interaction between wildfire disturbances and climate change, particularly regarding their impact on the ability of forests to sequester carbon, risking an overly-optimistic estimate of how much carbon forests can remove and store, and inaccurate predictions of future emissions​.

This is significant because land and ocean sinks are increasingly absorbing less carbon with rising temperatures. In higher emissions scenarios, the interaction between climate change and the carbon cycle becomes more uncertain due to the risk of positive feedback loops – such as forest fires and permafrost thaw – amplifying climate change impacts. These types of ecosystem responses are not fully integrated into models simply because of their sheer complexity. While models have tended to predict a slow erosion of natural carbon sinks over the next 100 years or so, other estimates suggest that the impact from feedback loops is happening much sooner than anticipated.

  • 1
    Each new NDC submitted needs to be more ambitious than the last.
  • 2
    LULUCF excludes non-carbon-dioxide agricultural emissions, such as methane from livestock.
  • 3
    One outcome is that estimates of land-use change due to afforestation or reforestation are in close agreement between NGHGIs and IPCC models, but differ for managed forests.
  • 4
    The Canadian government does not have a database for the net carbon flux in unmanaged lands in the country, making it difficult to track carbon emissions and evaluate whether Canada’s landmass is sequestering enough carbon to offset its emissions.
  • 5
    This is compounded by the fact that Canada classifies removals from mature forests as human-caused.
  • 6
    Agricultural land is already under significant pressure from rising global food demand, expanding populations and the need to balance land use with biodiversity conservation and climate mitigation efforts. A 2022 analysis estimated that afforestation and bioenergy production could place an additional 41.9 million people at risk of hunger by 2050 due to higher food prices and displacement of agricultural land
  • 7
    The RCP 2.6 emissions pathway in the IPCC’s Sixth Assessment Report.
  • 8
    Values obtained from Supplementary Table S1 in the report.
  • 9
    Values obtained from Table 6.2: Sectoral mitigation potentials in 2030 and 2035.
  • 10
    This is a rough calculation assuming a direct comparison between land-use footprint in the IPCC technical mitigation potential and the analysis in Deprez et al. (2024) and was calculated as the difference between the IPCC estimates of 15.6 billion metric tonnes and the lower sustainability risk estimate of 3.3 billion tonnes.
  • 11
    The IPCC recommends that these models are interpreted in the context of their assumptions.

Finding economic value in nature beyond carbon

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Key points:

  • Rates of biodiversity loss and nature degradation are alarming, with regions around the world at risk of long-term economic instability, worsened climate change and weakened natural systems.
  • Though hard to quantify because of the complexity of natural systems, ecosystem services – the benefits humans receive from nature, such as food and climate regulation – are estimated to be worth more than USD 150 trillion a year, or around one and a half times global GDP. 
  • Biodiversity loss is currently costing the global economy more than USD 5 trillion a year. USD 5 trillion is roughly the same amount it would cost Europe to transition to renewable energy by 2050.
  • Economies around the world are highly dependent on nature. China, the EU and the US have the highest absolute GDP exposed to nature loss – a combined USD 7.2 trillion.
  • Conservative estimates suggest that nature loss could cost the global economy at least USD 479 billion per year by 2050.
  • The negative consequences or costs associated with the destruction of nature can be greater than any economic benefits or value added from activities causing the destruction.  
  • The destruction of nature in one region can ripple across natural systems, with far-reaching consequences beyond local borders. For example, deforestation causes droughts and elevates temperatures far beyond the site of deforestation, threatening food security and economies in other regions.  
  • Nature adds ‘free’ value to society by providing essential ecosystem services that support life and economic activity without direct costs. For example, conserving  natural habitats near farms boosts production.
  • Fortunately, estimates suggest that conserving biodiversity and ecosystems is much more affordable than destroying them.
  • Restoring and preserving biodiversity is substantially less expensive than building a net-zero emissions energy system – the required annual investment in biodiversity is only 15% of that needed for energy system transition.
  • The funding gap for biodiversity conservation is approximately USD 830 billion per year, comparable to the size of the global tobacco market. 

Human societies are fundamentally dependent on nature 

Nature provides a host of valuable ‘ecosystem services’ – the benefits humans receive from natural ecosystems, such as food, medicine, resources, clean air, climate regulation, climate change mitigation and disease control. These services are essential for sustaining life. 

Biodiversity – the variety of species, genes and ecosystems on earth – is key to supporting nature’s ecosystem services and the value they bring. Biodiversity helps maintain ecosystem balance by supporting species interactions that regulate nutrient cycling, water filtration and climate regulation. It ensures resilience to environmental changes, since diverse ecosystems are better able to recover from disturbances such as extreme weather events. Biodiversity is also important for preserving the genetic diversity that is crucial for the adaptation and evolution of species.

Rates of biodiversity loss and nature degradation are alarming – 50% of natural ecosystems are in decline, over 85% of wetlands are lost, and 25% of species are at risk of extinction. More than three-quarters of essential ecosystem services have decreased over the past 50 years. Additionally, there has been a significant decline in per person ‘natural capital’ – the world’s stocks of natural assets. The stock of natural capital per person declined by almost 40% between 1992 and 2014, while produced capital per person doubled over the same period.

Nature-related risks like deforestation, habitat destruction and resource depletion can lead to long-term economic instability, worsened climate change and weakened natural systems resilience. For example, the diversion of rivers for cotton farming has depleted the Aral Sea in Central Asia, causing an economic crisis as well as increased local and regional temperature extremes due to the impact on the sea’s climate regulating function. 

Nature-related risks are interconnected, meaning that a disruption in one area can amplify risks in other areas. For example, moisture from the Amazon helps generate rainfall in the region and in surrounding areas. Deforestation reduces this function, causing drought in neighbouring regions and impacting agriculture, water availability and overall climate stability across most of South America.
Five human-caused drivers are responsible for 90% of nature loss over the last 50 years: land- and sea-use change, climate change, natural resource use and exploitation, pollution and alien invasive species.

It pays to protect nature

Financial value of nature 

Though hard to quantify because of the complexity of natural systems, ecosystem services globally are estimated to be valued at more than USD 150 trillion a year, or at least one and a half times global GDP in 2023. The ocean economy alone has a value of up to USD 3 trillion a year, or 3% of global GDP. 

The knock-on effects of current biodiversity loss are costing the global economy more than USD 5 trillion a year. USD 5 trillion is roughly the same amount of investment needed for Europe to transition to renewable energy by 2050. Conservative estimates suggest that a collapse of essential ecosystem services, including pollination, marine fisheries and timber provision in native forests, could result in annual losses to global GDP of USD 2.7 trillion by 2030.1This model includes various tipping points, which are changes in an ecosystem that push it into an entirely different state, such as the transition of forests into savanna due to land degradation and climate change, with potentially catastrophic changes for global climate regulation. The model baseline is a scenario where these services do not collapse. Similarly, biodiversity loss is believed to be costing the global economy 10% of its output every year.   

The global economic costs of eroded ecosystem services between 1997 and 2011 alone resulted in up to USD 20 trillion in annual losses to the value of these services due to land-use change, and as much as USD 11 trillion in losses due to land degradation. 

A World Economic Forum (WEF) analysis suggests that USD 44 trillion of economic value generation – just under half the GDP of the world – is moderately or highly dependent on nature and its services and is therefore highly vulnerable to nature loss. Construction, agriculture, and food and beverages are the three largest sectors that are highly dependent on nature, the report said. These sectors generate a total of USD 8 trillion in gross value added (GVA) – about twice the size of the German economy.

Analysis of industry-wide GVA at national or regional levels reveals the extent to which economies depend on nature. In some of the world’s fastest-growing economies, such as India and Indonesia, around one-third of GDP is linked to nature-dependent sectors, while Africa generates 23% of its GDP from these sectors. Globally, larger economies including China, the EU and the US have the highest absolute GDP exposure to nature loss – a combined USD 7.2 trillion.

Cost of nature destruction exceeds value of exploiting it

The negative consequences or costs associated with the destruction of nature are in many cases greater than any economic benefits or value added from the activities causing the destruction. For example, deforestation for palm oil production was a key driver of fires in Indonesia in 2015, which on some days released more carbon emissions than the entire US economy. These fires cost the economy USD 16 billion – more than the value added from Indonesia’s palm oil exports in 2014 (USD 8 billion), and more than the entire value of the country’s palm oil production in 2014 (USD 12 billion). 

In Europe, fertiliser runoff is one of the most pressing environmental challenges, with nitrogen pollution from agricultural runoff estimated to cost the EU between EUR 70 billion and EUR 320 billion annually. This is more than double the estimated value that fertilisers add to EU farm income.      

Commodity supply and demand can trigger different environmental impacts in different regions, where extraction might lead to deforestation in one area while consumption worsens pollution in another. In the Netherlands, much of the feed for intensive livestock systems comes from soy, predominantly sourced from Brazil, including from regions linked to deforestation. 

Demand for soy puts immense pressure on the Amazon’s ecosystems, driving deforestation, which leads to biodiversity loss and a reduction in the forest’s ability to capture and store carbon. This not only disrupts local ecosystems but has global consequences, as the loss of the carbon-sequestering capacity of forests accelerates climate change, while the degradation of biodiversity undermines global ecosystem stability. The environmental and health impacts of livestock farming in the Netherlands are estimated to cost EUR 9 billion a year – making the damage by the sector three times higher than its added value. This estimate does not account for environmental impacts outside of the Netherlands.

Costs of inaction

Highly conservative estimates suggest that a reduction in six essential ecosystem services – namely pollination, coastal protection, water yield, timber, fisheries and carbon sequestration – could cost the global economy at least USD 479 billion per year by 2050, or cumulatively almost USD 10 trillion,2Between 2011 and 2050. with a 0.67% drop in global GDP every year.3This is under a ‘Business-as-Usual’ scenario, which is a high-emissions scenario aligned with the RCP8.5 pathway used in the IPCC’s Sixth Assessment Report. The economic model does not include impacts from tipping points, such as the collapse of rainforests or pollination. Land degradation, desertification and drought are anticipated to cost the global economy USD 23 trillion by 2050. 

Global GDP could contract by USD 2.7 trillion as early as 2030 if the timber, pollination and fisheries industries partially collapse as a result of environmental destruction.4As the analysis only considered a narrow set of risks, the authors of the report warn that this estimate should be viewed as a lower bound. Credit rating firm Moody’s also identifies eight sectors, including protein and agriculture, with ‘high’ or ‘very high’ inherent exposure to natural capital and with almost USD 1.6 trillion in rated debt. Increasing environmental pressures will erode the capacity of these sectors to pay their debts.

Companies involved in nature destruction face increasing financial risks. For instance, a palm oil company was fined USD 18.5 million for fires that destroyed forested land on its concession in Borneo in 2015. Similarly, the world’s largest meat company JBS received USD 7.7 million in fines in 2017 for sourcing cattle from deforested areas in the Amazon. 

New regulations and shifts in demand as societies respond to climate change could mean that 40 of the world’s largest food and agricultural firms, together worth more than USD 2 trillion, lose up to 26% of their value by 2030. This equates to a loss to financial institutions connected to these firms of USD 150 billion – comparable to the value of financial institution losses following the 2008 financial crisis. A 2023 report found that the total financial impact of deforestation for 1,043 companies that disclosed their deforestation risks in 2022 is nearly USD 80 billion, emphasising the need for urgent and effective management of deforestation risks.

Nature has value beyond carbon

Natural systems, such as forests, are often valued primarily for their role in carbon capture and storage – global forests are estimated to be worth at least USD 150 trillion, almost twice the value of global stock markets and over 10 times the worth of all the gold on Earth. While carbon sequestration accounts for a substantial portion of this value, forests are invaluable beyond this.

Global human health is intricately tied to tropical rainforests, which host an immense variety of plant species, many with medicinal properties. Between the 1940s and 2006, almost half of anti-cancer pharmaceutical drugs originated from products of natural origin. 

It is estimated that every new pharmaceutical drug discovered in tropical forests is worth USD 194 million to a pharmaceutical company and USD 927 million to society as a whole. With almost 90% of pharmaceutical drugs originating from tropical forests still yet to be discovered, the total value to society could be as much as USD 303 billion.5Values have been adjusted from 1995 values to 2024 values based on the Consumer Price Index and have not taken into account any industry-specific changes such as changes in market dynamics or production costs.

In the cosmetics sector, the supply of shea butter, used in various topical products, comes from a tree that is threatened by deforestation and pollinator loss.

The value of nature extends beyond the extraction of goods. Mangrove forests, which are valued for their vast carbon sequestration ability, also offer significant economic benefits from flood protection, including for the US, China, India and Mexico. It is estimated that mangroves reduce damage to property from floods by more than USD 65 billion per year and protect more than 15 million people.

The costs of nature destruction transcend borders 

The destruction of nature in one region can ripple across natural systems, with far-reaching consequences beyond local borders. Deforestation in the Amazon, Congo and Southeast Asia has been linked to significant reductions in both local and regional rainfall. This can negatively impact agriculture and hydropower generation, posing threats to food security and energy generation beyond local borders.  

Deforestation in Brazil and Bolivia has altered regional rainfall patterns, exacerbating droughts in neighbouring regions. In Colombia, the 2015-2016 megadrought was intensified by these disruptions in moisture recycling. This drought caused a national energy crisis as hydropower – responsible for over 70% of Colombia’s energy – became unreliable due to plummeting river water levels. As a result, energy prices soared nearly tenfold, showcasing how environmental damage in one country can exacerbate economic consequences in another. 

The impacts of deforestation go beyond drought. In Southeast Asia, logging and the conversion of forests to palm oil plantations causes soil erosion and results in increased soil sediment in rivers. This sediment is carried downstream and is eventually released into the ocean where it settles on coral reefs, threatening their survival. An estimated 41% of coral reefs globally are impacted by sediment export. 

Coral reefs provide a wealth of ecosystem services, such as coastal protection, food and recreation. By reducing wave energy by up to 97%, they protect up to 5.3 million people on coastlines and USD 109 billion in GDP per decade from flooding and erosion impacts. Coral reefs are an important food source, with global reef-associated fisheries valued at USD 6.8 billion.6 In 2010. Additionally, coral reef tourism is valued at USD 36 billion a year, which is more than 9% of total coastal tourism value in the world’s coral reef countries. 

Forests keep people and the atmosphere cool both locally and regionally by providing shade and releasing water vapour, acting as a natural air conditioner and alleviating heat illness. In the Amazon, deforestation can increase temperatures by up to 4.4°C7Note that absolute temperature change can be expressed in Kelvin (K). A change of 1°C is equal to a change of 1 K. as far as 100 km away. Similar estimates have been made for other forested regions around the world. 

Pollution, such as fertiliser and animal waste runoff from unsustainable farming, can have widespread impacts on nature. Runoff from agricultural fields flows into water bodies, leading to excessive nutrient levels, which depletes oxygen in water and harms aquatic life. The Gulf of Mexico’s dead zone – an area of low to no oxygen that can kill marine life – occurs every summer and is mostly caused by nutrient runoff from excessive fertiliser application and livestock on Midwestern US farms, carried to the gulf via the Mississippi River and its tributaries. In August 2024, the dead zone reached approximately 6,705 square miles – an area almost the size of Kuwait – potentially making 4 million acres of habitat unavailable to marine species. 

The yearly costs of the dead zone to fisheries and the marine environment were estimated at up to USD 2.4 billion between 1980 and 2017. Studies have found that the dead zone reduces the size of large shrimps relative to small shrimps, with prices for large shrimps driven up as a consequence, impacting consumers, fishers and seafood markets.

Pollinators ensure our food security 

The agriculture and food and beverage sectors are highly dependent on pollination – a critical ecosystem service of immense economic value that is essential for human well-being through its impact on agricultural production and food security. Pollinators impact about 35% of global crop production by volume, with 87 out of 115 major crops worldwide depending on pollination by animals, such as insects, birds and bats, to some extent. The contribution of pollinators to global agricultural production and food security is estimated at USD 235 billion to USD 577 billion annually. In the UK alone, the value of pollination services from nature is GBP 430 million.8In 2011.

Pollinators are facing a significant threat from habitat loss, pesticide use and land-use changes. More than 40% of insect pollinators worldwide are facing extinction. In the short-term, the costs of a ‘pollinator collapse’ are valued at a mid-point range of USD 1 trillion or around 1-2% of global GDP. 

Native bumblebees in North America are critical pollinators of blueberries. The value of fresh cultivated and wild blueberry exports from the US in 2023 exceeded USD 127 million, with key export markets in Canada, Taiwan, Japan and South Korea. Yet bumblebees are in decline in North America due to habitat loss, pesticide use and climate change, posing a threat to blueberry production.

Pollinator loss is anticipated to continue on an upward trend in the future, with projections indicating that pollinator decline could cause annual crop production losses of more than USD 50 million for the US, around USD 125 million for Brazil, and around USD 225 million for China by 2050.

Nature adds ‘free’ value 

Nature adds ‘free’ value to society by providing essential ecosystem services that support life and economic activity without direct costs. These services are often overlooked in economic calculations, yet they are fundamental to human well-being and environmental sustainability. The destruction of these natural systems can lead to significant financial costs in the long run as humans are forced to replace or mitigate these services.

In Northern California, wild bee species were found to significantly increase tomato production both in terms of size and numbers. Tomatoes are able to self-pollinate, meaning they don’t rely on pollinators to produce fruit, but this example demonstrates the added value from pollination services in nature. 

In Costa Rica, pollinators from forests increased coffee yields by 20% within 1 km of forests and improved coffee quality by reducing poor-quality berries by 27%. The study estimated that pollination services from two forest patches generated around USD 62,000 per year for a single coffee farm, representing approximately 7% of its total income. For both the coffee and tomato examples, simply being in close proximity to forested or natural habitats benefitted production on farms.

The natural flood control function of wetlands offers another example. During Hurricane Sandy in 2012, which devastated the Caribbean and east coast of the US, wetlands are estimated to have saved more than USD 625 million in avoided flood damage.

Solutions and distractions

Conserving biodiversity and ecosystems is estimated to be much more affordable than destroying them. By 2030, an estimated USD 996 billion9In 2021 USD. annually will be required to sustainably manage biodiversity and maintain ecosystem integrity. This represents less than 1% (0.7-0.9%) of global GDP in 2023. It is also substantially less than the amount spent annually on subsidies that accelerate the production or use of natural resources or that undermine ecosystems, which are estimated at USD 1.8 trillion to USD 6 trillion – or around 6% of global GDP. Nature-smart policy interventions, which already have demonstrated success and could achieve further impact and value, can substantially reduce the risk of ecosystem services collapse by 2030, with economic gains of up to USD 150 billion.

Protecting and restoring biodiversity is crucial to achieving net-zero goals – it enhances ecosystem resilience, supports agricultural systems and increases carbon sequestration. At the same time, estimates suggest that restoring and preserving biodiversity is substantially less expensive than building a net-zero emissions system – the annual funding needed to protect and preserve biodiversity is only 15% of the investment needed to transition to a net-zero emissions energy system.

Biodiverse ecosystems like forests, wetlands and grasslands store significant amounts of carbon, helping to offset emissions. They also provide critical services such as regulating the water cycle, supporting pollination and improving soil health, all of which are necessary for sustainable agriculture and climate resilience. It is estimated that a transition to deforestation-free operations, entailing a 75% reduction in deforestation rates by 2025 and the restoration of 300 million hectares of forests, could result in an economic gain of USD 895 billion by 2030 through a reduction in annual environmental costs of USD 440 billion.

Closing the funding gap

The funding gap for biodiversity conservation is approximately USD 830 billion per year, comparable to the size of the global tobacco market in 2022. About 73% of the funding is needed to manage productive landscapes and seascapes, with a significant focus on transitioning agriculture to sustainable practices. 

There are various financial mechanisms for closing this funding gap for biodiversity conservation. Public finance presently plays a significant role, with government budgets and tax policies supporting biodiversity projects. It is estimated that 80% of biodiversity financial flows – around USD 133 billion per year10Value is from a 2022 report. – are from domestic and international public finance.

The private sector contributes around USD 29 billion per year to biodiversity through various sustainable debt products. The largest contributor is payments-for-ecosystem services, where financial incentives are given to landowners or resource managers to adopt practices that conserve or enhance ecosystem services that derive value from nature. These schemes contribute around USD 9.8 billion a year. However, they are often vaguely defined and suffer from issues such as payment volatility and high project costs. 

Debt-for-nature swaps allow countries to cancel portions of their foreign debt in exchange for committing to fund local conservation projects. Estimates suggest that as much as a third of the USD 2.2 trillion of developing country debt could be eligible for debt-for-nature swaps. However, the impact of this on debt levels has been very small: between 1987 and 2023, these swaps offset only ​​around 0.11% of debt payments by low- and middle-income countries. Critics also argue that these swaps sometimes commodify nature and could undermine the sovereignty of local communities if not properly managed.Carbon offsets and credits aim to compensate for greenhouse gas emissions and environmental impacts by investing in projects that reduce or remove carbon from the atmosphere, such as reforestation or afforestation. However, they have been criticised for allowing companies to continue emitting carbon while relying on offset projects that may not always deliver long-term or verifiable climate benefits.

  • 1
    This model includes various tipping points, which are changes in an ecosystem that push it into an entirely different state, such as the transition of forests into savanna due to land degradation and climate change, with potentially catastrophic changes for global climate regulation. The model baseline is a scenario where these services do not collapse.
  • 2
    Between 2011 and 2050.
  • 3
    This is under a ‘Business-as-Usual’ scenario, which is a high-emissions scenario aligned with the RCP8.5 pathway used in the IPCC’s Sixth Assessment Report. The economic model does not include impacts from tipping points, such as the collapse of rainforests or pollination.
  • 4
    As the analysis only considered a narrow set of risks, the authors of the report warn that this estimate should be viewed as a lower bound.
  • 5
    Values have been adjusted from 1995 values to 2024 values based on the Consumer Price Index and have not taken into account any industry-specific changes such as changes in market dynamics or production costs.
  • 6
     In 2010.
  • 7
    Note that absolute temperature change can be expressed in Kelvin (K). A change of 1°C is equal to a change of 1 K.
  • 8
    In 2011.
  • 9
    In 2021 USD.
  • 10
    Value is from a 2022 report.

Relying on soil-based carbon capture to offset livestock emissions is risky

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Key points:

  • Soil carbon sequestration is the process through which atmospheric carbon dioxide is captured and stored in soil, forming part of the natural global carbon cycle.
  • In undisturbed natural ecosystems, carbon may be stored in the soil for thousands of years. However, the conversion of natural land into farmland has depleted soil organic carbon stocks and released this stored carbon into the atmosphere.
  • Livestock grazing systems are responsible for the loss of significant amounts of soil carbon over the past six decades.
  • Regenerative grazing – which involves rotating livestock on land for short durations – has been proposed as a solution for improving soil carbon stocks and offsetting emissions from livestock farming.
  • Recent estimates suggest that improved grazing management could potentially take-up around 63  gigatons (billion metric tons) of carbon in vegetation and soils.
  • However, once methane and nitrous oxide emissions from grazing animals are considered, an estimated 135 gigatons of carbon take-up would be needed to offset these emissions.
  • Relying on soil carbon sequestration to offset emissions from grazing systems is risky as carbon storage is finite and reversible, and increased emissions of methane and nitrous oxide could offset any gains from carbon sequestered in the soil. The impacts of regenerative grazing are also highly context-dependent.
  • Despite uncertainties, sequestering carbon in soil could contribute to climate change mitigation in the medium term in certain regions of the world.
  • Management practices aimed at maintaining or improving soil carbon offer other benefits, such as improved soil health, erosion control and reduced emissions intensity, with positive outcomes for yields and farmers’ incomes.


Soil carbon sequestration: the basics

Soil carbon sequestration is the process through which atmospheric carbon dioxide is captured and stored in soil. Plants capture atmospheric carbon dioxide through photosynthesis, and the carbon is stored in its organic form in plant tissues while the oxygen is released back into the atmosphere. As the leaves, roots and other tissues of plants decay, the carbon contained in these tissues is released into the soil through microbial activity, enriching the soil carbon pool. The carbon pool is also enriched through the exchange of carbon between plant roots and soil microbes.

Soil carbon sequestration is a natural process that forms a critical part of the global carbon cycle – whereby carbon is exchanged among all life on earth, the soil, water, minerals and the atmosphere. Soil organic carbon is important because it regulates the functioning of ecosystems, provides energy for soil microorganisms and improves the structure of soil. It is also an important carbon sink – the soil organic carbon pool contains up to 2,400 gigatons (or billion metric tons) of carbon, which is more than double that of the atmospheric carbon pool.

In undisturbed natural ecosystems, carbon may be stored in the soil for thousands of years. However, the conversion of natural land into agricultural land from human activities has depleted soil organic carbon stocks by reducing the amount of plant tissues in soil and encouraging erosion, thereby destroying soil structure and speeding up microbial breakdown. It is estimated that over the last 15,000 years, and particularly in the last 200 years, the growth of farmland has released 133 gigatons of carbon from the top two metres of the soil layer. This is equivalent to about 80 years’ worth of present-day US emissions.

This deficit of soil organic carbon has created an opportunity to draw earth-warming carbon dioxide from the atmosphere and store it in the soil in an effort to mitigate against climate change.

Grazing systems and soil organic carbon

Grasslands are a significant reservoir of soil carbon, storing around one-third of the global soil organic carbon pool.1This definition of grasslands includes some savannas, woodlands, shrublands and tundra. However, estimates suggest that livestock grazing is responsible for the loss of 46 gigatons of soil carbon over the past six decades – which is more than four years’ worth of current global fossil fuel emissions.

While moderate to heavy livestock grazing depletes the soil organic carbon pool on average, light grazing has been found to increase soil organic carbon stocks. This is because grazing can stimulate plant productivity and the allocation of carbon to the roots for microbes, thereby increasing carbon sequestration.2Some studies show that grazing-induced changes in vegetation are not correlated with changes in soil organic carbon. As a consequence, ‘regenerative grazing’ – which involves rotating livestock on land for short durations to allow soil to recover and draw carbon dioxide from the atmosphere – has been proposed as a solution for improving soil carbon stocks and mitigating the climate change impacts of livestock grazing. Currently, global grazing systems emit more greenhouse gases than they sequester.

A 2021 analysis found that ‘adaptive multi-paddock grazing’ – a form of regenerative grazing – increased soil carbon stocks compared to conventional grazing. The authors emphasised the importance of carbon being stored in the mineral fraction of the soil – meaning it is tightly bound to soil particles. This makes the sequestered carbon more resistant to disturbance and means it will be stored for a longer duration. The study is backed by a global meta-analysis, which found that regenerative practices, particularly integrated crop-livestock systems, have significant potential to increase soil organic carbon pools because they enhance the storage of carbon in the mineral soil fraction.

Another study reported that over a four-year period, the emissions from adaptive multi-paddock grazing on a beef farm could be completely offset by the carbon sequestered in the soil. Some advocates of regenerative grazing have gone as far as claiming it can ‘reverse climate change’. They argue that increasing livestock production could help sequester more carbon from the atmosphere into the soil.3This is in contrast to experts who believe that managing livestock numbers will be essential, together with other strategies, for reaching Paris Agreement commitments.

A long-term field experiment found that rotational grazing accumulated more soil organic carbon than other management systems. However, the findings have been questioned by other scientists, who point out that the analysis did not consider the contribution of methane and nitrous oxide – two significant greenhouse gases associated with livestock farming – and the method for measuring the permanence of soil carbon was unsuitable. According to these scientists, “grazing cattle, well-managed or not, has no role in enhanced C sequestration.”

How much carbon could these strategies sequester?

An analysis published this year estimates that improved grazing management could take-up around 63 gigatons of carbon in vegetation and soils globally. This number is three times higher than IPCC estimates, which the authors attribute to the overly simplistic model used by the IPCC. To put the number into perspective, 63 gigatons is about six years’ worth of emissions from fossil fuels globally.

A separate analysis published in 2022 suggests that 148 to 699 megatons (or million metric tons) of carbon dioxide equivalent could be sequestered in the soil globally every year through improved grazing management.4Other estimates suggest that improved grazing management could sequester 0.28 megatons of carbon per hectare per year.

Sequestration potential overstated

Some scientists are more cautious and suggest that the potential for soil carbon sequestration under regenerative agriculture to offset emissions may be greatly overestimated. There are several reasons why relying on soil carbon sequestration to offset emissions from livestock systems is risky.

1. The capacity for soil to store carbon is finite

In long-term undisturbed ecosystems, soil carbon stocks are assumed to be equal to soil carbon emissions because the system has reached a state of equilibrium, or a steady state. When the ecosystem is disturbed – such as a grassland being overstocked with cattle – carbon is released from the soil due to, for example, erosion from reduced vegetation cover. Once a new land management practice aimed at enhancing soil carbon sequestration – such as rotational grazing – is introduced on this disturbed land, the rate of soil carbon sequestration follows a sigmoid curve, being high during the initial period after adoption of the practice and then slowing down upon approaching a new soil carbon steady state (Figure 1).

Figure 1. Soil carbon sequestration after a new management practice is introduced
Note: Figure has been adapted from Considering the influence of sequestration duration and carbon saturation on estimates of soil carbon capacity, 2006. The graph is theoretical and the axes are not true to scale.

The new steady state reflects a balance between carbon inputs and outputs under the new management practice, with soil carbon stocks no longer increasing. For grassland management, estimates suggest that the time until the maximum sequestration is reached is, on average, around five years, with declining rates for another 45 years. In other words, the rate of carbon sequestered within the first several years of a new practice being introduced does not reflect the long-term total sequestration rate.

Initial soil carbon sequestration rates from short-term studies on regenerative grazing should therefore not be extrapolated to estimate the total soil carbon sequestration potential of the practice. In some cases, the carbon sequestration potential can be improved beyond the new steady state with the addition of inputs, such as manure.5Importantly, inputs such as manure can also increase the emissions of other greenhouse gases, offsetting soil carbon sequestration gains. Soil carbon saturation then occurs when further inputs no longer lead to increased carbon stores, representing a cap on the carbon storage capacity.6Estimates suggest that saturation is reached at 82 g C kg-1 silt+clay for 2:1 clay dominated soils and 46 g C kg-1 silt+clay for 1:1 clay dominated soils.

2. Soil carbon storage is reversible

For the sequestered carbon to remain in the soil, and for the rate of sequestration to reach its full potential, the new practice needs to be implemented permanently. However, disturbances such as fires or floods – which can be difficult to predict and control – could reverse the practice and cause the release of stored carbon. Climate change is contributing to this reversibility, causing the release of decades-old soil organic carbon by thawing permafrost and accelerating microbial decomposition. This creates a positive feedback loop that further accelerates global warming. As soil organic carbon is sensitive to temperature changes, it is estimated that the potential storage capacity could decrease by 14% by 2040 under a moderate global warming pathway.7The SSP3−7.0 pathway from CMIP6.

3. Warming potential of other greenhouse gases

Land management changes that enhance soil carbon sequestration may increase the emissions of other, more potent, greenhouse gases. In certain cases, even small increases in these other gases may offset the benefit from the change in soil carbon stocks offered by the practice. Ruminant (cows, buffaloes, sheep and goats) farming emits nitrous oxide (from manure), which has a global warming potential 265 times that of carbon dioxide, and methane (from belching animals), which has a warming potential 28 times that of carbon dioxide. They are both also shorter-lived gases than carbon dioxide and have a stronger initial warming effect. Estimates suggest that ruminants emit 110 megatons of methane and 2.4 megatons of nitrous oxide every year, in addition to carbon dioxide.8The ratio of emitted methane: carbon dioxide in ruminants is 4:1. Studies claiming regenerative grazing systems have a net benefit have been criticised for failing to consider the warming contributions of these gases.

A 2023 study estimated the potential for ruminant emissions to be offset through soil carbon sequestration in grasslands, considering the different warming potentials and lifespans of these greenhouse gases. The analysis suggests that around 135 gigatonnes of carbon would need to be sequestered in order to offset global methane and nitrous oxide emissions from ruminant farming – more than double the carbon sequestration potential of improved grazing management. For some grasslands, the soil carbon stock would need to increase by up to 2,000%, which emphasises how infeasible grassland management might be for offsetting ruminant emissions once the warming from other gases is considered.

4. Context is important

Though moderate to heavy grazing consistently reduces soil carbon stocks on average on a global scale, the impacts are highly context-dependent and will vary depending on a number of factors such as the climate conditions, type of soil, type of grazer, the vegetation type and the grazing strategy used. For example, sheep have a greater negative impact on soil carbon sequestration than cattle; the impacts of a higher grazing intensity will be more severe in warmer climates but less severe when water availability is high; and certain types of grasses will improve carbon sequestration, even under heavy grazing.

Due to this wide variability, some scientists argue that it is difficult to anticipate the soil sequestration potential of regenerative grazing practices. There are also concerns that farmers’ skills and motivation levels could limit the outcomes and scalability of practices. Difficulties in measuring the results also makes monitoring soil carbon stocks challenging – it typically takes a decade of monitoring to determine how much carbon a practice is sequestering.

Soil carbon markets

Through soil carbon markets or ‘carbon farming’, farmers implement a management practice that allows them to sell ‘carbon credits’. The credits, a quantifiable amount of carbon dioxide that has been sequestered in the soil from the management practice, are being proposed as a solution to mitigate climate change, with millions of dollars’ worth of credits already sold. However, the uncertainties around the permanence, monitoring and accounting of soil carbon make soil carbon certificates unsuitable for climate change mitigation.9While permanence is a necessary condition for creditable carbon offsets – which are typically issued over a 100-year period – this permanence refers to the duration for which the sequestration practice is carried out rather than the stored soil carbon. Therefore, when the practice ends and the carbon is lost to the atmosphere, it is no longer a permanent removal. As emphasised by a prominent soil scientist, “It’s really hard to evaluate the actual greenhouse gas benefit of these programs”.

Sequestration offers important benefits

Despite several limitations, sequestering carbon in soil could make a meaningful contribution to climate change mitigation in the medium term in certain regions of the world, depending on the management strategy that is used. For example, converting arable land to grassland or forest will almost always have a positive effect on soil carbon sequestration. In addition, many management strategies are well-established and are not reliant on the development of new technologies, meaning they can be implemented quickly and with relative ease.

Additionally, management practices aimed at maintaining or improving soil carbon typically offer multiple other benefits, such as improved soil health, erosion control, increased water availability and reduced emissions intensity, with positive outcomes for yields and farmers’ incomes.

Article 6 of the Paris Agreement at COP29: What is at stake?

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Key points:

  • Article 6 (A6) is a key component of the Paris Agreement. It aims to finalise the rules on how countries can use UN-governed carbon markets to reduce their emissions and reach their climate targets. 
  • Negotiations have been drawn out over multiple years and the resulting lack of clarity means that A6 is already being misused. Competing objectives mean that instead of helping to slow climate change, A6 could in fact let countries get away with making inadequate emissions cuts.
  • Making progress on A6 has been highlighted as a priority by the COP29 Presidency. While the topline rules have been largely agreed upon, with some progress made during 2024, several key details are still under discussion. 
  • Sticking points for COP29 negotiations are likely to include ensuring transparency in credit trading and review processes, implementing strong methodology requirements that prevent the inclusion of low-integrity carbon credits and developing robust guidelines to prevent human rights abuse and fraud.  
  • There are reports that decisions on Article 6.4 will be pushed through early in Baku, but countries may still be able to request changes to the mandate of the Supervisory Body, which governs A6.4 implementation, to provide more specific guidelines in how the Body operates. 
  • In light of the scrutiny over carbon markets, non-market approaches to financing nature may also attract more attention at COP29.
  • Decisions made are also likely to influence the voluntary carbon market, particularly those regarding double counting and carbon removals.
Update: Progress on A6 at COP29

Since this briefing was published, the operational standards on A6.4 were pushed through for adoption on the first day of COP29. Parties at COP29 will still need to agree on other issues before Article 6.4 is completely operationalised, including rules for the authorisation, transparency and reporting of carbon credits and deciding on how different carbon credit registries will function.

The decision to address the issue so early in the conference has been criticised, as it meant countries and observers did not have much time to consider and debate the issue. Isa Mulder of Carbon Market Watch said that “Kicking off COP29 with a backdoor deal on Article 6.4 sets a poor precedent for transparency and proper governance.” 

Last updated 15 November 2024.

What is Article 6? 

A6 is one of the least accessible and most complex articles in the whole Paris Accord. It allows countries to cooperate voluntarily with each other to achieve the emission reduction targets set out in their Nationally Determined Contributions (NDCs) via the transfer of carbon credits. 

A6 sets out two market mechanisms and one non-market mechanism:

Fig. 1: Carbon trading mechanisms under Article 6
Source: Adapted from The Nature Conservancy (2023)
How do carbon markets work?

Carbon markets allow countries and governments to buy and sell emission reduction credits to help them reach climate targets. The underlying principle is fairly straightforward: country A can buy a credit, the money from which pays for country B to restore a rainforest or a natural carbon sink. Country B benefits from receiving funding for its efforts to restore ecosystems, while country A can count that credit towards offsetting its own hard-to-abate emissions and meeting its NDC targets. If the rules are properly defined and implemented, carbon markets can, in theory, unlock additional finance and cut the cost of reducing emissions.

There are two types of carbon markets:

  • Voluntary markets (VCM) are unregulated. They function outside compliance markets and enable companies and individuals to trade carbon credits on a voluntary basis. The credits generated by these markets are not allowed to fulfil compliance market demand, unless they are explicitly accepted into compliance regimes. Unregulated VMCs exist because of companies making voluntary net zero and carbon neutrality claims, often for PR purposes. A6 does not apply directly to voluntary markets but is very likely to influence them (see below).

Offsetting is not the same as reducing emissions

However, the concept of offsetting carbon emissions has faced criticism for being a distraction from emissions reductions. Offsetting is at best a zero-sum game and by design does not reduce emissions: done properly it merely compensates for emissions growth by a reduction elsewhere. If it lacks environmental integrity (i.e. does not result in real emission reductions where it promises to) it leads to an overall increase in emissions. 

The quality of credits has come under fire, with critics pointing out that the majority of offsetting projects are not permanent and do not actually reduce or remove emissions. Nature-based offsets, for example, are vulnerable to climate impacts such as extreme weather and forest fires. 

Credits need to be issued from projects that are ‘additional,’ meaning the reductions would not have occurred without the project. Credits issued from renewable energy projects are no longer seen as ‘additional’ emission reductions, as they are already profitable without relying on revenues from selling credits. 

Reports have also shone a light on the overuse of credits as a way to avoid emissions reductions. Countries and corporates are putting unrealistic demands on offsets, making assumptions that massively overestimate the amount of land available for offset projects.

Why will Article 6 be so important at COP29?

While the framework of A6 – the ‘Article 6 Rulebook’ – was agreed at COP26, slow negotiations at COP27 and COP28 have left key details undefined and open to interpretation. The longer we wait for effective carbon markets – that sell only a small number of high-quality offsets for hard-to-abate emissions – to become a reality, the further we delay essential emissions reductions. The release of the IPCC Sixth Assessment Report in 2023 confirmed that we cannot afford to invest in ineffective solutions. Straightening out the details of A6 could ensure that ineffective offsetting is not allowed. 

Agreeing on the practical details remains one of the main objectives of COP29, with countries and the private sector already gearing up for A6 implementation. The current context for the conference means there are many reasons eyes will be on A6.

The integrity of carbon markets has come under fire

A series of investigations have raised major red flags over the integrity of the voluntary carbon market. An analysis released in 2023 found that 90% of Verra’s rainforest carbon credits do not represent real emission reductions. Additionally, a systematic review of 90% of all carbon offsets in the VCM, estimated that “only 12% of the total volume of existing credits constitute real emissions reductions.” As a result, demand and prices have fallen, particularly for nature-based offsets, and the value of the VCM has shrunk by 61% in the past year alone after peaking in 2022 at over USD 2 billion. 

Corporations have distanced themselves from offsets due to increased scrutiny over credit quality and accusations of greenwashing, as well as crackdowns from regulators on claims of “carbon neutrality”. Developing stringent rules for the global carbon market under A6.4 could set a precedent for high standards and restore faith in carbon trading if paired with regulation to ensure that credits are only used to offset hard-to-abate emissions.

Questions are being raised as to whether, in practice, the use of offsetting aligns with 1.5°C. Setting higher standards and proper review processes that exclude previously issued credits with poor integrity could ensure that a smaller number of high-quality, expensive offsets become the norm, rather than flooding the market with poor-quality credits that undermine 1.5°C. However, even if done perfectly, carbon offsetting is at best a zero-sum game and should only be used to compensate for emissions in hard-to-abate sectors.

Lack of agreement on details means A6 is being misused 

A6.2 has been operationalised and countries can already technically start trading A6.2 credits, despite there still being many details that need ironing out – including crucial review and transparency processes. This has resulted in the announcement of large-scale deals that potentially lack integrity and do not disclose their methodologies. Carbon markets are being pushed as a climate solution and are growing without any regulations or laws, particularly in Africa. 

For example, UAE company Blue Carbon has signed MoUs with eleven countries to gain rights to massive portions of land and develop carbon credits, with only a small proportion of the benefits going back to the government and local communities. The UAE also announced in 2023 that it would buy USD 450 million worth of carbon credits from the African Carbon Markets Initiative, which aims to achieve a 19-fold increase in the size of the African carbon market by 2030.

We are at a crunch point for land 

Demand for land is increasing as high food prices put pressure on increasing production, leading to indigenous land rights abuses, pressure on farmers and unstable ecosystems. NDCs and corporate targets are drastically over-relying on land for mitigation. The Land Gap Report states that to meet the nature-based mitigation pledges in NDCs alone, a land mass almost four times the size of India is needed – and that is before corporate targets are taken into consideration. Improving A6 standards and transparency could help to reduce the burden on land.

Financing for nature is becoming more urgent 

As scrutiny of forest credits grows and emissions avoidance credits are no longer eligible for use under Article 6, negotiations at COP29 may turn towards alternative ways to pay for the protection and restoration of nature – especially in the lead-up to COP30 in Brazil, which is expected to focus on forestry – and alongside ongoing negotiations on financing for nature in the Convention on Biological Diversity. This is essential for adaptation and mitigation – the IPCC estimates that protecting natural forests currently contributes between five to seven billion tonnes of CO2 per year to climate mitigation efforts. 

Initiatives such as the LEAF Coalition aim to bring the public and private sectors together to mobilise funding for tropical forest protection, and similar announcements may follow. However, like other carbon offsetting schemes, these initiatives have raised concerns, including over the threat to indigenous rights and enabling greenwashing. Negotiations on A6.8 – outlining non-market mechanisms for making contributions – can help to answer questions around what the Paris Agreement means for nature, and who pays.

What is REDD+ and how does it relate to Article 6?

REDD+ is a UN financing mechanism, outlined in Article 5 of the Paris Agreement. ‘REDD’ stands for Reducing Emissions from Deforestation and Forest Degradation, while the ‘+’ encompasses additional activities of conservation, sustainable management of forests and enhancement of forest carbon stocks. Under the REDD+ framework, developing countries can receive results-based payments for emissions reductions when they reduce deforestation. 

However, emissions reductions from REDD+ projects should not be treated as carbon credits or be used for offsetting purposes. Reductions are verified under the UNFCCC’s REDD+ Measuring, Reporting and Verification process and are known as REDD+ Result Units or RRUs. To verify RRUs, the UNFCCC requires national-scale accounting and reporting to address leakage and permanence. RRUs are also subject to safeguards.

Ultimately, UN REDD+ projects are only designed to enable the transfer of money to countries engaging in forest-related activities, so the REDD+ framework misses some essential criteria to qualify as a carbon standard. For example, there is no fixed methodology, with countries given freedom in how they measure results.

 REDD in the VCM

RRUs under the REDD+ programme have never been implemented in the UN carbon trading system. However, the accounting methodologies of the VCM standard Verra enable credits from REDD projects to be traded in the VCM. In the VCM, REDD is used to describe the category of projects related to avoided deforestation. 

Verra is the leading provider of REDD credits and had certified over 97 REDD projects, generating 445 million credits as of 2023. Verra provides carbon credit project developers with a large amount of flexibility when estimating emissions reductions, enabling them to choose among several different methodologies to calculate the amount of credits their projects would create. As a result, emissions reductions are often overstated, among other issues, and REDD credits have drawn increasing criticism in recent years. Other major carbon registries, such as the Gold Standard, do not allow the inclusion of REDD activities.

Eligibility of REDD+ credits under Article 6

Some REDD+ activities can be considered for inclusion under A6.4 if they meet the relevant criteria and involve emission reduction and removal – as opposed to emissions avoidance, which are not eligible for use under A6.2 or A6.4. For use under A6.4, the UN’s A6.4 Supervisory Body would have to approve REDD+ related methodologies. However, to be traded as ITMOs under A6.2, countries only need to decide that REDD+ activities meet the criteria under A6.2 – which can be decided nationally.

Some submissions from countries and organisations have already called for REDD+ activities to be included in A6. For example, the Coalition for Rainforest Nations (CfRN), a non-profit and single-issue negotiating block of 50 countries, led by Papua New Guinea and Costa Rica, helped establish the concept of REDD+ in 2005 and is a major proponent of its use. CfRN claims that there are “no legal reasons” that RRUs cannot be used like other carbon credits and traded in global carbon markets. 

The CfRN has promoted the idea of REDD+ “sovereign” credits, where countries are able to sell their UN-verified RRUs from REDD+ projects. The CfRN has already set up a platform where host countries can sell UN-verified RRUs to businesses and individuals on the VCM, called REDD.plus. The platform is completely separate from UN infrastructure.

In 2022, Gabon said it planned to issue 90 million RRUs, citing its right to do so under Article 5 of the Paris Agreement. However, the country failed to find buyers for its credits. Additionally, Xpansiv, the world’s biggest VCM platform, reversed plans to host trading of RRUs in 2023 due to technical reasons and lack of demand.

In September 2023, CfRN launched a for-profit spin-off, called ITMO Ltd., which sells post-2020 RRUs. It has renamed these RRUs as ITMOs, therefore classing them as equivalent to credits traded under A6.2. CfRN has signed MoUs with countries including the Democratic Republic of the Congo, Honduras and Belize to sell their credits through this platform. In August 2024, it supported Suriname in the development of 1.5 million ITMOs, which were back-issued from 2021 through improvements in addressing deforestation and forest degradation. ITMO Ltd. claimed, “These are the world’s first carbon credits from the new Paris Agreement Carbon Markets where countries are allowed to issue and trade their Sovereign Carbon with other countries and the private sector.”

There is not much that can be done to prevent the creation of ITMOs from REDD+ activities, as this is up to countries under A6.2. However, it is possible that there will be no buyers for these low-quality credits, preventing this approach from being used widely. 

Negotiations have progressed slowly since COP28

While the adoption of the Article 6 Rulebook lays out the fundamental rules for how A6.2 and A6.4 are to operate, negotiations over the past few years have been slow, leaving a great deal of work to be done – and the devil lies in the detail. At COP28, lack of consensus on many agenda points meant countries failed to adopt decisions on A6.2 and A6.4. The COP29 President has highlighted that it will be a priority for technical issues around Article 6 to be finally resolved at COP29. 

Parties met at negotiations in Bonn in June 2024 to discuss “crunch issues” for 6.2, “including authorizations, the agreed electronic format, sequencing of reviews and addressing inconsistencies, and registries.”  Generally, there is a divide between countries that want to see more regulation over carbon trading and those that want trading to occur with little oversight. 

Few decisions were made in Bonn, with many core issues to be discussed again in Baku. However, negotiators did approve an appeals and grievance procedure under A6.4. Another positive development is the decision in Bonn that emissions avoidance will not be allowed under either A6.2 or A6.4 and that this will only be reopened for discussion in 2028 – a win for environmental integrity. It is unlikely that they will be included again at this later date. 

The Supervisory Body (SB) for A6.4 also held meetings throughout 2024. As negotiators were not able to reach an agreement on the recommendations put forward by the SB on A6.4 during COP27 and COP28, the SB has taken a different approach for COP29: instead of releasing recommendations on methodology requirements and on activities involving removals for approval by during COP, the SB has converted these into internal SB standards which “procedurally do not require CMA approval”, according to Olga Gassan-zade, member of the A6.4 SB. This approach seeks to avoid the standards being open for line-by-line edits for countries’ approval at COP29. However, countries must still endorse this approach at COP29 and provide guidance if needed.

During pre-COP meetings, the SB agreed upon mandatory environmental and human rights safeguards, which will be enforced through a “sustainable development tool.” The ‘SD Tool’ provides a structured approach for users to conduct a risk assessment, identify and assess potential positive and negative impacts on sustainable development goals, and monitor and report on indicators. 

As in previous years, it is essential that while parties are keen to get things up and running, rushing the negotiation process may jeopardise transparency and proper safeguards for environmental integrity and human rights.

What are the key sticking points for COP29?

Article 6.2 (bilateral trading between countries)

While ITMOs are already being traded, there are still some key elements that need to be agreed upon to ensure the functioning and integrity of trading. The bottom-up approach and lack of transparency requirements under A6.2 means there is a risk it may be exploited. Negotiations in Bonn, as well as those in past years, failed to reach an agreement on many key issues, which will be discussed again at COP29.

Ensuring transparency

So far under A6.2, countries have been given a broad scope to decide whether key details of carbon trading should remain confidential, including the type and quantity of offsets traded. There are no limits on what information can be treated as confidential – while countries “should” explain why information is confidential, there are no requirements to do so. This is particularly concerning as, unlike A6.4 where credits are subject to UNFCCC authorisation, under A6.2 countries themselves decide if credits meet their standards. Countries do not have to provide any information before they announce the issuance and use of ITMOs. 

Discussions during Bonn on what information should be disclosed, and if any of this should be compulsory, failed to reach a consensus and will continue during COP29. Activists and civil society have previously raised concerns that a lack of transparency will make it hard to ensure deals struck between countries are meeting integrity standards. Carbon Market Watch suggests that in addition to the authorisation of ITMOs (which can be done at any stage of the process, including after they have been issued and even sold for use), cooperative approaches should also be authorised, requiring upfront disclosure of information.

Strengthening the review process

A review team, made up of technical experts assigned by nations participating in A6.2, is mandated to check deals struck under A6.2 for inconsistencies and ensure all rules are being met. The scope and remit of this team has been weakened considerably during previous negotiations. There are also questions about how confidential information will be treated in this review process. Although the review team is able to carry out checks on ‘inconsistencies’ that are deemed confidential, they may not be able to make their findings public or impose any sort of consequences. 

At discussions in Bonn, the development of a code of conduct for how to treat and review information identified as confidential was requested for negotiation at COP29. Recommendations on the review process and associated confidentiality will be negotiated at COP29 and have the potential to give more weight and authority to the review process. This is particularly important, as there are no safeguards to prevent human rights abuse under A6.2 – which is a major concern given the human rights abuse and land abuse cases in other carbon market schemes, particularly the CDM.

Clarifying the authorisation process

The authorisation process for ITMOs, including timing and the possibility of revoking credits, was debated during talks at Bonn. Some countries want flexibility to take back their authorisation at a future date, if, for example, they are unable to meet their NDC targets, which could threaten the integrity of trading under A6.2. The authorisation process could also enable revocation of ITMOs under “extreme circumstances”, such as fraud or human rights abuse. Recommendations on country authorisation requirements will be discussed at COP29.

Deciding on registries

To trade ITMOs, countries either need to set up their own national registries to track the types of credits being sold by who and from where, which can involve a lot of time and capacity, or use a third-party registry or use the A6.2 international registry. The A6.2 international registry is still under negotiation and not yet operational which has stalled progress on A6.2. Some countries are in favour of linking the A6.2 international registry with the A6.4 registry, while others oppose it. Decisions regarding a registry are not likely to have huge implications for the environmental integrity of A6.2, but the type of registry decided upon could help ensure countries have equal access to A6.2 regardless of national capacity and pre-existing carbon trading infrastructure.

Who has already signed deals under Article 6.2?

There are already 91 cooperative agreements at various stages of implementation under A6.2, with Japan, Singapore and Switzerland having signed the most of all countries. However, most of these only represent an intention to trade in the future and are not legally binding – only 22% are at the signed bilateral phase. 

Only deals for five projects have issued authorisation statements, Switzerland’s agreements with Ghana, Thailand and Vanuatu, and only one transfer has occurred under A6.2 – from Thailand to Switzerland for a “Bangkok E-Bus Programme” at the start of 2024. However, it is typically a lengthy multi-year process for countries to authorise A6.2 agreements.

Under A6.2, governments can agree for companies to trade ITMOs within the overarching frameworks established by those governments, enabling private sector participation in ITMO transactions. 

The involvement of some companies has raised concerns. For example, the UAE-based private company Blue Carbon has come under fire for bilateral deals announced with eleven countries, most in Africa. One deal gives customary land rights of around 10% of the land area of Liberia to Blue Carbon, which claims to be generating credits by adhering to REDD+ standards. However, key gaps arise: for example, REDD+ credits must be ‘additional’ – meaning the emissions reductions would not have occurred in the absence of the project – which is not true in the case of Liberia, as the purchased land already includes nature reserves.

Article 6.4 (project-based emission trading)

The A6.4 Supervisory Body (SB) has been set up to establish the rules for a new global carbon market. As trading under A6.4 will be overseen by the UN, key rules need to be agreed upon before the global market for carbon trading can be set up. 

Many aspects of A6.4 have already been decided by the SB, and not all outstanding items are set to be discussed at COP29. However, there is potential for countries to request the SB to set future timelines to review guidance that is not up for discussion during the conference.

Aspects of A6.4 to be discussed at COP29

Approving standards on methodologies and removals

The SB has developed standards on methodology requirements and on activities involving removals. However, as the SB has its own governing power, it can make decisions without requiring approval during COP. During COP29, it will only need to seek approval on the two standards it has developed on methodologies and removals. It has only asked the decision-making body at COP to endorse this approach and provide additional guidance. 

Although there are some shortcomings in the texts, it is likely that these standards will be approved. Even if the standards are adopted, countries are able to request changes to the mandate of the SB, providing them with more specific guidelines on the guidance they are able to provide. For example, they may request that scientists will need to be involved in the development of the methodological requirements.

Development of registries

Transactions under A6.4 will be recorded in a registry, the features of which are still to be discussed at COP29. Developing an effective registry can help improve the integrity and transparency of A6.4. Carbon Market Watch recommends that the registry provides publicly available and up-to-date information on each project and a record of all transactions and holders of A6.4ERs, among other information. Some countries have raised the need for a registry that connects both A6.2 and A6.4 transactions, as well as registries outside the UN system, however, views on this were split in Bonn.

Other outstanding issues on A6.4

Transfer of Clean Development Mechanism (CDM) credits

The SB has developed a standard on methodology requirements, but, until new A6.4 methodologies are approved, the first 6.4 activities will likely be from transitioning CDM projects, which are likely of lower quality compared to current methods, threatening the integrity of A6.2 transfers. This will likely include large amounts of credits from reforestation and renewable energy activities from countries like Brazil and India, which issued many CDM credits. So far, the transition has been approved for nine activities which include hydropower, renewable energy and clean cookstove projects – all likely to have low additionality.

Developing clear guidelines for authorisation

Under A6.4, emission reduction credits authorised by host countries to be used towards NDCs, or other international mitigation purposes, must undergo a corresponding adjustment (CA) to ensure they are not double-counted. This means that if an emission reduction credit is authorised for sale to another country, it must be taken off the host country’s balance sheets and only accounted for by the purchaser. However, it remains unclear when exactly a 6.4ER credit is required to undergo a CA. At COP27 it was suggested that if a country does not authorise the use of credits for trading, these could be used as a “mitigation contribution 6.4ER”, where they do not require a CA as they will only be claimed for use by the host country. Lack of clarity means contribution credits may be double counted and could create what some observers have termed a ‘subprime market’ in carbon credits, which could overestimate progress towards 1.5°C.3It was also decided at COP27 that credits (known as Certified Emissions Reductions) issued under the previous carbon trading scheme (the Clean Development Mechanism) established under the Kyoto Protocol registered after 2013 can be transferred to the A6.4 for use against a first NDC without a corresponding adjustment by the host country. The issue of double counting may also be exacerbated if changes can be made after authorisation.

Human rights considerations

The Sustainable Development Tool is designed to mandate environmental and human rights safeguards and the appeals and grievance procedure are important steps in the right direction, but also contain room for improvement. Given the corruption and fraud within carbon market schemes, there are concerns that the measures as-are will not go far enough to prevent this in future. According to the Institute for Agriculture and Trade Policy, the Sustainable Development Tool still lacks “criteria that Parties could use to combat carbon market related corruption”. Both the Sustainable Development Tool and the appeals and grievance procedure have been agreed upon, however, it is possible that countries can ask for this to be reviewed and strengthened in future.

Will countries favour A6.2 over A6.4?

One other distinctive feature of A6.4 is a requirement that credits issued will have 2% of credits cancelled for Overall Mitigation of Global Emissions (OMGE) and 5% of credits forwarded towards a global adaptation fund to help Global South countries finance efforts to adapt to climate change. This means that conducting transactions under A6.2 is comparatively less costly than under A6.4, and might result in A6.2 becoming the favoured mechanism – particularly as the infrastructure to start trading already exists and it is still unclear when exactly trading under A6.4 can commence. 

Trading under A6.2 still requires countries to develop their own national registries and spend time and effort signing agreements with other countries or organisations. However, transactions under A6.2 may be conducted with lower integrity, as countries can decide their own guidelines for issuing credits, whereas UN guidelines have to be used to trade credits under A6.4.

Article 6.8 (Non-market Approaches)

A6.8 remains the least well-defined and discussed approach under A6. As the ongoing scrutiny of VCM reduces confidence in market-based mechanisms and developed countries fail to deliver their fair share of climate finance to developing countries, some countries and civil society groups are likely to shift attention towards A6.8 as an alternative financing mechanism for climate action. 

For example, Souparna Lahiri from the Global Forest Coalition said in June 2023 that A6.8 is an “opportunity for the global south to find sources of climate finance to strengthen resilience and take real climate action, instead of surrendering land, resources and rights to the global north.” Peter Riggs from the Climate Land Ambition & Rights Alliance highlighted that A6.8 could be the better mechanism as it is “not limited to a carbon metric” and can better support co-benefits such as the protection of biodiversity and Indigenous rights. Additionally, leaders of eight Amazon basin countries signed the so-called Belém Declaration in 2023, which highlights A6.8 as an opportunity for establishing funds for protecting the Amazon.

A key issue is that the term non-market approaches (NMA) is not well defined. At COP26, the Glasgow Committee was established to continue work on A6.4 and has since put together a technical report including examples of NMAs. Work is continuing on the development of a “web-based platform”, which could potentially match countries in need of climate financing with those providing funds. However, discussions in Bonn in June 2024 failed to highlight many concrete initiatives under A6.8. 

To be successful in presenting a practical alternative to market mechanisms, there will need to be a larger focus from parties on operationalising A6.8 at COP29.

How will negotiations impact the voluntary carbon market?

While A6 does not directly address the interaction between voluntary and compliance carbon markets, decisions made under A6.4 are likely to indirectly influence the VCM, particularly in relation to double-counting. A key concern is that ambiguity in the A6.4 text opens up the possibility of issuing credits that are not authorised by countries. These ‘non-authorised’ credits could be traded internationally for use in the VCM without requiring a Corresponding Adjustment – meaning they may be double counted and result in greenwashing if used by companies to make offsetting claims. 

Increasing scrutiny over offsetting claims has pushed the VCM to consider new rules. The Voluntary Carbon Market Integrity Initiative developed a Claims Code of Practice in 2023 which addresses double counting. The Integrity Council for the VCM (ICVCM, formed by Mark Carney’s Taskforce for Scaling up the VCM) has also released a set of Core Carbon Principles to measure the quality of carbon credits. However, this alone is unlikely to resolve the deep-rooted integrity issues in the VCM.

VCM standard setters have different positions on the use of authorised vs non-authorised credits. Verra and the ICVCM, for example, will continue to sell non-authorised credits – stating in 2023 that a CA should not be obligatory in the VCM – whereas Gold Standard does not sell them. Regardless, both Verra and Gold Standard have begun developing labels for credits that have been authorised by host countries under A6 and issuing guidance for projects seeking compliance under A6.  

Although VCMs don’t have to abide by A6 rules, it is unlikely that credible, standard-setting bodies will want to appear as having weaker standards than the UN under A6. Just as many VCM registries used methodologies and standards from the CDM, it is expected that A6 guidelines will heavily shape the future guidelines of the VCM. For example, the ICVCM is awaiting decisions from the A6.4 SB.

Decisions around authorised and non-authorised credit sales on VCMs, as well as decisions around avoidance credits (which make up roughly 75% of all certified credits and the definition of a ‘high integrity’ removal, could drastically limit the scale of VCM growth. Growth in compliance markets through more widespread implementation of A6.2 and A6.4 could reduce the significance of VCMs. While some countries, like Singapore, are investing in growing the VCM, others, like Australia and Japan, are planning to trade domestic carbon credits under A6, instead of using the VCM. Many countries have put carbon trading plans on hold until the rules for carbon trading under A6 are finalised. 

Actors in these markets should also note that all countries who have ratified the Paris Agreement have agreed that simple offsetting is no longer acceptable and that credits must deliver climate adaptation finance.

This briefing was originally published in November 2023 and was updated in November 2024.

  • 1
    The Supervisory Body consists of 12 member parties to the Paris Agreement and will have met 14 times by the opening of COP29.
  • 2
     The Clean Development Mechanism (CDM), Joint Implementation (JI) and the EU Trading System (ETS).
  • 3
    It was also decided at COP27 that credits (known as Certified Emissions Reductions) issued under the previous carbon trading scheme (the Clean Development Mechanism) established under the Kyoto Protocol registered after 2013 can be transferred to the A6.4 for use against a first NDC without a corresponding adjustment by the host country.

Biodiversity offsetting and biocredits

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Key points:

  • Biodiversity offsets are a way of mitigating the impact of new infrastructure developments, compensating for biodiversity loss by protecting or restoring similar habitat elsewhere. Their use is often mandatory.
  • Biodiversity credits, or biocredits, are investments, typically voluntary, in projects that support biodiversity conservation, but which do not imply biodiversity loss elsewhere.
  • There is concern that companies could use biodiversity offsets to meet their environmental targets without making any meaningful changes to their unsustainable practices.
  • As biodiversity losses arising from development cannot be properly quantified, it is impossible to know what needs to be compensated for. So, offsets are unlikely to compensate properly for these losses.
  • Increased focus on trading biodiversity credits could draw attention away from more effective conservation actions and may provide further opportunity for greenwashing.
  • Biocredits may contribute meaningfully to conservation if strict accountability guidelines are followed.
  • The UK, France, Australia and the EU are actively promoting global biodiversity credit initiatives.

What is biodiversity offsetting?

The negative biodiversity impacts of some developments cannot be avoided, minimised or restored. Biodiversity offsetting is a form of impact mitigation that aims to compensate for these negative biodiversity impacts – at least in theory – by protecting, enhancing or restoring similar habitat elsewhere. These biodiversity offsets are based on a ‘no net loss’ policy – in other words, overall biodiversity is left no worse off than if the development had not happened.

For example, a developer clears land to build a mine and then compensates for the resulting loss of biodiversity by either purchasing degraded land and restoring the ecosystem on it, or by purchasing land that has a natural ecosystem on it and protecting it – under the assumption that it is likely to become degraded in the future.

Biodiversity offsetting is now widely used to compensate for biodiversity losses from developments and is part of planning and decision-making processes. For example, as a component of mandated Environmental Impact Assessments for developments.

But, as a conservation practice, biodiversity offsetting is highly controversial. Critics are concerned that offsets may be used by companies to meet their environmental targets without making any meaningful changes to their unsustainable practices. Parallels can be drawn with carbon offsets: For example, a fossil fuel company offsets its carbon emissions by planting a forest to remove CO2 from the atmosphere, rather than actually reducing its emissions, thereby “trading a known amount of emissions with an uncertain amount of emissions reductions”, the consequence of which could be a net increase in emissions.

Similarly, the consequences of biodiversity offsetting are, ultimately, increased biodiversity loss. This is in part because most offset projects compensate for a lost ecosystem by protecting land that might be lost in the future. Offset policies mostly define ‘no net loss’ against a baseline of what would have happened without the project and its offset. If the biodiversity loss from future degradation is overestimated, then the positive contribution of the offset will also be overestimated, giving the developer more scope to have a negative impact on biodiversity. While this may be defined as ‘no net loss’ within the current framework, the outcome would be less biodiversity than if the project had not happened.

What are biodiversity credits?

In response to these criticisms, biodiversity credits, or biocredits, which are typically purchased voluntarily, have emerged to direct money “towards meaningful and well-designed biodiversity conservation and management”. Biodiversity credits are investments in projects that support biodiversity conservation, but which do not imply biodiversity loss elsewhere. A 2022 report from the International Institute for Environment and Development (IIED) and the United Nations Development Programme (UNDP) endorses biocredits, arguing that because biocredits, unlike biodiversity offsetting, do not imply biodiversity loss elsewhere, they represent a “positive investment in biodiversity” that companies or other entities – such as philanthropists – can choose to make.

However, whether biocredits would realistically be used for non-offsetting purposes is a point of contention. There is also concern that policies may weaken over time under increasing pressure from developers, and that frameworks are being redefined to include financial and other non-environmental metrics, which could facilitate claims of success when the environmental contribution is, in fact, weak. Some also argue that without enforcement, there will not be sufficient investment in biocredit projects.

But the IIED and UNDP report is clear that, if used correctly, biocredits can contribute meaningfully to nature conservation and restoration. To ensure this, “buyers should be screened to ensure they are not using the credit to offset damage elsewhere” and “the investment in the purchase of the biocredits [should] maximise the social and biological impact compared to other potential investments”. The report also recommends that the metrics used to define a unit of biodiversity should include its cultural and social value.

Issues with trading units of biodiversity

The concept of ‘no net loss’ does not sit well with ecologists because it fails to recognise that biodiversity exists within complex ecosystems and cannot easily be isolated from its social, historical and evolutionary context. Because of this complexity, the losses arising from development cannot be properly quantified, and so it is impossible to know what needs to be compensated for. In fact, a 2021 study found “no evidence that biodiversity gains from offsets actually compensate for development-associated losses, because losses were never estimated”.

Moreover, as the ecological circumstances of two areas will never be identical, offsetting the impacts to one area by restoring or conserving another will always result in some degree of biodiversity loss.

Though a development may only be impacting a small area of land, the land required for compensating for this development may be much bigger – indeed, policy often requires that at least twice the area of biodiversity loss must be protected. Conservationists worry that there is simply not enough land available to compensate for expected biodiversity losses from future development.

There is also concern that increased focus on the trading of biodiversity credits will draw attention away from other, more robust, conservation actions. It could create even more scope for greenwashing – tricking consumers into thinking that their choice is sustainable through a false claim – if badly designed offsets or biocredits are marketed as supporting biodiversity or social equality.

As biocredit schemes are aimed at providing both economic and environmental benefits, this may also allow financial markets and short-term speculators to determine the price of conservation, thereby framing the value of conservation purely in terms of its profitability. But, assigning monetary value to nature does not always promote the conservation of biodiversity and may, in fact, result in the opposite. This also creates a “dangerous and misleading illusion of the substitutability” of critical ecosystem services that may actually be irreplaceable.

COP 15 and the Global Biodiversity Framework

In December 2022, the United Nations Biodiversity Conference (COP 15) concluded with the establishment of the Kunming-Montreal Global Biodiversity Framework (GBF). The core aim of this framework is to tackle the alarming decline in biodiversity, facilitate the restoration of ecosystems, and safeguard the rights of indigenous communities. It garnered widespread recognition for its progress in connecting human rights with biodiversity, encompassing concrete measures to stop and reverse the decline of natural ecosystems.

A pivotal target of the GBF is the commitment to safeguard 30% of the earth’s surface and 30% of degraded ecosystems by 2030. It also includes provisions for increased financial assistance to support developing nations in their conservation efforts.

However, a component of the GBF called Target 19 remained unchanged, despite reservations expressed prior to COP 15 by a group of 119 experts. The target underscores the importance of “increas[ing] the levels of financial resources made available from all sources… towards nature-positive economies” and “stimulating innovative schemes… such as biodiversity offsets [and] carbon credits”. Concerns revolved around the potential for the monetisation of nature, the creation of a global market for trading biodiversity credits, and the promotion of biodiversity offsetting without the requisite rigor to ensure a comprehensive reduction and reversal of biodiversity loss within the prescribed time frame.

Nations championing biodiversity credits

The GBF has rapidly propelled global initiatives forward. The UK, France, Australia and the EU are at the forefront of promoting “nature markets”.

UK and France

In March 2023, the UK government unveiled plans to launch three separate nature markets, one for biodiversity offsets, another for flood mitigation and one for clean water. These are to be integral to the UK’s Environmental Improvement Plan 2023, with the goal of increasing private financing for nature to a minimum of GBP 500 million annually by 2027 and GBP 1 billion cumulatively by 2030.

The UK and France are taking the lead in advocating for a global biodiversity credit market. They jointly introduced the Global Biodiversity Credits Roadmap in June 2023, which aligns with the GBF and outlines a strategy to expand worldwide efforts to support companies in procuring biodiversity credits. Working towards COP 16 in 2024, the two countries have committed to bringing together global expertise on biodiversity credits and establishing working groups to explore best practices, ranging from credit funding governance to monitoring frameworks. The Roadmap also intends to address the equitable distribution of income from biodiversity credits.

Australia

Australia has a well-established presence in biodiversity offsetting markets, with both existing and new initiatives in development. All six Australian states have implemented compliance-based biodiversity offsetting schemes, alongside a federal biodiversity offset scheme. Recently, the Northern Territory introduced a new policy framework for biodiversity offsets. The determination of offsets typically takes place on a case-by-case basis, with assessments considering the impact on critical species or habitats.  

In addition to the existing offsetting schemes, Australia’s government is working on establishing a Nature Repair market, a controversial initiative aimed at addressing the funding gap for nature conservation and restoration in Australia. This initiative seeks to stimulate private investment in biodiversity efforts by rewarding landholders who actively engage in nature preservation. The Australia’s Minister of the Environment, Tanya Plibersek, stated that the initiative aims to turn Australia into the “Green Wall Street”.

The proposal faced significant backlash from members of the opposition bench, due to concerns about integrity and its potential for actual impact. Additionally, think tank The Australia Institute criticised the government’s insufficient environmental and economic justification for the scheme, stating that it cited unsubstantiated financial projections from a PwC report. As a result, the Committees have extended their deliberation period without a specified end date.

EU

In its most recent update to the EU Taxonomy for sustainable activities, the EU has chosen to include an element of biodiversity offsetting. This decision ignores the recommendation provided by the Platform on Sustainable Finance, a group of advisors to the EU’s executive branch, which had called for the removal of it from the list of economic activities related to biodiversity protection and nature restoration due to potential interpretational issues. Nonetheless, the EU decided to include it, albeit with slightly altered phrasing, leading to confusion over its precise meaning.

The decision has faced significant criticism from NGOs and civil society groups. In an open letter, they called for the removal of biodiversity offsetting, claiming that “offsetting is only compensating significant harm elsewhere and thus cannot represent a substantial contribution” to meeting the EU’s biodiversity objectives.

If not biodiversity offsetting and credits, then what?

The most straightforward solution is to avoid biodiversity losses as much as possible, with offsetting only used as a last resort.

Biocredits can encourage positive investment in biodiversity if strict accountability guidelines are followed and governance is transparent, and if a holistic approach that considers social, cultural and biological value is used.

Another potential solution is target-based ecological compensation, a new policy framework that offers an alternative to traditional biodiversity offsetting. It requires that compensation for biodiversity loss is linked to broader conservation goals to ensure that overarching targets for biodiversity are met, thereby enhancing compensation beyond an ad-hoc, reactive response.

An alternative proposal by the research center Enterprise for Society Centre (E4S) involves a centralised private sector biodiversity fund. According to E4S, this approach could enhance and simplify financing, allowing for direct allocation of funds to critical conservation areas, where they would contribute towards global restoration targets. The centrally-managed fund could also accommodate both current and historical compensation, particularly where local biodiversity offsetting is not mandated. However, transforming this into reality relies on the availability of comprehensive ecosystem data and transparent cost information.

Smallholder farmers, agricultural sustainability and global food security

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Key points:

  • Smallholder farms of two to five hectares produce 46% of the world’s food on around one-third of the world’s agricultural land. They are major producers of key global agricultural products, such as rice, peanut, coffee, cocoa, bananas and tea.
  • Smallholder farms tend to have higher food yields per hectare than larger farms, attributed to dedicating a larger share of their land to food crops (rather than animal feed or fuel), employing family members (which lowers transaction costs and increases labour intensity per unit of land) and high fertiliser and seed use.
  • Smallholder farms tend to have higher crop and non-crop biodiversity than larger farms. This is due to their use of varied crops and ecological land management practices, including limited insecticide use, more field edges providing a habitat and breeding ground for insects, and diverse land cover types, such as forests, fields and wetlands.
  • Sustainable and climate-smart agricultural practices are already implemented in many smallholder farming systems. In Africa, organic manure, agroforestry, crop rotation and crop diversification are common practices.
  • The availability of finance has been identified as one of the most significant variables influencing whether or not smallholder farmers in Africa adopt climate-smart agricultural practices.
  • Ensuring that smallholder farmers can access modern agrifood chains is critical for ensuring food security, productivity and nutrition.
  • Growth and investment in smallholder agriculture has significant potential to alleviate poverty for smallholder farmers while supporting global food security.

Smallholder farmers are important for rural and national economies, development and food security

Smallholder farming is the most common type of agriculture in the world.1Smallholder farmers are small-scale farmers, pastoralists, forest keepers and fishers who manage smaller tracts of land, using mainly family labour and dedicating at least some of the produce to household consumption. Farms of less than two hectares in size produce around one-third of the world’s food, while those two to five hectares in size produce almost half. Farms of less than five hectares located in developing countries account for more than half of the global production of nine staple crops – rice, peanut, cassava, millet, wheat, potato, maize, barley and rye – demonstrating their importance for global food security. As shown in Figure 1, farms of less than two hectares produce the majority of rice (>80%), peanut (75%), cassava and millet (~60%) globally. Smallholder farmers are also major producers of food that is consumed in their country. For example, smallholders in Tanzania meet around 69% of national food demand, and 2.7 million smallholder farmers in Nepal produce around 70% of their country’s food.

Fig. 1: Share of global production of major food crops in developing countries according to farm size
Source: Subnational distribution of average farm size and smallholder contributions to global food production.2This study used data on smallholder farms from 83 countries in Latin America, Sub-Saharan Africa, and South and East Asia, which is where 90% of the world’s farms are located. Farms over 50 hectares are largely grazed lands.

The role different size smallholdings play in producing food calories varies by region (Figure 2). In Asia, farms of less than five hectares produce 90% of food calories, whereas in Sub-Saharan Africa, farms of this size produce around half of food calories and farms of 5-15 hectares produce another 26%. By contrast, 70% of food calories in Latin America are produced on larger farms (> 15 hectares), while only 7% are produced on farms of less than five hectares.3This estimate is based on 41 major food crops.

Fig. 2: Calories produced by farms of different sizes in Asia, Latin America and Sub-Saharan Africa
Source: Subnational distribution of average farm size and smallholder contributions to global food production.4This study used data on smallholder farms from 83 countries in Latin America, Sub-Saharan Africa, and South and East Asia, which is where 90% of the world’s farms are located.
Despite their size, smallholder farms are highly productive

Farms of smaller than two hectares produce around one-third of the world’s food on just one-quarter of the world’s agricultural land and those two to five hectares in size produce 46% of food on one-third of agricultural land. Small-scale farms have been found to have higher land productivity – the farm’s output per unit of land area – than larger farms. For example, in Kenya, a farmer farming on less than half a hectare of land produces USD 888 of food per hectare on average, whereas a farmer farming on two hectares of land produces food to the value of USD 330 per hectare.

On average, smallholder farms dedicate a larger share of their land to food crops – rather than animal feed or fuel – compared to larger farms. Around 70% of the calories produced on smallholder farms of less than five hectares are available as food, compared to 55% for the global agricultural system.2

Another reason smallholder farms are able to achieve high productivity is their high labour intensity. Employing family members allows for a higher number of labourers per hectare and keeps labour transaction costs low.

As smallholder farmers need to optimise production on small tracts of land, they also tend to use more inputs, such as fertiliser and seeds, than larger farms.5This comparison is between small and large farms within the same country. For example, smallholder rice farmers in Bangladesh apply 181 kg of fertiliser on average per hectare, whereas larger farms only apply around 130 kg.

Though smaller farms are more productive than their larger counterparts in many developing countries, yields could be improved with the adoption of modern technologies and optimised inputs, such as fertiliser, manure and seeds. This ‘yield gap’ – the amount by which yields could be improved – ranges from 11% in East Asia to up to 76% in Sub-Saharan Africa, emphasising the significant potential for farmers in developing countries to contribute even further to rural and national food security.
Reaching this potential is contingent on smallholder farmers having access to and participating in modern food supply chains. For example, smallholder farmers may not have access to roads or transport to get their produce to market, they may lack access to suitable storage facilities to reduce food spoilage, or they may not have access to the technology needed to communicate with buyers or to learn about food safety and quality control requirements.

Smallholder farmers and global food supply chains

Ensuring that smallholder farmers can access modern agrifood supply chains is critical for ensuring food security, productivity and nutrition. Smallholder farmers produce some of the world’s most important agricultural products. For example:

Smallholder farms have a potential competitive advantage over larger farms when producing labour-intensive and high-value products, though they face difficulties linking these products to modern value chains. Growth and investment in smallholder agriculture has significant potential to alleviate poverty for smallholder farmers while concurrently supporting global food security.

For example, obtaining an Ecocert Organic Standard certification allowed pineapple growers in Zimbabwe to sell their organic produce internationally. Accessing these supply chains will enhance the farmers’ livelihoods – their pineapples could fetch as much as a 30% premium in European supermarkets. Obtaining this certification was made possible with assistance from organisations including the Committee linking Entrepreneurship – Agriculture – Development (COLEAD), the Embassy of Netherlands in Zimbabwe, the Netherlands-based Programma Uitzending Managers (PUM) and the Netherlands Enterprise Agency (RVO), highlighting the importance of collaboration in facilitating access of smallholder farmers to international food supply chains.

Similarly, smallholder avocado farmers in Tanzania were able to access the European export market through help from the private sector companies Africado and Rungwe Avocado Company, both supported by US food security initiative Feed the Future. Another example is macadamia nuts in Malawi, where a Dutch-Malawian partnership has facilitated the export of sustainably-produced macadamias to the European market.

Smallholder farming is important for GDP

Agriculture contributes substantially to the GDP of many developing nations, with smallholder farming playing a significant role. For instance, in Sub-Saharan Africa, where the majority (up to 80%) of farming is done by smallholder farmers, agriculture contributes 23% to GDP. Agriculture GDP values are even higher for certain African countries – for example, 41% of the GDP of Liberia and 31% of the GDP of Guinea-Bissau is attributed to agriculture.

In Sub-Saharan Africa, more than 60% of the population are smallholder farmers and smallholder farms employ up to 65% of the labour force. Around 73% of the population of Tanzania lives in rural areas, where 3.7 million smallholdings support up to 19 million people. In Malawi, smallholder farmers produce 80% of the country’s food and more than 80% of the working population are employed in agriculture.

Smallholder farmers practise climate resilient and sustainable agriculture

Sustainable and climate-smart agricultural practices are already an integral part of many indigenous farming systems. For example, traditional fallow systems, crop rotation and water harvesting practices in the Sahel aim to improve crop yields and livelihoods, and conserve water. In Nigeria, indigenous knowledge and practices are implemented by farmers to improve agricultural productivity and food availability, including mulching, using organic manure, using locally made pesticide, no-tillage and treating seeds with ash for long-term preservation. In South Africa, subsistence farmers use indigenous knowledge and practices such as planting in different soil types, fertilising soil with manure, selecting seeds by colour and size, and storing seeds in ash in clay pots and baskets to preserve them.

Fig. 3: Climate-smart agricultural practices used by smallholder farmers in Sub-Saharan Africa
Source: Contribution of smallholder farmers to food security and opportunities for resilient farming systems. See our explainer on sustainable agriculture in small-scale farming.

Figure 3 shows 17 different climate-smart farming practices that are used by farmers in Sub-Saharan Africa.6Fourteen Sub-Saharan African countries were included in the analysis: South Africa, Zimbabwe, Malawi, Zambia, Tanzania, Kenya, Uganda, Ethiopia, Cameroon, Nigeria, Niger, Burkina Faso, Ghana and Senegal. The most widely-adopted practice is using organic manure, followed by agroforestry (where annual crops or pastures are farmed together with trees or shrubs), crop rotation and crop diversification. In Ghana, smallholder farmers use a range of climate-smart agricultural practices, including timely harvesting and storing of produce, crop rotation, appropriate and timely weed and pest control, appropriate fertiliser use, mixed cropping (where two or more crops are grown simultaneously), planting legumes among crops, conservation agriculture (agriculture focused on regenerating degraded lands and preserving arable land) and agroforestry, among others. The primary motivations for adopting these practices are improving household food security, reducing pests and diseases, increasing yields and farm income, and controlling erosion and protecting soil. In Nicaragua, smallholder coffee producers implement agroforestry to reduce production costs, improve livelihoods and diversify income.

Table 1: Comparison of the yield, crop and non-crop biodiversity and efficiency of small farms and large farms
Source: Higher yields and more biodiversity on smaller farms

Smallholder farmers tend to plant a greater diversity of crops than larger farms in order to improve nutrition, mitigate drought risk and for market diversification (Table 1). Smallholder farms also have higher non-crop biodiversity than larger farms, which has been attributed to the use of ecological management practices, such as limited insecticide use, the presence of field edges – which provide a habitat and breeding ground for insects – and diverse land-cover types, such as forests, fields and wetlands. Smallholder farms within and around cities can also improve the environment by reducing urban heat island effects and can improve access to easy and affordable nutritious foods for city dwellers.

Encouraging climate-smart agriculture for smallholders farmers

The availability of finance has been identified as one of the most significant factors influencing whether smallholder farmers in Africa adopt climate-smart agricultural practices. In Malawi, access to credit was found to be a major factor dictating the adoption of climate-smart agriculture. In Ghana, maize farmers farming smaller lands face more credit constraints than those farming larger lands. Both private and public financing approaches are needed to encourage the adoption of sustainable agricultural practices by smallholder farmers, who are often lacking the necessary financial resources.

In Kenya, farmers that are more likely to adopt climate-resilient farming practices are those that sell their produce to markets (as opposed to farming entirely for subsistence) and have off-farm activities related to agricultural supply chains, such as milling their grains to add value to their produce or hiring out their farm equipment. Having individual land tenure rights and having middle to high school education were also found to be factors.

  • 1
    Smallholder farmers are small-scale farmers, pastoralists, forest keepers and fishers who manage smaller tracts of land, using mainly family labour and dedicating at least some of the produce to household consumption.
  • 2
    This study used data on smallholder farms from 83 countries in Latin America, Sub-Saharan Africa, and South and East Asia, which is where 90% of the world’s farms are located.
  • 3
    This estimate is based on 41 major food crops.
  • 4
    This study used data on smallholder farms from 83 countries in Latin America, Sub-Saharan Africa, and South and East Asia, which is where 90% of the world’s farms are located.
  • 5
    This comparison is between small and large farms within the same country.
  • 6
    Fourteen Sub-Saharan African countries were included in the analysis: South Africa, Zimbabwe, Malawi, Zambia, Tanzania, Kenya, Uganda, Ethiopia, Cameroon, Nigeria, Niger, Burkina Faso, Ghana and Senegal.

An introduction to sustainable agriculture in smallholder farming

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Key points:

  • Smallholder farmers produce at least one-third of the world’s food 
  • Smallholder farmers are disproportionately experiencing the effects of climate change and are particularly vulnerable to climate shocks, yet it is estimated that they receive only 1.7% of total climate finance
  • The FAO describes sustainable agriculture as meeting “the needs of present and future generations, while ensuring profitability, environmental health, and social and economic equity”
  • Various farming approaches can be considered sustainable, such as sustainable intensification, climate-smart agriculture, regenerative agriculture, organic farming and agroecological farming
  • The WEF recognises that farmers are key to addressing the current ecological and climate crises and need to be supported through the provision of financing and fair economic opportunities in order to embrace sustainable food production practices
  • Ninety-five percent of climate finance for small-scale agriculture comes from the public sector, including government donors, multilateral development finance institutions and bilateral development financial institutions
  • Smallholder farmers are vulnerable to production risks, so they need initiatives and investments that are relatively low-risk and that offer short-term returns on investment
  • Impact-oriented funds, blended finance and green bonds offer finance solutions for climate resilient and sustainable agriculture. 

Smallholder farming

More than half of agricultural land globally is degraded, leading to productivity losses of USD 400 billion every year. Projections indicate that globally, agricultural production will need to expand by 60% by 2050 to meet increased demand, and most of this will need to come from increased productivity. Food production also makes up more than a third of greenhouse gas emissions worldwide, of which 58% is from animal-based agriculture (including livestock feed) and 29% is from the production of plant-based foods. 

Smallholder farms of less than two hectares in size produce around one-third of the world’s food. Farms of up to 20 hectares produce over half (see the chart below).1Small-scale farmers are typically those that produce food on up to two hectares of land in Asia and Africa and up to 15 hectares in Latin America. Small-scale farmers may or may not hold land titles. These farms face various production risks due to a range of factors, including they are small in size, are held under traditional or informal land tenure, are more vulnerable to market shocks, are constrained by low soil productivity and low-quality or marginal lands, feature complex production systems hosting a diversity of plants and animals, face regulatory regimes in the Global North that have strict and ever-changing policies on food security and safety, suffer from isolation and low levels of technology, and may be subject to armed conflict and state fragility.

Source: Our World in Data

Small-scale farmers, particularly in developing countries, therefore play a crucial role in ensuring food security despite experiencing major food insecurity themselves. Smallholder farmers are disproportionately vulnerable to the effects of climate change and climate shocks, yet it is estimated that they receive only 1.7% of total climate finance. The World Economic Forum (WEF) recognises that farmers are key to addressing the current ecological and climate crises and need to be supported through the provision of financing and fair economic opportunities in order to embrace sustainable food production practices.

Sustainable agriculture

The Food and Agriculture Organization (FAO) describes sustainable agriculture as meeting “the needs of present and future generations, while ensuring profitability, environmental health and social and economic equity”. Various types of agricultural production can be considered sustainable, and these are discussed below.  

Sustainable intensification

The main aim of sustainable intensification is to increase crop and livestock yields and the associated economic activity without negatively impacting soil, water or the integrity of natural ecosystems. In general, this means a move away from the typical seed, fertiliser and pesticide technologies used in modern agriculture to restorative practices that rely more on ecological processes and internal resources. It also means increasing output on existing agricultural land and reducing the loss of natural habitat for agricultural production. Examples of how agricultural systems in both developed and developing countries may be redesigned to fit the principles of sustainable intensification are provided in the table below:

Source: Global Assessment of Agricultural System Redesign for Sustainable Intensification

Many argue that sustainable intensification can only be achieved if public investments encourage the adoption of innovations and support farmers by making technologies accessible and affordable. As smallholder farmers are vulnerable to production risks, they need initiatives and investments that are relatively low-risk and that offer short-term returns. 

For example, agroforestry, which is one of the tools that can be used in different types of sustainable agriculture and involves planting trees alongside pasture and crops, is being supported by the non-profit research institute CIFOR-ICRAF. Their Trees for Food Security II project trained smallholder farmers in Africa in agroforestry principles and business skills, allowing them to participate more effectively in timber, fruit and fodder value chains while increasing outputs and improving sustainability. Another initiative is designed to demonstrate to smallholder oil palm producers in Cameroon that the use of industrial mills is more efficient than small local mills and could improve their productivity and income. Research supported by research centre CIFOR-ICRAF has shown that pests in Zambia and Malawi that would ordinarily be controlled using pesticides can be managed through the use of low-cost agroecological farming principles.2Conventional pesticides are expensive for these farmers, who often do not have access to adequate protective clothing.

Sustainable intensification and climate-smart agriculture (discussed below) are closely interlinked, with sustainable intensification forming the foundation of climate-smart agriculture. Therefore, the constraints, solutions and financing options discussed below under climate-smart agriculture will be broadly applicable to sustainable intensification.

Climate-smart agriculture

Climate-smart agriculture aims to guide agricultural systems towards supporting food security in the context of a changing climate, through “integrating climate change into the planning and implementation of sustainable agricultural strategies”. As climate change presents considerable risk in terms of unpredictable weather patterns, climate-smart agriculture focuses on building resilience in order to respond more rapidly to these risks and reduce the chances of becoming food insecure. It has three broad principles:

  • Increased sustainable production to meet food security and equitably increase incomes, food security and development 
  • Enhanced resilience to climate shocks and risks through adaptation and resilience building
  • Development of opportunities to reduce greenhouse gas emissions from agriculture, thereby reducing the greenhouse gases emitted per calorie of food. 

Climate-smart agriculture uses existing approaches focused on supporting ecosystem services for achieving these principles, with sustainable intensification being a foundation.3Ecosystem services are the basic services that are provided by the natural environment that offer benefits to humans, such as pollination The tools and approaches that are used will vary depending on the regional context, but some examples include:

  • Integration of crop, livestock, agroforestry and aquaculture systems 
  • Improved management of pests, water and nutrients, including using nitrogen fertiliser more efficiently  
  • Landscape approaches, which focus on the use of collaborative initiatives in farming
  • Improved management of forests and grasslands, and the integration of trees into agricultural systems  
  • Reduced tillage and the use of a variety of breeds and varieties
  • Restoration of degraded land
  • Manure management, which may include the use of anaerobic bio-digesters.

A recent analysis of climate-smart agriculture on small-scale farms found the common barriers to be poor education, skills and knowledge; potentially high investment costs and delayed benefits; and uncertainty.

The constraints and potential solutions have been summarised in the table below:

Source: Climate-Smart Agriculture on Small-Scale Farms: A Systematic Literature Review

This analysis highlights that knowledge sharing and education, among other factors, are key to realising climate-smart agriculture. Solutions also need to consider that the benefits and costs of agricultural transitions differ in different social groups and contexts. 

An analysis by McKinsey identified the approaches that could be taken by government, development partners and the private sector to encourage the adoption of climate-smart agricultural measures for smallholder farmers. Among other things, it recommended the following:

  • Provision of opportunities for land-use optimisation linked to financing and incentive mechanisms 
  • Redesign of subsidies and tax incentives for the adoption of adaptation and mitigation measures 
  • Design of agricultural lending products that are are linked to the adoption of adaptation and mitigation measures 
  • Investment in infrastructure to reduce postharvest losses and investment to make infrastructure more resilient (such as flood protection) 
  • Improvement of traceability and sustainability certifications for applicable crops 
  • Launch of a results-based payment scheme tied to specific goals 
  • Scaling of investment in research and development of technologies for mitigation and adaptation, such as  pest-resistant seeds, biostimulants and livestock breeds.

The World Bank Group is supporting the development of climate-smart agriculture and is committed to working with countries to increase productivity, improve resilience and reduce agricultural emissions. It has developed more than 10 Climate Smart Agriculture Investment Plans, offering financing of over USD 2.5 billion for climate-smart agriculture projects that are aligned with its objectives. Two examples include: 

  • Investment of USD 50 million in a Livestock and Dairy Development Project in Bangladesh
  • Supporting the design of the USD 50 million second phase of the Smallholder Agricultural Development Project in Lesotho through identifying potential climate change challenges and solutions.

Various green bonds have also been developed to support climate-smart agriculture in the Global South. For instance:

  • Bank Windhoek has issued green bonds for climate-smart agriculture in Namibia
  • The Nigerian sovereign bond includes investments in sustainable agriculture and climate-smart farming
  • The Trust Funds for Agricultural Development (FIRA) supports water efficiency and protected greenhouses in Mexico
  • The Sovereign Bond Issuance in Egypt supports the development of crop species that are resilient to salinity and temperature increase. 

The CGIAR, a global partnership linking international organisations concerned with food security, aims to improve the resilience of small-scale farmers to climate shocks through providing climate adaptation solutions through national innovation schemes. Examples include ‘climate-smart villages’, which identifies villages or regions that are likely to be badly affected by climate change and then connects community representatives and researchers to work together to identify climate-smart solutions.   

The African Development Bank Group and the International Fund for Agricultural Development (IFAD) have launched the ‘Mission 1 for 200’ initiative, which aims to “double agricultural productivity through the use of state-of-the-art, climate-smart technology and advice” and “build resilience by helping food systems and farmers adapt to climate change and reducing agriculture’s environmental impact and emissions”.

Organic farming 

The aim of organic farming is “to create integrated, humane, environmentally and economically sustainable production systems, which maximize reliance on farm-derived renewable resources and the management of ecological and biological processes and interactions, so as to provide acceptable levels of crop, livestock and human nutrition, protection from pests and disease, and an appropriate return to the human and other resources”. Increasing awareness of the negative impacts on inputs, such as pesticides, on human health and the environment has spurred public interest in organic products. It is suggested that organic agriculture has room to expand globally, and given its various sustainability benefits over conventional farming, such as improved soil and food quality, greater biodiversity, less pollution and greater social benefits, it could contribute greatly to feeding the world.      

Organic farming systems can promote food security by using minimal external inputs and promoting environmentally-friendly techniques. They are characterised by the following five features:

  • Respect for the environment and animals, such as through reduced pesticide pollution and lower nitrate leaching
  • Promotion of sustainable cropping methods, such as crop rotation and legume intercropping, as well as the promotion of crop and livestock diversity
  • Use of non-chemical fertilisers and pest/disease/weed control means, such as green fertilisers, compost and animal manures, natural pest control and no prophylactic antibiotics 
  • Production of high-quality foodstuffs, such as those with no pesticide residue 
  • Zero use of genetically modified crops.

There are various advantages of organic farming for small-scale producers, including: 

Some disadvantages include: 

  • Yields are approximately 25% lower than yields from conventional farms4Despite the lower yields, the economic profitability is around 22%-35% higher than conventional agriculture. 
  • It may not be possible to produce sufficient compost and green manures in certain regions due to landscape constraints
  • The average return on investment for farmers is around five years
  • Achieving organic certification requires around three years, and during this time farmers will need to produce organic products but will not be able to sell their products at premium and will also need to endure reduced yields at the same time
  • Higher labour costs5In certain regions, this could be viewed as an advantage, such as by promoting rural employment. 
  • Challenges with soil nutrient management.    

Compared to intensively-managed agriculture, organic farming tends to improve species richness and abundance, although there may not be a major difference between organic farms and small-scale farms made up of different agricultural fields and species. Organic farming has been found to have higher soil carbon levels, better soil quality and less soil erosion than conventional farms. Organic farming, on average, has a lower climate impact than conventional farming, whether considering the carbon footprint per land unit (43% fewer greenhouse gas emissions) or the carbon footprint per product unit (12% fewer greenhouse gas emissions). However, there are some examples of where organic farming performs less well than conventional farming:

Source: Our World in Data

As the chart above shows, while organic farming mostly performs better in certain impacts, such as greenhouse gas emissions, it performs less well in others, such as land use. For some impacts, the effects might be mixed – for example, energy use for producing vegetables in organic farming is higher because of certain alternative pesticides that may be used. The eutrophication (enriching a body of water with minerals and nutrients) potential in organic farming is high due to differences in the nutrient release of synthetic fertilisers versus manures. 

Regenerative agriculture

Regenerative agriculture has been broadly defined as “a system of farming principles and practices that increases biodiversity, enriches soils, improves watersheds and enhances ecosystem services”. It strongly emphasises the improvement of soil health and the restoration of degraded soils, which in turn enhances the quality of water and vegetation, improves land productivity and restores the carbon content of the soil. Another core feature of regenerative agriculture is the reversal of biodiversity loss. 

A wide variety of practices may be promoted under regenerative agriculture, as summarised in the table below:

Source: Regenerative Agriculture: An agronomic perspective

In terms of financing, in Brazil Rizoma-Agro has issued green bonds for regenerative agriculture, while Biotrop has issued green bonds worth BRL 100 million for regenerative agriculture. PepsiCo has issued a 10-year USD 1.25 billion green bond focused on investments into environmental sustainability, including regenerative agriculture.    

Agroecology

Agroecology is “the integrative study of the ecology of the entire food system, encompassing ecological, economic and social dimensions”. It offers a framework for supporting sustainable agriculture and food systems that is focused on three aspects: 

  • The scientific aspect, which uses modern ecological knowledge to design and manage sustainable farming ecosystems 
  • The practical aspect, which values the local, empirical and indigenous knowledge of farmers to develop innovative and effective farming practices 
  • The social change aspect, which advocates for changes to the food system that ensure food security for all. 

Rather than altering the practices of existing unsustainable agricultural systems, agroecology requires the complete transformation of food and agricultural systems. The way in which agroecological principles are applied will depend on the local context. 

The 10 Elements of Agroecology, which is a framework that was developed by the FAO and multiple stakeholders, offers a guideline: 

  • Diversification is key to agroecological transitions to ensure food security and nutrition while conserving, protecting and enhancing natural resources
  • Agricultural innovations respond better to local challenges when they are co-created through participatory processes
  • Building synergies enhances key functions across food systems, supporting production and multiple ecosystem services
  • Innovative agroecological practices produce more using less external resources
  • More recycling means agricultural production with lower economic and environmental costs
  • Enhanced resilience of people, communities and ecosystems is key to sustainable food and agricultural systems
  • Protecting and improving rural livelihoods, equity and social well-being is essential for sustainable food and agricultural systems
  • By supporting healthy, diversified and culturally appropriate diets, agroecology contributes to food security and nutrition while maintaining the health of ecosystems
  • Sustainable food and agriculture requires responsible and effective governance mechanisms at different scales, from local to national to global
  • Circular and solidarity economies that reconnect producers and consumers provide innovative solutions for living within our planetary boundaries while ensuring the social foundation for inclusive and sustainable development.
Source: International Fund for Agricultural Development

For a project to be considered agroecological, it should be:6This is according to the International Fund for Agricultural Development Agroecology Framework

  • Increasing resource use efficiency while reducing and/or substituting external inputs
  • Recycling water, nutrients, biomass and/or energy
  • Diversifying and integrating different farming sectors (various crops and/or animals)
  • Facilitating efficiency and recycling, spreading risks, increasing resilience and producing a greater variety of nutritious food.

The Scaling-up Agroecology Initiative is a UN-led platform that aims to support national agroecology processes through policy and technical capacity. The International Fund for Agricultural Development (IFAD) supports the initiative, and of the 207 IFAD-supported projects completed between 2018-2023, around 60% are implementing agroecological principles. The total investment in all IFAD projects in these years was USD 8.25 billion, though more financing was allocated to non-agroecological farming projects. Financing from the Adaptation for Smallholder Agriculture Programme (ASAP) and the Global Environment Facility (GEF) has been key in providing access to funds for agroecological practices – around 87% of projects with ASAP financing and 90% of projects with GEF financing entirely or partially promote agroecology. While the public sector is the primary financing source for both agroecological and non-agroecological IFAD, ASAP and GEF-supported projects, the private sector has played very little role in this financing, highlighting a key financing source to be developed.

Finance for small-scale farms in the Global South

IFAD is a UN-linked international financial institution focused on small-scale agriculture and supporting farmers through projects that provide small-scale farmers with access to finance, markets and technology, including via grants and low-interest loans. Together with finance and policy advisory organisation the Climate Policy Initiative (CPI), it released a report on the climate finance gap for small-scale farming. Climate finance is aimed at “reducing emissions and enhancing sinks of greenhouse gasses, and aims at reducing vulnerability and maintaining and increasing the resilience of human and ecological systems to negative climate change impacts”. The report found that 95% of climate finance for small-scale agriculture comes from the public sector, including from government donors, multilateral and bilateral development finance institutions (see the chart below).

Source: International Fund for Agricultural Development

The financial instruments used by the public sector mostly include grants (50%), followed by concessional (low cost) debt (33%) and non-concessional debt (16%). Of these grants, the majority (80%) were provided by governments, while concessional debt was largely issued by multilateral and bilateral development finance institutions. Multilateral development banks also provided the majority of the non-concessional debt. 

There are various impact-oriented funds aimed at small-scale agriculture, including: 

  • The Land Degradation Neutrality (LND) Fund, which is an “an impact investment fund blending resources from the public, private and philanthropic sectors to support achieving LDN through sustainable land management and land restoration projects implemented by the private sector”.
  • The Meloy Fund, which is an “impact investment fund focused on proving the triple bottom line viability of investing in fishing and seafood-related enterprises that will lead to better management and protection of these formerly under-appreciated and undervalued natural assets”.
  • &Green, which aims to “finance the delinking of major commodity supply chains from deforestation in a way that is commercially viable and replicable” through offering “innovative financial instruments that take away part of the risks of investing”.
  • Root Capital, which “provides credit and capacity building to small and growing agricultural businesses around the globe”.

Blended finance, which is “the strategic use of development finance and philanthropic funds to mobilise private capital flows to emerging and frontier markets”, is viewed as a finance solution for climate resilient and sustainable agriculture. Blended finance helps reduce both real and perceived risks in an investment, thereby facilitating private capital investment. Between 2014-2019, around 22% of blended finance transactions globally went to rural and smallholder farmers (see the chart below). The median transaction size for smallholder farmers during this period was USD 35 million, though the scale of these transactions has increased in recent years.

Source: Convergence

Blended finance is helping small-scale farmers through market initiatives such as Aceli Africa, which is supporting loans to agricultural small and medium sized enterprises in Africa. For instance, Aceli’s financial incentives helped Tanzania Commercial Bank provide loans for business to purchase cassava from smallholder farmers. Another example is the African Agricultural Capital Fund, which has made investments ranging from USD 250,000 to USD 2.5 million in small and medium sized agricultural businesses in Africa. 

The Commission on Sustainable Agriculture Intensification (CoSAI) commissioned a report that found that around USD 60 billion was spent each year on agricultural innovation in the Global South between 2010-2019, of which 60%-70% came from national governments, 20%-25% from the private sector (mostly related to the research and development and marketing of new products related to mechanisation, crop protection, and seed development and biotechnology), and 10%-20% from development partners, including institutional investors, bilateral and multilateral agencies, and international philanthropies.7Examples of innovation funding in the report included research into new seed varieties, training on new agroforestry practices, the adoption of agricultural policies such as fertiliser subsidy reforms, digital marketplaces for agricultural sales and purchases, and the maintenance and management of research institutes or infrastructure, such as the modernisation of slaughterhouses. Of this funding, less than 7% was directed at sustainable intensification specifically.

  • 1
    Small-scale farmers are typically those that produce food on up to two hectares of land in Asia and Africa and up to 15 hectares in Latin America. Small-scale farmers may or may not hold land titles.
  • 2
    Conventional pesticides are expensive for these farmers, who often do not have access to adequate protective clothing.
  • 3
    Ecosystem services are the basic services that are provided by the natural environment that offer benefits to humans, such as pollination
  • 4
  • 5
    In certain regions, this could be viewed as an advantage, such as by promoting rural employment.
  • 6
    This is according to the International Fund for Agricultural Development Agroecology Framework
  • 7
    Examples of innovation funding in the report included research into new seed varieties, training on new agroforestry practices, the adoption of agricultural policies such as fertiliser subsidy reforms, digital marketplaces for agricultural sales and purchases, and the maintenance and management of research institutes or infrastructure, such as the modernisation of slaughterhouses.

Biogas and its role in the energy transition

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Key points

  • Reliance on biogas and biomethane as a decarbonisation solution should be limited to hard-to-abate sectors where there are currently no feasible, economic alternatives for emissions reduction (such as petrochemical production or industrial heating)
  • Use of biogas in electricity generation, heating and transportation should be limited given there are already cost effective options for electrification of end-use using renewable energy
  • Biogas’ potential to reduce agricultural emissions is limited to sources of emissions arising from manure and crop residuals, which contribute to a minority of agricultural emissions overall. The source and sustainability of feedstock is critical to the overall lifecycle emissions and costs
  • Biogas deployment should be carefully weighed against known limitations and risks, which include the impact of fugitive emissions, potentially limited availability of sustainable feedstock, high cost and reliance on public investment, and safety concerns.

What are biogas and biomethane?

Biogas is produced from the controlled decomposition of organic matter (through processes like anaerobic decomposition), where the gases that form as a result are captured. These gases are usually a mixture of methane (waste and agriculture account for roughly 60% of global methane emissions) and CO2, which are both potent greenhouse gases. Additional processes can be applied to remove the CO2 from biogas, leaving only methane, which is known as biomethane. For the purpose of this briefing, the term biogas is used to encompass both biogas and biomethane. 

Biogas can be a substitute for current uses of fossil fuel-based natural gas, ranging from electricity generation to heating – the IEA estimates that biogas has the potential to replace 20% of current demand for natural gas. Some argue that by capturing methane from waste and agricultural products and using it as a substitute for natural gas, biogas is a necessary renewable solution for limiting global warming to 1.5oC. This briefing examines the potential and limitations of using biogas for reducing global emissions.

Mitigation potential of biogas

Agricultural byproducts are the main source of biogas feedstock today. However, biogas feedstock is not the only valuable use of agricultural byproducts. For example, animal waste can be used as fertiliser.

Biogas can reduce emissions in two ways:

  • Mitigate methane and other greenhouse gas emissions in the agriculture sector, where livestock emissions represent roughly 32% of global methane emissions
  • Substitute the use of natural gas by producing methane from waste materials.

Using biogas for electricity generation and heating still requires methane to be combusted, which produces CO2, the greenhouse gas driving climate change more than any other. 

Therefore, the emissions benefit of biogas depend on:

  • The sustainability of its production method as a feedstock
  • The emission reduction potential compared to other low or zero-emission alternatives 
  • Feasibility and potential for uptake given the cost and availability of feedstock 
  • The net lifecycle emissions from the production of feedstock, including any potential leakages
  • Whether a high rate of carbon capture and storage is deployed if the biogas is combusted.

It is also worth noting that common technologies for producing biogas from manure management (such as anaerobic digestion) tend to be inefficient and often produce large amounts of CO2, which require processing to upgrade into biogas.

Biogas’ potential to mitigate agricultural emissions

Biogas’ potential to reduce agricultural emissions is limited to sources of emissions arising from manure and crop residuals, which contribute to a minority of agricultural emissions out of the five main sources: 

  • Enteric fermentation: 44.3% of agricultural emissions
  • Manure left on pasture and management: 23% of agricultural emissions
  • Crop residuals: 5.9% of agricultural emissions
  • Feed: 13.5% of agricultural emissions
  • Other emissions (land use change, energy use): 13.3% of agricultural emissions.

Therefore, capturing emissions from manure and crop residuals to produce biogas will, at best, address 28.9% of global agricultural emissions, leaving the majority of emissions unabated. And this is likely to be an overestimate given that more than 80% of the world’s farms are held by smallholders in developing countries with less than two hectares of land that meet the technical and financial requirements needed to install an anaerobic digester. Comparatively, US livestock farms need to meet the following criteria to be potential candidates for anaerobic digestion:

  • Minimum of 500 head of cattle, 2,000 hogs with anaerobic lagoons or liquid slurry manure management systems, or 5,000 hogs with deep-pit manure management systems
  • Minimum of 90% of manure is regularly collected.

Beyond using manure and crop residuals as sources of feedstock, biogas production requires farming energy crops, and this has been criticised by the IPCC for causing biodiversity loss, undermining food security and excessive water use, as well as creating the potential for temperature overshoot.

The REPower EU plan

In the RePower EU plan, the European Commission announced a target of 35 billion cubic metres (bcm) of production volume in Europe by 2030. This is a twelvefold increase of the current 3 bcm biogas (specifically biomethane) produced in the EU each year. 

An assessment by the Institute for Energy and Environmental Research (IFEU) for the European Climate Foundation of how much sustainable biogas could be produced in Europe found only 17 bcm could be produced by 2030. 

It found that, in order to achieve the 35 bcm biomethane target, the residues available for biogas production would not be sufficient and a considerable amount of crop-based biomass would have to be used. This would have considerable disadvantages. In a realistic scenario, around five to six million hectares of arable land would be required. This equals 5% of the arable land and 20% of the land used for wheat cultivation in the EU27. It would be more than the area that is used in the Ukraine for rapeseed production. Occupying land for biomethane production would thus lower the land availability for food production significantly.

Biogas as a substitute for fossil fuel-based natural gas

Most biogas produced today (64%) is used for electricity generation, predominantly in Europe and North America. Around 27% is used for heating in buildings. Acting as a substitute for fossil fuel natural gas can help avoid the current emissions impact of natural gas extraction, and its associated environmental impact. However, this substitution effect assumes that natural gas will continue to be used in electricity generation and heating. But viable alternatives such as renewable energy and widespread electrification already exist today. A study that evaluated the lifecycle environmental impacts of biogas electricity in comparison to other renewable alternatives looked at 11 environmental indicators (including emissions, human toxicity and ozone layer depletion) found that “biogas electricity can help reduce greenhouse gas (GHG) emissions relative to a fossil-intensive electricity mix; however, some other impacts increase. If mitigation of climate change is the main aim, other renewables have a greater potential to reduce GHG emissions.” 

In fact renewable energy is now the cheapest source of energy in most countries. Given the continued cost reductions in wind and solar and high implementation cost of biogas production, it is unlikely that biogas electricity generation will be competitive against renewable energy on a levelised cost of electricity (LCOE) basis.

There may be a limited role for biogas as a substitute for fossil fuel-based natural gas for hard-to-abate sectors such as petrochemical production and industrial heat, where there are fewer options for electrification using renewable energy. However, achieving the volume and cost reductions needed to supply biogas for these purposes is by no means a given.

Risks and limitations for deployment of biogas

Fugitive emissions reduce the benefits of biogas

The IPCC has found that fugitive emissions generated by biogas plants can reduce the potential benefit of biogas production from an emissions perspective. A 2022 study found that supply chains for biomethane and biogas release more than twice the amount of methane previously estimated by the International Energy Agency, with 62% of leaks originating from a small number of facilities. 

Another study examined 10 biogas plants in the UK and found that the rate of fugitive emissions reached a maximum of 9%, suggesting biogas plant methane emissions may account for up to 3.8% of total UK methane emissions. The research reached the conclusion that “the sustainability of biogas plants and the UK Net Zero Commitment may be jeopardised unless robust, consistent emission measurements and legal requirements are put into practice in the near future.”

High cost and reliance on subsidies

Biogas production and consumption require significant investment for:

  • the construction of biodigestion facility 
  • feedstock collection
  • processing
  • transport and conversion
  • application of carbon capture and storage.

The cost of each component is highly dependent on the location of feedstock and its ultimate end use. This means biogas production tends to be more economically feasible in countries where the location of the feedstock is close to the source of final conversion and use, and where there is already transportation infrastructure in place. As a result, biogas production barely exists in countries like Australia, and remains challenging to implement in other regions (such as Latin America, Africa or Southeast Asia). 

In Europe and the US, the high capital cost of installing biodigesters (around 70%-95% of total biogas costs) means significant subsidies are required to make projects financially feasible. A detailed geospatial analysis recently revealed that 40% of the amount that is technically available would still be uneconomic by 2050 without subsidies. In Germany, small plants have been found uneconomic, needing combinations of 50% of investment subsidised and EUR 11.50/MWh (USD 11.30/MWh) feed-in tariffs to make the projects economic. 

The application of carbon capture and storage to limit the emissions of carbon dioxide when biogas is burnt at its end use would also increase costs significantly. Given alternatives that exist to reduce waste and agricultural emissions, and limited situations where biogas can be a credible substitute for hard-to-abate sectors, the public investment in biogas should be balanced against other investment opportunities in decarbonisation.

Safety concerns

Many biogas facilities operate at small and medium scales, and they are not subject to the same safety standards as large-scale operations. Major hazards from biogas facilities include:

  • Explosions and fires
    • When inappropriately mixed, air and methane is explosive
    • Ammonia has explosive and flammable properties
    • Hydrogen sulfide is extremely flammable
  • Toxicity
    • Hydrogen sulfide is highly toxic. 

A study suggests that between 1994-2015, 169 accidents occurred in the biogas sector, 12% of which could be classified as serious. One hundred and sixty-three of these occurred in Europe, mostly in Germany, which has the highest number of biogas plants. Of these, 53% resulted in fire, 40% resulted in explosion and 7% were related to toxic release.

Alternatives for reducing agricultural emissions

There are cost-effective alternatives for reducing emissions in agriculture and waste management that are ready for deployment. For example, transitioning to sustainable agriculture methods as well as a shift to a more sustainable food system are cost effective ways to reduce existing emissions in the agriculture industry. The IPCC found that economic mitigation options (less than USD 100 per tonne of CO2 reduced) such as improving soil management, agroforestry and livestock management have the mitigation potential of 4.1 GtCO2e each year. Shifting to sustainable healthy diets, reducing food waste and other demand side measures have the mitigation potential of 2.2 GtCO2e each year.

Loss and Damage in the Sundarbans

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Key points:

  • The Sundarban region, home to 7.2 million of the world’s most vulnerable people and the largest single mangrove forest in the world, is increasingly at threat from catastrophic impacts of climate change
  • Climate change is contributing to the absence of employment opportunities, the destruction of property from extreme weather events and the loss of vital mangroves and land from sea level rise. With homes and livelihoods under threat, many are left with no choice but to migrate elsewhere
  • The increasing scale and frequency of climate impacts mean the limits of adaptation have already been reached in many cases. The most affected argue that the extensive loss and damage needs to be addressed by those responsible with the financial means to do so.

What are the Sundarbans?

The Sundarbans are a cluster of low-lying islands in the Bay of Bengal, spread across India and Bangladesh. The region is recognised internationally for its unique biodiversity and ecological importance – including the single largest mangrove forest in the world, encompassing a total area of 10,200 km2.  

The Sundarbans ecosystem offers a wide range of vital ecological services, including cyclone protection for millions of people, wildlife habitat, food and natural resource provision, and carbon sequestration. It is also home to about 7.2 million people (4.5 million in India and 2.7 million in Bangladesh), including some of South Asia’s poorest and most vulnerable communities. Around half the population lives below the poverty line.

Due to a lack of employment opportunities, most are dependent on the land and natural resources that are increasingly being depleted by climate change. Most rely on subsistence agriculture, supplemented with fishing, crab and honey collection. Millions are unable to meet their basic nutritional requirements, leading to health issues such as anaemia, malnutrition and childhood stunting. At the same time, climate impacts are exacerbated by other factors, such as poverty, lack of livelihood options, reliance on land, uneven land ownership and limited government support.

The Sundarbans were declared a reserve forest before the partition of India in 1875, and UNESCO declared the Indian and Bangladesh portions of the Sundarbans World Heritage Sites in 1987 and 1997, respectively. The region is also recognised under the Ramsar Convention on Wetlands. Despite this recognition, including conservation obligations under international conventions and treaties, the Sundarbans are under threat from climate change, along with a combination of natural factors and human impacts.

Climate impacts in the Sundarbans

Land mass is declining year by year

In 2015-16, the total area of the Sundarbans had shrunk  by 210 km2 since 1967, and by 451 km2 since 1904. This declining trend holds true whether the Indian and Bangladesh portions of the Sundarbans are considered separately or grouped together. The main reason is the surrounding sea level, which is rising more than twice as fast as the global average. Satellite imagery shows the sea level has risen in the Sundarbans by an average of three centimetres a year over the past twenty years, and the area has lost almost 12% of its shoreline in the last forty. In addition to sea level rise, a gradual reduction in sediment flow from rivers to the Sundarban region has resulted in loss of land mass. 

Due to these factors, the rate of retreat of coastlines is as high as 40m a year for some of the islands, which will disappear completely within the next 50–100 years at the current rate. Already some islands have been submerged and it is predicted that many more will vanish if sea level rise maintains its current pace.

Salinisation is threatening agriculture and health

Where land is not yet lost, frequent flooding with salty water from rising sea levels and extreme weather events renders affected land unproductive. Increasing water and soil salinity are also caused by climate-induced changes in temperature and rainfall, along with reduced freshwater flows from the Himalayas in the dry season. In the last 40 years, approximately 25% of glacial ice has been lost in the mountain range, posing a significant risk to stable and reliable freshwater supplies to major rivers, such as the Ganges and Brahmaputra, that flow into the Sundarbans. 

In the Sundarban region, water and soil salinity has increased dramatically, with projections that many parts of the region will reach near ocean-level salinity by 2050. In Bangladesh, soil salinity increased six times, and up to fifteen times in certain areas, from 1984 to 2014. The salinisation of soil ruins crops and devastates farmer livelihoods. Research estimates a one metre increase in sea level would cause losses as high as USD 597 million in agriculture from salinity-induced land degradation. Some villages no longer support agriculture due to recurrent salt water inundation. When households are no longer able to grow crops on land due to lack of access or salty soil, they are unable to engage in subsistence farming and are exposed to the cash economy, increasing their risk of food insecurity.

Progressive salinisation of rivers and groundwater has also resulted in the decline of available fresh drinking water, with numerous adverse effects on mother-child health, including dehydration, hypertension, prenatal complications and increased infant mortality. Collection of data from drinking wells in the Indian Sundarbans found that 17 out of 50 wells sampled contained salinity levels unsuitable for drinking. Increased saline water levels also cause high blood pressure and fever, as well as respiratory and skin diseases. A vulnerability assessment of Mousuni Island in the Sundarban region found that 80% of the villagers experienced skin disease caused by salty water. Additionally, 42% of households suffered infectious diseases, such as malaria and dengue fever, during flooding. Under high emissions scenarios, climate change is expected to make the prevalence of disease, particularly water-borne illnesses, even higher.

Mangroves and biodiversity are being depleted

Mangrove forests are a crucial natural blockade against cyclones, storm surges and tides, and sustain the high levels of biodiversity in the region. One study estimates that between 2000 and 2020, 110 km2 of mangroves disappeared from the reserve forest of the Indian Sundarbans due to erosion. While 81km2 of mangroves were gained through plantation and regeneration, the gains were all outside the existing mangrove forest. Another study looking at the coverage of mangrove forests between 1975 and 2020 found that mangrove forests have been decreasing in density by an estimated annual rate of 1.3%.

Researchers also observed a deterioration in the health of mangrove forests over the last twenty years due to increased salinity, temperature rise and rainfall reduction in pre and post-monsoon periods. While mangroves are known for their resilience, they are sensitive to changes in the salinity of water and soils, which is already resulting in shifts away from high-value timber species towards more salt-tolerant mangrove species. This is reducing the quality and overall availability of timber stocks, with implications for those relying on the forest for their livelihoods. Researchers estimate that there has been a loss of USD 3.3 billion in ecosystem services of the Sundarban Biosphere Reserve during the last 30 years, over 80% of which is provided by mangroves.

In a changing climate, it is expected that the Sundarbans landscape will undergo significant fragmentation, causing habitat loss for many endangered species, including tigers and venomous snakes, and this is increasing the risk of human-wildlife conflicts in the region. Sea level rise is resulting in habitat loss for many terrestrial and amphibian species. Habitats for freshwater fish are also shrinking as water becomes more salty, threatening many small, indigenous freshwater species. This has adverse impacts on the livelihoods of fishermen, as well as on human health as fish is a critical source of protein and nutrients in the Sundarbans. For example, in regions with high levels of fish species loss, chronic and acute malnutrition among mothers and children is higher than the thresholds set by the World Health Organization for public health emergencies.

Extreme weather events are more frequent and severe

While the Sundarban region has always been affected by cyclones and extreme weather events, the rate and intensity of these events are increasing. In the last 23 years, the area has witnessed 13 supercyclones. In the Bay of Bengal along the Sundarbans, the occurrences of cyclones increased by 26% between 1881 and 2001. Additionally, research has shown there has been a significant rise in the frequency of very severe cyclones in the post-monsoon season from 2000 to 2018. Scientists project an increase of about 50% in the frequency of post-monsoon cyclones by 2041-2060. 

The rise in cyclone frequency and severity is in part attributed to the increase in sea surface temperature, which rose in the Indian Sundarbans at 0.5°C per decade from 1980 through to 2007 – around eight times higher than the globally-observed warming rate of 0.06°C per decade. Land surface temperature in Sundarban region has already increased about 1°C over the past century and is projected to warm by up to 3.7°C by 2100.

Due to the low elevation of the Sundarbans and reduced protection from mangroves, cyclones can cause catastrophic damage. Four major cyclones have hit the Sunderbans in the last three years, killing nearly 250 people and causing losses of nearly USD 20 billion. Cyclone Amphan in 2020 was estimated to have destroyed 28% of the Indian Sundarban region and caused USD 12 billion of damage. The Cyclone displaced 2.4 million people in India and 2.5 million people in Bangladesh. While many returned soon afterwards, damage to more than 2.8 million homes and lack of evacuation centres resulted in homelessness and prolonged displacement for many thousands.

Following Amphan, the government estimates over 100,000 farmers experienced heavy losses as salt water in fields and ponds killed off fish and rendered fields uncultivable. With hundreds and thousands of extra mouths to feed, conflicts between humans and tigers spiked as islanders began venturing deep into the forests in search of fish, crab, honey and firewood.

Livelihoods are being hit hard

About five million people are dependent on the Sundarbans for their livelihoods. According to the World Bank, almost 80% of households in the Sundarbans pursue livelihoods that involve inefficient agriculture, fishing and aquaculture production methods. Dependence on the land and natural resources paired with a lack of alternative employment opportunities means livelihoods are extremely vulnerable to changing climatic conditions.

Salinisation is threatening agriculture. Fishermen are impacted by the decline in fish populations. Forest-based livelihoods are adversely impacted by changes in the composition of mangrove species, which is reducing the value of standing timber and honey production. A study of three villages in the Indian Sundarbans found that 62% of the workforce has lost their original livelihoods and have been forced to rely on much more uncertain incomes. 

Even though the impacts of climate change put their livelihoods at greater risk, some households continue to live in vulnerable locations due to high land prices and a lack of employment opportunities elsewhere. Due to a lack of job opportunities, others need to migrate to seek out employment, temporarily or sometimes permanently. 

Young men and women have had to leave for nearby cities, or even states over 1,000 kilometres away. There they face a precarious existence as daily wage labourers and contract workers at construction sites and factories. Some estimates suggest that roughly 60% of the male workforce in the Indian Sundarbans has migrated. Migration has also increased the poverty of the population left behind since it takes considerable time for low-skilled migrant family members to save sufficient funds to send back home.

Migration as a last resort

An estimated 1.5 million people will have to be permanently relocated outside the Sundarbans because sea level rise will make it impossible for them to live there or earn a livelihood. As climate change is responsible for their forced migration, these people are climate refugees – however, the term is not formally recognised internationally.  Additionally, extreme poverty both arises from and contributes to their vulnerability to environmental hazards. 

Over the past 25 years, four islands in the Indian Sundarbans – Bedford, Lohachara, Kabasgadi and Suparibhanga – have already disappeared, causing 6,000 families to become displaced. Lohachara became well-known as the first inhabited island in the world to disappear. Neighbouring Ghoramara is already half underwater. Once home to 40,000 people, the 2011 census counted only 5,000 people still struggling on the island. 

Many of those displaced relocated to nearby Sagar island with the aid of government programmes in the 1980s and 1990s. However, with a population of 200,000 and growing, and with the island having shrunk by a sixth of its original size, land and resources are being severely depleted. One case study calculated the total value of damage to 31 households forced to move from inundated areas of the Sundarbans to the island of Sagar at Rs 6,0742,225 crore (USD 700,000), 98% of which was due to loss of land assets. 

Back in 2002, it was estimated that climate change would displace over 69,000 people from the Sundarbans by 2020. In 2018, about 60,000 people had already migrated from the region.

Why adaptation is not enough

Climate adaptation is the process of adjusting to current or expected effects of climate change. However, it is clear that adapting to some impacts of climate change will not be possible and, in some cases, the limits of adaptation have already been reached. 

A key adaptation measure is the construction of storm surge walls and embankments. However, even with these measures, the loss and damage inflicted by a few hours’ battering by waves, winds, and storm surges during a cyclone can undo the gains from many years of measures to prevent flooding. After Cyclone Aila in 2009 destroyed 778 km of embankments in the Sundarbans, it cost Rs 5,032 crore (USD 670 million) to rebuild them, only for them to be breached again ten years later by Cyclone Amphan. One Sundarban village, after embankments to hold back the rising sea collapsed during Cyclone Aila, attempted three times to build sea walls, all of which collapsed against the power of the sea. 

Another adaptation approach is the introduction of salt-resistant crops. This has been met with some success, but may prove to be a temporary fix, with hurdles such as the availability of seeds, knowledge of farming and relatively low yields. 

Adaptation practices can also exacerbate and accelerate the ecological damage caused. For example, increasing salinity levels prevent the cultivation of rice or other crops, causing some to shift towards shrimp farming, which requires salt water and can be more profitable. However, the conversion of land to shrimp farms further accelerates the salinisation of water while profits often only benefit private investors. Workers – primarily women – receive little income and suffer health issues, such as infections, problems with eyesight and skin disease.

For the people of the Sundarbans, lives depend upon the land on which they live, produce food and sustain their livelihoods. Some inhabitants have already had to relocate multiple times. In the words of one resident: “People are resilient, but how much resilience can they have?” The outlook is bleak for the Sundarbans, with proposals that ‘managed retreat’ – the planned migration away from vulnerable regions over time – may be the only viable option.

Why financing for Loss and Damage is needed

Loss and damage is a term used to describe how climate change is already causing serious and, in many cases, irrevocable impacts around the world – particularly in vulnerable communities. According to the most recent assessment of climate impacts from the Intergovernmental Panel on Climate Change (IPCC), loss and damage can broadly be split into two categories – economic losses involving “income and physical assets”, and non-economic losses, including “mortality, mobility and mental wellbeing losses”. 

For the people of the Sundarbans, the economic and non-economic losses, such as loss of land, livelihood, mortality, health, culture, are beyond what the region can afford. According to a 2009 study, the annual costs of the environmental damage and health issues caused by climate change are estimated at Rs 1290 crore annually (USD 250 million) – equivalent to 10% of the Sundarbans GDP in 2009. 

The Sundarbans bear little responsibility for global emissions (for example, the whole country of Bangladesh is accountable only for only 0.56% of global emissions), but are forced to suffer the consequences. Alongside many other developing nations and vulnerable communities, the region argues strongly that it should not be forced to pay for the excessive loss and damage already incurred, and anticipated in the future.

The effectiveness of animal feed supplements in cutting methane emissions

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Key points:

  • Various natural and synthetic supplements for reducing methane emissions from cattle, sheep and goats are being developed, each with its own set of positive and negative characteristics    
  • Most supplements have only been tested in feedlots. Effectively administering them to animals on pasture, where cattle, sheep and goats spend most of their time and where most methane is produced, could prove challenging
  • The methane offset potential varies considerably among studies of the same supplement, highlighting the fact that impacts are difficult to predict     
  • The lifecycle emissions of many supplements are poorly understood, and so a full understanding of their mitigation potential is lacking
  • Scaling-up the production of some of these supplements in the near-term comes with its own set of challenges.

Methane from ruminant (animals with four-chambered stomachs, including cows, sheep and goats) burps is the  single largest human-caused methane source across all sectors, contributing 25%–30% of global methane emissions. Due to urbanisation, a growing human population and an expanding middle class, global demand for milk and meat is expected to increase by 58% and 74% respectively by 2050 compared to 2010. To combat this rise, several measures for curbing methane from burps are being developed.

One of these measures involves feeding ruminants supplements that inhibit methane production in the stomach. Cows eat carbon contained in plants, and this carbon is converted into methane in the stomach by microbes before being burped out. These supplements work either by physically disrupting methane production, or by shifting the composition of the microbial community away from methane-producing microbes.

Though some supplements have shown promise for reducing methane emissions and are already being sold as voluntary carbon credits, questions remain about the scientific credibility, practicality, scalability, safety and efficacy of these products.

Natural supplements

Red seaweed (Asparagopsis) has received a lot of media focus in recent years on the back of trials reporting methane emission reductions of up to 98% (when as little as 0.2% of the diet is supplemented with dried seaweed powder). It is estimated that if just 20% of the beef and dairy market in developed countries incorporated the supplement into feed, up to 15% of global methane emissions from burps could be avoided.

The main active ingredient in the seaweed is a compound called bromoform, which is a methane-production inhibitor and probable human carcinogen – although concerning levels of bromoform have not been detected in the tissue or milk of cows fed red seaweed. These seaweeds are also rich in iodine, excessive amounts of which can cause thyroid dysfunction in humans. Concerns have also been raised about the ozone-depleting properties of bromoform. Levels of the inhibitor vary naturally due to the environment and genetics, which could translate into variation in the efficacy of the product.

Probably the biggest barrier to rolling-out this seaweed supplement in the near term is producing enough of it. Harvesting wild populations alone would be unsustainable, so aquaculture techniques would need to be developed, along with land for growing and drying facilities. Ideally, these facilities would be located near farms to avoid transport and other processing emissions, although growing seaweed does have potential environmental benefits, such as CO2 sequestration, water quality improvement and ocean acidification reduction. The development of these aquaculture facilities could support regional economies by using local labour for seaweed growing and processing. 

More modest methane reductions of up to 30% have been achieved using garlic and citrus extract supplements, marketed under the name Mootral. However, this is only based on a few animal trials. In one trial, statistically significant results were only seen after 12 weeks, although the authors attribute this to the refusal of the animals to eat the feed at the start of the experiment. However, no safety concerns have been raised with the use of this product.  

The methane offsets from Mootral are being sold as voluntary carbon credits, called CowCredits, which are issued by Verra. With no lifecycle assessment available, and only a small handful of animal trials published in peer-reviewed scientific journals, it is difficult to properly evaluate the offset potential or efficacy of this product.

Methane reductions of up to 30% have also been found when adding nitrate-rich foods into the feed, as this modifies the microbial community. Nitrate has obtained better results in dairy cows than in beef cows, with a lifecycle assessment of the potential net greenhouse gas reductions in the US dairy industry estimating a 5% reduction in CO2 equivalents. However, a major barrier to nitrate supplements is toxicity from nitrite – a by-product of nitrate metabolism in the stomach.

Synthetic supplements

One supplement that has received regulatory approval in Brazil, Chile and, soon, the EU, and for which there is substantial scientific evidence from animal trials, is 3-nitrooxypropanol, or 3-NOP. It is marketed under Bovaer (a combination of ‘bovine’ and ‘air’). The methane reduction potential averages 30% and lifecycle assessments report 11.7%–14% decreases in whole-farm dairy net greenhouse gas emission intensity when 3-NOP is used. 3-NOP also shows more promising results in dairy cattle than in beef cattle, with the same dose reducing methane emissions more in dairy cows than in beef cows. 

The safety risks of 3-NOP to animals and humans are low. However, the compound degrades rapidly in the animal stomach so it needs to be supplied constantly, for example by incorporating it into feed, in order to work. This may be impractical for animals raised outside the feedlot (a yard or building where animals are fed in intensive production systems).

Typical lifecycle of beef cows in pastures and feedlots in the US

To understand how applicable these supplements may be in highly-developed, intensive beef-production systems, we can use the US as an example. The US is the largest beef-producing nation in the world (12.3 million tonnes in 2019), and the production system has a high proportion of cattle finished in feedlots – though Australia and South America are catching up. 
In the beef production system in the US, a permanent herd of cattle is kept in order to produce calves (called the calf-cow operation). These cattle typically graze on inexpensive pastures such as grass. Of the calves born to this herd, about 60% will be raised on pasture for anywhere between 10 and 23 months (called the stocker operation) after which they will be finished in the feedlot (called the feedlot operation) for a further 100 to 300 days. The other 40% of calves go directly into feedlots for 240 to 280 days before going to slaughter. It is estimated that the permanent herd is responsible for up to 82% of the methane produced in the beef production system.

Methane production across the different operations of the beef production system

The feedlot issue

One obstacle shared by all the above supplements is that they have only been tested in feedlots. While they could, in theory, be given to cows raised on pasture, the practicality of doing so is likely to prove challenging, as feed is not as carefully controlled in pasture systems as it is in feedlots. Moreover, although some may consider cows raised on pasture to be more sustainable because they are eating fibrous plants that humans and other livestock otherwise cannot eat, pasture-raised cows actually burp more methane than cows that are fattened on more easily-digestible and nutrient-dense grains in feedlots. As most of the world’s cows spend the majority of their life on pasture and generally burp more methane than feedlot cows, an effective feed supplement must be effectively applicable to pasture-raised cattle. 

Reducing emissions in pasture-raised animals

For pasture-raised animals, switching to more easily digestible legume forages could help reduce methane emissions. Tannin-rich forages or additives are another natural supplement option that can also be readily used in pasture systems. However, they have more modest reduction potential compared with some of the supplements mentioned above, with results varying greatly depending on the type of tannin. Tannins may negatively impact nutrient and protein digestibility and stomach health, affecting the animal’s ability to convert feed into milk and meat. It has been suggested that 3-NOP (Bovaer) could be supplied in lick-blocks or slow-release stomach devices for cattle on pasture, but the practicality of this has not been assessed. The effectiveness of 3-NOP was also found to decrease when higher amounts of fibre are eaten, implying that even if it were made available to cows on pasture, it may not be effective when low-quality forage is being eaten.     

Environmental considerations 

Though grain-fed feedlot cows produce less methane than grass-fed pasture cows, supplying these grains also comes with its own environmental impact. Feedlots are also significant sources of hydrogen sulphide (a toxic air pollutant) and major polluters of waterways with ammonia, pathogens and antibiotics. Concerns around increased antibiotic resistance are also growing. However, pasture systems come with their own set of concerns. For instance, if cattle production in the US were to shift from feedlot-based to pasture-based, herd size would need to increase by 30% to maintain present-day numbers because cows would take longer to fatten up and there would be less meat per cow. This shift would also result in greater methane emissions and other environmental costs, such as soil erosion, loss of native vegetation and water eutrophication (when water becomes overly enriched with nutrients, depleting oxygen levels). 

Below is a table summarising the attributes of the supplements discussed, including the science (the number of studies and quality of the studies), scalability (how easily could this technology be scaled up for use in the near future), deployability (how readily could the technology be deployed), safety (potential safety concerns to humans, livestock and the environment), reduction potential (the extent to which methane could be reduced) and pasture use (the potential for the supplement to be used in pasture-based systems).    

Summary of the supplements

In summary, many of these supplements are only in pilot phases or need more rigorous scientific research, especially animal trials, to fully understand their potential. There are major discrepancies in the methane reduction potentials reported among studies testing the same supplement, suggesting complex interactions of multiple variables, with impacts that are difficult to predict. Perhaps the biggest limitation of most of these supplements is that they have only been tested in feedlots. Controlling and monitoring the consumption of these supplements by cows in pasture systems, which produce the majority of global methane emissions from cattle, could prove particularly challenging, especially considering the palatability of many of them is low.

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