Carbon credits created by offset projects such as reforestation, soil sequestration by regenerative agriculture practice, avoided deforestation and direct air capture have become relatively well known, but a new carbon crediting method still in its infancy is quickly gaining popularity and attention — blue carbon.
Blue carbon refers to carbon sequestration approaches that use oceans and coastal ecosystems as carbon sinks. The most popular projects so far have mostly focused on mangroves in areas including Indonesia and South America. In 2021, Apple with Conservation International partnered on the Philippines Palawan Protection Project to protect 110,000 acres of mangroves. And in Colombia, an 11,000-acre mangrove in Cispata became the first to have its entire carbon sequestration potential entered into the carbon market and verified by Verra .
William Theisen, CEO of EcoAct North America, a climate consultancy, noted that for the past five or six years, inquiries about blue carbon projects have slowly increased, "but it's really now that it's kind of taking hold within the market."
Blue carbon has captured the hearts and wallets of the carbon-crediting marketplace. Oceans are an under-tapped resource for storing carbon, while mangroves alone hold four to 10 times the CO2 sequestration potential of tropical rainforests. These types of numbers excite both environmental activists and investors, but there is still a huge gap in investment for blue carbon projects. According to Theisen, only 3 percent of all the climate investments is directed toward blue carbon projects. But blue carbon project developers, such as the nonprofit The Ocean Foundation , are starting to get a lot of questions about how to invest in these types of programs.
"I think [blue carbon] got a lot of finance people excited because they see a business opportunity," said Ben Scheelk, program officer at The Ocean Foundation.
But there’s more to the interest in blue carbon than just the numbers, he added. "Thinking holistically about all of the different ecosystem services and co-benefits afforded by coastal habitats that go above and beyond carbon in many ways," Scheelk said. "It's not just about climate change mitigation here. It's also about adaptation."
With that in mind, here is what companies should know about blue carbon projects and offsets as this new type of credit takes off.
Blue carbon is defined by Nature as the organic carbon captured and stored by the ocean and coastal ecosystems. According to the Blue Carbon Initiative , coastal habitats cover 2 percent of the ocean’s surface but store 50 percent of the carbon in their sediment — a 75-gigaton carbon sink, or the equivalent of eight years of fossil fuel-related CO2 emissions. And these ecosystems are under threat: Between 25 and 50 percent of coastal habits have disappeared in the past century, according to the Intergovernmental Panel on Climate Change . Unlocking financing for this specific niche of carbon credits could be key to saving these habitats.
While mangroves are the most common sort of blue carbon restoration projects, other approaches that involve protection and restoration of seagrass, marshes and kelp forests are starting to be developed. Even more nascent is the process of carbon sinking — taking seaweed and moving it to biodegrade on the ocean floor to sequester the carbon instead of letting it biodegrade near shorelines or on land.
Coastal ecosystems such as mangroves have the capability to store up to 10 times the amount of carbon as traditional land-based forests. The salty, wet environment keeps organic material from breaking down, and the complex roots hold onto sediment, keeping CO2 from releasing into the atmosphere. Mangroves aren’t alone in this ability; sea marshes and seagrasses can similarly store greater amounts of carbon than terrestrial projects, according to the Australia-based Blue Carbon Lab .
As for the big three criteria that defines quality of credits — permanence, additionality, leakage — mangroves and other coastal ecosystems have a leg up on two: According to Scheelk, mangroves are more durable and have longer permanence timelines than traditional forests.
According to Scheelk, blue carbon sinks offer longer permanence because they are less susceptible to wildfire: The unique environment underneath them — the lack of oxygen and salinity — slows down decomposition.
"That carbon has been there for hundreds, if not thousands, of years, and will continue to accumulate and stay there. You immobilize [it], essentially," he said. "So, I think that's really attractive from a buyer's perspective."
The carbon literally gets stuck in the soils between the roots and can’t get released into the atmosphere.
There’s also less of a concern around leakage, because coastal trees are not as attractive for lumber so there is less illegal harvesting, Scheelk said.
But beyond carbon stores, blue carbon’s co-benefits may also outstrip those of traditional forestry. According to Scheelk, coastal ecosystems have more biodiversity and can provide defense from storms that cause property damage and erosion.
When a business starts to invest in a carbon project — blue or not — the main concern is where the money is going: How will it help sequester more carbon? For terrestrial projects, the answer is pretty straightforward; to plant or protect trees that suck up carbon from the atmosphere via photosynthesis.
Making the case for blue carbon sequestration, however, is more complicated because the challenges are more intricate. First, mangroves are being lost at an unprecedented rate. According to a 2001 study in BioScience, 35 percent of mangrove surface area was lost between 1980 and 2000 with 11 species on the verge of disappearing entirely. Tidal marshes and seagrass have also lost 50 and 30 percent of their surface areas, respectively. Funding planting and rehabilitating degraded coast ecosystems using credits is part of the solution.
The solution is not going to be planting mangroves necessarily, it’s restoring the conditions for those trees to grow.
But planting trees isn't the main concern for restoration of these ecosystems, it's addressing the infrastructure and development issues that have restricted the water or poisoned it.
Many coastal wetlands have been destroyed by development — roads that cut right through them and interrupt the flow of water, starving the trees. Most projects Scheelk has worked on focus more on rectifying these issues than simple replanting.
"The solution is not going to be planting mangroves necessarily, it’s restoring the conditions for those trees to grow," Scheelk said. "Dealing with systemic issues around wastewater management or infrastructure."
Some examples of this type of infrastructure work include cleaning culverts to restore water flows, cleaning up agriculture pollution that has poisoned waters and soil, and the expansion of shrimp farms that have overwhelmed the coastlines. According to Scheelk, this all increases the costs of such projects.
This leads to an important thing for companies to know about blue carbon offsets.
Because the issues that blue carbon must address are more systematic than those involved with simple tree planting, the prices for blue carbon credits are much higher — between two and four times higher according to Scheelk. According to a "trader" who spoke to SP Global , credits for blue carbon projects in Asia and Central America are being offered for about $13-$35 per metric ton of carbon removed. According to Bloomberg, in January an offset was traded at $7.53 a ton.
Of course, price is dependent on the scope and type of project, as well as the lack of availability of projects and high levels of interest from first movers — all of which are increasing the value of blue carbon credits. But there are other reasons for the increase in costs.
For one thing, blue carbon projects are usually in rural and hard-to-get-to locations, making not only the project but also the measurement and remeasurement of the carbon stores even harder.
According to Scheelk, many countries where blue carbon projects are located don’t have the laboratory capacity to analyze soil carbon samples, forcing project developers and verifiers to ship the samples and pay for analysis in Europe, Australia or the U.S. That adds to the overall cost and siphons off investment from staying within the country. And that is just one part of the certification process, which also can include measuring trees, tracking pollution decreases, satellite monitoring, among others — most of these processes require sending scientists into remote, waterlogged places. While certification is a huge lift for any carbon credit project, for blue carbon projects are usually more remote, harder to traverse through and in more underdeveloped countries, which makes certification even harder and costlier.
"The cost to certify a project is enormous," Scheelk said. "And sometimes [the certification process cost] even is greater than the cost of doing the project itself."
Scheelk has seen companies piece together several 100-acre plots of degrading mangroves or sea marshes just to make it cost-effective to certify a project. There isn’t a lot of continuous blue carbon degradation and mangroves only exist within a relatively small area, so everyone is getting creative to make the economies of scale work, he said.
"I think for the practitioners in the field, actually designing these projects and implementing them, there's still a lot of challenges," he said.
In September 2020, Verra, the carbon credits registry, released the first blue carbon conservation methodology. The methodology used the base of reducing emissions from deforestation and forest degradation ( REDD+ ) methodology that focused mostly on terrestrial forests. The update added restoration activity methodologies for coastal wetlands including mangroves , seagrass and salt marshes.
In May 2021 , Verra registered the Blue Carbon Project Gulf of Morrosquillo in Colombia as its first blue carbon conservation project.
The Gold Standard is also developing a mangrove methodology that isn’t based on adapting avoided deforestation methods. And the American Carbon Registry offers two blue carbon methodologies, the Restoration of Pocosin Wetlands (bogs) developed with The Nature Conservancy in 2016, and the Restoration of California Deltaic Coastal Wetlands , developed with Sacramento–San Joaquin Delta Conservancy and The University of California Berkeley in 2017.
This year at COP 27, Salesforce and the World Economic Forum, announced a blue carbon credit framework called the High Quality Blue Carbon Principles and Guidance . The guidelines define that "high quality" for blue carbon projects means investments that have triple benefits for people, biodiversity and climate. And the principles ensure equitable, fair and credible projects.
As more and different blue carbon projects start to emerge, including kelp forests and seaweed farming, more new methodologies will emerge — so corporations investigating and investing in these sorts of offsets must remain flexible as the field evolves.