Carbon markets 2.0: How the Ocean Green project fills a need far beyond carbon capture

Kelp is something of a wonder plant. From a natural coastal defence system to a foundational species that provides shelter and a place to grow for a myriad of ocean life, these underwater rainforests also serve as essential carbon sinks.

In northern Norway, native kelp has been decimated by the march of urchins, a species whose voracious appetite and over-abundance as predators have been over-fished has turned once-kelp-green waters into barrens devoid of their natural biodiversity.

Kelp forest, Ava Ocean, Ocean Green project.

This is the balance that the Ocean Green consortium is seeking to restore. The UN Ocean Decade-endorsed project is a world-first in its scale, scope and ambition, with plans to restore kelp forests over a large scale and for the long term.

“We know that restoring the kelp forests of northern Norway will provide a huge boost to local biodiversity,” – Dagny-Elise Anastassiou, chief impact officer at Ava Ocean, lead on the Ocean Green Project.

“We have seen how quickly kelp returns when you clear urchins – and the ocean life comes with it. That alone is of huge value but we also know that healthy kelp forests act as a nature-based sea defence system. They offer carbon sequestration. And, by establishing a new urchin fishery to drive a zero-waste, circular economy for clearing urchin barrens, Ocean Green is also delivering social benefits to the communities it serves. These are the kinds of tangible, holistic and long-term benefits that should come with any kind of credit system – be that carbon removal or biodiversity. We should be delivering on all fronts.”

Ava Ocean clearing urchins to restore the sea bed.

Anastassiou stresses the need for a robust system that makes investment easier and more transparent. “Carbon and biodiversity credits are a real win-win for hard-to-abate emissions – but they must deliver. High-quality credits allow companies to invest in sustainability projects like Ocean Green while also offering an essential funding stream that offers stability and longevity to the projects themselves, allowing them to achieve more over the longer term.”

A new, high-quality system

Nata Tavonvunchai, a sustainability consultant with Across Nature, which works with Ocean Green has been exploring the possibilities of self-reliance that come from the credit system.

The idea of biodiversity credits is quite new, she explains “but they offer something more tangible than the traditional carbon-focus, which is harder to visualise. With biodiversity credits, we’re looking at species count and species diversity. We’re looking at habitat complexity and structure.”

Tavonvunchai talks about the ‘permanence’ of the solutions being offered on the credits market. And this is where the idea of carbon credits 2.0 comes in. “Previously, the focus was really on the carbon, with social or benefits seen as add ons. But the approach should be holistic and broader benefits should come as standard.”

“With the Ocean Green project, what we are really emphasising is the potential for permanence,” she continues. Though incredibly important, the lifespan of a kelp plant does impact its carbon sequestration abilities – with further research still ongoing in areas such as the role of kelp detritus in the deep sea. But, as Tavonvunchai points out, “we’re looking to make sure the biodiversity and social benefits of the Ocean Green project continue. We’re focused on that longevity and that tangibility.”

Nata Tavonvunchai, Sustainability consultant at Across Nature.

What are carbon credits?

Carbon credits are essentially a system designed to compensate for unavoidable emissions while companies work become greener. But some critics raise questions about the quality or impact of some of the credits traditionally offered.

Increasingly however, it is being recognised that certain sectors – particularly those with ‘hard-to-abate’ emissions, such as from essential activities – will be unable to meet their net-zero goals without some form of carbon credit system. Tavonvunchai also points out that, because of the newness of biodiversity credits, these novel credits offer an opportunity to learn from past criticisms and deliver an even higher impact.

As the sector matures, moving into areas such as carbon removal as well as biodiversity credits, experts from corporate advisers such as Nasdaq and McKinsey to the Science Based Targets initiative agree that the credits system is an essential cog in the global transition – and what is needed now is a new generation of solutions that come with a much broader scope than just carbon.

Anticipated demand for high-quality credits far outstrips what is currently on offer in the carbon market and there is an urgent need for creative, high-quality solutions that deliver across multiple challenges and for the long term. Growing demands from investors – including the world’s largest money manager Norges Bank Investment Management, which has been spearheading biodiversity reporting by its investee companies – is further driving the potential for biodiversity credits as a sustainability solution.

A circular economy project

One of the goals of Ocean Green is to become a self-funded project. Ocean Green was awarded NOK 47 million from the Norwegian government Green Platform grant to run for three years but is also looking at how it can open an entirely new fishery to further fund its work.

As Ocean Green works to remove urchins at scale, allowing kelp to return to Norway’s northern waters, scientists within the consortium are looking at economically viable products that can be developed through zero-waste solutions. Those products will help drive the project forward, offering durability as well as a template for others battling urchin barrens around the world.

Carbon and biodiversity credits offer yet another funding source: “These credits are meant to provide a sustainable, long-term, independent source of financing for projects like Ocean Green,” says Tavonvunchai. The idea is essentially a virtuous circle, where funding from such credits drives the growth of regenerative, carbon sequestering projects that boost biodiversity. And it is already a huge market, estimated at $479.4 billion in 2023 and (at the time) projected to grow at a compound annual growth rate of 39.4% from 2024 to 2030. There is a huge pot of money with the potential to be funneled into projects that do long-lasting environmental good.