Timing is already a hot topic in virtual roundtables discussing the role of offsets and nature based solutions for net zero commitments.16
The term ‘time value of carbon’ has sometimes been used previously in the context of sequestering carbon in nature, or other forms of temporary carbon storage.
It takes time for carbon dioxide to be absorbed into trees and other vegetation. For instance, a landscape being reforested might sequester carbon at a rate of around 10 to 20tCO2 per hectare, per year, over the first 20 years.17 The rate varies a lot according to the type of vegetation, the location, and the maturity of the forest.
Problems arise when claims are made about carbon removals from nature that will take years to achieve. Put simply, planting a tree today that will absorb carbon over decades is not a fair ‘offset’ for your company flights last year. The assumptions used to correct for this are important and contentious.
Avoided deforestation is very different. By not releasing the carbon, the benefit is immediate. But it is hard to see how companies can claim avoided deforestation as a contribution to their net zero goal, for instance, since these forests should not be cut down in any case.
In the run up to COP26, work is underway to clarify best practice nature-based solutions and carbon removal, including their contribution to net zero commitments. For the purposes of this piece, the main point to stress is that a gold-standard approach should be adopted whenever the Time Value of Carbon is applied to removals as part of net zero strategies. We are actively engaged in investor initiatives on nature based solutions and ending deforestation to work towards this goal.