Is it true that private investment can make a difference in Climate change? 

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Most of us don’t know that by funneling capital into climate change, not only will we make a better world to live in, but we could generate profits from which we could benefit for the greater good.

Drum roll for carbon credits and carbon offsets. What are they? Government authorities from countries that have signed the Kyoto and Paris treaties impose a cap on companies that emit carbon, just like an allowance or right to produce. That is a carbon credit. Let’s say you, as a company, according to such restriction, cannot emit more than 3 tons of CO2. Now, your next-door neighbor has the same cap, but he, a wonderful earthling, only produced one and a half tons. That surplus of one and a half credits is what is called offsets. You, sinful earthling, made 3 tons and a half, but you can make things right by purchasing the number of credits you need to comply with your cap from your neighbor, thus counterbalancing the use of fossil fuels. The thing is, we wrongly use the word credits interchangeably.

Let’s see what Gabrielle Walker says about this kind of investing: “Carbon markets should be a fire hose for directing money where it’s needed in the climate crisis. If we rethink how we use carbon credits, we should focus on outcomes. That’s because different outcomes need different incentives. We can effectively steer carbon market money in the right direction by differentiating the three forms of carbon credits based on their distinct outcomes”. (Walker and Giussani, 2022).

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  • Reducing emissions
  • Protecting natural carbon sinks
  • Removing carbon dioxide from the atmosphere. 

First, we need to cut carbon emissions by 50% by 2030; we can start with environmental reduction credits (ERCs). If you release CO2 because you are actively burning fossil fuels, you could be paid for not doing it by converting everything that uses energy into solar. Reduction credits can help lessen overall fossil-fuel-related emissions by funding clean infrastructure, especially in developing countries or low-income economies that need to build a low-carbon infrastructure. 

“ERCs are only issued for reductions of actual emissions that are quantifiable, enforceable, permanent, and surplus. There is no minimum or maximum limit on the reductions that may be eligible for ERCs. You can earn a credit for reducing as little as one ton of emissions. The ERC becomes a commodity for your business.” (“A Guide to Emission Reduction Credits (ERCs) System,” n.d.)

  1. Protect Natural Carbon Sinks

For these, we have protection credits. When you prevent the release of one metric ton of carbon from an existing natural sink like a forest or peatlands, “as with reduction credits, it doesn’t make sense to use these as offsets, as they don’t neutralize existing emissions.” (Walker and Giussani 2022).

According to Ms. Walker, “credits like these exist in the carbon market but are generally lumped in with reduction credits which does neither any favors. Separating them gives us the opportunity to judge the quality of the credit by what we are trying to achieve. If we focus on protecting existing carbon stores, the highest-rated credits could then be for the biggest natural carbon stores and those that foster biodiversity. This approach makes it easier to reward good behavior… “. (Walker and Giussani, 2022).

  1. Removing carbon dioxide from the atmosphere.

According to the World Resource Institute, there are six ways of removing carbon from the air:

  • Forests: Trees are especially good at storing carbon removed from the atmosphere by photosynthesis. “WRI estimates that the carbon-removal potential from forests and trees outside forests in the United States alone is more than half a gigaton per year, equivalent to all annual emissions from the U.S. agricultural sector.”
  • Building soil carbon in farms: “Planting cover crops when fields are otherwise bare can extend photosynthesis throughout the year, sequestering about half a metric ton of CO2 per acre per year. Using compost can improve yields while storing the compost’s carbon content in the soil”. Unfortunately, natural systems are challenging to predict because nature is capricious, and some of these practices are constantly under scrutiny because they are hard to control or monitor. 
  • Bio-energy with Carbon Capture and Storage (BECCS): “The process of extracting bioenergy from biomass and capturing and storing the carbon, removing it from the atmosphere.” But it’s not always straightforward to determine whether those conditions are met. Moreover, if BECCS relies on bioenergy crops, it could displace food production or natural ecosystems, erasing climate benefits and exacerbating food insecurity and ecosystem loss.
  • Direct air capture is a chemical process of scrubbing Co2 from the air and storing it underground or in long-lived products. This removes excess carbon directly from the atmosphere instead of capturing it at the source. Carbon removal is measured and accounted for quickly, but the technology is expensive and energy-intensive. 
  • Carbon Mineralization: Some minerals react with Co2 over hundreds or thousands of years. Scientists are trying to sort out how to speed this process by enhancing their exposure to carbon dioxide in the air or the ocean.
  • Ocean-based concepts: These have been proposed to leverage the sea’s capacity to store carbon. Each approach aims to accelerate natural carbon cycles in the ocean. They could include leveraging photosynthesis in coastal plants, seaweed, or phytoplankton, adding certain minerals to increase storage of dissolved bicarbonate, or running an electric current through seawater to help extract CO2.

Each carbon removal approach offers promise and challenges, but capturing and storing CO2 already in the air must be part of our climate change strategy in the United States and worldwide to avoid dangerous levels of global warming.

It’s time to begin investing across the portfolio of carbon-removal approaches—in research, development, demonstration, early-stage deployment, and enabling conditions—so that they become viable options at the scale needed in the coming decades.” (Baltz 2020)

The goal is Net-zero (cutting greenhouse gas emissions to as close to zero as possible) with any remaining emissions re-absorbed from the atmosphere, by oceans and forests, for instance. So, removal credits, because they can neutralize emissions, “could count against an individual or company’s net-zero target, with protection/reduction counting as a contribution towards net-zero for the world….” “…Restoring degraded forests would qualify as removal while protecting those untouched but vulnerable, would come under protections. (Walker and Giussani, 2022).

Other financial mechanisms support climate solutions. It is just a matter of aligning government entities with the private sector. According to the World Bank, investing $1 in transitioning to a green economy yields an average of $4 in benefits.

A report published on the United Nations webpage presented The New Climate Economy Report from 2018, which found that “bold climate action could yield a direct economic gain of Us$ 26 trillion through 2030 compared with business-as-usual.

Much is left to be done, but the first steps have been traced, and more and more private entities are willing to help in this endeavor.

Here at  XXXXXXXXX, we have the means to help you reach your environmental goals.         

Wouldn’t you feel proud?



Walker, Gabrielle, and Bruno Giussani. 2022. “How Carbon Credits Could Help Fight Climate Change | Time.” TIME.

“A Guide to Emission Reduction Credits (ERCs) System.” n.d. Santa Barbara County Air Pollution Control District. Accessed August 20, 2022.

“Biomass (ecology).” n.d. Wikipedia. Accessed August 21, 2022.

Baltz, James. 2020. “6 Ways to Remove Carbon Pollution from the Sky.” World Resources Institute.






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