Cross-Border, Nature Based Market Solutions to Protect Blue Carbon Coastal Ecosystems in the Californias

March 2022

important increase in demand is expected to come as the aviation sector looks to mitigate GHG emissions through the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). International aviation was one of the only two sectors not covered in the 2015 Paris Agreement (along with international shipping). As such, many airlines started using carbon offsets to limit their net carbon emissions, either on a voluntary basis or to comply with national or regional regulations. A relevant update that came from COP26 is that, through article 6.2 previously mentioned, countries will be required to authorize carbon credits generated to be available for use for CORSIA-required mitigations. CORSIA is the first international effort to curve emissions from international travel. CORSIA is a program run by the International Civil Aviation Organization (ICAO) to limit carbon emissions from international aviation and meet the industry's goal to achieve carbon neutral growth beginning in 2020 and a 2% annual fuel efficiency improvement through 2050. The pilot phase ran until 2021, followed by a voluntary phase from 2023-2026, and will begin its mandatory phase for all countries in 2027. Under CORSIA, 75 airline offsetting has a chance to take off. Depending on how the industry grows in the coming years, this program is expected to generate between 1.6-3.7 billion tCO2e of demand for offsets between 2021 2035. S&P Global Platts priced CORSIA-eligible carbon credits at US $8.71 CO2e in November 2021, 75 https://www.forest-trends.org/wp content/uploads/2018/10/CORSIA_infographic.pdf 76 https://www.spglobal.com/platts/en/market insights/latest-news/energy-transition/112321-cop26 confirms-role-of-voluntary-carbon-market-verra 77 https://www.iucn.org/sites/dev/files/content/docu ments/2021/manualbluecarbon_eng_lr.pdf 78 Manual for the Creation of Blue Carbon Projects in Europe and the Mediterranean, IUCN, March 2021, page 36

a gain of 989% since its first assessment on Jan. 4, 2021, at 80 cents. 76

BLUE CARBON OFFSETS

Carbon offsets follow guidelines or standards, developed by organizations, usually NGOs, which “certify that a particular project meets its stated objectives and its stated volume of emissions. Standards have a series of methodologies, or requirements, for each type of carbon project.” There are now several standards today that verify blue carbon credits. In 2020, a mangrove-specific methodology (not limited to considering mangroves as a type of “tropical forest”) was developed under the French certification label bas-Carbone , allowing companies in that country to offset their CO 2 emissions based on protection of mangroves, and a similar methodology is under development for seagrasses. 77 Likewise, the Andalusian Emissions Offset System now too includes blue carbon projects. 78 Currently, there are six carbon accounting and monitoring approved methodologies that have been applied to blue carbon projects in the voluntary market. 79 However, these standards are fairly recent. Verra published its first methodology for tidal wetlands and seagrass restoration in 2015, and only in September 2020 did it expand rules to cover wetland conservation. According to a Yale University blog, 80 only a few mangrove-specific projects have received carbon offsets to date, https://www.iucn.org/sites/dev/files/content/docu ments/2021/manualbluecarbon_eng_lr.pdf 79 There are currently six carbon accounting and monitoring approved methodologies under the Clean Development Mechanism (CDM), the Gold Standard (GS) and the Voluntary Carbon Standard (VCS) that can be applied to blue carbon projects. The GS methodology is only applicable to mangroves. 80 https://e360.yale.edu/features/why-the-market for-blue-carbon-credits-may-be-poised-to-take-off

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