Panel
Asia's Green Gold: Unlocking Value in Natural Capital Markets | Asia Summit 2024
Milken InstituteMeaghan See, Mark Glossoti, Hoon Ling Min, Madhur Jain, Justin Reynolds, Megan Seen, Mark Mazzotti, Sun Ling Min, Mada Dharian, Madhuri, Madhu, Amit Arora, Cécile, Mindy, Doreen, Linh Minh, Vaswant, Bonnie, Mike, Li-Ming, Madhav
- Asia is projected to supply approximately 30% of the global carbon offset potential by 2030, with forestry credits alone potentially generating $25 billion annually as agro-station, reforestation, and re-registration projects expand under EU regulations.
- New revenue streams are expected from biodiversity credits, though current funding gaps for nature-based solutions require a tripling of the estimated $150 billion annual investment by 2030 to meet scale.
- Meeting Paris Agreement targets requires global government emissions to peak by 2025 and reduce by 43% by 2030; current trajectories suggest exceeding 1.5°C warming, necessitating annual investment levels 3 to 6 times current figures for the decade to limit warming to 1.5°C–2°C.
- Capital allocation is currently dominated by the public sector (over 80%), with private sector contributions below 50%; to support scaling, natural capital funds target 10% to 12% returns to justify the 30 to 40-year gestation periods inherent in these projects.
- Technological integration, including satellite imagery and machine learning, will be critical for validating smallholder practices, standardizing biodiversity metrics, and enhancing the transparency and integrity of emissions measurements and soil carbon quantification.
- Structural market developments include the introduction of exchange and marketplace mechanisms, ratings agencies for complex product types, and the operationalization of Article 6.4 to improve liquidity and governance.
- Revenue distribution models are evolving to include direct digital payments to farmers, with specific initiatives like Guarana sharing 50% to 65% of revenue, potentially increasing farmer income by $60 to $80 annually.
- Long-term agronomic impacts from these scaled sustainable practices include yield increases of 4% to 7%, reduced fertilizer requirements by 7% to 12%, and a cumulative net increase of 24% to 26% over a 5 to 6-year period.
- Singapore is beginning to allow companies to offset cash liabilities using 1% to 5% of carbon credits, a threshold that is expected to grow alongside domestic environmental markets aligned with Nationally Determined Contributions (NDCs).
- Key risks and challenges involve the nascent state of biodiversity standards, the need for unified measurement metrics, and the complexity of long-gestation projects, which are being mitigated through pre-financiability studies, concessionary capital, first-loss guarantees, and insurance products.