Will investors sink money into carbon sinks?

One of the peculiarities of public debate about decarbonisation has been the sometimes lopsided emphasis on future emissions reduction. Vital though future reduction is, altering the future trajectory only tells a partial story. Much of the carbon is already with us, under our feet.  The earth’s soil contains about 2,500 gigatons of carbon – more than three times the amount of carbon in the atmosphere and four times the amount stored in all living plants and animals, according to Columbia Climate School. Estimates from the 1990s suggest peatlands alone store approximately 450 billion tonnes of carbon and this figure must have hugely grown since then.

 This is where Ireland comes in. The CSO estimates 14% of Ireland’s surface is covered by bogs, with about 2% covered by moors and heathlands. This is both a threat and an opportunity. The threat is that much of this bogland has been disturbed by farming or excavation thereby releasing carbon, but the opportunity is to make Ireland’s boglands not carbon releasers, but carbon sinks, where carbon is sequestered (or ‘fixed’ to use the scientific process involved). A drop in water table due to drainage, peat removal, burning and other human influences have led to significant releases of greenhouse gases, the Irish Peatland Conservation Council has pointed out.

Farming and extractors like Bord na Mona have obviously not been charged for such carbon release over the centuries and decades, but now things are changing and Irish land owners and other entrepreneurs are gazing at the commercial opportunities involved in carbon sequestration and testing out its commercial potential. Before taking one step along this journey, one has to ask a simple question- do you own a carbon sink or a carbon source? That is the starting point in any investment case in this area. Sinks are usually confined to peatland, forests and ocean. Forest planting is already commercially supported in Ireland by range of schemes, with farmers paid €680 per hectare for each of the first 15 years of their forest, but the agricultural industry is increasingly delving into the idea of planting for carbon sink potential primarily. For example you can see what a forest can do when sequestering carbon by using a special tool developed by Teagasc,

In terms of bogs, commercial opportunity is arguably nearer. Bord na Mona has a €128m fund available for peatland restoration, which happens by ‘re-wetting’ a bog, effectively stopping its drainage or planting certain mosses. Some of this money is being deployed to transform its own bogs into carbon sinks, but it has also reached out to third parties, so anyone in bog rich areas (think counties Donegal, Kerry, Galway and Mayo in the main) will be assessing the merits of working with the company. The financial rewards for bog restorations and re-wetting remains however a very dynamic picture, with the Farmers Journal reporting some time ago about farmer scepticism. But other firms and co-operatives are moving into the area and testing how it works. For now much of the emphasis is on future income, but nevertheless the area is clearly is bringing a new dimension to how land may produce both societal benefits and financial gains in the future. A clear benefit will arise for those holding land that is not currently in productive use, other options are likely to be syndicated investment in the re-wetting and then recouping this investment potentially via carbon credits or direct government assistance. But for now the idea is like a bog, just settling.

 Emmet Oliver

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