An investor guide to negative emission technologies and the importance of land use
Negative Emission Technologies (NETs) are the next investment frontier and offer trillion dollar upside opportunities for investors. Within NETs, forest-related Nature-Based Solutions (NBS) could generate US$800 billion in annual revenues by 2050, worth US$1.2 trillion today in NPV terms, surpassing the current market capitalisation of the oil & gas majors. Hence, an entire new industry may emerge that values carbon stored in vegetation and soil, unlocking new business models and investment opportunities for avoided deforestation, reforestation and afforestation (hereinafter re/afforestation), and land restoration. Thanks to its low cost, natural forest restoration looks likely to emerge as the earliest feasible investment opportunity. The sector’s annual revenues could reach US$190 billion by 2050. Avoided deforestation may generate the remaining annual revenues with US$610 billion by 2050, but it is further from commercialisation as it involves more complex compensation mechanisms (The Inevitable Forest Finance Response: Investor Opportunities, commissioned by the PRI (Principles for Responsible Investment)). Technical solutions, such as Direct Air Carbon Capture, Use and Storage (DACCS) and bioenergy with CCS (BECCS), could generate an additional annual revenue of US$625 billion by 2050. This report provides transparency around NETs assumptions of climate scenarios and corporate net-zero commitments, presents risks and uncertainties associated with NETs, and assesses what upside opportunities NETs – particularly NBS and, within this, forestry – can offer to investors.