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    RESEARCH  |  3 POINT PERSPECTIVE  |  SOLVING SUSTAINABLE

    Reaching Net Zero through the power of nature

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    Contributors: Lydia Rainforth, Marie Freier, Mick Pickup, Chris Stevens

    14 Dec 2021

    In a recent report, Barclays Research analysts argue that nature-based solutions (NBS) are the “missing part of the Net Zero puzzle”. While they note that the priority of society, governments, and businesses should be genuine reductions in GHGs and a steady move towards decarbonisation, they argue that various NBS can and should be deployed right now.

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    Contributors: Lydia Rainforth, Marie Freier, Mick Pickup, Chris Stevens

    14 Dec 2021

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    Reaching net-zero through the power of nature

    Barclays Corporate and Investment Bank clients can access the full report. Sign in

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    1. Natural forestry

    As plants and trees grow, they absorb and capture CO2 from the surrounding atmosphere, storing it in their organic matter and soils. On average, our analysts think each tree could offset 100-200 kg of CO2 over its lifetime, or approximately 10kg a year over 20 years.

    This is why it is vital to protect woodlands through afforestation – the process of sowing seeds in a terrain devoid of trees – or reforestation, planting native trees in forests damaged by harvesting or fires. The amount of carbon emitted every year by the EU 27 nations, for example, is equivalent to about one-seventh of the carbon stored in the region’s forests. The restoration and management of forests and the curbing of deforestation, especially in tropical and sub-tropical regions, has the greatest potential among NBS to mitigate emissions, according to the UN’s Intergovernmental Panel on Climate Change.

    Technology could help increase the rate of carbon sequestration. One notable reforestation project is run in the north of Spain by two European companies. Before planting, data is compiled from satellites, UAVs, climate models, and soil samples to optimise planting designs and maximise tree survival. GPS-led automated planting systems are then used to reforest at scale.

    Example of tree sequestration

    Source: Tree Foundation, Barclays Research estimates

    2. Carbon farming

    Carbon is stored in soil as a component of organic matter -- plant and animal matter in various stages of decay. High-carbon soil is generally useful for agriculture, as increased carbon stocks improve water-retention capacity, nutrient availability, and soil fertility. But disturbance of such soils can release carbon stores into the atmosphere.

    Carbon farming refers to processes designed to change the balance between carbon lost via soil disturbance and plant respiration, and carbon gained by leaving materials such as roots, decayed leaves, and other residues in the soil, and through the addition of manure. Through the use of such techniques, more tracts of land could become carbon “sinks,” absorbing more carbon from the atmosphere than they release.

    Assessing the global capacity to sequester carbon is difficult, given the diverse nature of soils, farming practices, land use, and local climates. Estimates derived from modelling range from 1gt of CO2 per year up to 11gts. The answer is likely to be somewhere in the middle. According to estimates from the UN’s IPCC, sustainable soil management practices could sequester 15% of annual GHG emissions or about 5gt a year.

    Related content

    Putting a price on carbon

    Barclays Research analysts argue that carbon pricing must play a more significant role in public policy in order to limit global warming.

    Carbon farming

    Source: Barclays Research

    3. Blue carbon

    Blue carbon is a relatively new concept, and methods of calculating sequestration levels are still in the early stages. The name refers to the carbon captured and stored in coastal and marine ecosystems, including seagrass meadows, salt marshes, and mangroves. Such ecosystems tend to be carbon sinks, accumulating and retaining carbon in the plants themselves, as well as the soil below. Academic literature1 suggests that the annual sequestration rate for mangroves is on average 6-8 metric tonnes of CO2 per hectare – about 2-4 times the annual rate observed in mature tropical forests.

    But as with forestry, when blue carbon ecosystems are degraded or destroyed, they emit the carbon stored within them. According to data from the Blue Carbon Initiative, as much as 1bn tonnes of CO2 is being released annually from degraded coastal ecosystems. 

    The private sector is starting to get involved. A US-based company, for example, has joined a programme to mitigate coastal erosion in South America by building so-called Sediment Trapping Units. Such structures are permeable and promote sediment deposits, so that young mangrove trees arise naturally or, when planted, grow in newly formed mud banks.

    Barclays Research analysts argue that four industries are particularly well placed to capitalise on the growth of NBS: energy, financial services, agriculture, and monitoring and verification. But many sectors could unlock opportunities in their own way. Companies investing in NBS today are likely to face lower costs for carbon emission reduction in the future.

    1 Howard, J., Hoyt, S., Isensee, K., Pidgeon, E., Telszewski, M. (eds.) (2014). Coastal Blue Carbon: Methods for assessing carbon stocks and emissions factors in mangroves, tidal salt marshes, and seagrass meadows. Conservation International, Intergovernmental Oceanographic Commission of UNESCO, International Union for Conservation of Nature. Arlington, Virginia, USA.

    Blue carbon

    Source: Barclays Research

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    About the experts

    Lydia Rainforth

    Lydia Rainforth is a Managing Director and equity analyst at Barclays, based in London. She is responsible for coverage of European Integrated Oil and Gas companies. Ms. Rainforth joined Barclays in January 2009 from Lehman Brothers where she was responsible for coverage of the oil and gas sector in Europe. Ms Rainforth graduated with an MA from the University of Cambridge and is also a CFA charterholder.

    Marie Freier

    Marie Freier is Global Head of Cross Asset ESG Research at Barclays. Marie leads the integration of ESG into Barclays fundamental research products, driving collaboration and a coherent and consistent approach across regions and asset classes. Marie and her team of dedicated ESG subject matter experts support credit and equity analysts in assessing how ESG attributes affect financial risks and valuations across sectors and companies, ultimately driving security pricing. Marie joined Barclays from Sanford C. Bernstein, where she served as Head of European Product Management and, most recently, as both co-Head of European Sales and Global Head of ESG, spending more than 13 years at the firm. She previously worked for Aon and Willis Re, now part of Willis Tower Watson. Marie holds an M.A. in Mental Philosophy from the University of Edinburgh.

    Mick Pickup

    Dr. Mick Pickup is responsible for coverage of the oil service sector in Barclays European Oil & Gas equity research team, having covered the sector for eight years. Prior to Barclays, he was at Lehman Brothers beginning in 2000, which he joined after a brief time at Commerzbank. The European Oil & Gas team has been ranked No. 1 in Institutional Investor's "All-Europe Research Team" survey and has consistently been recognized as top two in the Extel survey since 2002. Prior to 2000, Mick worked in a consultancy role as a senior analyst for Evaluate Energy. He earned a B.A. from Oxford University and a Ph.D. in Chemistry from UCL.

    Chris Stevens

    Chris Stevens is a Director within Equity Research at Barclays, based in London. As part of the Investment Sciences team, he is responsible for creating investment insights by combining alternative data, data science, and traditional research. Chris remit includes both standalone data-led research as well as collaboration with analyst teams to incorporate data driven insights into their research. Prior to joining Barclays in this current role, Chris built his alternative data skill set at UBS Evidence Lab in New York where he worked for 2 years. Prior to this, he was a Travel & Leisure equity analyst at UBS, and originally Barclays.

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