Carbon markets, particularly offsets, are shaking off their past and becoming a vital instrument for reaching CO 2 reduction goals, protecting and conserving biodiversity at scale, as well as meeting many of the U.N. Sustainable Development Goals. They need to succeed.

To pay for climate change solutions and lower the risk of transitioning to more sustainable practices, farmers will have to rely on financial incentives. In California, the money for those incentives is coming from the taxes the state imposes on polluters for the emissions they release; a coalition of groups has advocated for a portion of those funds to go to farmers who practice carbon farming. Over the next year, $12.5 million will go to support those efforts.

The Lab, an initiative of over 60 public and private investors and institutions, accelerates much-needed investment solutions to support developing countries to meet their climate change and sustainable development goals. Created in 2014, the Lab has now launched 41 instruments that have collectively mobilized nearly $2 billion for action on climate change and sustainable development.

IHS Markit announced that it has launched the IHS Markit Global Carbon Index, the first benchmark for the global price of carbon credits. According to the IHS Markit Global Carbon Index, the global weighted average price of carbon credits is $23.65. Since the beginning of 2018, the total return potentially gained by investors in global carbon is 132%, index data show.

Nearly a quarter of all the greenhouse gases emitted by humans come from the way we manage our forests, farms and fields, yet the Kyoto Protocol offered little in the way of tools for financing forest conservation. That began to change when developing countries introduced the concept of REDD+ in 2005, at year-end climate talks in Montreal.

"Most efforts and funding to date have been focused on accelerating the transition to clean energy and improving energy efficiency. We can’t tackle climate change without changing our energy systems — but we also can’t get there without harnessing the power of natural landscapes, to reduce impacts we’re experiencing and turning them from sources of carbon emissions to carbon sinks."

Poorer rural people are not excluded from the carbon credit scheme because of their lack of formal land rights, but there are also risks to the approach, which gives state officials power to define what activities are incentivized.

Brazil is better positioned than any other nation to lead the pathway to the low-carbon economy. Its 7+ billion tons of carbon dioxide emissions that have been avoided through Brazil’s enormous and successful effort to slow Amazon deforestation are now poised to be monetized.

Recently demand for offsets has risen fast, and could rise faster if federal or state climate legislation created compliance markets for them. Voluntary carbon markets are relatively small, and voluntary carbon offsets cut less than two tenths of a percent of annual global greenhouse gas emissions — but in a larger compliance market, where offsets help meet climate policy requirements, they could cut orders of magnitude more.

The Nature Conservancy will manage the land, known as the Cumberland Forest Project, for a decade, and will provide investors financial returns from three sources: revenue from certified sustainable timber sales, carbon offset credits and the eventual sale of the land, at the end of the period, with long-term or permanent management restrictions in place.