Sliced: Peatlands in Carbon Markets

Listen to this Sliced essay on any of the streaming platforms below.

There is one ecosystem in dire need of protection across the planet that simultaneously holds incredible potential for sequestering and storing greenhouse gases (GHG) while receiving very little attention as a climate finance solution in carbon markets. That ecosystem is peatlands.

Peatlands are unique wetland ecosystems characterized by the accumulation of organic matter, primarily plant material, in waterlogged conditions. Peatlands cover about 3% of the Earth’s land surface and are found worldwide, particularly in boreal and tropical regions.

One of the most interesting features of peatlands is that they are extraordinary carbon sinks. They store more carbon per unit area than any other type of ecosystem, including forests. This carbon is sequestered in the form of peat, which is partially decayed organic matter that has accumulated over hundreds or thousands of years. The waterlogged conditions slow down the decomposition of plant material which leads to the buildup of peat and the sequestration of carbon.

The importance of peatlands in carbon sequestration cannot be overstated. They hold approximately 550 gigatons of carbon, which is equivalent to 42% of all soil carbon and more than all the carbon stored in the world’s forests combined. When peatlands are drained or degraded, the stored carbon is released into the atmosphere as carbon dioxide and methane, both potent greenhouse gases. Based on that fact alone, peatlands play a massive role in mitigating climate change which is why it’s essential to protect and restore them.

In addition to their incredible carbon storage, peatlands also play a major role in maintaining water quality and regulating water flow. The sponge-like properties of peat allow these ecosystems to absorb and retain large amounts of water, which helps to mitigate flooding and maintain base flows in rivers during dry periods. This water regulation capacity is important for sustaining local water supplies and reducing the impact of extreme weather events. Moreover, peatlands filter pollutants and excess nutrients from water, thereby improving the quality of water that flows through them and supporting healthy aquatic ecosystems.

Biodiversity in peatlands is exceptionally rich. They support a variety of specialized plant and animal species, and they provide habitats for rare and endangered species, including unique mosses, orchids, carnivorous plants, and a range of birds, insects, and mammals. Peatlands also have cultural and economic importance for many communities. Indigenous peoples and local communities often rely on peatlands for traditional practices, livelihoods, and cultural identity. Peatlands can also support economic activities such as sustainable tourism, fishing, and the harvesting of non-timber forest products.

Unfortunately, peatlands are at high risk of degradation, destruction, or drainage. Unsustainable practices, such as peat extraction for horticulture and drainage for agriculture, pose significant threats to these ecosystems. In Europe, for example, a staggering nearly 50% of all European peatlands have been drained. On a global scale, it is estimated that drained peatlands contribute to a massive 5% of GHG emissions.

Yet despite their mammoth importance and potential, peatlands have received very little attention in carbon markets. Some methodologies have been developed to guide peatland projects in the voluntary carbon market. These methodologies outline the processes for measuring, reporting, and verifying the carbon benefits of peatland projects.

For example, Verra’s Verified Carbon Standard (VCS) includes an active methodology for rewetting drained temperate peatlands and a methodology under development for tropical peatland conservation and restoration. Another standard, Social Carbon has a methodology for peatland restoration that is also currently under development.

The European Union (EU) recently announced plans to publish a peatland rewetting methodology in October. This new methodology will align with the EU’s Carbon Removals and Carbon Farming (CRCF) framework. The EU recognizes significant potential in peatland restoration, which could generate carbon credits for sale within its regulated carbon market, the EU Emissions Trading System (ETS). This initiative aims to leverage the environmental and economic benefits of peatland recovery to support the EU’s broader climate goals.

The European Commission also just initiated consultations on a proposed methodology for rewetting peatlands. This process involves transforming drained peatland soils back into wet soils by raising the water table. Actions to achieve this include blocking drainage canals and disabling pumping facilities in affected areas, among other measures.

The International Union for Conservation of Nature (IUCN) has the Peatland Code which is a voluntary standard for peatland restoration projects in the United Kingdom. This standard aims to help these projects market the climate benefits of their restoration efforts.

Peatlands are important ecosystems that offer significant benefits for carbon sequestration, water regulation, biodiversity, and local communities. Because their role in carbon markets is currently minuscule, there is plenty of room for growth. In Europe, only 1 or 2% of drained peatlands have been rewetted so there is ample opportunity for projects. If done correctly, peatland-focused projects can sequester carbon and deliver co-benefits such as biodiversity conservation, improved water quality, and enhanced local livelihoods. By improving, developing, and implementing high-integrity methodologies and carbon projects, carbon markets could support the conservation and restoration of peatlands which would contribute to climate mitigation and the preservation of these precious ecosystems.

Disclaimer: Hi there, you are receiving this update from Gordian Knot Strategies based on your previous engagement with us in some capacity. If you wish to unsubscribe, please use the link below, and we promise you that your contact details will be permanently removed from our distribution list. Thanks!

Want to unsubscribe?

Click here.

Want to receive the Sliced weekly dispatch?

Click here.

If you want to see more of our content, check out our monthly newsletter, Virtus.

Click here.