The use of carbon offsetting is set to grow rapidly driven by strict new rules covering the reporting of environmental impact and changes to global carbon markets. These growing demands on industry and finance require an ever-more rigorous method of environmental reporting and, as 26 out of 50 key climate indicators can only be accurately observed and measured from space, the use of satellite monitoring – like carbon offsetting – will play an increasingly important role in global efforts to reach net zero.
Many businesses cannot meet net-zero targets without the use of carbon offsets. But to date doubts over the credibility of carbon offset projects have left organisations and major investors wary of committing funds to carbon offset schemes that are unable to show real evidence of environmental benefit and regulatory compliance.
Offset projects have come under increasing scrutiny following reports of poorly managed climate ‘solutions’. The recently reported 6,000 dead trees in Norfolk, England is an example of how badly these can go wrong. The financial implication alone must have cost millions of taxpayers’ money for a result that had no environmental or social impact. Another example is Verra in Peru where Gucci, Disney and Shell’s carbon offsetting projects have been deemed ‘worthless’ and fraught with human rights issues. The need for credible and verifiable offsetting is acute with transparency essential to building confidence in both offsetting projects and global carbon markets. Space-based monitoring and reporting provides the credible solution that organisations have been calling for.
With finance increasingly aligned with environmental regulation and availability of a growing number of dedicated space-based monitoring and reporting platforms, this powerful trinity is merging to provide the tools and means needed to power meaningful solutions to the climate crisis.
The carbon offset market currently represents just under 300 million tonnes of CO2e, or less than one per cent of global emissions but is set to expand rapidly as more countries begin transitioning to net zero. According to a study by Berenberg the global carbon offset market, valued at $0.6 billion in 2019, could be worth $200 billion by 2050. But industries and financial markets will only commit such huge sums if they can see verifiable evidence to support environmental claims and establish commercial market value.
The role of earth observation in carbon offsetting
Satellite monitoring providing big data to a range of dedicated environmental platforms will increasingly assuage doubts over carbon offsetting schemes with its ability to deliver accurate real-time data from millions of monitoring points across the globe. Of around 5000 geostationary and polar-orbiting satellites currently in orbit 800 are dedicated to earth observation, imaging, mapping, remote sensing and monitoring via optical, Lidar, radar and passive microwave data. Space-based environmental monitoring is led by organisations such as NASA, ESA, Inmarsat, Eumetsat, eOsphere, GeoOptics, ACRI-ST SAS, Bluefield Technologies and NERCO-N that operate and manage satellites alongside global environmental authorities.
Satellites are used to report on the two core elements of carbon offsetting projects that either reduce GHG emissions or remove existing emissions from the atmosphere. Projects involving renewable energy generation, protecting forests from deforestation or increasing energy efficiency of buildings or industrial processes are examples of projects reducing emissions. Projects that extract emissions from the atmosphere include tree planting, methane recapture or wetland restoration. In 2021 around 90 per cent of offsets sold were from emission reductions.
The Decentralised Carbon Offsetting Platform, based on the Woodland Carbon Code, is a government-backed scheme promoting transparency in ESG reporting by allowing companies to register their carbon sequestration schemes in a publicly accessible database. Utilising Sentinel-2 satellite imagery and the new database regulators can remotely monitor forest carbon projects on a weekly basis. Factors such as land use, forest health and coverage can be easily assessed and by leveraging AI technologies these processes can be automated allowing independent verification of carbon offsetting on a national scale.
Satellite monitoring for investment
Financial markets need accurate information to establish the veracity of investments and analyse risks before placing a value on carbon offsetting schemes. Companies, banks and investors also have to comply with environmental reporting standards and frameworks such as the TCFD, set up by the Financial Stability Board in the US. To date, such reporting has often been expensive and backward-looking, relying on statistical sampling from physical site visits or data that can be up to a year out of date. The need for cheaper and more up-to-date information is a driving force behind the increasing use of satellite-based reporting.
Sust Global uses satellite data, geospatial data and machine learning to transform complex climate data into meaningful information for corporates and financial institutions. Data from the Sentinel-5P satellite, monitoring millions of data points across the globe, provides high-quality reporting that, linked to a cloud-based infrastructure, provides analysts with intelligence needed to monitor and verify carbon offset projects.
Satellite Applications Catapult, a space-based project with funding from the European and UK Space Agency, has developed a platform that links satellite imagery and isotopic analysis to provide evidence needed to comply with ecological regulations and validate and change sourcing decisions. Using data from multiple satellites via the data exchange system analysts can select and visualise different combinations of data relating to activities such as land use and carbon offset projects then automate reports for individual environmental monitoring.
Work is now in progress to establish new global standards and regulations that will verify schemes and satisfy financial institutions in order to secure the future of carbon offsetting. To this end, the need for robust and verifiable reporting is fuelling the rapid development of new platforms and services that, to comply with ever-stricter regulations, will be powered by environmental data that can only be sourced from space. With the growth in the use of carbon offsetting set to increase many times over in coming years, satellites will play a central role in global efforts to reach net zero.
“The business case for environmental monitoring can be seen in managing risks that result from ESG issues to create a competitive advantage,” says analyst Tess Buckley at EthicsGrade. “The use of satellite-based monitoring and reporting of environmental impact will enable a company to obtain real value and better terms from the financial sector.”
Space-based data is now at the heart of global environmental pledges and leading nations and their major industries have nowhere to hide as the world takes vital steps to tackle the climate crisis. In highlighting the importance of satellite monitoring Inmarsat’s recent ‘Can Space Help Save the Planet?’ report revealed that the world could reach Net Zero by 2040 – ten years ahead of schedule – by accelerating the adoption of space and satellite technologies.