As COP30 – the UN climate change conference in Brazil – unfolded, it looked less likely by the day that Australia would emerge victorious in its bid to host COP31.
Australia’s eventual concession to Turkey came as a disappointment to some investors hoping that proximity would help to channel capital into the Australian agriculture sector and spread awareness of the plight of its climate-change-prone Pacific Island neighbors.
Geoffrey Seeto, head of emerging markets at investment manager New Forests, hoped that COP31 would come to Australia with Pacific Island nations involved as co-hosts.
New Forests would have used the opportunity to showcase its first investment in the Solomon Islands, a 75 percent stake in local forestry company Kolombangara Forest Products, as one of the region’s “successes”, Seeto said.
“This has always been a very neglected part of the world, for the rest of the world,” he said. “If you can prove out a concept or a model in there, then potentially we could build scale.”
Heechung Sung, head of natural capital at the Clean Energy Finance Corporation, agreed that conferences like COP can create an “efficient” environment to connect capital to investment opportunities.
However, Sung said the location of next year’s summit is not so important as its agenda.
“I don’t think it makes a huge difference where COP is held,” she told Agri Investor from the corridors of COP30.
“Conversation, whether it’s [around] mitigation or adaptation, has to continue leading up to COP and then post-COP. The actions and the outcomes that we need live before and beyond COP.”
Sung said many Pacific Island nations had a strong representation in Belém, and that these nations – like Australia – can still impact next year’s agenda despite their distance from host city Antalya.
Indeed, while Turkey will host COP31, Australia will take responsibility for the negotiations, with minister for climate change and energy Chris Bowen acting as president of negotiations.
A Pacific Island nation, yet to be determined, will also host a pre-COP meeting.
Ecosystem economics
Sung described her experience at the summit as an “eye-opener” in terms of the amount of work needed to meet global climate ambitions.
The text adopted at the end of COP30 included a rallying call for at least $1.3 trillion towards climate action each year by 2035.
Nature-based solutions – ways to protect, manage or restore ecosystems – are emerging as one tool to combat the effects of climate change.
Sung said while many nature-based solutions were on show at the summit – most prominent among these being a Brazil-led rainforest fund that has so far raised $5.5 billion against a $125 billion target – natural capital as an asset class remains in its infancy.
The CEFC has been a leader in this space in Australia, most notably through its partnerships with Canadian public pension investment manager La Caisse and farmland manager Gunn Agri Partners.
The trio’s A$250 million ($163 million; €140 million) Meldora platform blends agricultural operations with environmental plantings to generate Australian Carbon Credit Units, for which a long-term offtake agreement is in place with mining group Rio Tinto.
Sung said the platform’s “infrastructure-like” cashflows gave La Caisse the confidence to support it, and described its combination of farming assets, decarbonization opportunities and environmental monetization methods, as unique.
“No one else is doing that,” she said.
“I feel confident in saying that, having spent the last week here talking to lots of different people who are so surprised we’re able to do those types of transactions.”
Sung expected the offtake agreement with Rio Tinto to generate strong interest from global investors but said even Australian institutions need more education around the intricacies of the ACCU market.
Looking forward, she said the CEFC could look to expand its use of different ACCU methodologies involving the restoration of coastal and inland waterways.
“Walking the massive facility – it’s a very large conference area and it’s very hot and steamy – there is a renewed focus on waterways and oceans as a source of climate solutions,” Sung said.
“That is an area I’d be really keen to bring home and progress.”
Market movements
Carbon markets were also an area of interest for New Forests’ Seeto, who wanted to see COP30 produce more clarity around the use of natural climate solutions in Article 6.4 of the 2015 Paris Agreement.
Article 6.4 established an international carbon crediting mechanism, but 10 years later, a supervisory body is still working out details around its rules.
“They have, in theory, included it, but the implementation piece and the operational piece is still being worked out,” Seeto, who did not attend COP30, said.
“That would help us tremendously, but it’d also help nature and natural capital take their rightful place in terms not just of climate change mitigation, but all the good things that you get from a piece of land and all those ecosystem services.”
Taking a scientific view on these ecosystem services, Michael Robertson, director of the agriculture and food research unit at the Commonwealth Scientific and Industrial Research Organisation, was in Belém to support the Australian government’s delegation.
He said the conference provided perspective on new avenues of research to pursue as climate change forces a greater focus on food security.
“While COP is largely trying to address containing climate change through greenhouse gas emissions reduction, there’s also a strong theme here about adapting to climate change,” Robertson said.
“That’s been one of the bigger insights I’ve got – just how much there is a need for science to help governments and businesses think through that at a strategic level.”
COP30 closed with a decision to triple global adaptation finance by 2035, lifting the target to $120 billion per year, up from the $40 billion agreed at COP26 in Glasgow.