In Denmark, the biodiversity crisis is the focus of media and politics. We hear how life on our planet is in jeopardy because of degrading ecosystems due to human activities. We see showcased examples of threats to natural habitats for wildlife such as insects disappearing and how birds, fish and mammals devour plastic. It leaves most of us sincerely, truly worried about our future.
Perhaps the narrative should include actionable insights for mitigation of this development? Decision makers consider reasonable, tangible actions for investments in nature. So, why not give them what they want and turn the good health of nature into real value? After all, sustainability reporting of companies soon has to deal with double materiality anyway, i.e. what is their impact on society and environment and vice versa.
Restoration of peatlands as financial incentive
Enter the world of natural capital and the metrics behind carbon credits. Natural capital is about managing nature the same way we manage financial assets like goods, properties, equity, and other investments. Carbon credits are measurable, verifiable emission reductions from certified climate action projects.
The rationale behind carbon credits is that organisations are doubly incentivised to reduce greenhouse emissions: Owners are allowed to emit a certain amount of carbon dioxide or other greenhouse gases, but must spend money on extra credits if their emissions exceed the cap. Furthermore, they can make money by reducing their emissions and sell their excess allowances on the market. Such a system is in place for household power consumption in California, where both the supply and the demand side are incentivised to consume and produce less.
When countries, for example, choose to restore raised bogs and peatlands, the project can be transformed into carbon credits sold in the market because bogs and peatlands naturally lock up carbon by absorbing it through grasses and storing it in the ground. Raised bogs and peatlands can store carbon for thousands of years. That makes them a far more efficient tool for battling climate change here and now than planting trees which is a more long-term solution. As we have all just experienced during a both wet and hot 2023, we don’t have time to wait 10-20 years to plant more forest if we want to meet the politically determined goals, like the Danish Climate Act. We need results fast. Raised bogs and other wetlands can give us just that, as e.g. 10% of the UK territory are peatlands in various conditions.
Trust and transparency
The biggest challenge today for turning nature into capital is the technology part. If we, for example, continue with the raised bogs, we first need to agree upon how much carbon a particular bog can store. How do we do that? That requires cutting edge sensors and a data platform, so we can measure exactly how deep the bog is; what are the composition of gasses in the bog; what the water level is, and how much growth has occurred. In other words, we need to agree upon the foundational metrics behind nature as a true asset. Otherwise, we cannot report the results correctly, and thereby we cannot establish an international market for carbon credits that we can all trust. What if you could know where the carbon emitted from your recent flight to Barcelona was absorbed? We are aiming for that level of transparency and credibility.
A few years ago, Deloitte Denmark partnered with The Danish Environmental Protection Agency (EPA) on a project to use technology for automated natural habitat recognition and mapping. Instead of manually keeping track of 19,300 square kilometres, the area is today co-monitored via AI. The EPA was already using input from quantum sensors in the form of Light Detection and Ranging (LiDAR) lasers to map the surface (reflection by rooftops and plants) and terrain (soil) heights.
Nature holds great value
In the future, nature as capital will require many new sensor types.
For example, the depth of wetlands is an issue that currently requires the deployment of on-site probes. This can be alleviated using ultra-sensitive devices for measurement of the local gravitational field. Such measurements can be done above ground and can map the soil types without probing. The precise location and time for collecting such data requires enhanced location and timing devices for both time and acceleration measurements. One possibility of such technologies is e.g. atomic clocks and quantum gyroscopes (for instance, using cold atoms), and they completely remove the reliance on satellite navigation and timing signals both above and below ground. Finally, the direct assessment of the actual on-site atmospheric chemistry can be measured using drone deployed quantum spectrometers (for instance, cascade lasers) to detect fine variations in trace gasses such as CO2 and methane.
My main message here is that if we want to do something about the biodiversity crisis for the ecosystems, for all animals and plants, we need to think about nature as capital. Because that is what it is: Something of the greatest value.
Forfatter spotlight
Jacob Bock Axelsen
Jacob Bock Axelsen (Snr Manager) is CTO in Deloitte Risk Advisory and is an expert in mathematical modeling and a specialist in artificial intelligence. Jacob is educated in mathematics- economics (BSc), biophysics (MSc) and physics (PhD) with nine years of research experience abroad. His scientific background has proven useful in advising both private companies and public institutions on AI, AI governance, Quantum Computing, Organizational Network Analysis, Natural Capital Management and much more. After six years in Deloitte he has developed a strong business acumen. He holds the IBM Champion title for the fourth year in a row and is part of Deloitte’s global quantum computing initiative.