For the past several years, tech disruption and how it will affect infrastructure investing has been a top concern for global infrastructure investors, and while autonomous vehicles, alternative energy, drones and robots are certainly disruptive, it could be a low-tech, long-dated “innovation” that could end up being one of the most disruptive for the current state of the planet.
Trees are like background noise or the air we breathe, always there and taken for granted. But according to a new study published in Science, newly planted trees could capture the attention of those concerned with climate change and ESG by capturing carbon on a scale needed to keep runaway climate change from becoming a reality.
Forget about high-tech innovations such as carbon capture technologies, clean coal, nuclear, solar and wind, according to the study, trees have the potential to dwarf them all in terms of their ability to keep carbon out of the atmosphere.
“The data finally exist to show that if the right species of trees are planted in the right soil types across the planet, the emerging forests could capture 205 gigatons of carbon dioxide in the next 40 to 100 years. That’s two thirds of all the CO2 humans have generated since the industrial revolution,” a report in Scientific American explains.
The study was conducted by researchers at the Swiss Federal Institute of Technology who analyzed nearly 80,000 satellite photo measurements of global tree cover, which were then combined with data about soil and climate conditions. Once mature and dying, the planted trees would create a carbon bank, having taken the C02 out of the atmosphere.
For infrastructure investors trying to understand how tech disruption is going to impact long-dated infrastructure assets and their investments in them, how trees play into that equation might be an important factor to consider. This is especially true in the energy sector where nuclear, geothermal, wind and solar seem poised to increasingly cut into the use of fossil fuels.
And before dismissing planting trees as pie in the sky, infrastructure investors might consider the case of PG&E, once thought to be as core and safe an infrastructure investment as you could get — disruption not only happens fast but also in unexpected ways.
Also consider that in California, a law was passed in 2016 that recognizes watersheds as part of the state’s water infrastructure and their relationship to climate change. The Society of Wetland Scientists noted, “the law allows the use of modern financing approaches to protect and restore source watersheds, including stream channel restoration, wet and dry meadow restoration, conservation of private forests, upland vegetation management to restore watershed productivity and resiliency, other projects that would increase conditions for water and snow attraction, retention and release under changing climate conditions, and road removal and repair. The new law is ground-breaking in that it fundamentally shifts the regulatory relationship to ecosystems and their services, and puts ecosystems on the same footing as grey infrastructure, relative to funding projects.”
This week in Canada, meanwhile, the government allocated $4.7 million to fund nine climate change research projects, including advancing the knowledge of the role forests play and improving the understanding of how carbon interacts with forests, wetlands and oceans.
And in Toledo, Ohio, in February, residents voted to grant Lake Erie legal rights on par with those of people, giving the lake “personhood” status. This was after pollution from agriculture created algae blooms and impacted drinking water.
“The legislation entitles the lake certain rights and empowers citizens to advocate for those rights when they are being violated, like bringing legal suits against polluters,” a report by the Smithsonian notes.
The increasing recognition of forests, bodies of water and wetlands’ importance in combating climate change, as well as being granted legal rights and considered infrastructure in some cases, could create opportunities for investment and ESG credit. We can’t know what the future holds, but should cap and trade or a similar system become the global standard, planting trees on a grand scale might be one way business offsets its carbon footprint. Exactly what that means for investments in energy infrastructure can’t be known either, but it seems possible new forests, acting as massive carbon sinks, might even help support a case for prolonged fossil fuel use by capturing from the atmosphere the pollution they emit. Of course, that pollution also affects people’s health more directly by the air, water and food we use, so, as is often the case, only time will tell.
