Smart Net-Zero

Organisation for Economic Co-operation and Development (OECD) | Source | Report |

Net soil carbon sequestration (SCS) on agricultural lands has the potential to offset 4% of annual global human-induced GHGs over the coming century. To unlock this, the OECD recommends a comprehensive policy package that includes regulations to prevent carbon loss from peatlands, knowledge transfer for "win-win" agronomic solutions, and voluntary market-based incentives. However, the report identifies critical hurdles for market-based instruments, specifically non-permanence of carbon stocks, additionality concerns, and high transaction costs, which can range from 3% to 85% of total credit value. To improve the integrity of carbon credits, policymakers are encouraged to adopt innovative contracting solutions, such as comprehensive accounting and buffer pools, to manage the risk of carbon being returned to the atmosphere due to climatic events like droughts or floods.