Green finance is an investment that aims to promote better environmental outcomes. It involves loans, equity and other mechanisms that support green projects such as renewable energy, sustainable agriculture or ecosystem restoration. 

Green finance is mainly understood to be ‘climate finance’ investing in low-carbon strategies (energy efficiency, low-carbon technology, carbon sequestration). But can be broader and encompasses all nature-based solutions (e.g. wetland restoration, using natural processes to manage flood and coastal erosion risk, carbon sequestration through habitat restoration).  Investment for peatland restoration is a form of green finance.

Peatlands have amazing carbon-capturing capabilities and are the most effective natural climate solution in the temperate world. They cover just 3% of the earth’s surface, but store 25% of the world’s terrestrial carbon. Ireland currently holds a large proportion of Europe’s remaining functional peatlands. Some Irish peatlands are in a degraded state and contribute disproportionately to Ireland’s greenhouse gas emissions, currently emitting large amounts of carbon dioxide per year. With effective restoration, healthy peatlands in Ireland have the potential to reduce national emissions by at least 5%, by reducing existing emissions and through capturing and storing carbon. Healthy peatlands have many other benefits, including for biodiversity, flood management, water quality, and as places of cultural and archaeological heritage that provide space for recreation and wellbeing. 

Peatland restoration represents an economic opportunity for Ireland that could yield significant returns on investment. The European Commission estimates that for every €1 spent on restoring landscapes, it could yield €8 - €38 for society, due to improved ecosystem services such as food security, climate resilience and mitigation, and human health as well as new restoration business opportunities.

Lack of capital acts as a significant barrier to peatland restoration as public funding is limited and competitive. In an impact assessment conducted by the European Commission on the EU Nature Restoration Law, it estimated that peatland restoration required under the law could cost Ireland €11.3 million annually, or €300 million total until 2050. There is simply not enough public money to cover the full cost of restoring Ireland’s peatlands, nor would it be fair to use public money in this way. Responsible private finance can provide a flow of money that is needed to restore peatlands locally. Peatland Finance Ireland aims to direct this flow of money to restoration projects by producing and facilitating the sale of verified carbon credits. 

Restoring and rehabilitating peatlands are two different things. Peatland restoration is the process by which we recover the functioning of degraded peatlands by reverting them to their natural, waterlogged state, encouraging native plants and animals to return. Common restoration techniques include rewetting, which is when the water table of the peatland is raised through methods such as drainblocking, and vegetation restoration, which is when vegetation specific to peatlands, such as Sphagnum moss, is reintroduced. 

Peatland rehabilitation occurs on peatlands that are highly degraded and which no longer support the formation of new peat. Rehabilitation follows similar methods to restoration, such as rewetting and reintroduction of vegetation as well as managing water flow. As the degraded environment is so different from that of a natural peatland habitat, rehabilitation usually results in different habitats forming such as fens, reedbeds or lakes. 

The term net zero applies to a situation where global greenhouse gas emissions from human activity are in balance with emissions reductions. At net zero, carbon dioxide emissions are still generated, but an equal amount of carbon dioxide is removed from the atmosphere as is being emitted, resulting in zero increase in net emissions. If a company is climate positive it means that they have taken net zero one step further, by saving more carbon through sequestration activities than they are generating.

Carbon credits are measurable, verifiable emission reductions from certified climate action projects that reduce, remove or avoid greenhouse gas (GHG) emissions. As well as storing carbon to reduce emissions, peatland restoration will bring about benefits for communities, water, and biodiversity. Generally speaking, 1 carbon credit represents 1 metric tonne of GHGs, usually simplified as carbon dioxide equivalents (CO2e).

Carbon markets are trading systems in which carbon credits are sold and bought. Companies or individuals can use carbon markets to compensate for their greenhouse gas emissions by purchasing carbon credits from entities that remove or reduce greenhouse gas emissions. Carbon removals  are an important part of global agreements on climate change and are supported by organisations such as the Science Based Targets Initiative and the United Nations.

Greenwashing is a form of misleading marketing where companies purport to be more environmentally friendly than they are. Or, when they deceptively use green messaging to try to distract the public from negative environmental performance. Greenwashing can occur when companies do not have a credible plan to reduce their emissions, double-count carbon credits, or invest in non-verified carbon credits. 

Using verified carbon credits is not greenwashing, as storing carbon in vegetation and soils is an essential component of reaching net zero. Some activities will always generate carbon emissions and so these must be balanced by storing carbon somewhere else. It is crucial that companies prioritise emissions reduction and use carbon credits only to balance out emissions that they cannot avoid.

When engaging with potential entrants to the PFI scheme, the entities’ adherence to the “mitigation hierarchy” will always be queried. That is: avoid, minimise, restore, offset. In other words, offsets should only be considered as a last resort.