Market participants indicated that Katingan (VCS 1477) and Rimba Raya (VCS 674) were the two most-traded REDD+ projects in voluntary carbon markets, adding that most of the other REDD+ projects in the market were struggling for any sustained traction.
A Europe-based trader said that Katingan is a project that is “always trading” given its perceived better quality. The source added that, due to a rating upgrade by carbon ratings agency BeZero earlier this year from A to AA, there has been a little more uptick in the demand for the project.
This has been reflected in a recent rise in Katingan prices, with vintage 2020 credits offered at $6.00-6.05 per tonne of CO2 equivalent (tCO2e) this week, up from $5.00 per tCO2e at the start of February. Deals for vintage 2019-2020 credits have been reported in the range of $5-6 per tCO2e over the past month as project-specific buyers stepped in.
This trend has mostly been focused on newer vintages, with vintage 2017 credits from Katingan moving little over the same period. Credits were reported offered at $3.75 per tCO2e this week, steady or at a slight discount of 10 cents per tCO2e to offers reported in January. Katingan prices have also been supported by a moratorium on new credit issuances put in place by the Indonesian government, meaning that the project last issued credits in 2022.
Offers for Rimba Raya, another Indonesian REDD+ project, were reported at $5.60 per tCO2e for vintage 2018 credits this week, down by around 15 cents per tCO2e than at the start of January.
A Singapore-based trader, on the sidelines of a carbon conference, said that most market participants were shifting investments to primary markets, adding that they wanted to be involved in the entire process so they could monitor the project, making it easier to complete due diligence and indicate toward avoiding greenwashing claims.
Another Singapore-based project developer said that, while they were seeing a slowdown in the markets, they were expecting better momentum in the market this year as they reported investments happening in “quality” REDD+ projects.
Another trader said they had entered a deal for selling credits from a project that was registered under Verra’s VM0048 methodology, adding that they were expecting prices over $10 per tCO2e and around double where projects such as Katingan have been trading.
Verra’s new REDD+ methodology strengthens credibility
Verra launched its new consolidated REDD+ methodology, VM0048, in November 2023, following widespread criticism of over-crediting and inadequate safeguards in its standards. The updated methodology moves to jurisdictional baselines that are published by Verra, significantly reducing the risk of over-crediting that was present in previous Verra methodologies. It also strengthened permanence risk assessments and enhanced safeguard standards, aiming to improve credibility and integrity.
No credits have yet been issued under VM0048, following recent delays in Verra publishing country and regional risk maps.
Multiple market participants, on the sidelines of the conference, said they were “optimistic” that these upcoming developments could address integrity concerns and begin to support demand.
Elsewhere, Fastmarkets heard an offer for Kasigau (VCS 612) vintage 2021 at $3.70 per tCO2e, down by 5 cents per tCO2e from mid-February.
A bid and an offer were heard for Southern Cardamom (VCS 1748) vintage 2018 credits at 10 cents per tCO2e and 40 cents per tCO2e, respectively, unchanged from the last reported range in February, indicating a stagnation in the market.
In Brazil, sharply lower offers for vintage 2019 and 2020 credits weighed on the market. Offers for VCS 1112 and VCS 1113 vintage 2020 credits were reported to be down by $2.50 per tCO2e and over $1 per tCO2e respectively from early February. Vintage 2019 credits from VCS 1112 were offered at $2.30 per tCO2e.
On the demand side, Italian oil major Eni retired further REDD+ credits in the past week, after retiring 5.9 million tCO2e a week earlier. The company retired over 95,000 tCO2e of vintage 2020 credits from the Mai N’Dombe (VCS 934) project, along with 58,116 tCO2e of vintage 2019 and 2020 credits from REDD+ projects in Malawi (VCS 1168) and Tanzania (VCS 1900).
Sam Carew in London contributed to this article.
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