OPIS Insights

A new, largely untested sector is forming in the global carbon market.

A cohort of governments around the world have or will soon receive tens of millions of carbon credits from jurisdictional REDD+ projects. Price discovery is hard to come by and much of their value will rest on whether they become eligible for use under Paris Agreement rules, several sources told OPIS.

“Part of what you’re doing with JREDD+ is enormous volume,” said Simon Puleston Jones, managing director of Emral Carbon, a brokerage and advisory provider. “You’re not going to find buyers for enormous volume in the voluntary carbon market, by and large. There are exceptions. So, you are looking to sell to airlines with compliance demands or governments that are falling short on their [Paris Agreement] nationally determined contributions.”

The province of Misiones in Argentina is targeting $25/metric ton for vintage 2021 and V22 credits issued to its Verra-registered JREDD+ Project, if it obtains authorization from the national government to transfer the credits under Paris Agreement rules, said Maximiliano Galli, advisor to the Misiones Secretary of Finance. Current offers from the voluntary carbon market, which does not require authorization, are around $10/mt, Galli added.

“The good thing is that we have a pretty good collaborative working relationship with the federal government,” Galli said. “We are very close to getting the corresponding adjustment.”

Weighing Authorizations Against Paris Agreement Targets

JREDD+ involves reducing emissions from deforestation and forest degradation across entire countries or states.

The Paris Agreement requires that carbon credits, known as internationally traded mitigation outcomes under the accord, are not double counted. If a host country authorizes the trade of ITMOs to another entity, it must make a corresponding adjustment to its carbon reduction target, or NDC. No ITMOs can be counted against the host country’s NDC.

If the carbon credits are not authorized for transfer and are sold on the voluntary market, the host country can still claim the emission reductions or removals against its targets. But authorization allows the credits to be sold into the Carbon Offsetting and Reduction Scheme for International Aviation and the Paris Agreement market, thereby raising the price.

In its first NDC, Brazil planned to reduce economy-wide emissions by 1.36 billion tons of CO2 equivalent by 2030. It hopes to do so, in part, with policies that seek to end deforestation and restore 12 million hectares of degraded land by 2030.

To date, six of Brazil’s nine Amazonian states have projects listed with the Architecture for REDD+ Transactions, a standard focused on JREDD+. Three of these states have submitted monitoring reports detailing the results of JREDD+ activity, according to ART records.

Tocantins expects to receive 21.2 million credits for 2020 to 2023, Acre expects to receive 6.5 million credits from 2023 and Pará expects to receive 38.2 million credits for 2023, according to the monitoring reports.

However, the national government has proposed authorizing just 50 million credits total for international transfer starting in 2031 to 2035, and that would include credits from other sectors as well.

CORSIA, Article 6 and Voluntary Buyers

If that proposal becomes policy, it will put the market for CORSIA Phase I out of reach. Carbon credit retirements for the first phase are due by January 2028.

“The trick is whether the states can get the federal government to increase the 50 million tons to a number which is more aligned with what they plan to issue,” said Eduardo Cid Ferreira, founder of Azero.earth, a carbon finance advisory firm focusing on JREDD+. “The counter to that is a lot of Brazil’s NDC targets are to do with reduced deforestation. It would increase the pressure on the federal government.”

CORSIA could be lucrative for project developers. Just 42 million credits that meet the scheme’s eligibility criteria have been authorized for use, and the International Air Transport Association has projected that demand could surpass 200 million credits.

Though the Phase I market remains structurally short, demand has also been weak so far this year as airlines have been forced to contend with stark jumps in the prices of jet fuel due to the US war with Iran and the closure of the Strait of Hormuz. OPIS assessed its CORSIA Eligible Offset low end at $12.75/mt on August 4. Sources broadly expect demand and prices will increase as the Phase I deadline approaches.

After January 2028, the next carbon credit surrender deadline for CORSIA Phase II is January 2031.

Another route to market through the Paris Agreement involves selling to other countries to use for their own NDC.

Sovereign demand indications up to 2030 range from Singapore’s plans to contract 2.18 million ITMOs to Japan’s expectations for up to 100 million ITMOs via its Joint Crediting Mechanism. The EU Commission recently proposed introducing as many as 260 million ITMOs into its Emissions Trading System starting in 2036.

Much of the capital for 2030 goals from these buyer countries, however, has already been allocated.

JREDD+ programs can also sell credits via the voluntary carbon market.

Two major buyers have signed long-term offtake agreements for JREDD+ credits to date.

Oil and gas producer Hess purchased 37.5 million credits vintage 2016 to vintage 2030 credits from Guyana’s JREDD+ initiative in 2022 for $750 million. The deal will amount to about 30% of the volume the country expects to receive, Guyana has said.

The LEAF Coalition, a JREDD+ buyers’ group composed of four governments and over 30 corporations, has also signed emissions reduction purchase agreements with Ecuador, Costa Rica and Ghana, the Brazilian state of Pará and Nepal. The deals could allocate more than $325 million in total.

Sovereign LEAF members provide funding through results-based payment and do not retire the credits themselves.

Costa Rica remains the only country to have delivered credits against a LEAF contract so far. Its JREDD+ project was issued 1.06 million credits in June. Its credits were purchased by Bayer and other LEAF members who chose not to be named, a spokesperson for Emergent, LEAF’s commercial partner, said in June. The purchase was also backed by a guarantee from Norway for up to one million credits if the full volume of credits was not purchased by other corporate members, Emergent said at the time.

Guyana, meanwhile, has already sold JREDD+ credits through multiple pathways.

The country has issued 62 million vintage 2017 to vintage 2023 credits from ART. It has sold its credits to Hess and Apple through voluntary transactions and at least 19 airlines for CORSIA compliance, Pradeepa Bholanath, senior director for climate and REDD+ at the Ministry of Natural Resources, said in March.

The country has authorized just under 25 million vintage 2021 to vintage 2023 ITMOs so far.

The JREDD+ Quality Spectrum

Carbon market buyers look for a range of quality indicators in global carbon markets. Paris Agreement authorization aside, existing JREDD+ programs feature a variety of different attributes.

Guyana follows the high forest cover, low deforestation (HFLD) pathway under the ART standard, which allows for credit issuances to countries that have significant intact forests, face the risk of deforestation but maintain a low harvest rate.

The Integrity Council for the Voluntary Carbon Market has approved ART’s non-HFLD for its Core Carbon Principles label, which serves as a VCM quality threshold but has withheld approval for ART HFLD credits and requested remedial action.

There is also the issue of free and prior informed consent. Any carbon project that impacts public or communal land needs to obtain the free, prior and informed consent of impacted communities. The scale of JREDD+ projects magnifies the difficulties of ensuring buy in.

Brazil’s Federal Public Prosecutor’s Office called for a review of Pará’s JREDD+ FPIC process on August 10. No federal action or determination has been made to date.

Projects that fail to obtain FPIC often see their credits lose significant value in the market.

But carbon credit ratings agencies have also praised aspects of JREDD+ programs.

JREDD+ programs’ government involvement and determination of baselines across the entirety of a jurisdiction can mitigate REDD+ quality concerns involving accurate carbon accounting and risks involving land tenure and leakage, according to analysis published by carbon credit ratings agency Sylvera in 2025.

“JREDD+ is … regarded as a far more effective way to ensure long-term, ongoing compensation for Indigenous Peoples and local communities in recognition of their responsible stewardship of forested lands,” ratings agency BeZero Carbon wrote as part of its rating for Guyana’s program in 2025. Still, BeZero granted Guyana a rating of BB, indicating a “moderately low likelihood of achieving 1 ton of CO2e avoided or removed.”

Some projects, like Costa Rica’s, are also capable of issuing removal credits, which many buyers prioritize over reductions. But by and large, the JREDD+ sector has yet been tested in the global market.

“A lot of the [Brazilian] states are looking to price at a high premium,” said Ferreira, who also serves as senior advisor to the International Emissions Trading Association in Brazil. “I don’t know how the market will perceive them. It remains to be seen.”