REDD+ Is Struggling but Alive

Nearly two years after a major reckoning of forest conservation projects in the voluntary carbon market, developers have managed to stay afloat and some buyers continue to retire credits.

But the outlook for REDD+ is uncertain.

“Voluntary is a dysfunctional market today,” said Pablo Fernandez, Chief Executive Officer of project developer Ecosecurities, “Very dysfunctional.”

REDD+ prices have yet to recover fully from a steep plunge brought on by media and scientific criticisms of projects regarding inaccurate carbon accounting and improper relationships with the local communities that support them, but recent months have seen prices rise. REDD+ stands for reducing emissions from deforestation and forest degradation.

The OPIS REDD+ V21 credit average rose to a high of $14.25/metric ton in 2023 before bottoming out at $7.375/mt in April. It has since climbed up to $9.708/mt in August and was calculated on Friday at $8.988/mt.

Considering the costs of validation, verification, ratings and other incidentals, credit prices in the range of $5/mt to $10/mt are not adequate to sustain project activities, Fernandez said.

While prices are on an upward trajectory, work on quality initiatives has continued.

Verra is working to build out its consolidated REDD+ methodology, VM0048. Among other measures, the protocol calculates carbon reductions based on jurisdiction-wide deforestation, instead of comparing a project’s impact with a reference area chosen by its developer.

However, progress has been slow.

As of June, the latest update available, just two maps for the Brazilian states of Mato Grosso and Para had been finalized, while six others were available on a provisional basis. Verra did not respond to a request for comment regarding what maps have been finalized since.

In the meantime, REDD+ project issuances have slowed significantly. Total volumes issued by Verra hit a high in 2021 of 131.4 million credits. They then dropped to 61.7 million in 2022, 44.7 million in 2023, 14.6 million in 2024 and 10.2 million so far in 2025.

Retirements have also ebbed from 76.7 million in 2021 to 35.9 million in 2022, 19.4 million in 2023, 7.5 million in 2024 and just 2.5 million so far in 2025. Retirements have historically been highest at the end of the year.

For Projects With Long-Term Offtake, it’s Business as Usual

Carbon Tanzania has registered two projects with Verra, one with PlanVivo and is developing a fourth with Verra under VM0048. The company has secured long-term offtakes for its credits, so it has been shielded from the ups and downs of REDD+ pricing, Co-Founder Jo Anderson said.

“We’re not market actors, we’re not financiers, we’re not bankers,” Anderson said. “We’re biologists, and the science tells us we have to protect forests, so we’re protecting forests.”

Over the past two years, “there’s been a lot of noise around using nature in other ways to generate removals, which is the credit type now that is preferred by the market,” Anderson continued. “I don’t think much else has really changed in terms of what we do.

“In the meantime, we are looking carefully at how we can repurpose and readjust our sales strategy, but we’re not going to suddenly turn the organization inside out just to respond to a faddish market trend.”

Jurisdictional REDD+

Jurisdictional REDD+, initiatives pursued by states or governments to reduce deforestation over the entirety of their regions, sits in an almost opposite position of project-based REDD+.

There has been significant financial support for various programs in the past year, and forward purchase agreements have been signed pricing credits between $10/mt and $15/mt.

The LEAF Coalition, a JREDD+ buyers club that launched in 2021 with a commitment to buy $1 billion worth of credits, has continued to advance emissions reduction purchase agreements. The group last signed a $30 million ERPA with Ecuador in January for 3 million credits.

“The focus since then has been on looking to sign more deals with more countries and bring in more demand from the private sector,” Emergent Executive Vice President of Marketing and Communications Philip Brady said. Emergent manages JREDD+ purchases for the LEAF Coalition.

The group’s members have grown its market commitment to over $1.5 billion. Its four ERPAs with Ecuador, the Brazilian state of Para, Ghana and Costa Rica total just under $300 million, Brady said.

The agreement with Para signed in September 2024 valued credits at $15/mt, while the Ecuador offtake was at $10/mt.

“There just haven’t been enough transactions to really form a view of where the market is going,” Brady said. “If you look at JREDD+ in general, the [World Bank’s Forest Carbon Partnership Facility] is $5 per ton. The Initial LEAF price was $10 a ton, priority $15 a ton. So, we’re seeing LEAF has helped increase prices. Individual prices with individual jurisdictions, we wouldn’t comment on that. It’s up to the seller and the buyer to set the price between them.”

Furthermore, none of the host countries have delivered credits to date.

“All of these countries are going through this process for the first time,” Brady said. “When you’re doing things for the first time, it’s going to be complex. It’s going to take time.”

The JREDD+ and Compliance Market Interplay

All of the agreements signed by LEAF are for credits that will be issued via the Architecture for REDD+ Transactions registry. Just one country, Guyana, has issued credits with the registry to date, and it has elected to target the market for Phase I of the Carbon Offsetting and Reductions Scheme for International Aviation.

CORSIA, administered by the UN’s International Civil Aviation Organization, requires airlines flying between participating countries to limit emissions growth to 85% of the sector’s 2019 baseline.

The International Air Transport Association has estimated that CORSIA Phase I, which runs from 2024 to 2026, could bring demand of up to 236 million credits. To be eligible for retirement under the scheme, credits need to be authorized for transfer and use under the Paris Agreement’s Article 6 rules. So far, Guyana is the only host country or developer that has taken those actions, and the country’s 15.9 million issued credits are the only volume of CORSIA-eligible supply.

These credits have traded in recent weeks between $15.75/mt and $23.50/mt, giving them a premium over both project REDD+ and ERPAs in the voluntary market.

But there are strong reasons to believe the CORSIA Phase I market will shift dramatically before compliance comes due in January 2028.

Credits from other standards and other project types will soon become eligible. There were 6.5 million credits marked as CORSIA Phase I Scope on Verra as of Monday, meaning they were in the process of securing eligibility. Credits that meet ICAO criteria issued by Gold Standard, the Climate Action Reserve, ACR and the Global Carbon Council will also be eligible to supply Phase I.

At the same time, airlines have yet to begin retiring credits in earnest. Just two Japanese airlines, All Nippon Airways and Japan Airlines, have retired 1,000 credits and 100 credits, respectively, in compliance with Phase I.

“Airlines don’t hedge fuel more than six months ahead,” Fernandez said. “Why would they hedge carbon three years ahead? They will almost all wait for 2027.”

In Fernandez’s view, JREDD+ will likely be used primarily for compliance markets like CORSIA and Article 6, while project-based REDD+ will continue to serve the voluntary market.

“Because you’re talking about compliance schemes, you end up having a premium in comparison to voluntary,” Fernandez said. “On the project side, they really require ratings nowadays. No rating, no interest. With a high rating, you get a slightly higher price, and with lower ratings, you may have some discounts.”

“We’re always two years away from the market, and it has been that way for a couple of years now,” Fernandez continued. “We’re still two years away from Article 6 proper. It was much easier having conversations with countries three years ago. You would ask for a letter of approval, and they would sign it. Ask them now to change the letter of approval to the UN template, and they don’t. Because now they also learn, ‘OK this has become kind of a liability for me. I need to ensure that I can meet my [Paris Agreement nationally determined contribution].’”

Will Demand Return to Project REDD+?

Newt Natural Capital Co-Founder and CEO Mike Musgrave has advised numerous Africa-based REDD+ projects for feasibility, project design and implementation, among other functions.

But Newt doesn’t have any REDD+ projects on contract at the moment.

“The reason is that very few people are putting these projects together,” Musgrave said. “There’s a very low level of new REDD+ projects coming online because the financials just don’t make much sense.”

According to Musgrave, REDD+ developers are facing “an ideological position around the monetization of nature which is fundamentally opposed to anything to do with monetizing carbon in a conservation type context.”

“If that’s the ideology, there’s nothing really the industry can do to fight back against that other than to cite the general failure of conservation to actually preserve any of these areas on a scale that is meaningful,” Musgrave said. “That ideological stance then gets applied to sometimes legitimate problems in a REDD+ project and leads some to conclude that the whole thing’s a waste of time. That it’s all one big scam and one big lie. Well, that’s quite an extreme position to take on any project, even the worst ones.”

“If they’re claiming to capture one ton of carbon and they don’t do that, and they only capture half a ton of carbon, is that nothing? Musgrave continued. “It isn’t.”

Verra’s VM0048 methodology, in addition to its jurisdiction-wide reference area, hopes to get around issues of over-crediting by taking a much more conservative approach to crediting. In some cases, that could reduce project issuances by as much as 70%, sources have told OPIS.

More accurate measurement, reporting and verification using remote sensing are also becoming more widely available.

But according to Musgrave, “We will never reach a stage where we can LiDAR scan every leaf and twig in real time or get to 100% credibility. And if you think that is the end goal, and you must stop all carbon projects and wait until you get to that end goal, that is also ridiculous. We need to be doing this stuff now.”

In both Musgrave’s and Anderson’s views, uncertainty over outcomes is inherent in any REDD+ project.

“What nobody seems to have done is look at the actual fundamental methodological approach that was used by [academic papers finding REDD+ over-crediting] and say ‘How does it materially differ from the previously used project-level baselining?’ Anderson said. “Should it and can it be improved? We can’t know what will happen in the future. And none of these approaches is answering that question. It will always be unknowable.”

“There are lots of levels of accuracy we can improve, and I think that’s what’s happening now,” Anderson continued. “But in the end, it’s about reducing error. That’s really what science is about.”

Several sources believed insurance policies could provide a strong mechanism to get around that uncertainty, but the unknowable character of REDD+ will remain.

“That’s the problem when I speak to the finance end,” Anderson said. “They find that uncomfortable.”

–Reporting by Henry Kronk, hkronk@opisnet.com; Editing by Jeremy Rakes, jrakes@opisnet.com and Michael Kelly, mkelly@opisnet.com