Verra Nature-Based Issuances Are Down, Removals Make Up Growing Share

August 13, 2024

Verra Nature-Based Issuances Are Down, Removals Make Up Growing Share

Carbon credit issuances from nature-based projects registered with Verra have fallen sharply so far this year, with REDD+ taking a greater hit than removal project types like afforestation and coastal environment restoration, records show.

Since the start of 2022, Verra-registered REDD+ projects issued over 110 million credits. So far this year, Verra has issued 4.2 million credits after issuing over 44.7 million credits in 2023.

REDD+ stands for reducing emissions from deforestation and forest degradation.

By comparison, Verra-registered removal projects like afforestation, reforestation and revegetation and Blue Carbon projects, which restore coastal environments, produced 22.58 million credits since 2022, including 2.38 million credits so far this year. In 2023, Verra issued over 8 million removal credits.

Toronto-based Carbon Streaming has signed streaming agreements with numerous nature-based carbon projects, including both REDD+ and ARR initiatives. During a second-quarter earnings call Wednesday, Carbon Streaming interim Chief Executive Officer Christian Milau attributed slow issuances to backlogs at Verra.

The accusation is a common refrain among developers and investors, but a Verra spokesperson recently told OPIS that fewer projects have requested issuances this year and that previous backlogs had been cleared.

A range of quality exists among nature-based removal projects, as it does with REDD+, but ARR and Blue Carbon credits tend to command higher values. OPIS has heard trades of volumes of 2,000 REDD+ credits or more ranging from $1/mt to $12/mt in recent weeks. By contrast, trades for ARR and Blue Carbon credits were heard between $5/mt and $30/mt.

OPIS calculated the REDD+ Vintage 2021 Credits Average at $8.56/mt on Monday. Blue Carbon V21 and ARR V21 Credits Averages were calculated at $31.202/mt and $21.677/mt, respectively.

Milau, speaking on the earnings call, said carbon markets had been difficult to predict in recent years and that investors are looking primarily for high-quality nature-based removal credits.

Carbon Streaming’s investment strategy “is starting to prove out,” Milau said. “The focus on good quality projects recently with scalable growth, removals, Article 6 and some committed offtakes I think is the way forward here.”

“We have to also remember, long-term removal projects take some time to gestate and get to the cash flowing stage,” Milau continued. “So I think it would be naïve of us to completely ignore the avoidance market. I do think in the long term, cashflow from removal projects will be superior and they have a longevity potentially that some of the avoidance projects don’t have. But that business also can’t just wait the 5 to 7 years it takes a tree to grow.”

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