State of Forest Carbon Finance 2015 - Report

Companies and governments that put a value on the carbon stored in the world’s remaining forests are ramping up results-based finance for those assets, according to Ecosystem Marketplace’s State of Forest Carbon Finance 2015 report, launched last week.

Bonn, 11th of November 2015

2014 marked a breakout year for forest carbon markets, with buyers paying a record-high $257 million for 34.4 million offsets. Voluntary demand increased 18% over 2013’s volumes, to 23.7 million tonnes, and voluntary prices recovered to an average of $5.4/tonne. Meanwhile, compliance demand jumped over 200% as buyers in California and Australia collectively purchased 10.6 million tonnes in land-use offsets to meet regulatory obligations, with compliance prices coming in just beneath the going allowance price or set carbon tax.

Offsets from REDD+ (Reducing Emissions from Deforestation and Forest Degradation) were the most commonly transacted project type last year, with voluntary market actors purchasing 16.1 million tonnes from project-level activities. More than 100 forest carbon projects are located in states, provinces, or countries engaged in larger-scale avoided deforestation programs, and many are grappling with how to "nest” into these jurisdictional efforts as more international finance may soon be targeted towards regional-level programs. In climate plans submitted to the United Nations Framework Convention on Climate Change (UNFCCC), 29 developing countries specifically mention that they plan to implement a national REDD+ policy or sell REDD+ offsets – with a portion of their emissions reductions target hinging on this possibility.

"Tropical forest countries are poised to make huge contributions to climate change mitigation by pursuing development pathways that treat standing forests as their greatest asset,” said Forest Trends President and CEO Michael Jenkins. "But they need a strong signal that companies and developed country governments are ready to pay for those assets.”

In additional to the market numbers, the report tracked $219 million committed to forest protection in 2014 in the form of non-market, bilateral payments from the Norwegian and German governments to help reduce tropical deforestation in Brazil and Guyana. At least $1.2 billion in new results-based finance is "on the table” for tropical forest countries in the near future through similar bilateral deals.

The report is available for download here.

Tags: Ecosystem valuation | Supply Chain Management

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