Brazilian ARR developer Re.green obtains high rating from BeZero

Quantum Commodity Intelligence - Rio de Janeiro-based project developer Re.Green has obtained an AAe rating from UK-based carbon ratings agency BeZero for its afforestation, reforestation and revegetation (ARR) project, reinforcing the image to be one of the leaders in the Brazilian market.

The project VCS 3743 Atlantic Forest, named after the Brazilian biome where it's located, received the second-highest rating from BeZero achieved by only 4% of all projects that have not yet issued credits achieved.

The "e" letter on AAe the rating denotes an "ex-ante analysis", conducted prior to the issuance of offsets.

"Re.green achieved this BeZero rating in the early stages of its operations, demonstrating the quality of its large-scale ecological restoration efforts," said the company in a statement.

The high rating by one of the most well-known carbon ratings agencies is another good news for the developer, which this year has struck a major deal with US-based tech giant Microsoft for 3 million offsets.

The company has thrived during 2024, a year marked by general pessimism over carbon markets, especially nature-based solutions, and the goal is to expand operations in the new year, the developer's CEO, Thiago Picolo, told Quantum in an interview.

According to him, Re.green expects the auditing processes to take place throughout next year and to issue credits under US-based Verra in the first quarter of 2026 as it positions itself to growing demand for high-quality ARR credits.

He added that while obtaining a high rating was not a demand for the deal closed with Microsoft, which has built a specialist team to analyse projects, it will support potential buyers' decisions.

"Microsoft has a nature-based solutions team of 19 people including PhDs... it's not every company that can build this. So this rating will provide a valuable tool that maybe Microsoft does not need but others do," he said.

Price tag

The promise of quality comes associated with a high price tag due to the challenging task of procuring new properties in a country troubled by chronic land ownership disputes and the high costs of establishing the necessary supply chain for the projects to succeed.

According to Picolo, negotiations for forward contracts for its yet-to-issued credits currently sit "around $50 to $80" per tonne of CO2 equivalent.

Nevertheless, demand is robust and new buyers from distinct sectors apart from the big-techs have demonstrated interest in becoming new customers.

To keep up with the projects and in addition to issuing credits, Re.green expects next year to enlarge the amount of land available, according to Picolo.

He claimed that the developer has built a robust model to analyse properties' documentation when buying new land or making agreements with landowners to proceed with the reforestation process.

Once their internal analysis to find issues - such as fraud or overlaps with indigenous lands - is finished, then Re.green uses legal support from major law firms in the country to close the deals.

"Out of 1,200 properties we have analysed, we selected only seven so far… it's quite cruel once you narrow down the process," said Picolo.