Clarity on new Verra REDD volumes to emerge in Q3: standard
Quantum Commodity Intelligence – US-based registry Verra plans to release the first "risk maps" for projects under its new REDD+ methodology over the coming months, a spokeswoman told Quantum.
Risk allocations will allow avoided unplanned deforestation (AUD) projects to assess how much of a reduction in carbon credits, if any, they will receive under the new framework, with 'haircuts' likely to be between 10% and 90% in most cases.
They follow the collection of "activity data", meaning forest extent data, by specialised service providers last year and earlier this year.
Verra released the new AUD methodology, known as VM0048, last year in an attempt to standardise processes and reassure investors, and has since focused on data collection.
Jurisdictional risk mapping involves taking the gathered deforestation activity data across a region or country and allocating it to specific areas overlapping with carbon projects based on a method that measures deforestation risk.
"The risk mapping that will yield information about deforestation risk is currently being undertaken by our partners at Clark Labs," a spokeswoman for Verra said.
"We anticipate the first risk maps to be delivered in Q3, with others following as the information becomes available."
The US-based standard had previously said risk maps would be available in the first quarter of 2024, but the process has been delayed.
Until the issue is clarified, many REDD+ investments are on hold.
"We have spoken with three or four companies that are interested (in investing), however, everyone is holding their breath and their decision until they know what the haircut is going to be in the credits issued per hectare," said an existing project developer.
"A new developer would want to know the total credits per hectare that an area will produce before committing the dollars needed to develop a project based on the price and the average credits per hectare."
Collaboration
In April, Verra announced a collaboration with Clark Labs at Clark University in the US to develop such maps for the first 12 jurisdictions: Cambodia, Colombia, Democratic Republic of Congo, Guatemala, Kenya, Tanzania, and the following states in Brazil: Acre, Amapá, Amazonas, Mato Grosso, Pará and Rondônia.
This builds on a previous collaboration between Verra and Clark Labs, which resulted in the development of the unplanned deforestation allocation tool VT0007, which was launched last February and will be used to develop the risk maps, Verra said previously.
Market sources confirmed that, at the time of writing, the exercise had yet to start, with one well-informed market participant pinning September as the likely date, which could mean a further delay from Q3.
Clark Labs will reportedly work with various private data providers to build the maps, according to the sources.
Once the methodology and data collection is finalised, Verra plans to apply for approval under the Core Carbon Principles (CCP) quality label designed by the Integrity Council for the Voluntary Carbon Market (IC-VCM).
The CCPs are seen by some as a guarantee of future investor interest in REDD+, which has been on the wane over the past two years because of concerns about over-crediting.
"The new Verra baseline we think will provide a clear way forward for all the projects. The key to VM0048 is getting the CCP designation," said the project developer.
"If that methodology doesn't have that designation, the entire voluntary market will collapse and all the companies that have put their faith in Verra will be destroyed," the source added.
In the background, many developers have started adapting their projects to the new methodology, but they have been hampered by the lack of finalised data.
"We are working on the VM4008 project design document now and hope to have it substantially complete except for the carbon credit calculations which we will leave to third party consultant with that expertise," said the same developer, about its existing project.
The developer said activity data collection for its country, which is not part of the first 12 jurisdictions, should be complete by the third quarter.
The US-based standard is aiming to have data for "almost all jurisdictions with existing REDD projects" by the end of the year.
Verra has previously said it plans to roll out its new methodology for avoided planned deforestation (APD) in "early 2025" and to eventually tackle unplanned degradation as part of its overall REDD+ protocol as well, but it is unclear if it is still working to that timing.
AUD and APD are the two main types of REDD projects, but AUD is dominant in most forest basins.
