EDITORIAL: What does the rest of the year hold in store for the VCM?

Quantum Commodity Intelligence – The summer in in the northern hemisphere is almost over, although some like myself in UK could argue it never properly arrived this year, and we enter the latter part of the year with much to be determined that could have impacts on the voluntary carbon market (VCM).

Looming towards the end of the year is COP29 in Baku in November, although already it is unlikely the event is going to deliver anything concrete to fully operationalise the Paris Agreement's Article 6 carbon markets, but we do live in hope I suppose.

Let's wait and see, but I feel Brazil next year is going to be the make-or-break COP on this – although I would be very happy to be proved wrong by Baku.

The Science Based Targets initiative (SBTi) should finally come up with some concrete proposals on the use of carbon credits for corporate greenhouse gas emissions goals, but even then this debate – like Article 6 – is going to rumble on into 2025 and probably beyond.

Although by the time it is finally concluded it could be too late to have any meaningful impact as companies continue to take their own initiatives on this either one way of the other.

VM0048

The coming months are also expected to see the first releases of data for US-based carbon registry Verra's new consolidated avoided unplanned deforestation (AUD) methodology, VM0048. Verra said last month that October is anticipated to see jurisdictional data for the Brazilian states of Amazonas, Colombia, Mato Grosso, Pará and Rondônia. This will be followed by Cambodia, Guatemala and Peru in November and two more Brazilian states, Acre and Amapá, Kenya, Mai Ndombe in the Democratic Republic of Congo, and Tanzania in December.

However, the registry also said that "while Verra is committed to releasing data as quickly as possible, this is a new and complex process, and the timeline should be considered as estimations".

While the market and Verra, for that matter, would probably like this data to be released sooner rather than later, given the spotlight that REDD has been under for the last 18 months or more, it is better that time is taken to get the data right.

The only issue being will developers still look to use VM0048 with an increasing number of other standards/methods for REDD having appeared in recent times.

There are also the plans for wider jurisdictional initiatives by several state governments in Brazil that look likely to take a different approach, not to mention utilise forested land that could have been developed as individual projects.

But a wider question is whether project-based REDD has a future at all in the South American country. This issue's opinion piece by Michael Greene chief executive of Agfor, a carbon credit developer with projects in Brazil, does not paint a rosy picture of the REDD market in Brazil.

"For private market-based voluntary REDD in Brazil I don't see corporations coming back and due to that Agfor had to make a decision and the decision was to do a 12-month wait and see," he says, adding that the company already ended contracts with clients and has laid off over 80% of staff since last year.

Positives

On a more positive note, the VCM continues to attract investors with carbon dioxide removals (CDRs) without doubt the 'boom' sector. Quantum's analysis of money raised over the last four months from announced deals saw CDR companies raising $271 million from the start of May to the end August out of the $377 million raised in the period.

This was up on the $254 million secured by CDR companies in the opening four months of the year, although the overall figure is down – maybe due to the traditionally 'quieter' summer period? The target now for many CDR technologies is to reduce costs and scale. But if this doesn't happen, these investors will soon be putting their money elsewhere.