OPINION: REDD is at a critical juncture

Quantum Commodity Intelligence –

Michael Greene is chief executive of Agfor, a carbon credit developer with projects in Brazil.

REDD is at a critical juncture, which as a developer I predicted in 2019 would arrive before 2025. In 2019 while developing the Rio Anapu-Pacaja REDD project in Portel, Para, I asked myself, "Am I fulfilling the intended vision of REDD?" I realised I needed to do more.

To me, REDD, when I entered this market in 2008 was a way to address the complex inadequacies that plague tropical forest regions. If a community lacked a school, foreign funds managed by private groups would go and build the school, or health clinic, or water well or sanitation system.

Although REDD evolved and changed over time, in 2015 it did not involve the 17 Sustainable Development Goals set forth by the UN. However, once the goals were released, REDD developers gained better guidelines in project development.

I knew project developers needed to build schools, and health clinics as one day there would be a reckoning. By July of 2023, REDD finally had that reckoning, the anti-REDD groups pushed negative news on numerous projects, with Kariba, Pacajai, Southern Cardomom and even my own project Rio Anapu-Pacaja REDD all being blasted for minor things made out to be huge things, or in my case we were claimed to have developed the project on a public title, and did not.

I was then criticised in the news for allegedly hurting indigenous peoples' rights for assisting them develop REDD projects. Very unusual since my company wrote the reports, and do not own the project. Moreover, if the indigenous communities really have any concerns about their projects, they have full authority to cancel them at any time.

I believe REDD is now officially dead; there are numerous reasons for this. The main factor that drove the price high in 2021 was speculation by oil companies and commodity traders. I spoke with an oil company we are close to and they said at the time that the "US is historically 10 years behind Europe on the environmental curve, so it is only a matter of time that REDD carbon credits goes to $50".

This is what drove these guys to buy credits, and as soon as the Ukraine War started people had a reality check; bullets are real and carbon credits are not. The oil companies bailed, and prices collapsed, my buddy stated they were up $20 million on their holdings at one time and made it out only $500,000 up. But many oil companies took huge losses and swore off REDD.

The users of credits, the groups that actually want to retire, bailed as well. Some due to an overzealous marketing campaign that resulted in negative news attacks and others because they were tired of all the negative media attention surrounding REDD. Countless other corporations also bailed due to negative media coverage.

The anti-REDD movement has been able to leverage negative media to its advantage. In the state of Amazonas in the Brazilian Amazon, the Federal prosecutor's letters in paperwork and speeches refers to REDD credits as "pollution credits" and in meetings with Indigenous groups references The Guardian, and World Rainforest Movement making unsubstantiated claims that REDD exacerbates climate change, because it takes money that would be used in other locations.

In the case of Rio Anapu-Pacaja REDD, it would have required $50 per credit to prevent the destruction that is now occurring, which will release over 30 million tonnes of carbon dioxide (tCO2) into the atmosphere. Thus, the 30 million tCO2 emissions we aimed to prevent are now happening since the project is over.

The anti-REDD movement is entrenched and unwavering. Even if US-based registry Verra introduces new methodologies to address potential errors, the anti-REDD faction will continue to deceitfully undermine the system, shame credit buyers, and denounce companies over trivial matters and flat out lies.

The other problem with REDD, as seen in Brazil, is for REDD to be effective, it needs to be country wide and right now it is less than 2% of the Brazilian Amazon forest. As a result, invaders often move to adjacent plots of land to continue their activities. Or worst, the Brazilian government wants billions of dollars from the global community, and want to continue being allowed to legally deforest.

People are saying jurisdictional credits are the future, but a future for whom? Internal markets? The future of Brazil is likely to follow one of two paths. If Brazil establishes an internal REDD market, it will primarily involve internal companies to buy jurisdictional credits, which essentially means moving money around within Brazil.

Politicians and President Lula are opposed to this; in numerous speeches, Lula has questioned where the billions for preservation from foreign groups are. Possibly other countries will buy jurisdictional credits directly from Brazil, yet Europe, Canada and the US will not, nor will countries that are poorer. Most wealthy countries prefer direct aid rather than carbon purchases.

I see token purchases from China for jurisdictional credits, more out of strengthening a geopolitical relationship than any real interest in carbon credits. I also see some purchases from the Middle East. However, they are only going to buy if they can make a profit. They won't, if there is not a robust market of private companies buying REDD credits, which will not happen under the current system.

For private market-based voluntary REDD in Brazil I don't foresee corporations returning to the market. As a result, Agfor has decided to adopt a 12-month 'wait and see' approach to determine if our projections, which have rarely been wrong, are incorrect. We will shut down. We have already ended contracts with clients and have laid off over 80% of staff since last year.

REDD doesn't have to be dead, and this is where Brazil may have a chance to make money it dreamed, but real impact needs to be done. Brazil needs to approach Europe, the US and China and every other country with a 'Grand Plan'. The plan is simple: Brazil will zero out deforestation, and Europe and the US and the rest of the world will buy the projected credits based on this. It is a government plan to be compensated. Right now Brazil is deforesting about 1.1 million hectares a year. Th

is is each year 400 to 500 million tCO2e going into the air. Brazil zeros it out and the international community pays Brazil $20 a credit a year based on today's deforestation rates. This is 400 million tCO2e, multiplied by $20, is $8 billion a year to the government. This is not REDD; it is 'EEDD', the Elimination of Emissions from Deforestation and Degradation in Brazil.

The money is divided with $4 billion going to housing outside the Amazon – large cities along the border. This is to provide housing to populations that are headed to the Amazon to live there and adopt the forest life. $2 billion to state governments and $2 billion to the federal government.

How would Brazil execute a bold plan to save the Amazon? The solution is straightforward: Brazil needs to formalise an agreement with Europe, the US and other countries. These countries would raise money by re-selling the carbon credits to their own corporations to offset pollution, even making a profit doing it. The EU could insert these credits in its emissions trading scheme, the US could structure their own platform.

The 'catch' is simple: each year, $8 billion is provided as a 20-year, zero-interest loan. The 20-year programme would yield Brazil $160 billion, in exchange for halting deforestation in Northern Brazil. However, if Brazil reverses course, even a little, it would be obligated to repay the funds to the IMF, World Bank, and countries. After 40 years of no deforestation the loans are forgiven.

The hard part is stopping what is essentially the economy of the Amazon, deforestation and degradation. A law that is passed:

1.) What is forest is forest and what is open is open. If a forest is open as December of 2024 it needs to be abandoned and reseeded and turned back to forest;

2.) If someone deforests land, they would be given six months to reforest the area that was cut. If they fail to do so, the entire property would be seized by the government. The confiscated land, would be 100% reforested, as part of afforestation schemes that would create their own credits;

3.) All forest land is considered a reserve.

4.) Bus migrants looking to establish homesteads in the forest to housing purposefully built to prevent new economies.

There is another issue: time is short, and a real solution to the destruction needs to be completed and implemented now. I cannot envision an internal market, a voluntary market, or a patchwork REDD market regulated by domestic law as a remedy for the over 2.5 million acres of destruction that have occurred each year for the last several years.

What we are witnessing in real time is the worst-case scenario predicted by scientists regarding the collapse of the Amazon. Scientists have warned that the Amazon could reach a tipping point where it might transform into a savannah. Evidence includes rivers drying up during the dry season and the Munduruku Indigenous people facing the loss of their drinking streams. This situation prompted us to deploy our water well team to the region to drill wells for 10,000 people.

This is a serious situation, and it may be too late for voluntary REDD projects to make an impact. A bold approach is urgently needed to save the Amazon. It is only a matter of time before vast areas of the Amazon dry out, catch fire, and are replaced by savannah and bushland.