REDD+ entrepreneur calls for market truce amid falling prices

Quantum Commodity Intelligence - US entrepreneur Michael Greene, who is behind several large REDD+ projects in Brazil, has announced his intention to cut down staffing levels at his company Agfor and called for a truce between project developers in the country.

In the last few months, Brazilian media has written several negative articles about REDD projects operated by the likes of Moss, Carbonext, Biofílica Ambipar and Agfor, while a public defender in Pará state has criticised four schemes situated in the Portel area, in the north of the state.

Slowing deforestation is a main policy aim for leftist President Luiz Inacio Lula da Silva with using market-based mechanisms as one policy tool to halt logging.

But plans to open up more of the country to carbon emission reduction projects has triggered competition between developers amid falling prices for carbon credits and Greene said that this has led developers to openly criticise each other's projects.

"Negative news about the market is coming out daily... This negative news is scaring away buyers of carbon credits, which are essential to funding REDD projects," said Michael Greene.

"President Lula of Brazil is likely to be disappointed to find out that this news is scaring away the billions of dollars in foreign investment that he hopes will help save the Amazon rainforest."

Greene says awareness of carbon markets in Brazil has risen sharply in the last few months as the country prepares to set up a federal scheme.

"It is 24/7 in Brazil right now... mayors from towns with REDD projects are being asked for TV interviews to see if they speak bad about them," he said.

"It has happened in other countries, where radical ideologues and groups mount media campaigns to try to stop the laws. But the project developers should not participate in these campaigns."

Shedding staff

Deforestation accounts for around 20% of global emissions of carbon dioxide and it has long been identified by UN policymakers as a quick, easy win to combat climate change. 

Mandatory carbon markets, such as the EU ETS and the UN's Clean Development Mechanism, have largely shied away from allowing emitters to use offsets from avoided deforestation due to concerns over carbon leakage, baseline estimations and permanence. 

That has left the voluntary market to pick up the slack. 

But prices of voluntary credits have collapsed more than 80% over the past year as corporate buyers have been reluctant to be involved in projects types that have come under intense scrutiny and accusations that they do not deliver the reductions promised.

The price crash has hit his companies hard.

Agfor will shed 76 staff out of 105, said Greene, in an attempt to conserve funds.

The company will also have to stop building the remaining schools on its programme at the Rio Anapu Pacaja project (VCS2252) and has put its bricks factory on sale.

Meanwhile, project developer Carbonext has reportedly cut 15% of its workforce.

The ongoing rift between the country's developers has been highlighted by the recent decision by both Agfor and Permian Global to leave the country's main lobby group - the NBS Alliance Carbon Association - even if developers such as Carbonext, Biofílica, South Pole and Ecosecurities remain involved.

Greene said the main reason for leaving the association was the fact that he felt he was encouraged as a member to comment on competitors' projects.

"I felt that this was unethical and counterproductive," he said.

Greene has also called on US-based registry Verra to implement a "code of ethics" to prevent malpractice in the carbon industry.

The Brazil Nature Based Alliance, Carbonext and Permian Global were all contacted for comment.