The landscape of rainforest projects in developing countries is about to change globally, following Gabon’s forest management blueprint. Gabon is about to issue a record 90 million carbon credits to the voluntary carbon market from its preserved national rainforests before COP27 that starts November 6th, 2022.
The environment minister gave an update on the country’s iconic carbon credits sale that was announced in July 2022. He said the price of the credits may reach $35 a token.
“My own ballpark would be $25 to $35… That’s about the right price right now,” said Lee White, Gabon’s environment minister, during a webinar on Friday.
The African country’s plan to release the record 90 million credits into the voluntary carbon market is part of its government strategy as it seeks ways to finance the conservation of its carbon-absorbing forests. 88% of Gabon’s territory is covered with rainforests. The country is trying to make those trees worth more alive rather than cut for timber.
“The only way to maintain those forests is to give them value. Without a sustainable forest industry that is properly valued, the rainforests are condemned to die,” said Minister White in an interview for Forbes back in July.
The world is watching Gabon’s holistic commercial model and if it works, it would become a blueprint for rainforest nations that would show them economic diversification and climate protection.
The sale of carbon credits generated by national rainforests could make a big difference for world’s efforts to mitigate climate change. Those developing countries would be incentivized to protect their forests and the carbon stored in them rather than cut them to provide jobs for the local population. Currently, deforestation among rainforests nations is one of the leading causes of climate change.
Gabon will market the carbon credits by its national sovereign wealth fund and sell them via a new platform, REDD+ – a collaboration between S&P Global’s IHS Markit, CBL commodity exchange, and the Coalition for Rainforest Nations, which represents over 50 developing countries. The credits are expected to be released for sale in October 2022.
What is a concern of experts in the carbon market field is that the lack of a fair and universal price for a ton of carbon removed is hindering the net zero transition.
“We can’t keep paying developing countries pennies on the dollar” and expect them to implement their climate action plans. “We have to have a fair carbon price in order for that sustainable transition that we require,” said Kevin Conrad, the executive director of Coalition for Rainforest Nations.
“If 90 million tonnes from Gabon over ten years can flood the market, then the market is not fit for purpose and the global community has to do something to fix this… My prediction is there is the appetite out there because the world is slowly coming to terms with the seriousness of climate change,” also commented Mr White regarding the issue.
Some carbon credits offered on the REDD+ platform are being sold for about $16, and the release of a staggering amount of more credits could make the price drop.
Right now there is a huge discrepancy between the carbon price offered by similar projects in developing countries and carbon credits sold in Europe where some climate tech companies could offer $100 – $300 for a ton of CO2 removed.
The establishment of a globally universal price could support developing nations’ efforts to expand their forest conservation economies. Credits from rainforest project not only provide one of the highest quality of carbon removal credits but also can create jobs for Africa’s growing population.