New Report Forecasts Price Of Jurisdictional REDD+ Credits To Reach $15 In 2028

New Report Forecasts Price Of Jurisdictional REDD+ Credits To Reach $15 In 2028 - Carbon Herald

A new report by the Environmental Defense Fund (EDF) predicts a significant rise in the value of Jurisdictional REDD+ (JREDD+) carbon credits by 2028. JREDD+ programs focus on reducing emissions from deforestation and forest degradation on a national or state-wide level.

While a relatively new concept, JREDD+ has already gained traction. Several tropical forest countries, including Guyana, Costa Rica, and Ghana, have signed JREDD+ agreements in the voluntary carbon market. 

Notably, Guyana has successfully issued credits and received $150 million for its forest conservation efforts. The trend is expected to continue, with more jurisdictions anticipated to join forces with buyers this year. 

The recent term sheet signed by the Brazilian state of Acre with the LEAF coalition for 10 million credits exemplifies this growing interest.

Titled “Navigating Jurisdictional REDD+: A Pricing Guide for Tropical Forest Nations,” the report leverages data from MSCI Carbon Markets to assist tropical forest governments in securing better funding and contract terms for their JREDD+ programs.

The analysis by EDF and MSCI Carbon Markets forecasts that JREDD+ programs within the ART-TREES pipeline could generate up to 300 million metric tons of forest carbon credits by 2030. This represents a six-fold increase compared to the current demand for REDD+ credits, which focus on smaller-scale project-based activities.

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While uncertainty remains regarding whether demand will keep pace with this surge in supply, EDF anticipates rising JREDD+ credit prices driven by buyer preference for higher-quality credits.

Despite a 70% price drop for REDD+ credits in the past year, “premium” REDD+ projects command double the price of average projects, and this gap is widening. Additionally, a survey of 478 corporate buyers indicates a willingness to pay a premium of 20-40% for JREDD+ credits compared to REDD+ credits.

Based on these factors, EDF currently estimates JREDD+ credit values to range from $6 to $12, with variations depending on the credit issuance date and specific jurisdictional considerations. The LEAF Coalition’s recent agreement effectively establishes a $10 floor price, and Guyana’s 2022 deal with Hess Corporation appears increasingly like an exception.

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Looking ahead, the report forecasts average JREDD+ credit prices to climb to around $15 by 2028. This prediction is based on a comprehensive analysis that incorporates expert insights and explores 162 different scenarios. 

However, the report acknowledges the limitations of current market activity in the voluntary carbon market, particularly within the nascent JREDD+ market. As a result, price forecasts, including current estimates, may be subject to significant fluctuations due to a few major policy changes.

Beyond price, the report also outlines several important developments within the wider VCM on demand, policy, and market governance.

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