ICVCM Approves Jurisdictional REDD+ Methodologies

In its third announcement of Core Carbon Principles (CCP) assessment results, the Integrity Council for the Voluntary Carbon Market (ICVCM) approved three jurisdictional and project Reducing Emissions from Deforestation and Forest Degradation in developing countries (REDD+) methodologies on 15 November 2024. As forestry credits account for the largest share of retirements in the voluntary carbon market (VCM), the approvals help strengthen the overall integrity of the market amidst the backdrop of recent REDD+ controversies.

Approval for REDD+ methodologies under the Architecture for REDD+ Transactions’ (ART) and Verra’s Verified Carbon Standard (VCS) programs mark the first completed credit assessments under ClearBlue’s Forestry category. According to ICVCM, new projects that use the approved methodologies could supply up to a total of 423 million CCP credits in their first crediting period. A crediting period, which can vary for each methodology, defines the specific window during which a project can be issued credits for its verified emissions reductions or removals. Projects would have to reapply to issue credits for another period, which allows crediting programs to reassess baselines. However, no credits have yet been issued under the three approved methodologies, so the estimated supply is for 2025 onwards.

A summary of the approved methodologies can be found in the table below.

Prior to the recent REDD+ methodology approvals, the ICVCM had only made two announcements. The first announcement was made in June 2024, which approved methodologies for landfill gas and ozone-depleting substances, covering 1.2% (27 million) of all issuances. In August 2024, the following CCP assessments announced rejections for renewable energy methodologies, which accounted for 30.5% (267 million) of the available supply of all credits, as well as approvals in landfill methane recovery and leak repair methodologies.

VM0048 and JNR Framework v4.1 serve complementary but distinct functions in Verra's REDD+ architecture. VM0048 is a project-level methodology that uses jurisdictional data to set baselines for individual forest conservation projects, with Verra leading the baseline-setting process. In contrast, the JNR Framework is a comprehensive accounting and verification system that operates at the government level (national or subnational), providing a structure for entire jurisdictions to generate credits and "nest" smaller projects within them.

Projects using older Verra REDD+ methodologies for Avoiding Unplanned Deforestation (AUD) must transition to VM0048, which requires a complete recalculation of their baselines and monitoring approaches. This transition is mandatory for CCP label eligibility, as credits issued under the old methodologies cannot qualify for CCP status. While VM0048 is expected to generate approximately 300 million new credits from its 21 projects in development, this estimate excludes transitioning projects. Therefore, the potential contribution of these transitioning projects to the overall supply of CCP-labelled REDD+ credits remains uncertain.

Despite the developments, there could be delays in generating an additional supply of these credits since:

• Methodologies have to undergo ICVCM-suggested updates to issue CCP credits
• Projects will take time to transition to newer methodologies
• Jurisdictional data is not yet available for all regions

The approval of ART TREES and VCS JNR signals a clear market direction toward support for jurisdictional approaches, which aims to reduce over-crediting risk from developer-set baselines. As technology and data capabilities expand for crediting organizations, the improved oversight is expected to drive a substitution from quantity to quality. This could place upward pressure on credit prices through impacts on both supply and demand, as REDD+ projects may issue relatively fewer credits, while buyers will have more confidence in the integrity and quality of credits.

With the potential for millions of CCP credits to be issued, buyers may wait for the CCP-labelled REDD+ credits to become available, limiting short-term participation. The future availability of these credits may also accelerate the price segmentation seen in the VCM, where demand is shifting towards credits with CCP labels and other characteristics that influence perceived credit quality. The large potential supply of 423 million credits may place downward pressure on non-CCP REDD+ credits.

CCP-labelled credits are expected to impact other markets, such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), as 2021 vintage and newer credits will eventually receive CCP labels and drive additional demand. Jurisdictional REDD+ credits are also well-positioned for Article 6, as the CCP label could provide the necessary assurance to help streamline the integration of JNR credits into the market’s supply.

The ICVCM's approval of these methodologies could mark a pivotal moment for REDD+ credits in the VCM, particularly by addressing challenges related to additionality, permanence, and baselines through jurisdictional approaches. However, near-term supply remains limited, and the timeline for CCP-labelled REDD+ credits becoming available is still unclear. For further insights or questions about potential impacts, please reach out to ClearBlue's Market Intelligence team.