New analysis by Abatable finds that REDD+ carbon projects using Verra’s updated VM0048 methodology require a minimum carbon credit price of $15 to remain financially viable, rising to over $35 under more conservative assumptions.
This represents a sharp contrast with today’s voluntary carbon market (VCM) average of $3.50 per credit.
VM0048 addresses long-standing criticisms of REDD+ over-crediting by adopting a more conservative, jurisdictional approach to setting deforestation baselines.
It removes developer discretion by relying on independent data providers and reduces baseline reassessment periods from ten to six years.
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These changes aim to boost credit integrity but significantly cut the volume of credits issued—by 30% to 90% compared to older methodologies like VM0015.
Abatable modeled the financial performance of a hypothetical 50,000-hectare REDD+ project in Pará, Brazil.
Under VM0048, the project’s credit revenue would drop steeply, requiring far higher carbon prices to cover costs and remain sustainable.
According to Dr. Peter Wooldridge, Abatable’s Head of Carbon Research, while VM0048 is a crucial step toward high-integrity REDD+ credits, current market prices are far too low to support project transitions.
The findings place REDD+ projects close in cost to Afforestation, Reforestation, Revegetation (ARR) projects, historically among the most expensive in the VCM.
Juan Carlos Arredondo Brun, Abatable’s Director of Knowledge, warned that without higher prices, developers may abandon upgrades to VM0048, threatening the viability of many projects.
Ultimately, Abatable stresses that if the VCM values forest protection, it must reflect that in pricing, especially for high-quality projects on the frontlines of deforestation.
