🎧 Listen to this newsletter on our podcast!

🎵 Listen on Spotify: https://open.spotify.com/episode/1dpdL9RRWcS9dp8X1sOBJU?si=62fbdce663724cd6

🚨 Critical Market Integrity Development

Third-Party Auditing Crisis Threatens VCM Foundation

A groundbreaking study published in Science revealed that 64% of Verra's certified auditors have signed off on problematic carbon projects where overcrediting was acknowledged. The research concludes that third-party auditing cannot guarantee carbon offset credibility due to inherent conflicts of interest—auditors are selected and paid by the organizations they evaluate, creating unconscious bias toward approval.

Why this matters: This could fundamentally reshape how projects are verified and may lead to stricter regulatory oversight. Projects with robust, transparent verification will command significant price premiums.

💰 Historic Financing Breakthrough

First-Ever $210M Non-Recourse Project Finance for US Afforestation

Chestnut Carbon closed the first-of-its-kind non-recourse project finance facility, led by J.P. Morgan with a syndicate including CoBank, Bank of Montreal, and East West Bank. This landmark transaction, backed by Microsoft's long-term offtake agreement, establishes a replicable model for bankable carbon assets.

Why this matters: This proves carbon credits can be treated as bankable assets by traditional financial institutions, potentially unlocking billions in lower-cost capital for project development.

📈 Record-Breaking Market Activity

Q2 2025: Strongest Quarter Ever for Carbon Removals

• 15.48 million tonnes of durable carbon removal credits contracted in Q2 2025—nearly double all prior quarters combined

• Microsoft dominated with 14.6 million tonnes (≈94% of Q2's volume), including:

  • 6.75 Mt deal with AtmosClear

  • ~3.7 Mt with CO₂ Limited

  • 4.9 Mt with Vaulted Deep

  • 4.8 Mt with Anew Climate

H1 2025: Record Retirements Signal Market Recovery

• 95 million credits retired in H1 2025—highest half-year total ever (9% increase from H1 2024)

• Total retirement value jumped 32%, indicating buyers paying premium for quality

• 57% of retired credits held BB ratings or higher, up from 52% in 2024

🏛️ Major Policy & Regulatory Updates

EU Opens Door to International Credits

The European Commission confirmed a 90% emission reduction target by 2040 and crucially allowed up to 3% of the target to be met using international Article 6 credits from 2036. This represents approximately 140 million credits annually by 2040, potentially worth over €10 billion.

Why this matters: The EU will become the largest sovereign buyer of carbon credits, creating massive demand for high-integrity international projects.

Developers Demand Complaints Process Overhaul

Dozens of carbon project developers (via the Project Developers Forum) urged VCM standard registries to overhaul their project complaints procedures. They argue current processes don't allow developers to defend against allegations before suspensions go public, and call for anonymous whistleblower tools.

Africa Launches Continental Carbon Initiative

The African Union Development Agency (AUDA-NEPAD) rolled out a continent-wide carbon market governance initiative, introducing new integrity and equity principles, a regional coordination platform, and a digital hub to support Article 6 readiness across Africa.

🏆 ICVCM Methodology Approvals Accelerate

The Integrity Council approved multiple Core Carbon Principles (CCP) methodologies in July:

• ACR's Afforestation and Reforestation methodology received CCP approval, making 7.8 million existing credits eligible for CCP labeling

• Two additional ACR methodologies (ODS destruction and landfill gas) earned CCP status

• Over 120 new project listings in H1 2025 used ICVCM-approved methodologies

Why this matters: CCP-approved credits command significant price premiums. Developers should prioritize these methodologies for new projects.

⚠️ CORSIA Supply Crisis Looming

Only 15.84 million CORSIA-eligible credits have been issued as of June 2025 (all from Guyana's jurisdictional REDD+ program), while airlines need up to 144 million credits by January 2028. This supply shortage could drive CORSIA credit prices to $25-$60 by 2027.

Why this matters: CORSIA-eligible projects will see explosive demand. Developers should urgently pursue CORSIA eligibility for existing and new projects.

💡 Innovation Spotlight

Boomitra Launches Innovative Biomass Carbon Removal in Botswana

Silicon Valley startup Boomitra (Earthshot Prize winner) launched its "Oasis" project to clear invasive woody bush on 10,000 hectares and permanently sequester over 200,000 tCO₂ by compacting biomass into bales and burying them in oxygen-free pits. Using Puro.Earth standard with robust MRV including traceability and soil gas chamber measurements.

📊 Market Pricing Trends

Quality Premium Continues to Widen

• Tier 1 credits commanded a 65% premium over Tier 3 credits in H1 2025

• Nature-based ARR credits averaged $24 per credit, reaching $27 for highly-rated projects

• Corporate buyers increasingly willing to pay for quality, with average retirement prices up 32% year-over-year

🎯 Key Takeaways for Project Developers

1. Quality is King: The auditing crisis and widening price premiums mean only the highest-integrity projects will succeed. Invest in robust verification and pursue CCP approval.

2. Financing Revolution: The Chestnut Carbon deal opens doors for traditional project finance. Strong offtake agreements can unlock institutional capital.

3. Supply Crunch = Opportunity: With retirements outpacing issuances and CORSIA facing severe shortages, well-positioned projects will command premium pricing.

4. Regulatory Tailwinds: EU's acceptance of international credits and Africa's unified approach create massive new demand pools.

5. Act on CORSIA Now: The supply shortage presents a time-limited opportunity for CORSIA-eligible projects.

🚀 Stay Ahead of the VCM with Real-Time Intelligence

We're building the most comprehensive VCM intelligence platform to help project developers, buyers, and investors make data-driven decisions in this rapidly evolving market.

Sign up for early access at VCM.fyi

Get exclusive insights, market alerts, and deal flow intelligence before anyone else.