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- Week of July 25th 2025 - $210M Forest Financing Breakthrough Changes Everything + Nature Credits Double in Price as Corporate Confidence Wavers
Week of July 25th 2025 - $210M Forest Financing Breakthrough Changes Everything + Nature Credits Double in Price as Corporate Confidence Wavers
VCM.fyi: Voluntary Carbon Markets News
VCM.fyi team
July 25, 2025
🎧 Listen to Our Weekly Update
Apple Podcasts: https://podcasts.apple.com/us/podcast/week-of-july-25th-2025-%24210m-forest-financing/id1823118261?i=1000719016531
📊 Market Trends & Key Insights
Market Performance: Volume Up, Prices Down
Q2 2025 showed mixed signals: Credit issuances and retirements both increased year-over-year, but average prices fell nearly one-third compared to 2024, according to Carbon Pulse. This reflects ongoing oversupply and quality concerns, particularly for older credit types.
Nature-Based Removal Credits Surge
Premium segment explodes: Nature-based carbon removal credits (reforestation, peatland restoration) have doubled in price during H1 2025, Carbon Pulse reports. McKinsey and BCG research forecasts high-quality nature-based credits could increase 3-10x by 2030 amid rising corporate demand and stricter climate targets.]
Key insight: Market is bifurcating between low-quality oversupplied credits and premium removal credits with strong demand.
Corporate Confidence Crisis
Buyer hesitation grows: A global business survey by VCMI reveals latent demand being held back by quality concerns, integrity issues, and unclear rules. Companies fear reputational risk and "greenwashing" scandals.
What buyers need:
Clear, aligned, and stable rules across regulatory regimes
Proof of real climate impact
Endorsements from regulators/NGOs
Better guidance through ICVCM and VCMI frameworks
Reality check: Carbon credits are no longer a brand boost – they can be a liability if climate benefits are uncertain.
Carbon Removal Momentum Accelerates
Record Q2 performance: Microsoft's massive BECCS purchases led surge in removal credit demand, Carbon Pulse reports. The tech giant's multi-year offtake agreements for BECCS and direct air capture are driving investment in new removal projects.
Supply constraint: Demand growth outpacing supply expansion. Long-term procurement commitments essential for scaling.]
💰 Major Deals & Financing Breakthroughs
🏆 Landmark Achievement: $210M Non-Recourse Forest Financing
Game-changing deal: Chestnut Carbon secured $210 million non-recourse project finance facility led by J.P. Morgan – first of its kind for voluntary carbon markets.
Deal structure:
Loan secured only by project assets/cashflows (not developer balance sheet)
Enabled by long-term Microsoft carbon credit offtake agreement
Structured like traditional infrastructure finance
Sets new benchmark for institutional capital in carbon projects
Significance: Proves nature-based carbon removals can attract institutional capital on similar terms as wind/solar farms. Opens door for major banks and investors to back carbon projects.]
TotalEnergies' $100M+ U.S. Forest Investment
Strategic partnership: French oil giant teams with NativState to conserve 100,000 hectares across Arkansas, Louisiana, Mississippi, and Tennessee.
Project details:
13 Improved Forest Management projects
Prevents clear-cutting of private family-owned forests
280 family landowners participating
ACR-certified credits for TotalEnergies' 2030+ net-zero strategy
Substantial funding flows to forest conservation in threatened U.S. South
Blue Carbon Breakthrough in Indonesia
Sadot Group investment: US agri-food company (NASDAQ: SDOT) takes 37.5% equity stake in Indonesian peatland/mangrove restoration project.
Project scope:
Partnership with 11 indigenous coastal communities
Expected 1.1-1.2 million verified credits in first issuance
VM0007 REDD+ and VM0033 wetland restoration methodologies
Community-inclusive development model
Market signal: Traditional sectors investing in nature-based solutions for supply chain decarbonization.
Additional Funding Highlights
Japan: Tokyo developer raises ¥2.4B (~$16.4M) for sustainable agriculture projects (Carbon Pulse)
Brazil: $2.6B financial coalition commitment for forest restoration and bioeconomy (Carbon Pulse)]
🏛️ Policy & Standards Developments
UK Government Integrity Framework
Major policy milestone: UK moving to "raise integrity" in voluntary carbon/nature markets with new governance framework.
Six key principles:
Companies must prioritize in-house emissions cuts before offsets
High-integrity credits requirement
Transparent reporting mandates
Government oversight mechanisms
Clear rules and standards
Truth in advertising enforcement
Stakeholder response: Generally positive (Carbon Market Watch input), but Oxford researchers warn about greenwashing litigation risks if VCMI guidelines aren't robust enough.
Significance: First major economy creating national voluntary market framework – potential model for other countries.
Zambia's Carbon Market Regulations
Emerging market progress: Zambia finalizing first carbon market regulations covering voluntary credits and Article 6 trades.
Key provisions:
Clear governance roles and legal definitions
Project approval and revenue sharing oversight
National jurisdiction maintenance
Need for stronger transparency requirements identified
Importance: Case study for African nations looking to benefit from carbon finance while avoiding double counting.
Verra VCS Version 5 - Final Consultation
Major standard upgrade: Largest crediting standard's VCS v5 final consultation open through August 11, 2025.
Three focus areas:
Increasing integrity: Improved permanence approaches, risk-based safeguards
Improving usability: Simplified, standardized rules for faster project review
Maximizing climate impact: Expanded eligibility for previously restricted project types
Notable proposal: Allow grid-connected renewables in more developing countries (reversing earlier exclusions) where deployment still below needs.
CEO emphasis: Working with governments so voluntary/compliance systems "move in same direction" on climate ambition.
Gold Standard Updates
Suppressed demand standard: New accounting methodology for least-developed contexts where communities lack basic services.]
Applications: Clean cooking, water purification, off-grid energy projects in poor regions can claim emissions reductions for low-carbon alternatives.
Significance: Aligns with UN Paris Agreement Crediting Mechanism approaches, supports development-focused projects.
🔧 Technology & Infrastructure
MRV Innovation: Open-Source Data Framework
Transparency breakthrough: Rocky Mountain Institute launched Carbon Crediting Data Framework (CCDF) - open-source toolkit.
Features:
Common data schema for carbon credits
570+ standardized data fields
Reduces 60% of developer time spent on duplicative data requests
Improves interoperability between registries
Facilitates due diligence for buyers/investors
Impact: Could significantly reduce transaction costs and improve market trust through better data transparency.
Challenge identified: Lack of standardized MRV holding back premium low-carbon commodities (steel, cement).
Problem: Non-interoperable MRV systems prevent reliable verification of product carbon footprints.
Urgency: EU's Carbon Border Adjustment Mechanism (CBAM) will tie product emissions to financial value.
Solution needed: Unified product carbon accounting protocols.
Financing Innovation for Engineered CDR
Scaling solutions: Report highlights creative financing models needed for direct air capture and carbon capture tech.]
Key mechanisms:
Forward purchase agreements
Innovative debt structures
Buyer coalitions guaranteeing future markets
Long-term contracts providing revenue certainty
Challenge: Traditional project finance still cautious about unproven CDR technology.
🌍 Regional & Global Developments
Wales Policy Position
Domestic focus: Wales declares it should not rely on international carbon credits for climate targets, emphasizing domestic action preference.
Brazil Market Delays
Compliance market postponed: Government delayed launching independent ETS authority, potentially pushing more activity into voluntary channels near-term.
Asian Market Activity
Investment flows: Continued early-stage funding for carbon project developers and technology in Japan and Southeast Asia.
Focus areas: Agriculture, forestry, engineered removal, MRV tools.
📈 Market Outlook & Analysis
Key Trends Shaping the Market
Quality over quantity: Market increasingly bifurcating between:
Low-quality, oversupplied older credit types (falling prices)
High-integrity removal credits (premium pricing, strong demand)
Institutional capital entry: Non-recourse financing models proving viable, opening door for major financial institutions.
Corporate procurement evolution: Buyers demanding higher standards, transparency, and government/NGO endorsement.
Geographic expansion: Emerging market frameworks (Zambia model) enabling new project development while maintaining national oversight.
Technology infrastructure: Open-source tools and standardized MRV reducing transaction costs and improving transparency.
Critical Success Factors
For project developers:
Focus on high-integrity, removal-focused projects
Invest in robust MRV and transparency
Secure long-term offtake agreements
Align with emerging government frameworks
For buyers:
Prioritize internal emissions reductions first
Source credits with clear additionality and permanence
Engage with standardized data frameworks
Prepare for stricter regulatory requirements
For the market:
Government endorsement and oversight essential
Standardization across registries and methodologies
Transparent data sharing and verification
Community-inclusive development models
🔮 Looking Ahead
Immediate Priorities
August 11: Verra VCS v5 consultation closes
Q3 2025: UK voluntary market framework implementation
2025-2026: CCDF adoption across registries
Medium-Term Catalysts
Enhanced government frameworks in major economies
Institutional financing model replication
Standardized product carbon accounting for CBAM compliance
Scaled engineered CDR with innovative financing
Long-Term Transformation
2030: McKinsey/BCG forecast of 3-10x price increases for premium credits
Voluntary-compliance market integration
Community-owned project models becoming standard
Technology-enabled transparency and verification
Key Takeaway
The voluntary carbon market is rapidly evolving with clear quality differentiation emerging. While overall prices face pressure from oversupply, premium nature-based removal credits are experiencing explosive growth. The breakthrough in non-recourse project financing, combined with advancing government frameworks and technology infrastructure, signals the market's maturation toward institutional-grade investment opportunities.
Success requires focus on integrity, transparency, and long-term partnerships between developers, buyers, and communities.