REDD: A High-Integrity, Transparent Market for REDD+ Projects

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Neutral is launching REDD, a trading instrument for REDD+ credits, to create a high-integrity, transparent market for preservation financing. We’ve mobilized a coalition of partners to bring REDD to market. Ecoregistry and Cercarbono certify the REDD+ credits under advanced registry infrastructure and an ICROA-endorsed standard. Renoster uses the latest science to provide transparent and independent quality assurance. Toucan provides the foundational architecture for the instrument. We’re also working with insurers to provide optional insurance and protect against the multitude of risks that REDD+ projects face. 

We’re launching REDD because the REDD+ market is broken. Buyers wanting to acquire REDD+ credits have to conduct lengthy due diligence to ensure a project represents real climate action and doesn’t land them on the front page of a newspaper. If they want to acquire credits, they don’t know a credit’s fair market value due to opaque prices, and many still execute transactions via emails and invoices. After they retire credits, buyers have to worry about a reversal event, such as the project developer defaulting or a wildfire, invalidating their offsetting claims. It is not a market that can scale and rise to meet the climate challenge. 

REDD is a trading instrument with a transparent price that fluctuates based on the supply and demand of credits in its inventory. Users can execute transactions instantly to buy or sell REDD+ credits. REDD’s inventory is fully transparent and buyers can select the credits they want from the inventory. To sell a project’s credits using REDD and be made available to buyers, projects have to be reviewed by Renoster and pass their quality assessment. 

Renoster will publicly release the project reviews, making a project’s due diligence fully transparent. Participants will have an in-depth review of a project’s additionality, baseline assumptions, and leakage, among other characteristics.

It will also be the first trading instrument that doesn’t commoditize the underlying credits and prices projects according to their quality. The more effective a project is at avoiding emissions, the higher the price its credits will be bought and sold under the REDD trading instrument. 

We’ve currently whitelisted three projects available to trade at launch, with more in the pipeline:

• ER114, Proyecto REDD+ Pazcífico Sur in Colombia
• ER130, Rio Jacareacanga REDD+ in Brazil
• ER139, Juina REDD+ in Brazil

The future of REDD+ will be a high-integrity, transparent market funneling billions towards forest preservation and biodiversity protection. We hope that REDD will be a meaningful contribution to that future.

“Despite the controversy around REDD+ we’ve always believed the fundamentals that REDD+ was founded on, that our forests are significant carbon sinks and their preservation has a host of important co-benefits, are sound and that the market needed to be reimagined to reflect those fundamentals. A new market vision requires a wide range of expertise and wouldn’t be possible without our partners. We’re excited to bring REDD to market and hope it will act as a catalyst for significant investment in forest preservation.” - Farouq Ghandour, Co-founder and CEO at Neutral. 

“The most important piece of the puzzle is to have access to the necessary information to make a good assessment and for the buyers to take an informed decision. This is why EcoRegistry focuses on giving this extra mile of information to the public and managing the accounting system transparently.” - Juan Duran, Co-Founder and CEO at EcoRegistry.

“Having studied and lived in Colombia, I’ve seen firsthand the importance of protecting and preserving forests in the region. REDD is a transparent vehicle for channeling much-needed finance towards these threatened ecosystems. By embedding third-party ratings into the creation of REDD, we ensure that only projects driving real climate action are supported. Combining that with price and instrument transparency from Toucan gives us a high-integrity, transparent market for preservation projects.”  - Raphael Haupt, Co-founder and CEO at Toucan.

“In the last two years, there has been a significant influx of information layer innovation, but we have not seen the same on the transactional layer yet. REDD ties the two essential components of a carbon project together: quality - whether the project has real climate benefit - and price - whether the credits have fair market value - in a market where there has been little to no connection between price and quality up to this point. We’re excited for this next layer of transparency and for forest preservation credits to demonstrate their climate efficacy on the open market.” – Saif Bhatti, CEO and Founder at Renoster.

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