Nature-based carbon project developers are facing increasingly stringent requirements for Monitoring, Reporting, and Verification technologies, but implementing advanced technologies could make their projects economically unviable given low prices and low demand, industry participants said Feb. 20 during Commodity Trading Week Asia Pacific 2025 in Singapore.
Nature-based carbon projects have been through a trust crisis in the past two years, with criticism from the media and academia questioning whether these carbon credits can truly represent genuine emission reductions.
To avoid reputational risks, carbon credit issuers have raised the bar in terms of examining emission reductions, and buyers have also asked for project developers to upgrade MRV technologies to protect their investments from reputational risks.
However, the nature-based carbon market has experienced a severe supply-demand imbalance amid this trust crisis, which has resulted in significantly lower prices and made MRV technologies a heavy financial burden.
MRV technologies can only be implemented at scale if buyers are willing to pay more, project developers said.
"At this point of time where pricing is so low, we will have to bring those costs to the buyers," said Anna Stablum, director of Business Development Asia at ClimeCo, an international project developer. "So, it then comes down to if the buyer would be willing to pay for these technologies and [if] they find that this data is so important that they are willing to fund it."
Rajesh Sundaresan, co-founder at Carbon Impact Capital, said: "For those who are just asking for the techs, we should ask them whether they are willing to pay for that." Carbon Impact Capital is a Singapore-based project developer currently focusing on Asian and African projects.
Rene Velasquez, the founder of Carbon Exposure Project, called for the carbon industry to address the difficulties of passing the "additionality test", which refers to the excessive requirements of technologies and documents to prove a carbon project can bring additional emission reductions compared with the business-as-usual scenario.
Velasquez emphasized the importance of ensuring the long-term viability of nature-based projects, adding that setting a high bar for passing the additionality test could hinder investors from entering this market.
He pointed out that -- like what happened to renewable projects -- the costs of technologies need to be significantly lowered to make nature-based projects attractive to investors, especially compared with fossil fuel projects.
Velasquez was previously head of Global Carbon Markets at CBL, one of the world's largest spot carbon exchanges.
Satellite-related technologies have advanced at a remarkable pace in the past few decades, said Akash Verma, research fellow and lecturer at the Centre for Nature-based Climate Solutions at the National University of Singapore.
"You don't realize how many satellites have gotten launched in the last 10-15 years. There's more traffic up in space than probably on our road right now. What it also meant is that there's more data available, and the platforms have become much simpler to access," Verma said.
"For satellite data, there's a lot of it. There's a new MRV company coming up every day, saying that we're going to do this, we have MRV, and we have AI. I think the prices of MRV are going to fall," Verma said, emphasizing the potential of MRV technologies for nature-based projects to achieve economies of scale.
Platts, part of S&P Global Commodity Insights, assessed nature-based avoidance carbon credits traded at $4.55/mtCO2e Feb. 20, down sharply from above $10/mtCO2e in 2022 before the trust issue emerged.
Additional regulatory risks
Another side effect could be the government's concerns over homeland security for imposing overly stringent requirements on MRV technologies, especially on high-resolution satellite data, market participants said.
Kazeem Khan, general manager of Asia-Pacific Nature-based Solutions at Shell, said the government's security concern has already become a real issue that created hurdles for project development.
"We face this particular issue in China. There's a lot of sensitivity around mapping various [land], particularly because, when you have projects in China, the land is owned by the state and there's a real sensitivity about where the information is coming [from]. This is a real issue," he said.
A Singapore-based carbon trader told Platts on the sidelines of the event. "For some buyers and some carbon crediting methodologies, they require carbon projects to use military-alike technologies. If you want to locate every single tree in a forest clearly, it's almost like locating a sniper in a battle.
"Sooner or later, more and more regulators will wake up and think of this problem, which could potentially bring about another wave of regulator pushback for carbon projects," the trader said.
