INTERVIEW: New US reforestation deal shows evolving VCM buyer strategy, CIP CEO says

The recent 1 million metric ton CO2 removal deal in the US shows how voluntary carbon market buyers are evolving their deal structures, the CEO of VCM intermediary Climate Impact Partners said in a June 12 interview.

The deal, announced June 11, was brokered by Climate Impact Partners and involved a staggered purchase of 1 million metric tons of CO2 equivalent from GreenTrees' Mississippi Alluvial Valley project, the largest reforestation project in the US. The purchase was made at an undisclosed price "on behalf of a Fortune Global 500 client," CIP said.

The deal proves that buyers in the voluntary carbon market remain anchored to their climate commitments and securing "high quality, deliverable" carbon removals at scale, CIP CEO Sheri Hickok told Platts, part of S&P Global Energy.

"There are still big transactions happening, the market is still moving," Hickok said.

The GreenTrees purchase is an example of converging trends: the types of credits companies are buying and the structure of their deals, Hickok said.

Natural carbon capture buyers are increasingly looking to secure removals credits, such as afforestation, reforestation and restoration projects, soil sequestration projects and more, Hickok said. However, these buyers are "recognizing there is a shortage of high-quality supply," and are adjusting their portfolio planning to compensate, she said.

The GreenTrees deal was structured as a "staggered spot" purchase: a combination of short-term purchases of the latest vintage verified credits and longer-term assurances to buy credits from future issuances by the project.

This deal structure "really enables cash flow today to the project and landowners," while "giving confidence that the next issuance will sell," Hickok said. "As a developer, projects need both initial capital and long-term security... [in this structure,] you can really have your cake and eat it too."

The GreenTrees Mississippi Alluvial Valley project has removed nearly 8 million mtCO23 to date by planting over 50 million trees and engaging with nearly 600 landowners, the companies said. The project is the first ARR project to issue credits approved under the Core Carbon Principles developed by the Integrity Council for the voluntary carbon market.

Buyers in the VCM have recently expressed demand for a more diversified approach to their climate commitment portfolios. Buyers are increasingly pairing more short-term emissions reduction methods like superpollutants with longer-term, durable carbon removals like biochar. The ability to combine these different forms of emissions reduction alongside a clear display of the exact impact of these purchases is one of the ideal ways these markets could converge and increase accessibility for buyers, panelists said at the Carbon Unbound east coast conference in May.