February 2025 VCM Updates: Section A

This article is an automatically translated version of the original Japanese article. Please refer to the Japanese version for the most accurate information.

This is a newsletter from Sustainacraft Inc. This article is Section A (Market Trends) of VCM Updates (Voluntary Carbon Market Updates).

«VCM Updates Structure»

A. Voluntary Carbon Credit Market Trends ← Subject of this article

1. Credit Issuance, Retirement, and Investment Trends Analysis

2. Project Pipeline Analysis

3. Detailed Explanation Section

   1. Investment Cases in Nature-based Projects

   2. Case Studies of Credit Retiring Companies

B. Trends in Major International Regulations

Introduction

Credit Issuance, Retirement, Investment Trends, and Project Pipeline Trends

Credit Issuance and Retirement figures for January both decreased compared to the same month last year. The overall trend continues to show a decrease in the proportion of Verra (VCS), which previously accounted for a large share of issuances and retirements, while the proportion of issuances and retirements from other registries such as Gold Standard and American Carbon Registry (ACR) has been increasing.

Regarding investment trends, significant Offtake Agreements by major tech companies like Microsoft and Tencent stood out in the nature restoration sector. In the Carbon Dioxide Removal (CDR) sector, Offtake Agreements targeting Biochar and ERW (Enhanced Rock Weathering) were announced by Google and Shopify. As introduced in the January newsletter, the trend of active investment in CDR continues.

Regarding new project Pipelines, the five projects added to the December Pipeline followed previous trends, utilizing Afforestation, Reforestation and Revegetation (ARR) and Agricultural Land Management (ALM) Methodologies such as VM0047 and VM0042. The January Pipeline included ARR in PNG and Reducing Emissions from Deforestation and Forest Degradation (REDD+) in Liberia.

Case Studies of Credit Retiring Companies

This newsletter introduces Retirement case studies by B2C manufacturing companies. B2C manufacturing includes various industries that provide final products to consumers (cosmetics, food & beverages, personal care & household products, tobacco, etc.). Carbon Credit Retirement by B2C manufacturing as a whole surged in 2021 and has maintained that level since. We will introduce three companies with significant retirements over the past year (January 2024 - January 2025): Natura & Co (cosmetics), Maple Leaf Foods (food & beverages), and Church & Dwight (personal care). All three companies show a proactive stance towards Offsetting using Carbon Credits, and a consistent trend in Credit Retirement was observed across the B2C manufacturing sector. We will also explain the background behind this trend.

A. Voluntary Carbon Credit Market Trends (Verra)

A-1: Credit Issuance, Retirement, and Investment Trends Analysis

- Registries Analyzed: Verra (VCS), Gold Standard (GS), Climate Action Reserve (CAR), American Carbon Registry (ACR), Puro.earth (Puro), Isometric
- Period Covered: January 2025
- Notes: Please be aware that companies that retire credits are not obligated to register their real names with the registries, and therefore, accuracy cannot be guaranteed. Furthermore, there may be delays in reflection on the registries, so please note that the number of projects and their status may change for the period covered.

Issuance and Retirement figures for the period covered are as follows (figures in parentheses indicate year-on-year change for the same month):

• Issuance: 15.2 million (-14%), of which Nature-based Solutions: 2.76 million (-19%)
• Retirement: 16.26 million (-20%), of which Nature-based Solutions: 6.26 million (-34%)

<List of Issued Projects>

The following are the top 10 projects for which Credits were Issued during the period covered.

<List of Retired Projects>

The following is a list of the top 10 Nature-based Solutions projects with the most retirements during the period covered.

<List of Retiring Companies>

The following are the top 10 companies that retired Nature-based Solutions project credits during the period covered. Church & Dwight from the consumer goods industry, which has not been featured in our newsletters before, ranked 4th. Therefore, this month's newsletter will focus on B2C manufacturing, featuring Natura & Co (cosmetics), Maple Leaf Foods (food & beverages), and Church & Dwight (personal care) as specific examples.

<Investment Trends in Nature-based Solutions Projects>

- Period Covered: January 2025
- Notes: This section covers investments in nature restoration, REDD+, and Nature-based Solutions CDR projects. Please note that "Credit Volume" and "Investment Amount" may sometimes be projected future values.

In January, there were 8 significant investments in Nature-based Solutions and CDR projects.

A-2: Project Pipeline Trends

- Registries Analyzed: Verra (VCS), Gold Standard (GS)
- Period Covered: January 2025
- Notes: There may be a slight time lag for reflection on the registries, so please note that the number of projects and their status may change for the period covered.
- Terminology: Annual ER refers to the annual Emission Reduction / Sequestration volume (tCO₂e).

This section will first introduce new Pipeline projects, then review significant changes in last month's Pipeline that were not reflected in the previous newsletter.

<This Month's Pipeline>

The Pipeline for Nature-based Solutions projects includes the following two projects.

<Significant Changes in Previous Month's Pipeline>

Last month's newsletter stated that the December Pipeline included a total of 14 projects. However, after the latest data update, five new projects have been added. The project with the highest estimated annual ER is still VCS-5382, an Afforestation project in the United Arab Emirates that was featured in the previous newsletter.

A-3: Detailed Explanation Section

This section provides a more detailed explanation of some of the retiring companies, investment cases, and Pipeline projects introduced earlier.

<Investment Trends in Nature-based Solutions Projects>

This section introduces information regarding investments in Nature-based Solutions projects announced last month.