November 12, 2024

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First US Nature-Based Carbon Credit Auction Coming in 2025

First US Nature-Based Carbon Credit Auction Coming in 2025

This week, the American Forest Foundation
(AFF) announced it will hold the first auction for carbon credits for its
Family Forest Carbon Program (FFCP) in
February 2025.

The American Forest Foundation Carbon
Auction

— the first of its kind for a US nature-based carbon project — will offer
buyers a transparent and streamlined way to secure high-quality carbon
credits

while supporting rural communities and family forest owners.

More companies than ever are working to curtail their climate-changing
emissions, but there remains an urgent gap in the upfront capital needed to
deploy high-quality carbon
projects
to help meet climate-mitigation targets and keep global temperature rise within
1.5°C. Globally, only 1.2 percent of the annual potential of nature-based
solutions has been
unlocked
by the voluntary carbon
market

(VCM). If this underinvestment continues, we risk not financing enough
projects to produce a sufficient supply of high-quality credits to reach our
collective climate goals. Upfront payment addresses that gap.

The AFF’s Carbon Auction will help scale financing and deployment of
nature-based solutions through a transparent, cost-efficient approach —
companies will be able to access all due diligence resources in one central
place over several weeks and then bid on credits during a one-week period in
February. This approach will also give the Family Forest Carbon Program the
upfront funding it needs to deliver measurable carbon impacts and high-quality
ecological and community co-benefits.

“Family forest owners are ready to take necessary climate action, and time is of
the essence for corporations to invest in nature-based
solutions

to meet ambitious climate goals,” said AFF CEO Rita
Hite
. “This auction will be a
game-changing opportunity for buyers to secure premium carbon credits while
supporting family forest owners and rural communities.”


Tim Stout, a Vermont landowner enrolled in the Family Forest Carbon Program,
stands in the woods he proudly stewards. | Image credit: American Forest
Foundation

AFF says the Carbon Auction will reshape the VCM by:

  • closing the climate financing gap — Corporations often seek to buy
    carbon credits at lower prices and pay upon delivery, yet developers need
    upfront capital to kickstart their work. The auction will bridge the divide
    by offering hybrid commercial terms where buyers will provide a partial
    upfront payment to catalyze the project with the remainder to be paid upon
    delivery.

  • streamlining the due diligence process — The auction format will address
    the transactional frictions buyers and developers commonly face when
    transacting carbon credits — such as the protracted process of discovery,
    the need to manage multiple sources of due diligence data and the lack of
    insight into market prices. Through this auction, buyers will have access to
    the due diligence resources in one central place and the ability to see
    anonymous competing bids.

  • linking payments to impact — Companies will prepay through down payments
    directly tied to project milestones achieved — including landowners and
    acres enrolled, and verification milestones. This method of down payments
    will allow companies to tie their upfront investment to measurable impact
    for communities and the planet.

  • incentivizing early investment — Companies benefit from significant
    discounts on credits when they prepay. This helps ensure buyers get carbon
    credits at a competitive price, protecting against future price increases
    while safeguarding long-term decarbonization strategies and lowering overall
    costs.

By providing a share of resources upfront, buyers will be able to ensure that
the Family Forest Carbon
Program,
developed by AFF and The Nature Conservancy, has the funding required to
implement next-generation approaches to credit quality, resulting in credits
that are highly additional and that also deliver significant
co-benefits.

“The FFCP is a core element of my urgent goal to preserve our forests and
mitigate climate change, so my grandchildren (and their generation) can enjoy
this farm and the rest of Vermont the way that our family has enjoyed them over
the last 80 years,” said Tim Stout, principal of Northam Forest
Carbon
and a Vermont landowner
enrolled in the Family Forest Carbon Program. “I want this farm to be a land of
hope. Look at what small landowners can do to actively participate in climate
action and build resilient forests! It’s astounding how much we, as landowners,
can do with the right support.”

“This groundbreaking auction will redefine how corporations invest in
nature-based solutions to address the threats of climate change and biodiversity
loss,” said Kevin Maddaford,
director of US and Canada Carbon Markets at The Nature Conservancy. “It will
also advance carbon market access for US family forests owners and support the
health of woodlands.”

Interested parties can find additional details and register on the American
Forest Foundation Carbon
Auction
website.

link

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