Demand for voluntary carbon credits soared in the past year. While there was a temporary drop with the onset of the Covid-19 pandemic, demand has rebounded – and so have the opportunities for carbon offset project developers. Marcos Preto, CEO of Agrocortex – and head of Agrocortex's REDD Project in Brazil – sees huge potential for forestry carbon projects but adds that these projects need to be properly understood and supported to unlock their value.
Environmental Finance: What potential do forest carbon and REDD projects have in avoiding greenhouse gas (GHG) emissions and the destruction of forests?
Marcos Preto: REDD projects have enormous potential. In addition to preventing forest destruction, REDD projects protect biodiversity. It is one of the only remuneration options available to landowners to protect forests and prevent alternative land uses that further destroy the environment.
Our project has already prevented the deforestation of approximately 5,300 hectares of forests between 2014 and 2019. In addition, the project has generated new sources of income and jobs in what is one of the poorest regions Brazil.
Agrocortex is not just a forest, but a forest that is being managed correctly while achieving social inclusion, economic development, forest protection and carbon offsetting.
EF: How do you actively engage with buyers of carbon credits? What do they need to know about your REDD project?
MP: Buyers need to know the whole story behind a project.
I believe that buyers have a need and obligation to know what they are supporting, just as we have a need and obligation to deliver exactly what is described in our project plans and objectives.
We send our buyers materials that highlight the characteristics of our project, the company, our shareholders and activities. These materials are often accompanied by photos, videos, our certifications and all other mandatory public materials.
We also explain our unique corporate structure to buyers. Our main shareholder is one of the largest private investment groups in Spain and this gives us high levels of security and credit quality. To know that the money invested will be used correctly and in accordance with best practices is important for our supporters.
EF: You have won the Best Individual Offsetting Project Award in Environmental Finance's Voluntary Carbon 2020 awards. What do you think sets you apart from other projects?
MP: We are very happy with this award and the recognition of what we do here.
We work in an area of 186 thousand hectares in the middle of the so-called "Arc of Amazonian Deforestation" – an area that is under great deforestation pressure. We are also located in an important biodiversity corridor that connects the Andes to the Amazon rainforest. It is estimated that there are more than 400 species of birds in the project area, which represents about 20% of the total species cataloged in Brazil.
As I mentioned, we have also generated positive social and economic impacts in the form of jobs and alternative sources of income for a poor region of Brazil.
Furthermore, we are continuously searching for the highest standards in our processes and activities. We have VCS and SocialCarbon verifications and FSC® certifications.
We also reinvest of 100% of the sales of our carbon credits back into our businesses and our activities are supported by strong partners.
EF: What do new entrants to the market need to know about the different carbon credits available to purchase for offsetting strategies?
MP: The answer is the same for new entrants and established buyers of carbon credits: know your projects and do not compare on price alone.
GHG emission reduction projects are important, regardless of the type of project, but it is important to be sure of the quality of the project. Focusing on the price alone does not acknowledge this.
Buyers should request all the essential information that guarantees the quality of the project, such as third-party certification and verification, as well as results achieved.
Knowing the project, the owners, the developers, and the social, economic, and environmental benefits is extremely important.
EF: What are the challenges do you face in meeting increased demand for carbon credits?
MP: In my opinion, we have three major challenges: there is a widespread lack of knowledge or experience in the carbon offsetting markets; unfair competition from low-price, low-quality credits and pressure from customers/buyers to acquire carbon credits at a low price.
In our experience, many buyers only analyse the cost. They do not consider the importance of this revenue for project developers. It is this revenue that must be reinvested in existing projects or in the development of new ones.
We are asking buyers to choose carbon credits carefully and above all, value high-quality projects. We need everyone's support on this.
EF: What are your plans for the future?
MP: The increase in demand and higher prices for carbon credits will make forest conservation more economically competitive compared with other land uses that cause deforestation.
As such, we plan to consolidate our existing projects and develop new ones. But we need more support from the market and buyers of carbon credits to achieve this.
It is important that projects like the Agrocortex REDD Project and companies like ours are valued and supported. We hope that this award as Best Individual Compensation Project will bring us more visibility and will inspire other forest owners to develop REDD projects as well.
Agrocortex REDD project
The primary objective of the Agrocortex REDD Project is to avoid the unplanned deforestation (AUD) of the 186,369.66 hectare project area, consisting entirely of Amazonian rainforest.
The project area is located within a private property named "Fazenda Seringal Novo Macapá", which is situated in the municipalities of Manoel Urbano, Pauini and Boca do Acre, in the States of Acre and Amazonas, in the South-western Amazon.
In addition to contributing to the long-term conservation of the region, the Agrocortex REDD+ Project also has the function of establishing a barrier against the advancement of deforestation, making an important contribution to the conservation of South-western Amazon biodiversity and also to climate regulation in Brazil and South America.
The main deforestation activities with the Agrocortex REDD+ project region have been cattle ranching, timber harvesting – both legal and illegal – and infrastructure, in the form of existing highways and the expected expansions.
Conservation activities include increased monitoring to prevent the invasion of illegal deforestation by outside agents and the banning of unpermitted degradation within the project area. Other measures include forest fire prevention and firefighting training.
