Bringing forest carbon projects to the market

1.5. ConclusionCompared to the fears that were voiced for a long time over the possibility of largevolumes of low-cost forest carbon credits flooding the market and degrading pricesignals, it is now clear that what has happened is almost exactly the reverse. Highdemand for forest carbon credits has been strangled by their exclusion from the mainregulated markets and by quality imperatives on the voluntary markets. The supplyof standardized forest carbon credits at reasonable cost does not currently meetdemand, although with the 136 projects now working towards standardization, thereare grounds for optimism as to a consolidation of the role of forest projects on carbonmarkets. These two points are reflected in the moderate progress of forest carbonprojects in 2007-2008 (figure 18), but also in sale prices for forest carbon creditsthat are fairly close to observed average prices. The forest carbon market is thereforein a phase of transition and consolidation. The chaotic euphoria of the early daysis giving way to the establishment of standards that are placing the non-regulatedmarket on a more professional footing.6,05,04,03,0Kyoto (UQA)NZ ETSMDPGGASCCXOTC2,01,0-pre-2002 2.002 2.003 2.004 2.005 2.006 2.007 2.008 Jan-June2009Figure 18: Trends in the forest carbon market, in MteqCO 2(Source: Ecosystem Marketplace)The forest carbon market was worth 25 M€ in 2008, with the vast majority of tradetaking place on the voluntary market (24.5 M€). This has given a certain amount ofvisibility to forest projects despite their poor liquidity. Partial results indicate that,despite the current financial crisis, the market grew slightly in 2009 (figure 18) andremained stable in terms of prices.48The fragile position of forestry projects in the carbon markets