The REDD carbon market was slow during the fourth quarter of 2014

Reuters has published a report where it is explained that in Q4, the average spot bid decreased by $0.5/t to $4.5/t. The lowest spot bid was about $2/t for contracts sized between 10,000 and 50,000 tonnes. The highest spot bids posted some $10/t for credits from a few projects generating between 500 and 1,000 tonnes per year. Most buyers paid in the range of $4.0-5.0/t for issued REDD credits for contracts, most containing under 50,000 tonnes.


The average spot offer also decreased by $0.5/t and constituted $5/t, while the most common spot offers ranged between $4.0- 6.0/t for contract volume up to 100,000 tonnes. The lowest spot offers on credits were about $2.5-3.0/t; the highest were approximately $8.0/t.


Forward bids sunk roughly by $1.0/t to $3.5/t and forward offers lost $0.5/t, averaging around $5.0/t. The lowest forward offers neared $3.0-4.0/t, while the highest showed around $7.0/t for about 20,000 tonnes. Only a few forward contracts closed, and all at low prices between $1.5-4.0/t.


According to comments from REDD credit traders and resellers, Q4 also saw slow secondary REDD credit trading.


Market overview

Neither the Lima COP nor the announcements from US and China regarding emission reduction targets affected the REDD market. The market continued at slow pace, and buyers’ interests dominated the course of negotiations. In a few cases, potential buyers had abandoned negotiations as they considered REDD credits price too high, allegedly deciding to postpone purchasing deals or simply opting for cheaper credit types, including renewable energy.


Though selling offset credits directly to end-users usually results in a premium, some sellers increasingly relied on third party help to find REDD buyers. A number of end users showed preference for broker-assisted deals to obtain higher assurance in project quality and contract reliability. REDD credit traders indicated that they did not buy new credits throughout the quarter because they could not resell the units already in their portfolios.