REDD offset prices remained stable throughout the second quarter of 2014

REDD offset prices remained relatively stable throughout the second quarter of 2014. The majority of the closed or negotiated deals were for issued credits. The forward  contract price increased by about 25 percent.

The average issued credits bid and offer remained unchanged from last quarter at $5 – 6/t. The average bid on forward credits increased by about $1/t, and the offer price gained about $0.50/t, averaging around $5 – 5.5/t. We attribute the price increase to the fact that most forward contracts were closed when the projects were at verification stage, meaning buyers were willing to pay a premium to take on very little of the project performance risk.

The lowest spot bids were seen at around $1 – 2/t, and were rejected by some sellers. The bids that were accepted were for large volume contracts, exceeding a million tonnes over the length of the contract.

The highest spot bids neared $10/t for small volumes ranging between 500 – 3,000 tonnes. Contracts for 5,000 – 60,000 tonnes closed between $7 – 8/t, with one deal surpassing half a million tonnes.

In addition to OTC trading, about 10 separate REDD offset transactions closed via the CTX Exchange. The average price was around $5/tonne, with the low and high range of $3 – 7/t. Sellers of contracts exceeding 100,000 tonnes offered below $3/t.

A number of carbon market brokers reported to be long and were keen to sell their oversupply. Some resellers commented they would not be willing to buy primary REDD credits above $6 – 7/t on the primary market.

Early 2014, a number of REDD project proponents were offering their credits as an offsetting instrument for the FIFA World Cup. During Q1-2014, FIFA supported the Purus Project. The volume and pricing are undetermined.