LONDON, Feb 9 - A Kenyan project has become the first to issue Redd credits under the Voluntary Carbon Standard.
NGO Wildlife Works announced Tuesday its reducing emissions from deforestation and degradation (Redd) project in Kenya’s Kasigau Corridor became the first to be issued with VCS carbon credits, known as Voluntary Carbon Units (VCUs).
Redd carbon credits are not eligible for use in the UN’s primary offset programme, the clean development mechanism (CDM), but may be eligible for compliance under California’s cap-and-trade programme, which begins in 2012.
At last December’s UN climate summit in Cancun, parties reached agreement on deforestation that left the door open to create a Redd market mechanism.
The VCS said the announcement marked a “watershed moment for Redd projects everywhere” because it demonstrates how the private sector can mobilise capital to preserve forests.
“Coupled with being able to measure emissions reductions accurately and generate verified credits, this is exactly what is needed to attract private investment for forest protection,” said VCS CEO David Antonioli in a statement.
The project has been in operation since 2005 and protects the area’s local wildlife and biodiversity, while bringing jobs, education and financing to the local community.
It has generated 1.45 million carbon credits in its first six-year crediting period, and is estimated to reduce over 6 million tonnes of CO2 equivalent over its 30 year project life.
South Africa’s Nedbank Group, which provided early support to get the project off the ground, bought 1.16 million VCUs from the project and has the option to purchase 200,000 credits annually going forward.
Wildlife Works could not confirm the amount paid per credit but said the transaction had been a “multi-million dollar carbon credit sale”.
Around 300,000 VCUs, or 20 percent of the initial credits issued, went into a VCS buffer account, which is used as a kind of financial insurance in the event that fires, disease or other changes in land use reverse the storage of carbon in the soil.
In another section of the Kasigau Corridor, Wildlife Works has already initiated the project’s second phase.
French bank BNP Paribas had announced in September it would invest $50 million to help develop the project.
It also has the option to buy up to 1.25 million VCUs — 250,000 credits per year over five years — from the project’s second phase.
Although some project developers are eyeing California’s carbon market as a potential source of demand for their credits, interest in Redd thus far has come almost exclusively from voluntary buyers, according to Wildlife Works.
“We believe the global voluntary carbon marketplace is ready for carbon credits that the average consumer can relate to,” said Mike Korchinsky, president of Wildlife Works.