Market insight - the good, the bad, and the confusing

Carmen Alvarez Campo
Ben Rattenbury
October 26, 2022
Sylvera's analysis of
Sylvera's analysis of

One of the hottest topics in carbon markets circles this summer was the announcement that Gabon would issue 90 million credits through a mechanism called Given that this would equal around 20% of all credits ever issued in the voluntary carbon markets (VCMs), the news prompted headlines like “Huge looming REDD+ issuance sparks unease in the VCMs”, and “If Gabon’s Largest-Ever Carbon Credit Sale Works, It Will Be World-Changing”. 

So what is the deal with Gabon’s mega-issuance? What is And what does this mean for the VCMs? Spoiler alert: despite the reporting, Gabon is not actually selling carbon credits, but something slightly different. So here’s the story of what’s really going on.

Many shades of REDD

Part of the confusion around springs from the name, pronounced “redd dot plus”, which bears a striking resemblance to REDD+, REDD-plus and UN-REDD.

  • REDD+ is a framework for Reducing Emissions from Deforestation and forest Degradation. The ‘+’ represents activities related to the sustainable management of forests, and the conservation and enhancement of forest carbon stocks. REDD+ is a part of the UNFCCC architecture and is reflected in Article 5 of the Paris Agreement. However, REDD is now also used as shorthand to describe a category of projects in the VCMs related to avoided deforestation.
  • Redd-plus, also known as the Warsaw Framework for REDD-plus, is a series of decisions coming out of COP19, held in 2013 in Warsaw. This formalized various aspects of the UNFCCC’s REDD+ system. 
  • UN-REDD, run by Food and Agriculture Organization of the United Nations (FAO) and United Nations Development Programme (UNDP), is the flagship UN knowledge and advisory platform on forest solutions to the climate crisis. They define themselves as the biggest international supplier of REDD+ help, supporting its sixty-five partner countries to shield their forests and reach their climate and property development goals.

So, what is is a platform for countries to sell REDD+ Results Units (RRUs). RRUs nominally equate to 1 tonne of CO2e reduced or removed, are issued by a sovereign government and results are assessed following the UNFCCC REDD+ guidance. Thus, is not a carbon standard (like the VCS or ART TREES); it is just a platform through which countries can register REDD+ results and make them available to voluntary buyers. was created and is led by the Coalition for Rainforest Nations, a non profit organization based in New York that acts as a single-issue negotiating bloc in international climate negotiations, with over 50 member countries. 

How are RRUs created and commercialized? builds directly on the UNFCCC’s REDD+ framework, as set out in the table below. Host countries follow the UNFCCC REDD+ guidance to account for REDD+ activities results, which is completely independent of It is only at step 6 that comes in by serializing them on a registry, which is run by IHS Markit. claims it will track the life cycle of each RRU from issuance to the moment in which businesses and individuals can purchase and retire RRUs on the platform.

To date, Papua New Guinea is the only country that has issued RRUs and at the time of writing has sold roughly 20,000 units, out of the 9 million it issued. After receiving approval of its baseline (referred to as the FREL in the UNFCCC context) and REDD results for the years 2010-2018, Gabon’s RRUs are expected to be available on the platform shortly. Honduras, Belize and Ghana could be next.

Can RRUs be thought of as carbon credits?

No. The UNFCCC REDD+ framework was designed to guide countries in measuring REDD+ results and accessing results-based payments, not to issue carbon credits, and the framework misses some of the essentials to qualify as a carbon standard. Thus, RRUs should not be treated as carbon credits, nor be used for offsetting purposes.

What has the market made of RRUs? 

The market reaction to Gabon’s RRU issuance was initially one of surprise at the huge scale, then confusion as people got to grips with what actually is. Now it seems to be hardening into a view that RRUs are not carbon credits. This view was affirmed in mid-October when the Head of Markets for Xpansiv, the world’s largest VCM platform, which had planned to sell RRUs, confirmed that they would not be doing so, “for technical reasons, as well as a lack of product-market fit and customer demand". However it is worth noting that one large bank has endorsed the issuance. 

At a technical level, some of the key bodies have also been wary of RRUs. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), the global scheme for offsetting in the aviation sector, declined to accept RRUs in both 2020 and 2021, noting both times that “key elements of an emissions unit program… were not in place”. Similarly, the International Carbon Reduction and Offset Alliance (ICROA), a respected voice on the quality of carbon standards, doesn’t include in its list of endorsed programmes. Likewise, no national compliance scheme allows RRUs, and a last-minute effort to include in the COP26 agreement on Article 6 of the Paris Agreement, regarding carbon trading, was reportedly rebuffed.

Endorsing the highest standards of environmental integrity 

There is no doubt that substantial amounts of finance are needed to protect our forests and different ways of catalyzing that finance are essential to achieve those sums. However, it is important to ensure climate and carbon finance mechanisms are designed to the highest environmental integrity standards. Results-based payments should be utilized to receive climate finance, and carbon standards to issue carbon credits. Combining the two, as seeks to do, can threaten the environmental integrity of their outcome. So what’s the alternative for jurisdictions? 

  • To issue jurisdictional REDD+ credits through carbon standards with methodologies for jurisdictional approaches (like ART TREES or Verra JNR). These can be used for offsetting purposes.
  • To provide results-based payments through REDD+ programs (like the FCPF Carbon Fund or the Green Climate Fund). RRUs should not be used for offsetting purposes.

It’s important to recognize that Gabon has done excellent work to largely avoid deforestation in recent decades, and as a result has one of the highest rates of rainforest cover on earth. This achievement should be rewarded (including through results-based payments), and further incentivized in Gabon and elsewhere, and is not in any way undermined by any confusion or misunderstanding around

In order to bring transparency to the evolving market, Sylvera is building a jurisdictional REDD+ framework and regularly reviewing our current project-based REDD+ ratings. To learn more, contact us.

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