by David Stone, Head of Communications

August 23, 2023

How the market is undervaluing older vintage nature-based credits

And why this overlooks the climatic, biodiversity and community benefits of mature credits from high-quality projects

The received wisdom in the voluntary carbon market is that older credits are worth less than newer ones. Evidence of this can clearly be seen in the lower prices paid for older credits. However, far from depreciating in value like second-hand cars or perishable goods, older credits from high-quality forest projects can demonstrate greater climatic, biodiversity and community impacts by coming from longer-running, better established projects.

Permian Global, a forest conservation project developer that generates its own high-quality carbon credits, sees the lower value afforded to older credits as misrepresenting the bioclimatic science underpinning credits from nature-based solutions (NBS). In its whitepaper Demystifying Older Vintage Nature-Based Carbon Credits, Permian Global analyses the market assumptions that have led to older credits having lower value and argues instead that older carbon credits have in fact had more time to prevent a greater proportion of the heat that would have occurred otherwise as a result of persistence of CO2 in the atmosphere.

The ‘vintage’ of a carbon credit represents the year in which the emissions were avoided or removed by the project and credit subsequently verified. Often buyers of carbon credits select vintages that align with the year for which they are reporting their own emissions profile. The logic here is that if a corporation is reporting its 2023 climate action, it will prefer a 2023 vintage for the emissions it needs to offset. There is also a market sentiment that newer credits represent higher quality and that the value of a credit depreciates over time (currently described as “vintage decay”). Permian Global argues that the former assumption is arbitrary, and the latter demonstrates a poor appreciation for the science behind NBS carbon credits.

The paper’s author, Dr Leonardo Sáenz, Technical Manager, Permian Global, says: “Mature carbon credits derived from high-quality projects might be compared to fine wines that have taken time to age – these credits can convincingly prove the project’s integrity and permanence.”

To read the full report, click here.

Key takeaways:

  • The market expectation of a lower price for older NBS carbon credits runs contrary to the improved climatic, biodiversity and social benefits that older, more established high-quality projects provide
  • Far from being poorer quality, older carbon credits have had more time to prevent a greater proportion of the heat that would have occurred otherwise as a result of CO2 persistence in the atmosphere
  • High-quality nature-based solutions projects require significant upfront investment prior to credit generation and valuing older vintage credits less penalizes developers that moved early to prevent deforestation
  • The older vintage credits of projects that have already been operating for a long period represent more established and embedded community and biodiversity benefits, and can better prove the permanence of the activities undertaken and the resultant performance of the project



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