The European Energy Exchange (EEX) and the Coalition for Rainforest Nations (CfRN) announced their intention to cooperate in the establishment of a market platform for REDD+ sovereign carbon credits. For this purpose, during the UN Climate Change Conference COP27, both partners have signed a letter of intent.
Reducing Emissions from Deforestation and Degradation (REDD+) is a global conservation mechanism for tropical forests under the United Nations Framework Convention on Climate Change (UNFCCC) and was enshrined in Article 5 of the Paris Agreement. It incentivizes developing countries to reduce emissions from deforestation. Under an UN-led process, countries receive results-based payments for their verified actions to conserve and restore forest lands. The mechanism has been created with the unanimous consent of 194 countries and is administered by the UNFCCC secretariat.
Historically, result-based payments to rainforest nations have mostly come from public sources. In order to scale the necessary efforts to slow, stop and reverse deforestation globally and reduce emissions at gigaton scale, CfRN supports its member countries in the monetizing sovereign REDD+ carbon credits through sales to the private sector – to corporates and institutional investors alike.
“Today, rainforest nations are the planet’s frontline workers on the climate emergency. This partnership will help corporations and investors channel much needed climate finance to them and make their own net-zero targets Paris Agreement-compliant,” says Kevin Conrad, Executive Director of the Coalition for Rainforests.
In this context, EEX can contribute to building a secure, fair and transparent market infrastructure and connect the CfRN member countries with its global customer base. This would build upon EEX’s long-standing experience in carbon markets but also on its role as service provider for governments in emissions auctions in Europe and beyond.
Peter Reitz, CEO of EEX, comments: “It is our ambition to actively shape a decarbonised future, and the call for action to stop deforestation is clear. Carbon pricing has proven to be a powerful tool to mobilize capital towards mitigating climate change. Hence, we see great potential in REDD+ as vehicle for a net-zero pathway.”
EEX Group has over 15 years of experience in operating environmental markets and offers the largest portfolio of environmental contracts worldwide. Relating to carbon emissions, this includes continuous trading of Spot and/or Derivatives contracts based on the European Emissions Trading Scheme (EU ETS) and for the cap-and-trade schemes in North America (WCI, RGGI). In addition, EEX is the exclusive auction provider in Europe (on behalf of the European Commission, 27 EU Member States and the EEA/EFTA countries) as well as in New Zealand (on behalf of the New Zealand government, in cooperation with New Zealand Exchange). More recently, EEX Group has also introduced a dedicated product suite for the voluntary carbon market.
The European Energy Exchange (EEX) is the leading energy exchange in Europe which develops, operates and connects secure, liquid and transparent markets for energy and related products. As part of EEX Group, a group of companies serving international commodity markets, EEX offers contracts on Power, Natural Gas and Emission Allowances as well as Freight and Agricultural Products. EEX also provides registry services as well as auctions for Guarantees of Origin, on behalf of the French State. https://www.eex.com
The Coalition for Rainforest Nations is US not-for-profit established by forested tropical countries to collaboratively reconcile forest stewardship with economic development. It assists tropical governments and communities to responsibly manage their rainforests, under the United Nations Framework Convention on Climate Change, through capacity-building, policy and financial support within the UNFCCC. It is also the co-architect of the UNFCCC REDD+ mechanism, and is headquartered in New York. https://www.rainforestcoalition.org
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