REDD+ and avoided deforestation carbon credits are tradable certificates issued to projects in developing countries that keep tropical forests standing, with each credit representing one metric ton of CO2 kept out of the atmosphere. REDD+ stands for Reducing Emissions from Deforestation and Forest Degradation in developing countries, plus the conservation and sustainable management of forests and enhancement of forest carbon stocks. The framework assigns a financial value to the carbon stored in forest biomass so that protection can compete economically with clearing the land for agriculture or logging. Tropical deforestation for agriculture alone accounts for roughly 6.5 percent of global CO2 emissions, and REDD+ remains the primary international mechanism for reducing that figure through market-based incentives.1Our World in Data. Carbon Emissions From Deforestation: Are They Driven by Domestic Demand or International Trade?
Article 5 of the Paris Agreement anchors REDD+ in global climate policy, which means credits generated under the framework can support a country’s Nationally Determined Contribution as well as voluntary buyer claims.2UNFCCC. Paris Agreement3UNFCCC. What Is REDD+
The Five Activities That Generate Credits
Every REDD+ project is built around one or more of five recognized activities, and the activity determines which methodology a developer must follow and what kind of credit the project generates.4UNFCCC REDD+ Web Platform. REDD+ Infographic
- Reducing emissions from deforestation. Preventing the permanent conversion of forest to cropland, pasture, or other non-forest uses. This is the classic avoided-deforestation activity and requires showing the forest faced a credible threat of clearing.
- Reducing emissions from forest degradation. Stopping activities such as selective logging or fuelwood harvesting that thin out a forest’s carbon density without fully removing it.
- Conservation of forest carbon stocks. Protecting high-carbon forests that may not face an immediate clearing threat but hold long-term storage value.
- Sustainable management of forests. Balancing timber production with conservation so harvesting does not exceed regrowth.
- Enhancement of forest carbon stocks. Restoring degraded land and planting trees to increase sequestered carbon over time.
Avoided-deforestation credits, the most common REDD+ credit on the voluntary market, come from the first activity. Credits from the fifth category, enhancement, overlap with reforestation and afforestation programs.
What Makes a Credit Real
A REDD+ credit only has climate value if it represents an emission reduction that would not have happened otherwise, that can be measured accurately, and that will last. Four technical tests do that work, and any serious quality review runs on them.
Additionality
A project is additional only if the forest protection would not have occurred without the revenue from selling credits. A tract already inside an enforced national park, or one no one had any incentive to clear, fails this test. Proving additionality typically requires an investment analysis showing the project’s internal rate of return falls below a market benchmark without credit revenue, meaning no rational investor would fund the conservation on its own.5UNFCCC CDM. Methodological Tool: Investment Analysis Developers compare performance against local lending rates or weighted average cost of capital and must run a sensitivity analysis on any variable worth more than 20 percent of total costs or revenues.
Baselines
The baseline is the projected rate of deforestation that would have occurred without the project. Credits equal the difference between what the baseline predicted and what actually happened on the ground, so an inflated baseline inflates the credit count. For years, developers set their own baselines using localized historical data, which left plenty of room for aggressive projections. Verra’s consolidated methodology VM0048 tightened the process by requiring independent assessors to produce deforestation risk maps for entire countries or subnational jurisdictions, removing much of the developer’s discretion.6Berkeley Carbon Trading Project. Quality Assessment of Verra’s Updated REDD+ Methodology (VM0048)
Permanence and Buffer Pools
Carbon stored in a forest is only useful if it stays there. Leading registries benchmark permanence at 100 years because CO2 persists in the atmosphere at least that long.7Climate Action Reserve. One Hundred Years of Permanence? Forests, of course, can burn, be illegally logged, or die back well within that window. To manage reversal risk, every project must contribute a share of its credits to a pooled buffer account. If a wildfire destroys part of the project area, credits from the buffer pool are cancelled to compensate.
The exact share depends on a scored risk assessment. Verra’s AFOLU Non-Permanence Risk Tool evaluates internal risks like financial viability and project management, external risks like land tenure disputes and political instability, and natural risks like fire and pests. Under Verra’s current framework the minimum buffer deduction is 12 percent, and any project with an overall risk rating above 60 is ineligible for crediting.8Berkeley Carbon Trading Project. Quality Assessment of Verra’s Updated REDD+ Methodology (VM0048)
Leakage
Protecting one patch of forest means little if the loggers simply move to the next valley. Leakage is deforestation that shifts to areas outside the project boundary as a direct consequence of the project’s restrictions. Developers must monitor the surrounding landscape and deduct detected displacement from their credit totals. Jurisdictional programs have an advantage here because baselines are set across an entire region, so displaced clearing within the jurisdiction still shows up in the accounting.
Why Vintage and Methodology Matter: The Overcrediting Problem
These four tests exist because REDD+ has a documented history of issuing far more credits than the actual carbon saved. A peer-reviewed study in Science examined 18 REDD+ projects and found that only about 6 percent of the credits generated in 2020 were linked to genuinely additional emission reductions. Sixteen of the 18 projects had claimed far more deforestation would have occurred than comparison sites suggested, and the projects had collectively been used to offset nearly three times more carbon than they actually preserved.9University of Cambridge. Millions of Carbon Credits Are Generated by Overestimating Forest Loss The core failure was inflated baselines.
This is where most criticism of REDD+ originates, and it is why methodologies like VM0048 were introduced. Buyers who purchased pre-reform credits at face value may hold offsets that represent a fraction of the claimed emission reduction. The vintage of a credit and the methodology under which it was issued matter at least as much as the project’s stated location or acreage.
Certification Standards and Quality Labels
Verra’s Verified Carbon Standard
The Verified Carbon Standard is the most widely used crediting program globally and dominates REDD+ project certification.10Verra. Verified Carbon Standard Verra’s consolidated REDD+ methodology, VM0048, replaced multiple older methodologies and imposed stricter baseline requirements. Verra also updated its safeguard standards in 2023 to expand reporting on stakeholder engagement, explicitly require assessment of indigenous peoples’ customary land rights, and mandate respect for human rights consistent with international law.
ART/TREES
The Architecture for REDD+ Transactions operates a separate standard called TREES, which focuses on crediting at the jurisdictional and national scale rather than the individual project level.11Architecture for REDD+ Transactions. TREES – The REDD+ Environmental Excellence Standard Because TREES operates at a broader scale, it naturally addresses leakage concerns that project-level crediting struggles with.
ICVCM Core Carbon Principles
The Integrity Council for the Voluntary Carbon Market introduced its Core Carbon Principles as a quality benchmark for the entire voluntary market. Credits that meet all ten principles receive a CCP label signaling high integrity to buyers. As of March 2026, three REDD+ categories have been approved: Verra’s VM0048 methodology for project-level crediting, Verra’s Jurisdictional and Nested REDD+ Framework, and ART/TREES for jurisdictional programs.12Integrity Council for the Voluntary Carbon Market. Assessment Status The ten principles cover additionality, permanence, robust quantification, no double counting, effective governance, transparent tracking, independent third-party verification, sustainable development safeguards, and compatibility with a net-zero transition.13Integrity Council for the Voluntary Carbon Market (ICVCM). Core Carbon Principles (CCP) Assessment Framework
A Boundary: Gold Standard
The Gold Standard does not certify avoided-deforestation or REDD+ projects. Its forest-related programs require actual tree planting on the ground. Buyers looking specifically for REDD+ credits will not find them under this label.
Jurisdictional vs. Project-Level Credits
The scale at which a credit is issued shapes almost everything about its quality profile. Project-level crediting focuses on a defined geographic area, sets its own baseline at the project boundary, and lets the developer market credits independently. Jurisdictional crediting sets baselines at the state or national level and can issue credits for an entire landscape.
Nesting aligns accounting across both scales so that project baselines cannot exceed the jurisdictional baseline. In a centralized nesting model, the government issues all credits and distributes revenue to projects through benefit-sharing. In a decentralized model, projects generate and sell their own credits but within the ceiling set by the jurisdiction’s reference level. Nested systems manage leakage better because displaced deforestation within the jurisdiction still shows up in the national accounting, and they let governments allocate non-performance risk across the program so one weak project does not sink the whole figure.
Issuance, Pricing, and Retirement
Once a project’s documentation and data are compiled, the developer uploads them to a registry like the Verra Registry and requests pipeline listing.14Verra. Develop a Verified Carbon Standard (VCS) Project An independent Validation and Verification Body audits the project, including site visits and a technical review of the carbon calculations. Verification commonly takes six months to over a year. If the auditor approves, the registry issues Verified Carbon Units into the developer’s account, each tagged with a unique serial number that prevents double-selling.
Verra’s current fee schedule, effective January 2025, charges a VCU issuance levy of $0.23 per emission reduction claimed, plus a registry transaction fee of $0.02 per VCU for each transfer, retirement, or cancellation initiated by the account holder.15Verra. Verra Releases Updated Fee Schedule These are small relative to credit value but sit on top of the much larger costs of project development, field inventory, satellite analysis, and third-party auditing.
Prices have been volatile. Average prices for Verra-issued REDD+ credits reached roughly $14 per metric ton in 2023 before dropping sharply amid quality concerns and methodological uncertainty, settling near $9 per metric ton more recently. Prices vary with project vintage, methodology, co-benefits such as biodiversity, and whether the credit carries a CCP label or CORSIA eligibility.
When a buyer wants to claim an offset against their own emissions, they retire the credit on the public registry. Retirement permanently removes the credit from circulation so it cannot be traded or reused, and the registry records the retirement publicly. That public record is what supports any climate claim built on the credit.
If You Are Buying: Claims and Marketing Rules
The VCMI Claims Code
Companies that buy REDD+ credits and want to make public climate claims face the Voluntary Carbon Markets Integrity Initiative’s Claims Code of Practice. Before a company can credibly say it has used credits to address its emissions, it must maintain a public greenhouse gas inventory and set science-aligned near-term reduction targets consistent with net-zero by 2050. It then selects a tier based on the volume of high-quality credits retired against its remaining emissions:16Voluntary Carbon Markets Integrity Initiative. VCMI Claims Code of Practice
- Silver, where retired credits cover at least 10 percent but less than 50 percent of remaining emissions.
- Gold, where credits cover at least 50 percent but less than 100 percent.
- Platinum, where credits cover 100 percent or more.
The credits themselves must meet ICVCM Core Carbon Principles standards, and the company must obtain independent third-party verification. The percentage of remaining emissions covered must increase each subsequent year for Silver and Gold claims. Credit purchases supplement rather than replace a company’s own emission reductions, and the company must demonstrate that its public policy advocacy supports Paris Agreement goals.
FTC Green Guides
The Federal Trade Commission’s Green Guides apply to any business marketing products or services as carbon-neutral using offsets. Three rules matter most. Sellers must use competent and reliable methods to quantify claimed reductions and cannot sell the same reduction more than once. It is deceptive to imply that an offset represents reductions that have already occurred if the underlying project will not deliver results for two or more years, unless that delay is disclosed. And offsets based on activities already required by law are deceptive because the reduction would have happened anyway.17Federal Trade Commission. Guides for the Use of Environmental Marketing Claims (Green Guides) That third point maps directly onto additionality: a credit that fails additionality also creates legal exposure for the buyer’s marketing claims.
Tax, Accounting, and Registry Access
The IRS has not issued general guidance on how income from voluntary carbon credit sales should be classified for federal income tax purposes. A 2025 private letter ruling addressed the narrow question of whether carbon credit issuance income qualifies as REIT income, concluding it can be treated similarly to payments for granting a term easement on real property.18Internal Revenue Service. Private Letter Ruling 202549006 That ruling is non-precedential and explicitly declined to address the tax consequences of selling or disposing of credits. For most developers and buyers, tax treatment remains a facts-and-circumstances analysis that warrants professional advice.
FASB issued a proposed Accounting Standards Update on “Environmental Credits and Environmental Credit Obligations” in December 2024 and completed redeliberations in August 2025. A final standard is being drafted for vote, but no final rule has taken effect.19Financial Accounting Standards Board (FASB). Accounting for Environmental Credit Programs Until it does, companies holding or trading REDD+ credits rely on existing guidance and disclose their treatment in financial statements. The SEC separately voted in March 2025 to withdraw its defense of its 2024 climate disclosure rules, so there is currently no federal requirement for public companies to disclose their use of carbon offsets in SEC filings.20U.S. Securities and Exchange Commission. SEC Votes to End Defense of Climate Disclosure Rules
Opening an account on a carbon registry requires Know Your Customer documentation similar to financial institution onboarding. Organizations provide their legal entity name, registered address, company registration number, directors, and ultimate beneficial owners holding 25 percent or more ownership. Account holders, beneficial owners, and authorized representatives are screened against UN, EU, UK, and OFAC sanctions lists, and registries may apply enhanced monitoring for politically exposed persons or entities in high-risk jurisdictions.21International Carbon Registry (ICR). ICR KYC/KYB Policy KYC data is typically retained for at least five years after the last registry activity.