Despite this there are still concerns over the environmental integrity over existing investment portfolios and forest schemes have yet to be accepted in compliance markets.

In advance of the climate conference in Cancun, Mexico, the forest carbon sector is one of the few expected to benefit from an early global agreement. As was the case at the climate conference in Copenhagen last year the one shining light was the progress reached on the REDD scheme.

The findings from Eco-securities reflect the advances in negotiations on the monitoring, reporting, verification and sustainability of forest offset projects. It is these issues along with the number of stakeholders involved that have held back the expansion of REDD crediting schemes in the voluntary market.

Over 200 global, multinational and regional firms who bought a total of 7.9 million tonnes of CO2 equivalent of carbon offsets in 2009, including three million from forestry were surveyed by the report. This figure represents 57% of the total voluntary forestry carbon offset market in 2008.

Nearly 80% of those surveyed had a ‘positive’ or ‘very positive’ outlook on forest offsets, whereas last year that figure was only 58%. Most notably there was a sharp increase in Europe participants from 36% to 84%. This is reflected by the fact that more European firms are adding forest offsets to their overall offset portfolio, up from 13% to 54%.

Voluntary offset buyers have shown the most interest in this market, however there is an increasing number of buyers falling under regulatory schemes, particularly in North America and Australasia.

Even so, pricing varies depending on finance arrangements and offset schemes, ranging from $5-10/tCO2e. This is well below current levels of €13/tCO2e for international offsets under the UN Clean Development Mechanism. However, European buyers are willing to pay more than those in the US or Australia.

For those wishing to buy forest credits 89% said that certification under a recognised standard was important although not all firms considered lack of widely recognised certification a deal breaker. Up to 27% said it depended on the projects. The other three main factors were the location (84%), the ability of schemes to generate wider community benefits (83%) and project type (80%).

The biggest constraint however on forest carbon credit markets is that the EU emissions trading scheme does not yet accept forest carbon offsets. This survey confirms that as of 2013 most buyers want to see forestry activities included in a new global climate agreement.

Forestry Update is sponsored by Greenwood Management. For more information on investing in Forestry please click here