A Brazil-based biodiversity and carbon developer is considering transitioning from a ‘credit’ to a ‘nature asset’ approach in a bid to attract corporate funding, the company told Carbon Pulse.

Hannah Simmons, CEO and founder at ERA Brazil, said she believes companies would be more likely to finance restoration and conservation projects if they start to see biodiversity as a simple asset to invest in.

According to her, the ‘credit’ concept is carrying too much uncertainty for companies used to dealing with brokers and secondary markets in the carbon space.

“I don’t think that we can have this sort of market-based mechanism that everyone’s hoping for. I really don’t believe that it’s possible,” Simmons told Carbon Pulse.

“That’s why I’m thinking that the voluntary biodiversity credit market should actually rebrand itself into ‘nature assets’ that you can simply buy and retire.”

Among the earlier movers in the biodiversity market, ERA Brazil is piloting its methodology across 50,600 hectares of a private natural heritage reserve in Pantanal, Brazil, managed by Instituto Homem Pantaneiro.

As reported this week by US-based environmental credit platform Regen Network Development, the company has already pre-sold 15,000 units worth $30,000 from that project, and is expecting to issue 1.4 million credits by December.

However, none of those buyers were companies, Simmons said.

“We’ve sold the $30,000 worth of credits to individuals who believe in jaguar conservation because every company we talked to wasn’t ready to enter the market.”

The ‘nature asset’ rebranding may also be included in the new version of ERA’s methodology set to be released in Jan. 2025, the company told Carbon Pulse.

“It’s something that we will need to work on together with Regen, the community, and the stakeholders, but I will definitely support the idea,” said Simmons.

Other key updates in the methodology include increased flexibility for landholders in defining conservation and restoration activities and additional guidance on how carbon developers can apply the biodiversity methodology to create stacked assets.

The company is in talks with Brazilian farmers and tech firm Okala to pilot the new methodology in South America and Africa. Further details have yet to be disclosed.

PRICING

One of the main issues for the market is pricing, as processes for determining the value of each biodiversity credit in the world vary widely from project to project, depending on location and activities, as well as the nature of the credits.

Under the UK’s biodiversity net gain (BNG) legislation, prices reach up to £30,000 ($38,000) each, while in the emerging global voluntary market they can range from $0.88 to £50 ($59).

According to Simmons, prices in the voluntary market are likely to remain all over the place due to differences between methodologies.

The company is currently pre-selling its credit at $2 each, based on the landholder’s estimation of the project cost, validated by external auditors, as required under their framework.

“We want to give the power to the people who are actually doing the conservation work, because they are the ones who really know the interventions needed,” Simmons said.

This means that prices can vary across different projects under the same methodology, with the same initiative also being subject to cost changes if interventions become more expensive, she explained.

“As the project goes on, landholders could have to do more expensive interventions to address threats to umbrella species, like reforestation, creating a corridor between two pieces of forest, or their neighbour and his land,” she said.

“Our prices are not under the market influence and can increase or decrease depending on the activities needed on the ground.”

The company will announce new partnerships during the COP16 UN biodiversity summit, Simmons told Carbon Pulse.

During this year’s conference, to be held in Colombia over Oct. 21-Nov.1, much of the focus will be on finance, as countries are expected to ramp up efforts to plug the estimated $800 billion funding gap holding back the achievement of the GBF goals.

The summit could also carve out a role for biodiversity credits, with the UK-France led International Advisory Panel on Biodiversity Credits poised to release a set of final recommendations with practical and actionable outcomes for the emerging market.

By Giada Ferraglioni – giada@carbon-pulse.com

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