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Colombia carbon credit prices remained under pressure in April, particularly for Reducing Emissions from Deforestation and Forest Degradation (REDD+) projects. The weakness reflects a structural imbalance between supply and demand following recent regulatory changes. Market participants shared their views with Fastmarkets during the Carbon Forum event in Bogotá on April 17-18.
Colombia allows companies to use eligible carbon credits to offset their obligations under the country’s carbon tax. In 2022, the Colombian government reduced from 100% to 50% the share of emissions that can be offset with credits, limiting the use of this instrument.
Colombia set the carbon tax at 27,399 Colombian pesos ($7.64) per tCO2e for 2025, meaning that companies would look to purchase eligible credits if they could source below this level.
“The market is depressed, but this is not temporary, it’s structural,” a trading source said. “The move to 50% effectively cut demand in half.”
At the same time, supply has continued to grow. Three Colombian projects ranked among the top 20 globally in terms of credit issuance last year, reinforcing the oversupply scenario, the contact noted. “It’s a clear imbalance.”
REDD+ credit prices in the country issued under Cercarbono are currently in the $2.00-$3.50 per tonne range, a band considered relatively stable by participants. “It’s a well-defined range at the moment,” one source said.
Fastmarkets assessed REDD+ Latin America prices, which reflect credits issued under Verra, at $6.50 per tCO2e on Wednesday, unchanged week on week.
Overall, Colombia carbon credit prices currently span a wide band depending on certification standard and vintage, with Cercarbono at the lower end and Verra-certified credits at the upper end.
Despite the negative backdrop, some factors could support demand. The recent inclusion of sectors such as thermal power and cement in the offsetting mechanism could add around 5 million tonnes of demand to a market that traded approximately 20 million tonnes last year.
“If that materializes, it’s meaningful,” one participant said. “It doesn’t fix everything, but it helps rebalance.”
Demand remained highly concentrated. Around 90% of volumes traded last year came from just five fuel distributors, all buying credits in the domestic market to avoid paying the carbon tax. “There is no meaningful international buyer base yet,” one source said.
Many market participants see the lack of external demand as one of the main barriers to a more sustained price recovery. “That’s the trigger the market is waiting for,” a source said.
On the supply side, some natural adjustment is expected. “Projects unwilling to sell at these price levels will likely hold back issuance, which could tighten supply over time,” one source said.
Sources also highlighted significant differences between certification standards, both in terms of pricing and cost structures. Data cited by sources indicated prices of around $4.60 per tonne for Afforestation, Reforestation and Revegetation (ARR) credits from projects in the region issuing under Cercarbono. While credits certified under Verra can trade around $5-8 per tCO2e in Uruguay and $9-12 per tCO2e in Colombia, Gold Standard Latin America credits have recently been trading in the low-to-mid $20s per tCO2e.
“Certification costs vary widely across standards,” one source said. “Some have simpler fee structures, which improves project economics.”
The time between registration and issuance is also becoming increasingly important for developers. “Being able to issue credits in around 12 months makes a significant difference to cash flow,” one source said.
The market is closely watching international recognition processes, such as integrity assessments that could enable access to global markets. “If Colombian standards achieve that recognition, it opens the door to international demand,” one source said. “That’s the main re-rating event.”
Reputational pressure also continues to weigh on the market. Recent scrutiny over credit integrity in the voluntary carbon market continues to affect buyer confidence. “That impacted confidence and contributed to the price decline,” one source said. At the same time, some participants see growing competition among standards as a sign of market maturity.
Another source noted that projects, particularly in the REDD+ segment, have faced financial difficulties following the price drop. “Some had to secure advance purchase agreements to stay afloat,” one source said, adding that most managed to navigate the most critical period. “Volumes have started to pick up again in recent months.”
Sources also pointed to a significant disconnect between domestic Colombian prices and international voluntary market levels. In Colombia, credits traded under the carbon tax mechanism can reach between 6,000–10,000 pesos ($1.50–$2.50) per tonne and 18,000–20,000 pesos ($4.50–$5.00) per tonne, levels considered low by developers.
“The domestic market has effectively become commoditized,” one source said. “Buyers are sophisticated and are pushing prices down amid oversupply.”
This dynamic is prompting companies to seek greater exposure to international markets, where prices can be higher, although access is more limited.
“We’re trying to sell more internationally, but the criteria are becoming increasingly strict,” one participant said. Challenges cited include tighter technical requirements in international tenders, including biodiversity and additionality criteria.
“There’s a clear tension between what is required and what is feasible on the ground,” one source said. “Costs are rising, but prices are not following.”
While REDD+ credits dominate the current market, participants see ARR projects as a higher-value opportunity in the medium term, particularly for international buyers.
Several developers are structuring ARR projects for international buyers, avoiding the domestic market due to low prices. “These credits won’t go into the tax mechanism,” one source said, given prices are expected to be above the carbon tax level.
Price expectations for high-quality ARR credits are significantly higher, although still dependent on offtake agreements. “There are projects targeting above $30 per tonne,” one source said. Under Verra’s new VM0047 methodology, some developers have been targeting offtake prices in the $40s per tCO2e.
Market participants broadly agree that a more sustained recovery in Colombia carbon credit prices will depend on structural changes. Key factors include a potential revision of the offsetting mechanism, expansion of the carbon tax to additional sectors, and, most importantly, the entry of international demand.
“The main catalyst is access to global buyers,” one source said. “Without that, the market remains under pressure.”
Five fuel distributors move 90% of volume. Use Company Insights to explore who they are, what they pay, and which projects they’re retiring from