Perspectives and Challenges in Latin America and the Caribbean

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In recent years, the global landscape has witnessed a concerted effort to streamline carbon credit initiatives, bridging the gap between supply and demand. 


Spearheading this movement are initiatives defining ‘integrity’ like the ICVCM’s Core Carbon Principles on the supply side and  VCMI’s Claims Code of Practice on the demand side. Governments across continents, such as Paraguay or Zimbabwe, have also begun establishing regulations governing their involvement in carbon markets and their intersection with domestic compliance markets. 


Furthermore, countries are meticulously defining the conditions under which carbon projects can flourish within their jurisdictions, considering factors like safeguards, benefit-sharing, and Article 6 authorizations.


One influential player in this transformation is CAF, one of the largest development banks in the Latin American and Caribbean region. 


Through the Latin American and Caribbean Initiative for Carbon Markets (ILACC), CAF is orchestrating regional discussions to support market development and position the region as a leading supplier of high-integrity carbon credits.

Perspectives and Challenges in Latin America and the Caribbean

Prospects and Challenges in Latin America and the Caribbean

Integrity and Pricing panel at the Prospects and Challenges in Latin America and the Caribbean event

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Recently, I had the privilege of attending an event in Buenos Aires, Argentina, organized by ILACC and hosted by BICE, an Argentine development bank.


The event, which adopted a hybrid format, aimed to foster conversations about the challenges and opportunities in developing the carbon market within the region.


I had the opportunity to participate in the Integrity and Pricing Panel where I shared how we leverage artificial intelligence (AI) on observed market data and normalized project data across more than 16,000 projects.


Our experience reveals that carbon credit prices are primarily influenced by four key attributes:


Projects that demonstrate both additional and permanent carbon reduction potential command premium prices, aligning with the Core Carbon Principles’ emphasis on integrity, including social and environmental safeguards.

2.Host country and the perceived strength of institutions behind them

For example, Colombian REDD+ projects fetch a $1-2 per tCO2 over a Brazilian project to the perception of stronger institutions supporting forest protection.

3. Methodology and project type

Depending on whether the project reduces or removes carbon emissions and how it does it (i.e. removal via biomass or technology), a credit can price widely differently. Prices can range from aorund $1 per tCO2 for a renewable energy credit to $200 per tCO2 for a biochar credit. 

4.UN SDGs contributions

Carbon projects not only deliver climate change mitigation, they can also be a very effective vector of social and environmental co-benefits, often linked to UN Sustainable Development Goals (SDGs)


These contributions are highly valued in the market, with projects contributing to Goal 14, “Life Below Water,” commanding premiums of up to 8%. Projects that protect or restore coastal ecosystems also present a positive impact to biodiversity and local fisheries, increasing the communities resilience to climate change. 


Thus, these projects are highly sought after and corporations are willing to pay a premium for them.

Notable Trends

Here are some notable trends I observed from the region during the event:

Legislative Momentum

Latin American countries are increasingly proposing and approving legislation to regulate carbon emissions. While these proposals take time to materialize, waiting for absolute clarity could delay action, and 2030 is fast approaching.

Infrastructure Gaps

The region lacks a well-established network of project developers and qualified validation and verification bodies (VVBs). Local entities can reduce the origination and verification costs of credits.

Blending Markets

Some countries, including Colombia, Panama, and Brazil, are blending regulatory and voluntary carbon markets, allowing participants to use credits for tax contributions or allowances under Emissions Trading Systems (ETS).


However, has demonstrated by the World Bank’s State and Trends of Carbon Pricing 2023, the carbon prices in the region are still well below the recommended prices of USD 61 to 122 per tCO2e to limit global warming to below 2°C.

Need for Standardization

Development banks like CAF and BICE are poised to facilitate international investments by standardizing language and rules across the region.

Knowledge and Expertise Gap

There’s a need for enhanced scientific and technical knowledge and expertise to design, implement, and manage carbon projects on the ground.  

Leverage Lessons Learned from the VCM

As countries create and regulate carbon markets, it will be important to keep integrity at the forefront and leverage previous experiences from the international voluntary market.


Camilo Trujillo, from IETA, very clearly explained that even though Colombia has been successful at pioneering the use of carbon credits for regulatory purposes in the region, it still needs to strengthen the integrity criteria behind eligible projects. 


Latin America is in a prime position to harness its natural resources and past experiences to become a leading supplier of high-integrity carbon credits. Initiatives like ILACC, coupled with the collaborative efforts of organizations, governments, and experts, can surely pave the way for a coherent response to climate change from the region. 


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About the author:

María Elisa Vollmer is Head of Project Data at Viridios AI.  She has five years of experience in sustainability consulting for the public, private, and non-profit sectors. Her diverse background blends international development, environmental policy, and economics. She has a Master’s in Applied Economics from George Washington University and an undergraduate degree in Environmental Policy and Planning from Virginia Tech.

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