The Verdant Tapestry of South American Climate Action

South America - a continent renowned for its biodiversity, vast natural resources, and emerging economies - is increasingly recognised not only for its ecological richness but also for its immense potential as a major contributor to the Voluntary Carbon Market (VCM). As global demand for carbon credits intensifies - driven by ambitious corporate net-zero commitments and ESG mandates - South America has emerged as a pivotal supply-side frontier. The region hosts a diverse portfolio of projects that deliver verifiable greenhouse gas (GHG) reductions and removals. This vibrant landscape reflects a dual imperative: to address pressing regional environmental challenges such as deforestation and waste, while channelling essential climate finance to support global decarbonisation.

This article explores the dynamic and evolving nature of the VCM across South America. We examine the main drivers behind its project development surge, the prevailing types of carbon offset projects - from nature-based solutions to innovative biogas initiatives - and the nascent certification frameworks shaping the market. Importantly, we assess how the VCM provides indispensable finance for projects that might otherwise be economically unviable. Finally, we highlight how expert partners such as AFS Energy play a crucial role in connecting this growing supply base with the global demand for high-integrity carbon credits.

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South America: A Cradle of Carbon Offset Project Development

South America’s role in the VCM is heavily concentrated on the supply side. The continent is a prolific originator and issuer of carbon credits, enabled by several interlinked factors:

1. Abundant Natural Capital: The Amazon rainforest and other extensive ecosystems create ideal conditions for nature-based solutions. Meanwhile, vast agricultural zones and expanding urban centres generate abundant biomass for waste-to-energy projects.
2. Significant Emissions Reduction Potential: Challenges such as deforestation, methane emissions from waste, and fossil fuel dependence present major opportunities for impactful GHG mitigation.
3. Need for Climate Finance: Many high-potential projects in the region face considerable capital costs and lack alternative income streams. Carbon finance from the VCM helps bridge these gaps and unlock investment.
4. Expanding Local Expertise: A growing network of project developers, local NGOs, and technical experts is maturing across the continent, facilitating rigorous project design, implementation, and verification.
5. Commitment to Global Climate Goals: South American nations are signatories to the Paris Agreement and are implementing Nationally Determined Contributions (NDCs), catalysing local climate action.

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Dominant Project Types and Supply Characteristics

The supply of carbon credits in South America is diverse, mirroring its natural wealth and socio-economic priorities:

• REDD+ (Reducing Emissions from Deforestation and Forest Degradation): Especially prominent in Brazil and other forested nations, REDD+ projects aim to protect existing forests under threat from deforestation. Although impactful, these projects face scrutiny around additionality and permanence—prompting stronger methodologies and community integration.
• Renewable Energy Projects: While wind, solar, and hydro schemes have historically contributed significantly to the VCM, their relevance is shifting. In many cases, these projects have become financially viable without carbon finance, though they remain part of the credit supply, particularly in underdeveloped areas or older vintages.
• Waste Management and Biogas/Biomethane Projects:
  • These projects are gaining momentum due to increasing urbanisation and waste challenges.
  • Methane capture from landfills, animal waste, and wastewater is transformed into energy.
  • The Integrity Council for the Voluntary Carbon Market (ICVCM) has approved specific landfill gas projects under its Core Carbon Principles (CCP) framework, recognising:
    • High GHG Mitigation: Methane is a potent greenhouse gas, and capturing it results in substantial, verifiable reductions.
    • Clear Additionality: In many South American contexts, such projects would not proceed without the carbon revenue stream.
    • Strong Co-Benefits: These include enhanced sanitation, reduced pollution and odour, and local energy provision.
• Sustainable Agriculture Projects: These include initiatives focused on improving livestock feed, manure management, and soil carbon enhancement - now emerging across several countries.

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Certification and 'Ticketing': An Evolving Landscape

South American projects are typically certified under well-established international standards:

• Verra (VCS): The leading global programme, issuing Verified Carbon Units (VCUs), widely adopted across the continent.
• Gold Standard (GS): Favoured for projects with demonstrable development co-benefits and meaningful community engagement.

Emerging domestic initiatives include:

• Brazil’s Gas-RECs: These Renewable Energy Certificates for Gas operate similarly to electricity RECs, enabling the traceable certification of biomethane usage - highlighting a growing domestic recognition of biomethane’s green attributes beyond carbon offsets alone.
• National Registries and Frameworks: Several countries are creating national carbon registries and voluntary offset regulations. For instance, Colombia has introduced carbon market regulations that influence voluntary project development and credit issuance.

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Regulatory Context and the Role of UNFCCC Article 6

• Catalysing Climate Finance: The VCM serves as a critical funding tool for projects that contribute to local sustainability and national climate objectives.
• UNFCCC Article 6: South American countries are active participants in Article 6 negotiations, which could soon allow internationally traded carbon credits from VCM-like projects to count towards countries’ NDCs. This would blur the lines between voluntary and compliance markets, expanding the potential impact and market access of South American projects.

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Challenges and Opportunities in the South American VCM

Challenges:

• Integrity and Quality Scrutiny: The region has faced criticism over additionality, permanence (especially in REDD+), and leakage. Rigorous due diligence and credible third-party verification are therefore essential.
• Political and Economic Volatility: Shifting policy landscapes and macroeconomic instability may deter long-term investment.
• Infrastructure Limitations: For example, grid injection or fuelling infrastructure for biomethane remains underdeveloped in many areas.
• Regulatory Inconsistency: Varied national frameworks can complicate regional project deployment and investor confidence.
• Social Safeguards: Genuine stakeholder engagement, especially with indigenous communities, is essential to maintain legitimacy and ensure equitable benefit sharing.

Opportunities:

• Vast Untapped Potential: The region holds enormous opportunity for both nature-based and waste-to-energy carbon projects.
• Domestic Demand Growth: As regional corporates adopt net-zero goals and ESG reporting, local credit demand is set to complement international interest.
• Innovation in Project Design: South America is emerging as a fertile ground for innovation in sustainable agriculture, blue carbon, and integrated waste management.
• Global Leadership Role: By supplying high-integrity credits, the region can play a central part in global climate solutions.
• Biomethane Momentum: South America’s rich agricultural and urban waste streams make it a natural leader in biomethane, supporting climate, energy, and circular economy objectives.

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AFS Energy’s Role: Unlocking South America’s Green Potential

For buyers seeking high-integrity carbon credits, and for project developers aiming to monetise climate benefits, expert guidance is vital. AFS Energy, with global reach and regional expertise, is uniquely positioned to support both sides of this growing market.

AFS Energy’s Capabilities in the South American VCM:

• Targeted Sourcing and Due Diligence: Leveraging our deep understanding of standards such as Verra and Gold Standard, we source high-quality South American credits that meet rigorous additionality, permanence, and co-benefit criteria.
• Biomethane Expertise: With technical knowledge in biomethane generation and methane mitigation, AFS Energy identifies high-impact projects across the region, linking them to buyers seeking robust, verifiable carbon credits.
• Market Intelligence: Providing insights into credit pricing, supply trends, and policy developments - such as Brazil’s Gas-RECs or evolving Article 6 implementation pathways.
• Connecting Demand with Supply: Acting as a bridge between corporate buyers in Europe, the UK, and North America and project developers in South America, we ensure efficient, transparent transactions.
• Advisory on Credit Integrity: Supporting businesses in integrating South American credits into net-zero strategies aligned with best practices, including guidance from ICVCM and VCMI.

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A Cornerstone of Global Climate Ambition

South America’s Voluntary Carbon Market is a vibrant and vital pillar in the global climate architecture. By converting organic waste into energy, preserving crucial forests, and transforming agriculture, the region is delivering real, measurable decarbonisation. While challenges remain, the region’s abundant resources and growing institutional maturity make it an increasingly important player in global climate finance.

For forward-looking organisations committed to climate leadership, South America offers a wealth of opportunity. Navigating this complex yet promising landscape requires expertise, credibility, and global market reach. With AFS Energy as a partner, businesses can confidently engage with the South American VCM - unlocking meaningful climate impact and supporting a just, sustainable transition.