Voluntary Carbon Market: approval of the first methodology

The operation of the Voluntary Carbon Market (VCM), approved by Decree-Law No. 4/2024 of January 5, was dependent on the approval of methodologies and also on the respective computer registration platform.

On October 23, 2025, the first methodology for the Portuguese Voluntary Carbon Market was approved: the New Forestry Methodology (Methodology). The VCM’s computerized registration platform also became operational, meaning that the conditions are now in place for the VCM to truly begin.

1. What is the purpose of this Methodology?

The Methodology defines a set of criteria and guidelines for recognizing projects to create new forests, in other words, transforming non-forest land use to forest use through planting, seeding, or promoting natural regeneration.

2. Which projects fall under the Methodology?

Individual projects or project programs (several individual projects that do not share the same border) fall under the Methodology, starting on January 1, 2024, carried out on land used for agriculture (including fallow land, pasture, or scrubland at the start date) and which do not have, at the start or in the previous 10 years, tree cover exceeding 10%, which is reduced to 5 years in the case of priority areas  [1].

3. What interventions are excluded?

Afforestation is excluded in areas affected by fire defense networks, in areas of classified archaeological interest or in the process of classification, or which involve the prior cutting of native forest species with a diameter greater than 20 cm, except for health reasons or legal obligations.

Unlike the version submitted for public consultation, the Methodology also provides for the exclusion of projects that envisage final felling during the term of the project or its extensions. However, it is still possible to reconcile timber production, provided that it is planned and integrated into the credit estimates and does not involve final felling.

The Methodology acknowledges that the forest may suffer natural cutting or disturbances over time, but that forest land use will be maintained through successive cycles of planting and sustainable management, and that although the carbon stock may not be permanent after the project, there is a benefit compared to the reference scenario, reflected in the presence of biomass that would not otherwise exist.

4. What is the required duration for projects?

Projects must have a minimum duration of 30 years and a maximum duration of 50 years, with the possibility of two extensions per project, of 20 or 25 years each.

5. Which forest species are permitted?

Forest species listed in groups I and II of the Regional Forest Management Programs (PROF) in force for each region are permitted.

Other forest species may be accepted, subject to technical justification based on soil and climate conditions and authorization from the ICNF.

6. Which forest species are excluded?

Species legally classified as invasive and species incompatible with habitats protected under the Habitats Directive are excluded.

7. What types of credits can be issued/traded?

Verified carbon credits can be issued/traded, i.e., credits issued after effective carbon sequestration by the project, verified by an independent verifier.

Future carbon credits can also be issued/traded, i.e., credits issued prior to actual sequestration, based on an estimate submitted by the project developer and validated by an independent verifier, in an amount not exceeding 20% of the total carbon credits expected for the duration of the project.

“Carbon + credits” may also be issued/traded, i.e., credits that, in addition to carbon sequestration, incorporate significant additional benefits in terms of biodiversity and natural capital, provided they are certified (ecosystem services) by FSC Portugal.

“Future carbon + credits” cannot be issued or traded.

8. Should projects involve climate additionality?

Yes, since the reduction in greenhouse gas (GHG) emissions or carbon sequestration associated with a project must exceed the baseline scenario.

According to the Methodology, the project must involve net sequestration (sequestration – emissions), by comparing the sources of emissions and sequestration [2] between the baseline scenario [3] and the project scenario.

To ensure greater reliability in the accounting of credits, the Methodology enshrines the principle of conservative estimation, with emissions produced in the baseline scenario [4], and possible carbon leaks not being accounted for.

9. Must projects involve legal additionality?

Yes, insofar as GHG emission reductions or carbon sequestration must result from activities that are not required by legal requirements.

As a rule, the creation of new forest areas is considered additional to minimum legal compliance.

However, plantations carried out as a compensatory measure, within the scope of environmental impact assessment processes, or compensation projects for new eucalyptus areas, do not meet this criterion.

In contrast, afforestation projects included in approved Forest Management Plans or resulting from investment support contracts, although formalized, do not result from a legal obligation, as they are undertaken voluntarily by landowners.

10. Must projects involve financial additionality?

Yes, insofar as the promoter must demonstrate that financing from the carbon market makes the project viable (financial analysis based on cash flows) or contributes to overcoming other types of barriers.

11. How often does the monitoring cycle and credit issuance take place?

Every five years, the promoter must monitor the project’s activity, including GHG sequestration, in accordance with the monitoring plan defined in the methodology.

[1] “Vulnerable territories” identified in the Ordinance, ZIF, common lands, Natura 2000 Network, and National Network of Protected Areas.

[2] Emissions from fuel use, nitrogen fertilizers, livestock, fires, and emissions/sequestration from living biomass and soils.

[3] Maintenance of existing land use without a project.

[4] With the exception of sequestration associated with orchards, vineyards, olive groves, or scrubland less than 20 years old and up to 20 years old.