The American Forest Foundation (AFF) made history in March 2025 with the launch of the first U.S. nature-based carbon credit auction, a bold initiative aimed at transforming the voluntary carbon market (VCM). Held from March 12–19, 2025, the AFF Carbon Auction sought to connect buyers with high-quality carbon credits generated through the Family Forest Carbon Program (FFCP), empowering family forest owners while addressing climate change. Despite its innovative approach, the auction concluded without securing bids, sparking widespread discussion about its implications for carbon markets, nature-based solutions, and rural communities. This article delves into the key lessons learned from the AFF Carbon Auction, exploring its design, challenges, and the path forward for scaling nature-based carbon projects.

The Vision Behind the AFF Carbon Auction

The AFF Carbon Auction was born out of a pressing need to bridge the financing gap in nature-based carbon projects. Globally, only 1.2% of the potential of nature-based solutions—such as reforestation and improved forest management—has been unlocked through the VCM, despite their capacity to deliver up to 30% of global mitigation by 2030. Family-owned forests, which account for 39% of U.S. forestland, represent a vast untapped resource for carbon sequestration. However, high upfront costs, complex due diligence, and market opacity have historically excluded small landowners from carbon markets.

The AFF, in partnership with The Nature Conservancy, designed the auction to address these barriers. Hosted on the Prosfora platform using Lydion Vault technology, the auction offered a streamlined, transparent process for buyers to access credits from the FFCP. The program supports small landowners (20–1,000 acres) across 19 states, providing technical and financial assistance to implement climate-smart forestry practices that enhance carbon storage, forest health, and biodiversity. By 2024, the FFCP had enrolled 100,000 acres, with the potential to generate 1.9 million verified carbon credits over 20–30-year contracts, equivalent to removing 440,000 gas-powered vehicles from the road for a year.

The auction’s innovative features included:

• Hybrid Commercial Terms: Buyers could provide partial upfront payments to fund projects, with the remainder paid upon credit delivery, balancing risk and incentivizing early investment.
• Centralized Due Diligence: A virtual data room, open for nine weeks before the auction, provided comprehensive resources—program details, technical methodologies, financial models, and more—reducing transactional friction.
• Transparent Bidding: During the one-week auction, registered buyers could submit anonymous bids and view competing offers, gaining insight into market pricing without revealing their identities.
• High-Quality Credits: The FFCP’s credits, primarily removal credits, are verified by standards like Verra and BeZero, which gave the program a ‘BBBe’ rating, the highest for U.S. improved forest management projects.

The auction aimed to deliver measurable carbon impacts, support rural economies, and provide companies with a scalable way to meet net-zero goals. AFF CEO Rita Hite described it as a “game-changing opportunity” to secure premium credits while empowering family forest owners.

The Outcome: No Bids Secured

Despite its ambitious design, the AFF Carbon Auction closed without securing any bids, as reported by Quantum Commodity Intelligence on March 21, 2025. This unexpected outcome raised questions about the auction’s structure, market readiness, and the broader challenges facing the VCM. While the lack of bids was a setback, it provided valuable insights into the complexities of scaling nature-based carbon markets and the need for iterative improvements.

Key Lessons Learned

1. Market Readiness and Buyer Hesitation

The absence of bids suggests that buyers may not have been ready to engage with the auction’s novel format or terms. Several factors likely contributed:

• Upfront Payment Concerns: The hybrid model, requiring partial upfront payments tied to project milestones (e.g., landowner enrollment), may have deterred buyers accustomed to paying upon credit delivery. Despite discounts for prepayments, the perceived risk of investing in future credits could have outweighed the benefits, especially in a market wary of greenwashing scandals.
• Due Diligence Overload: While the nine-week data room was designed to streamline due diligence, the volume of technical and financial information may have overwhelmed buyers, particularly smaller companies with limited resources. Historically, carbon credit procurement takes 6–12 months, and the auction’s compressed timeline may not have aligned with corporate decision-making processes.
• Price Uncertainty: Although the auction offered transparency into competing bids, buyers may have lacked confidence in market pricing. With VCM credit prices volatile—ranging from $10–$80 per ton depending on quality—corporations may have hesitated to commit without clearer benchmarks.

Lesson: Future auctions must better align with buyer expectations, offering flexible terms, simplified due diligence, and clearer pricing signals. Engaging buyers early through webinars and pilot programs, as AFF did, is critical but may require more targeted outreach to build trust.

2. The Importance of High-Quality Credits

The FFCP’s credits were a highlight of the auction, backed by rigorous standards and a focus on additionality, permanence, leakage, and social integrity. The program’s ‘BBBe’ rating from BeZero underscored its credibility, and its emphasis on removal credits (which sequester carbon directly) appealed to buyers seeking high-impact offsets. However, the lack of bids suggests that quality alone isn’t enough to drive purchases in a skeptical market.

Recent controversies, such as a 2023 investigation revealing that 90% of Verra’s forestry credits lacked real impact, have heightened scrutiny of carbon credits. Buyers are increasingly cautious, prioritizing projects with transparent methodologies and verifiable outcomes. The FFCP’s collaboration with Upstream Tech’s Lens platform, which uses remote sensing to monitor forest health, addressed these concerns, but the auction’s failure to attract bids indicates a disconnect between quality and buyer confidence.

Lesson: Emphasizing credit quality is essential, but it must be paired with robust marketing to educate buyers on the project’s value. Transparent communication about methodologies, co-benefits (e.g., biodiversity, community support), and third-party validations can bridge the trust gap.

3. Financing Gaps Persist

The auction aimed to close the climate financing gap by providing upfront capital to scale FFCP projects, such as improved forest management on 90,000 acres and reforestation on 1,500 acres in Georgia. However, the lack of bids left these projects underfunded, highlighting the ongoing challenge of mobilizing capital for nature-based solutions.

Family forest owners face significant barriers to carbon market participation, including high upfront costs and technical complexity. The FFCP’s model—offering financial incentives and professional support—has been successful, with 750 landowners enrolled across 19 states. Yet, without auction revenue, the program’s expansion is at risk, potentially limiting its ability to double U.S. forest carbon sequestration, as studies suggest is possible by 2030.

Lesson: Innovative financing models, like the auction’s hybrid terms, are promising but require broader market acceptance. Partnerships with public entities, such as the USDA’s $5 million grant to AFF through the Inflation Reduction Act, can supplement private funding, ensuring project continuity.

4. Transactional Friction Remains a Barrier

The auction’s streamlined design—centralized data, anonymous bidding, and a user-friendly platform—was intended to reduce the “friction, opacity, and transaction costs” of traditional carbon markets. However, the lack of bids suggests that these barriers persist. Buyers may have found the auction’s timeline too rigid or the Prosfora platform unfamiliar, despite its intuitive Lydion Vault technology.

Additionally, the auction’s focus on small landowners, while socially impactful, may have introduced complexities. Unlike large-scale projects, FFCP credits come from diverse, small-acreage plots, requiring buyers to evaluate multiple sites and management practices. This complexity could have deterred participation, especially for corporations seeking simpler, high-volume transactions.

Lesson: Reducing transactional friction requires not only technological solutions but also standardization and scalability. Future auctions could aggregate credits into larger portfolios or offer pre-vetted “bundles” to simplify purchasing decisions.

5. Community and Ecological Co-Benefits Are a Selling Point

The FFCP’s focus on rural communities and ecological co-benefits—improved wildlife habitat, higher-quality timber, and economic stimulus—was a key selling point. Landowners like Tim Stout, a Vermont participant, highlighted how the program offsets rising management costs exacerbated by climate-driven extreme weather. By tying payments to milestones, the auction aimed to deliver direct benefits to these communities, fostering long-term stewardship.

However, the auction’s failure to secure bids suggests that these co-benefits were not sufficiently emphasized or understood by buyers. In a market increasingly focused on ESG (Environmental, Social, Governance) criteria, highlighting social and environmental impacts could have differentiated FFCP credits from competitors.

Lesson: Marketing campaigns should amplify co-benefits, using storytelling to connect buyers with landowners’ experiences. Case studies, like Stout’s “messy forest” approach to carbon storage, can humanize the program and appeal to ESG-driven investors.

The Path Forward

The AFF Carbon Auction’s outcome, while disappointing, is a stepping stone for refining carbon market strategies. AFF and its partners are already taking action:

• Iterative Improvements: AFF plans to analyze bidder feedback and adjust the auction format, potentially extending due diligence periods or offering more flexible payment terms.
• Public-Private Partnerships: Continued USDA funding and collaborations with organizations like The Nature Conservancy and Upstream Tech will support FFCP expansion, reducing reliance on auction revenue.
• Market Education: AFF is hosting webinars, such as the January 9, 2025, session on credit integrity, to build buyer confidence and clarify the program’s value proposition.
• Technology Integration: The Lens platform and Prosfora’s data capabilities will be refined to enhance transparency and scalability, addressing buyer concerns about project monitoring.

The broader VCM is also evolving. The voluntary carbon market, valued at $1.7 billion in 2024, is projected to grow to $15.7 billion by 2034, with forestry and land-use projects holding a 49% share. Innovations like blockchain-based registries and AI-driven verification are improving transparency, while regulatory frameworks, such as the EU’s scrutiny of carbon-neutral claims, are pushing for higher standards. AFF’s auction, despite its outcome, sets a precedent for transparent, inclusive carbon markets, paving the way for future success.

Conclusion: A Learning Opportunity for Climate Action

The American Forest Foundation Carbon Auction was a bold experiment in redefining how nature-based carbon credits are financed and traded. While it failed to secure bids, it illuminated critical challenges in the VCM—buyer hesitation, financing gaps, transactional friction, and the need for trust in high-quality credits. The FFCP’s proven impact, from 100,000 acres enrolled to its rigorous standards, remains a beacon of hope for family forest owners and climate mitigation.

The lessons learned—aligning with buyer needs, emphasizing co-benefits, and refining transaction processes—will shape future auctions and carbon market innovations. As the world races to limit global warming to 1.5°C, initiatives like the AFF Carbon Auction are vital for scaling nature-based solutions. By addressing these challenges head-on, AFF is not solving climate change alone but building a tool to accelerate high-quality, inclusive carbon markets that benefit both the planet and rural communities.