The trading of carbon commodities, such as certified emission reduction (CERs) units under the CDM, requires some form of legal (i.e. contractual) arrangement to be put in place between the buyer and the seller. In the carbon market, most carbon commodities are traded under individually negotiated emission reduction purchase agreements (ERPAs). This package contains the following suite of template carbon finance documents for transactions involving Clean Development Mechanism (CDM) projects:
sample term-sheet for a carbon off-take transaction;
sample term-sheet for a carbon off-take transaction for programmatic CDM;
Carbon Purchase Agreement;
Carbon Purchase Agreement for programmatic CDM;
legal due diligence checklist for a carbon off-take transaction;
sample term-sheet for a lending institution;
legal due diligence checklist for a lending transaction;
loan agreement provisions related to a standard carbon investment;
[standard contractual provisions to enable a Financial Institution (FI) or the IFC to access carbon credits from a client]; and
sample assignment and security provisions, including pledges.
Each document includes a range of options regarding the use of particular clauses and wording within clauses and a choice of commercial options. In-text explanatory drafting notes to guide the use of particular clauses and options which, along with negotiable variables are highlighted and italicised are also included. In addition, footnotes to identify jurisdictional and project specific issues associated with the sample clauses and documents prepared are included.
These template carbon finance documents are available to IFC partner FIs as part of the IFC Advisory Services product to enable FIs to enter carbon markets. We are grateful to the government of the Kingdom of Norway for funding these documents.