"Greater clarity on the legal nature of voluntary carbon credits (VCCs) would significantly contribute to the development of an efficient and more robust global voluntary carbon markets. Elements of legal nature include fungibility, collateralisation, and insolvency ... Enhanced legal certainty around the legal nature of VCCs would be helpful in reaching this goal.". That was how the panel was annouced and conducted by three participants:
Flavia Rosembuj, Climate Finance and Innovation, World Bank
Prof. Professor Ignacio Tirado, Secretary General, UNIDROIT
Dr. Peter Werner, Senior Counsel, ISDA International Swaps & Derivatives Association
Content-wise, the discussion was around the following questions:
Level of reliability, trust?
How to create securities?
Commodities nature?
Property rights?
Authorisation only?
What happens in case of insolvency?
According to Dr. Peter Werner, who in his role usually issues legal opinions to ISDA member industries, “not much legal certainty yet”. Specially in case of insolvency. Jurisdiction might be an issue, the location of the counterparty. Two papers by ISDA were mentioned:
On his hand, Prof. Ignacio Tirado from UNIDROIT. UNIDROIT is a global legal standard setter and was fouded in 1926, before United Nations. He highlighted the role of the registries, each one isolated with its rules. This has to evolve, to assure no double counting and to allow carbon credits to be used as collaterals, for example. And more complex situations may appear, from a private law perspective.
Click at the image below for UNIDROIT's "Legal nature of Voluntary Carbon Credits" supported by the World Bank . This is work in progress. So check regularly for updates.
During the final Q&A, someone from audience commented: "Lawyers, do not forget it’s about reducing emissions. And I do not need emissions reductions 'in my pocket'”. Reply was "The mission is to help. And integrity matters."
(recordings will be available only in the coming days, "Watch On-Demand")
