Today is Tuesday, 28 May 2024.
From 22 to 24 April 2024, the second session of the Working Group on the Legal Nature of Voluntary Carbon Credits was held by UNIDROIT, Rome. The Working Group was conducted in cooperation with the World Bank and was attended by 50 participants, including legal experts and observers from international, regional and intergovernmental organisations, as well as the private sector and academia.
Given that more and more projects that generate voluntary carbon credits, specially nature-based solutions, are located in developing countries carbon credit markets represent an opportunity to increase investments and funding to climate mitigation projects.
The legal nature of voluntary carbon credits determines issues such as the registration, issuance, transfer, and retirement of the credits and impacts broader considerations such as collateralisation and insolvency. Specially in cross border trading.
During this second session, the Working Group considered the matters raised in a revised Issues Paper. Click below to download this 93-pages paper.
According to the press release, main focus of the discussions was in the contents of the future instrument to be developed.
The Working Group agreed in principle to develop a soft law instrument that may take the form of principles plus commentary.
Through a property law perspective, the main steps in the life cycle of verified carbon credits was also analysed. The objective was to ascertain the proprietary nature of verified carbon credits and the effect of transfers and dispositions in verified carbon credits on a holder’s proprietary rights.
A few days ago, our post “China and the legal nature of carbon credits. How to reconcile civil with common law?” indicated how voluntary carbon credits definitions vary across jurisdictions: in Australia carbon credits are considered personal property, in United States intangible commodities, in Argentina a security and in Peru an intangible movable property.
Besides that, of particular relevance is the role played by carbon crediting programmes and registries. Representatives from Verra and Puro Earth already delivered presentations to the Working Group.
Click at the image below for UNIDROIT’s press release after this latest Working Group meeting. A report will be published in the coming weeks and Carbon Credit Markets will bring it to you when released.
A few days ago the World Bank, maybe UNIDROIT’s main sponsor behind this Working Group, released its "State and Trends of Carbon Pricing 2024" report.
