Emission Reduction Purchase Agreement Report
The World Bank releases a report on Emissions Reduction Purchase Agreements, aimed at summarizing the development of such agreements.
The Emission Reduction Purchase Agreement was designed by the World Bank to provide funding for carbon reduction projects and incentivize market participants to decarbonize.
Related Post: World Bank Releases 2025 Global Carbon Credit Market Report
Introduction to Emission Reduction Purchase Agreement
A Emission Reduction Purchase Agreement refers to a legal contract and financial agreement signed between the entity purchasing carbon credits and the entity selling carbon credits, with the World Bank as the buyer and the Emission Reduction project as the seller. The Biocarbon Fund Initiative for Sustainable Forest Landscape, managed by the World Bank, pays carbon credit fees to some jurisdictions through Emission Reduction Purchase Agreement. These carbon credits typically come from actions to reduce deforestation and forest degradation, such as sustainable land use, smart climate agriculture, etc.
The World Bank usually signs Emission Reduction Purchase Agreement as a trustee of the Biocarbon Fund Initiative for Sustainable Forest Landscape, providing funding and technical assistance for carbon reduction projects. The World Bank also conducts due diligence to ensure that the environmental and social risks of the project can be monitored and managed in accordance with the World Bank’s standards. As a legal and financial tool, Emission Reduction Purchase Agreements stipulate payment rules after the verification of emission reductions. This approach belongs to Results-based climate finance, where verified carbon reductions can be converted into carbon credits after the agreement is completed.
Emission Reduction Purchase Agreement Design
The World Bank believes that the following factors need to be considered in the process of designing Emission Reduction purchase agreements:
- Technical factors: Sources, types, quantities, calculation methods, measurement, reporting, and verification of Emission Reductions.
- Legal factors: Transfer rights of emission reductions, sales and purchase conditions, phased implementation plan.
- Environmental and social factors: Allocation of carbon reduction benefits among stakeholders, measures to reduce environmental and social risks.
- Business factors: Certification, issuance, and recording of carbon credits, and the purpose of carbon credits.
Reference:
Contracting Emissions Reductions from Natural Climate Solutions
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