Transactions
One of the major achievements of the international climate change regime has been the valorisation of emission reduction interventions and ecosystem services, resulting in the creation of a thriving marketplace for carbon credits and other environmental commodities.
Through emissions trading schemes such as the European Emissions Trading Scheme (EU ETS), the Clean Development Mechanism (CDM), the Joint Implementation (JI), International Emissions Trading (IET), and voluntary standards such as the Verified Carbon Standard (VCS), carbon credit transactions have not only spawned a huge economy worth billions, they have also spread specialized technology and carbon and ecosystem services infrastructure across the globe.
Atlas is dedicated to developing international climate transactions that are not only effective carbon-trading schemes, but which enable profitable investments that truly protect biodiversity and enable sustainable development.
» Project Structuring and SPV Enablement
Developing climate, carbon, and ecosystem projects requires a safe and stable environment for investment, smooth interaction among domestic and international project partners, and a robust legal and contractual set-up. In other words, successful projects depend on establishing clear and efficient rights, roles, and responsibilities for every stakeholder to secure financial flows, adequate return on investment, and balanced finances through the lifetime of the project and beyond.
At Atlas, we have worked with governments, international banks, investors, and on-the-ground project developers, assisting them with structuring these kinds of projects - in particular those of sector-wide scale with long-term impact such as:- Programmes of Activities (PoAs).
- Grouped Projects.
- Nationally Appropriate Mitigation Actions (NAMAs).
We are particularly experienced in identifying best practices for operations, revenue distribution and reinvestment, and designing special purpose vehicles (SPV) for implementing all kinds of intervention projects.
Our experience devising these types of investment schemes from scratch has provided us with a practical know-how and a deep understanding of the complexities of the marketplace. Consequently, to ensure the short- and long-term success of our work, we have developed a process that is rigorously inclusive of local expertise and highly sensitive to political realities, engaging with clients’ domestic legal advisors and making certain that all crucial stakeholders’ input is included in decision-making.» Emission Reduction Purchase Agreements (ERPAs)
Most carbon transactions are made on the basis of Emission Reduction Purchase Agreements (ERPAs), whether in the primary ERPA arrangement (project owner / first buyer) or the secondary one (buyer-seller / buyer).
At Atlas, we advise at all stages of ERPA-based transactions, from the drafting of primary legal documents and negotiation of ERPA contracts, to secondary ERPAs and the review of investments presented to our clients, with a special focus on regulated and voluntary market transactions (including land-use and forestry).
Our robust knowledge of leading ERPA models as well as of the overall transaction risks in the sector allows us to bring a nuanced consideration for the various interests of project owners, investor-buyers, carbon traders, and compliance buyers to every project and deal. With our experience as trained negotiators, we provide articulate, tailor-made contracts and related legal documents for clients that are clear, assertive, and compelling under any circumstances.» Project and Program Due Diligence
To properly evaluate their investment potential, emission reductions and ecosystem services projects rely on deep fact-finding into sector benchmarks and expectations, general contractual environments, and a thorough identification of partners' legal rights and responsibilities. For the foreseeable future, this kind of due diligence work on international climate projects will pose a unique challenge since it so often involves specialized agencies and remote jurisdictions, with little case history and few precedents to point towards a standard course of action.
These investments tend to occupy a hybrid regulatory terrain crossing both international and domestic law, and projects often maintain a “pioneer” status that signals an unpredictable legal landscape. At Atlas, we have more than ten years of experience with just this sort of difficult legal and contractual due diligence on international regulation, working with our clients and local partners to pinpoint and verify domestic legal issues and risks, and to develop viable hedging strategies and flexible contingency plans for dealing with any and all challenges.
We bring a keen insight into the technical and procedural operations for a wide range of projects - including both regulated regimes and voluntary standards - with the end goal of delivering timely, relevant, and comprehensive risk assessments that allow our clients to make fully informed decisions about their investments.» Sovereign Trades and Bilateral Agreements
The accrediting of sovereign emissions trading has been one of the chief motivators for adopting the Kyoto Protocol. It allows developed (“Annex 1”) countries to directly engage in Clean Development Mechanism (CDM) schemes and Joint Implementation (JI) projects and to develop bilateral agreements on the sale and purchase of carbon credits as Assigned Amount Units (AAUs) under the Protocol’s International Emissions Trading (IET) platform.
These sovereign transactions, along with other bilateral agreements, have gained prominence in anticipation of a more diversely regulated post-2012 environment, yet they suffer from a lack of uniform legal conditions and trading formats. While countries will be able to commit to certain kinds of predetermined interventions, such as sector-wide mitigation actions and emissions trading schemes, they will depend, sometimes to a large extent, on government-to-government support, and bilateral agreements will set the terms for both on-the-ground action and behind-the-scenes support.
At the regional level, in its expansion to a third trading phase, the European Emissions Trading Scheme (EU ETS) governs various bilateral agreements such as those covering offsetting and cooperation on international aviation, while EU Member States are in the process of independently reaching out to developing countries to begin negotiating project-specific country-to-country deals.
At Atlas, we assist both donor and recipient governments with the drafting and negotiation of these increasingly important bilateral agreements. Our wide experience with sovereign transactions under the Kyoto Protocol, combined with a deep technical knowledge of the challenges of offsetting, sector-wide actions, and the scaling-up of proposals and plans, means we offer excellent contract and treaty drafting, negotiation, and settlement services to our diverse clientele, helping both developed and developing countries adequately prepare for the forthcoming changes to the marketplace, and respond flexibly to a fast-paced business environment.