Second Session of the UNIDROIT Working Group on the Legal Nature of Voluntary Carbon Credits

From 22 to 24 April 2024, the second session of the Working Group on the Legal Nature of Voluntary Carbon Credits was held in hybrid format at the seat of UNIDROIT in 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.


The UNIDROIT project on the Legal Nature of Voluntary Carbon Credits is a high priority project on the UNIDROIT Triennial Work Programme 2023-2025.  Its main objective is to provide guidance on private law issues so as to enhance confidence in VCC transactions and support the development of a well-functioning market which could play a central role in fighting climate change, achieving the goals of the United Nations Framework Convention on Climate Change, in particular the Paris Agreement, and facilitate the fulfilment of the UN Sustainable Development Goals.  Given that a significant share of the projects that generate VCCs are located in developing economies, a reliable carbon credit market also provides an opportunity to increase capital flow to emerging markets and provide funding to climate mitigation projects.



During this second session, the Working Group considered the matters raised in an revised Issues Paper prepared by the UNIDROIT Secretariat, focusing in particular on the content of the future instrument to be developed. The Working Group analysed the main steps in the life cycle of verified carbon credits through a property law perspective, in order 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. Among other things, the Working Group discussed the definitions of key terms to be included in the instrument and addressed issues pertaining to the registration, transfer, retirement, reversal and cancellation of verified carbon credits. Of particular relevance was consideration of the role played by independent carbon crediting programmes and registries, including in relation to the issuance and registration of verified carbon credits. To that end, representatives from Verra and Puro Earth, two leading independent carbon crediting programmes, delivered presentations to the Working Group, addressing, inter alia, how verified carbon credits are issued, evidenced, individualised, transferred, encumbered, retired or otherwise cancelled. In addition, with input from the HCCH, the Working Group discussed relevant conflicts of law issues to be addressed in the instrument.


A report of the second session of the Working Group will be published in the coming weeks. The third session of the Working Group is scheduled for September 2024. More information about the VCCs Project can be found on the UNIDROIT website.

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