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Clifford Chance

Clifford Chance

Carbon trading and investment

Functional carbon markets to drive investment decisions

Carbon trading is a market-based system aimed at reducing greenhouse gases that contribute to global warming, particularly carbon dioxide emitted by burning fossil fuels.

Carbon trading can be: (i) regulatory or compliance emissions trading markets where emission allowances are required to satisfy regulatory 'cap and trade' obligations, thereby encouraging reductions in emissions, or (ii) on voluntary carbon markets where voluntary credits are issued by accredited projects producing reductions in or avoidance of emissions.

We advise clients in all aspects of regulatory and voluntary carbon market trading, regulatory requirements of trading schemes and investments into carbon reduction projects and project developers.

We act for a wide variety of project developers and investors, financial participants and corporates.

Our deep bench expertise covers advising on:

  • net zero and other targets, and how to build carbon offsetting into target implementation.
  • assistance on selecting offset partners.
  • structuring of purchases/purchasing arrangements and documenting transfers of credits to ensure ready supply of offsets and risk mitigation.
  • establishment of standalone projects for offset purchases, and minority investments in project companies/developers, including all necessary documentation.
  • legal due diligence on offset projects.
  • trading allowances, credits and environmental attributes on the regulated markets.
  • carbon reduction obligations for operators under emissions trading schemes.
  • all aspects of carbon finance and funds.

Recent client highlights

  • Carbon offsetting arrangements: Advised easyJet on carbon offsetting agreements in relation to its commitment to offset the carbon from all domestic and international flights.
  • Tropical Asia Forest Fund 2: Advised Temasek on their participation in the Tropical Asia Forest Fund 2, including negotiating the Voluntary Emissions Reduction Purchase Agreement and related Supply Agreement.
 
 
  • EU Emissions Trading System: Advised RWE, easyJet, Administrators for British Steel and Administrators for Calon Energy on the EU Emissions Trading System.
  • Voluntary credits: Advised Temasek on purchasing voluntary credits to offset emissions.
  • Forestry project, DRC: Advised Temasek and Macquarie on their potential investment in a forestry project in the DRC including the due diligence of the project.

  
  • Natural capital investment, UK: Advised Pollination Climate Asset Management (CAM) on the setup of its debut fund for investment in Natural Capital Projects and related carbon agreements.
  • Forestry investments, Germany: Advised global car manufacturers on investments in forestry projects and an investment in an offsetting developer including due diligence.