GGGI Technical Guideline No.

Mitigation Outcome
Purchase Agreements
March 2023
 Part of GGGI’s technical guidelines series

1. Green Growth Planning Guidelines, Jin Young Kim, Robert Mukiza, Mohammed Angawi, and Nobert Maass, 2016.
2. Green City Development Guidelines, Nguyet Minh Pham, Daniel Buckley, Adam Ward, Okju Jeong, and Julie Robles, 2016.
3. Pro-poor, Inclusive Green Growth: Experience and a New Agenda, Steve Bass, Paul Steele, Camilla Toulmin, Oliver Greenfield, Chris
Hopkins, Inhee Chung, and Thomas Nielsen, 2016.
4. Green Energy Development, Dereje Senshaw, 2017.
5. NDC Implementation Roadmap Development: Guidelines for Small Island Developing States, Douglas Marett, Marc André Marr,
Katerina Syngellakis, and Kristin Deason, 2018.
6. GGGI Strategic Outcomes Guideline: Frameworks and Methodologies for Development Impact Estimation, Pranab Baruah, Frank
Rijsberman, and Diana Quezada, 2019.
7. Mitigation Outcome Purchase Agreements, Ximena Aristizabal, Carlos Maldonado, 2023

Copyright © 2023

Global Green Growth Institute

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The Global Green Growth Institute does not: (i) make any warranty, either express or implied; or (ii) assume any legal
liability or responsibility for the accuracy, completeness, or any third party’s use or the results of such use of any information
contained herein; (iii) intend this template/guide as legal advice or as a substitute for legal advice or (iii) represent that its use
by any third party would not infringe privately owned rights. The views and opinions of the authors expressed herein do not
necessarily state or reflect those of the Global Green Growth Institute.
iii
 iv

ACKNOWLEDGEMENTS
This guideline to Mitigation Outcome Purchase Agreements was prepared for the Designing Article 6 Policy Approaches (DAPA) Program
by Ximena Aristizabal and Carlos Maldonado with information from capacity building sessions led by a team of consultants from Carbon
Limits and Climate Focus in the four implementing countries of the DAPA Program, as well as relevant experience of practitioners in the
design and negotiation of Emission Reduction Purchase Agreements.

GGGI greatly appreciates the insights and knowledge of expert reviewers:

• Thiago Chagas, Climate Focus

• Mercedes Fernández Armenteros, lawyer, BIG SUR

• Lydia Omoku-Jung, Climate Focus

• Moritz von Unger, Silvestrum Climate Associates

• Cristobal Agravante, Principal Legal Counsel, GGGI

• Sam Yeol Choi, Legal Senior Officer, GGGI

We also thank our GGGI colleagues Tamie Kanda and Nathalie Chifamba for their valuable feedback and support in editing.

This guideline belongs to a series of deliverables from the implementation of the DAPA Program funded by the Norwegian Ministry of
Climate and Environment (NMCE), a pioneer program on piloting scaled-up mitigation activities under the Paris Agreement. We would like
to acknowledge the invaluable support and feedback from the NMCE team.
v

ACRONYMS AND ABBREVIATIONS

BTR Biennial Transparency Report

CA Corresponding Adjustment

CER Certified Emission Reduction

CDM Clean Development Mechanism

DAPA Designing Article 6 Policy Approaches

ER Emissions Reductions

ERPA Emissions Reduction Purchase Agreement

GGGI Global Green Growth Institute

GHG Greenhouse Gas

ITMO Internationally Transferred Mitigation Outcome

MADD Mitigation Activity Design Document

MO Mitigation Outcome

MOPA Mitigation Outcome Purchase Agreement

MRV Measurement, Reporting, and Verification

NDC Nationally Determined Contribution

SDG Sustainable Development Goals

UNFCCC United Nations Framework Convention on Climate Change

 vivi

CONTENTS
1
Contract Design Considerations 02

2
General Aspects 03

Main Sections of MOPA

3 05
3.1 Background 06
3.2 Conditions precedent 06
3.3 Obligations 07
3.4 Default and termination 09
3.5 Annexures 10

Appendices 12
1 GGGI Guideline to Mitigation Outcome Purchase Agreements

EXECUTIVE SUMMARY
In any commercial agreement, the signature of a contract is the (DAPA) Program. As its name indicates, the DAPA Program
seal with which the Parties involved commit to comply with all aims to promote approaches at the policy level, which is why it
the agreed terms and conditions. The formality of this document covers transactions between sovereign entities, leaving out those
assists with clarity and enforcement and establishes the means to agreements in which private entities participate, such as single
resolve any disputes between the Parties. In the context of carbon projects. In addition, there can be other arrangements engaging
markets, a purchase agreement will define the type, quality, delivery non-state actors; however, those will not be addressed here.
schedule, and volume of verified emission reductions that a seller
agrees to transfer to a buyer and that the buyer agrees to purchase The generic contents of a MOPA are grouped into five categories:
from the seller. The agreement will also detail the conditions and background, conditions precedent, obligations, default and
means to transfer these emission reductions, the price the buyer termination, and annexures. A MOPA should serve the purpose
of outlining potential risks, fairly allocating these risks between
will pay per ton of carbon equivalent received from the seller, and
parties, and providing alleviatory and corrective actions; therefore,
the payment method.
at the end of the document, a list of common risks for sellers
and buyers is presented, along with potential options to address
Purchase agreements are a common practice in all types of
these risks as well as tips for the strategic design of a MOPA. This
carbon markets, including voluntary and compliance markets,
guidance accents those provisions that set MOPAs apart from any
and provide confidence to investors and commercial and financial
other sales contract, demonstrating how innovative and accurate
partners. Under the Kyoto Protocol, they were known as Emission
they should be designed to respond to the new context under the
Reduction Purchase Agreements (ERPAs) in the context of the Paris Agreement.
Clean Development Mechanism (CDM) and Joint Implementation
and evolved over time along with the implementation period of As MOPAs can adopt different forms and contents depending
these mechanisms. Now, in the context of the Paris Agreement, it is on the nature and views of the contracting parties, type of
imperative to collect all the experiences from the implementation intervention, and the legal regime of the host country involved.
of these Kyoto mechanisms and build an improved version of Signatories should seek legal advice to customize them for a
its processes and instruments that is compliant with the new specific trade and to accurately describe the agreements with
requirements of Article 6. the other Party. This document is intended to serve as a guide for
anyone interested in learning the general purpose and structure
Some of the elements from Article 6 that might be reflected in the of a MOPA as well as understanding both sides of the negotiation
so-called Mitigation Outcome Purchase Agreements (MOPAs) table, potential risks of terms and conditions, and the means to
include provisions related to corresponding adjustments (CAs), address these risks. While the document has been drafted in a
registries, safeguards, and authorization of transfer. Finally, it is neutral way so that it can be used by both sovereign buyers and
essential to highlight the link between the transfer of Mitigation seller, special consideration has been paid to describe the risks
Outcomes (MOs) and the achievement of participating countries’ that developing countries will face when entering into Article
Nationally Determined Contributions (NDCs). Unlike other 6 transactions. This GGGI guideline will be updated in case of
commercial agreements, sovereign-to-sovereign MOPA in the significant and relevant policy, regulatory, and legal developments
context of Article 6 goes beyond setting out the agreed terms with implications for the design and negotiation of MOPAs.
and conditions to carry over a transaction. MOPAs can integrate
provisions related to the host country’s NDC, for example, to
prevent overselling and noncompliance with its unconditional
targets.1

This document provides an overview of the main components

of an ideal MOPA between sovereign countries, using elements
and experiences gained from the CDM and the voluntary carbon
markets, and highlights those features specific to the Paris
Agreement that are advisable to include in the agreement. This
document does not constitute legal advice but is part of the
capacity building efforts the Global Green Growth Institute (GGGI)
is undertaking through its Designing Article 6 Policy Approaches

1 Richard Saines, “From ERPA to MOPA: Practical Application of Article 6 Guidance

to ITMO Transfers,” ICAP–IETA, last modified 2020, https://register.gotowebinar.com/
register/1730240286441422347.
 GGGI Guideline to Mitigation Outcome Purchase Agreements
2

1
Contract Design Considerations
A general Mitigation Outcome Purchase Agreement (MOPA)
structure for educational purposes was derived from an Emissions
Reduction Purchase Agreement (ERPA) model used by the
Norwegian Ministry of Climate and Environment2and the public
template used by the International Emissions Trading Association
(IETA).3 Elements related to the Paris Agreement, come from
the Global Green Growth Institute (GGGI) template for MOPA
MOPA training Senegal, July 2022

It was observed that even though ERPAs from different Parties

can follow a different structure and clauses can be more or
less descriptive, there are some common elements adjacent
to all the examples under analysis. The simplified structure of
the background, conditions precedent, obligations, default and
termination, and annexures provides a straightforward view of
the general format of a contract. It is relevant to point out that
(Sovereign Buyer/Sovereign Seller)4 and contents from Designing requirements in compliance with Article 6 of the Paris Agreement
Article 6 Policy Approaches (DAPA) training on MOPAs for host are present throughout the purchase agreement—not in an
countries.5 exclusive section.

Parties to a purchase agreement or legal firms structure their

2 Norwegian Ministry of Climate and Environment, “Certified Emission Reduction contracts differently; therefore, there are no prescribed formats—
Purchase Agreement,” last modified November 26, 2015, https://www.regjeringen. only content that gets normalized over time due to legal and
no/contentassets/86680864084e47118f0086fccc0855fd/template-nmoce- commercial practice. In approaching different clauses, particular
erpa-2016-2020.pdf. attention has been paid to reflect the interest of developing
3 International Emissions Trading Association, “Emissions Reduction Purchase countries to create a balanced agreement.
Agreement,” Version 3.0, last modified 2006, https://www.ieta.org/Trading-
Documents.

4 Global Green Growth Institute, “Mitigation Outcomes Purchase Agreement

(Sovereign Buyer/Sovereign Seller),” Template Version 1.0, last modified January 27,
2021, confidential document.

5 Global Green Growth Institute – Carbon Limits – Climate Focus, “Training on

Mitigation Outcome Purchase Agreements (MOPA) for Policy Approaches under
Article 6,” last modified 2022; Global Green Growth Institute, “Mitigation Outcome
Purchase Agreement under Article 6 Training for Korean Practitioners – Legal and
Contractual Aspects of MOPAs,” last modified 2022.
3 GGGI Guideline to Mitigation Outcome Purchase Agreements

2
General Aspects
A MOPA is a legal contract between entities that governs a
transaction for the purchase and sale of Mitigation Outcomes
(MOs) generated by a mitigation action. This purchase and sale
contract can be understood in legal terms as the “nature” of the
agreement.
BOX 1
MOPA training Morocco, July 2022

DAPA Program

Policy approaches under DAPA Program

aim to generate emission reductions that
can be traded internationally to access
Every contract starts by stating the “object.” In the case of a MOPA, carbon finance in the form of result-based
this is MOs generated by a mitigation activity. payments. The DAPA Project supports
Partner countries in increasing climate
Also, it is necessary to state who the signatories of the agreement ambition through the mobilization of
are, which are the buyer and the seller; in the case of policy carbon finance under Article 6 of the Paris
approaches, they would be sovereign countries known as “Parties.” Agreement. These policy approaches are
broader and more encompassing than
Another common element would be to define the “principles” that the historic project project-based carbon
govern the transaction. These can be derived from the United markets, creating the transformational
Nations Framework Convention on Climate Change (UNFCCC) or change needed by scaling up transactions.
the Paris Agreement. As an example, they can include: Besides, the DAPA Program focuses on
the fact that any intervention must be
• Pursuing sustainable development country-led in order to ensure full national
ownership.
• Ensuring environmental integrity and avoiding double
counting
• Prioritizing long-term cooperation
• Not compromising NDC achievement
4 GGGI Guideline to Mitigation Outcome Purchase Agreements

In addition, MOPAs can be aligned with principles specific to the

trade under consideration or the motivations or priorities of the
signatories. In the case of policy approaches under the DAPA BOX 2 Addressing Risks
Program, participants have agreed on the relevance of:6
The purchase agreement denotes a series of
• Implementing and following a strict monitoring, reporting, and institutional, political, and technical milestones
verification (MRV) system in the context of climate action that adds
• Being additional to unconditional NDC targets reputational value for both Parties.

• Aligning with national policies As with any contract, the MOPA creates
• Respecting human rights negotiated obligations between Parties and
should specify ways to mitigate potential risks.
• Being conservative and robust in mitigation estimates
• Inducing transformational impacts in the host country In addition to the general commercial provisions,
a MOPA can include provisions to address
Paris Agreement requirements, including the
All the elements above need to be understood and internalized by application and reporting of corresponding
the Parties to incorporate them into the fundamental aspects of the adjustments, fulfillment of participation
final MOPA. Main considerations must also be agreed on, covering requirements, and compliance with reporting to
aspects such as specific transactional issues, rights, and titles to the UNFCCC, among others.
MOs, which are addressed in the following sections.
Even though contracts may seem standardized,
there is no such thing as a replicable transaction,
and a MOPA should reflect the needs and context
of countries under the agreement (GGGI, 2022b).
See Appendix 1 and 2 for further information.

Correctly preparing a MOPA can reduce the

impact of common risks; for example, monetary
losses (buyer side) and oversellling (seller side).

Potential risks shall be assessed and addressed

from the negotiation stage of MOPA. Mitigating
actions can be devised along the document, from
conditions precedent to obligations. For example,
completing due diligence can be inserted as a
condition precedent.

6 These elements come from International Carbon Reduction and Offset Alliance´s
(ICROA) integrity principles for projects to policies, and features from the Paris
Agreement were also considered. Global Green Growth Institute. “Designing Article 6
Policy Approaches (DAPA),” last modified 2022.
 GGGI Guideline to Mitigation Outcome Purchase Agreements
5

3
Main Sections of MOPA
As the MOPA predecessor, the ERPA governed the purchase of
Emission Reductions (ERs) from specified/defined project activities
and stated the conditions for trading Kyoto Protocol units. The
contract period, volume of greenhouse gas (GHG) to be reduced,
price, delivery schedule, milestones that trigger payment, payment
means, and other terms7 were to be agreed on in a negotiating
MOPA training Viet Nam, July 2022

process. Initial conditions were agreed on and often laid out in a

term sheet8 (commercial terms), and further discussed to narrow
the scope for final arrangements in the purchase agreement
(contract). The conclusion of the negotiation process was
evidenced by the signature of an ERPA.

7 World Bank, “What You Need to Know About Emission Reductions Payment 8 There is no rule whereby prices must be negotiated beforehand, but it is a common

Agreements (ERPAs),” last modified 2021, https://www.worldbank.org/en/news/ practice to pre-negotiate core terms, including the project/activity, quantity of MOs,

feature/2021/05/19/what-you-need-to-know-about-emission-reductions-payment- vintage, price, and delivery schedule.

agreements.

Figure 1 General MOPA structure and inclusion of article 6 elements

PARTICIPATION REQUIREMENTS, AUTHORIZATION, SHARE OF PROCEEDS AND OVERALL MITIGATION

IN GLOBAL EMISSION, CORRESPONDING ADJUSTMENTS, AND REPORTING ARTICLE 6
6 GGGI Guideline to Mitigation Outcome Purchase Agreements

The Paris Agreement transcends the transactional aim of “This Agreement will commence on its execution by both Parties
carbon finance with the pivotal role of voluntary cooperation in and terminate on the fulfilment of all obligations unless terminated
achieving sustainable development and higher global ambition. earlier in accordance with this Agreement or extended by mutual
Besides regular agreements on ER transactions, MOPA agreement between the Parties.”12
contents will reflect compliance with Article 6 requirements
and provisions. Furthermore, the negotiation process will not be
3.1.3 Definitions and interpretations
merely commercial; it will likely be based on a memorandum of
understanding or a similar instrument, bringing two countries This section establishes the language used throughout the
together in the spirit of collaboration. agreement, describes key concepts, and provides instructions on
how to approach specific terms. Concepts that can be found in a
MOPA are contract volume, Internationally Transferred Mitigation
Outcome (ITMO), Paris Agreement rules, and payment milestone,
3.1 Background among others. For example:

This initial section identifies the Parties of the purchase agreement, “‘Corresponding Adjustment’ or ‘CA’ means to account for
provides relevant information on their motivations to sign this international transfers of ITMOs in accordance with paragraph 36
document, and explains their common objective, both in terms of decision 1/CP.21 and the Paris Agreement Rules.”
of basic aspects (e.g., definitions) and substantial ones (e.g., their
“‘Delivery’ or ‘Deliver’ means the transfer of the Delivery Amount
intentions to trade). This is a core section that describes who is
into Buyer’s Registry.”
legally responsible for compliance with the conditions, and it will
be used in the resolution of possible disputes. A closer look at the
contents is provided in the following subsections.

3.1.1 Recitals
3.2 Conditions precedent
Recitals are used to set out a series of statements about A condition precedent is an operative, technical, or legal
motivations and objectives that Parties regard as useful before circumstance that must prevail before starting a legal relationship
approaching the body of the contract.9 They can contain essential between Parties. Parties agree on what would be required to
elements that play an operative legal role throughout the happen before certain MOPA clauses and obligations become
contract.10 For example: binding. Therefore, once all the agreed conditions are met, the
Parties are ready to fully execute the purchase agreement. The
“WHEREAS the Parties are committed to ensuring transparency MOPA will also stipulate what proceeds in case a particular
and environmental integrity and to preventing double counting of condition precedent fails to be met.
Mitigation Outcomes by conducting reporting related to ITMOs as
required by the Paris Agreement.”11 Depending on the circumstances of the transaction and the Parties,
different events can be subject to conditions precedent. They can
“NOW, THEREFORE, based on the mutual premises contained be applicable to specific provisions, such as the sale and purchase of
herein and for other good and valuable consideration the MOs, buyers’ obligations, or the entire MOPA. Parties can also use
sufficiency of which the Parties acknowledge, the Parties hereby conditions precedent to address potential risks, for example:
agree as follows:”
“The obligations of the Parties under this Agreement shall not take
effect until the following conditions are met: Seller has provided
3.1.2 Effective date and term evidence of legal ownership of Mitigation Outcomes that underlie
The effective date and term specify that the agreement will come the ITMOs.”
into force and terminate at a particular time. For example:

9 Marcel Fontaine and Filip de Ly, “Chapter 2. Recitals in International 12 Norwegian Ministry of Climate and Environment, “Certified Emission Reduction
Contracts,” last modified 2006, https://brill.com/view/book/9789047440222/ Purchase Agreement,” last modified November 26, 2015, https://www.regjeringen.
Bej.9781571053558.i-654_003.xml?language=en. no/contentassets/86680864084e47118f0086fccc0855fd/template-nmoce-

10 John Coates, “Contracts: Purposes, Types, Regulation, and Patterns of Practice,” erpa-2016-2020.pdf.

last modified 2015, http://www.law.harvard.edu/programs/olin_center/papers/pdf/

Coates_825.pdf.

11 Global Green Growth Institute, “Mitigation Outcomes Purchase Agreement

(Sovereign Buyer/Sovereign Seller),” Template Version 1.0, last modified January 27,
2021, confidential document. All examples will be based on the cited document, except
for those that expressly contain another source.
 GGGI Guideline to Mitigation Outcome Purchase Agreements
7

Conditions precedent should be clear and precise. Also, they can This is a relevant section, and both Parties shall give heed to it.
be kept to a reasonable limit as long lists can become burdensome Conditions precedent should be balanced and preferably reciprocal
and delay the start of the agreement. Some examples of conditions to the extent relevant, avoiding overloading or benefiting a sole
precedent can be: Party. Additionally, confirming the attainment of Conditions
precedent should not be discretionary or unilateral, granting the
• Each Party providing an explanation to the satisfaction of the right to terminate the agreement without any liability.
other Party as to how the participation in this agreement will
enhance ambition in its NDC. Consequences of nonfulfillment can include a waiver, the extension
of the compliance period, or MOPA annulment. Regarding Article 6,
• The government/entity showing they have the ownership or it is common to include diplomatic elements in accordance with the
selling right to the ITMOs to be traded. aim of voluntary cooperation. For example, a country might delay
the starting of a crediting period while the host country enacts
• Having a public carbon trading strategy and appointed Article 6 participation requirements.
institutions to perform processes such as ITMO transfer
authorizations.

• Showing the existence of a registry.

3.3 Obligations
• Conducting due diligence.
As the name implies, this is where the Parties will describe all the
commitments and responsibilities that they agreed and decided
• Reporting in accordance with the Guidance on cooperative
on. They are not only related to buying and selling aspects, such as
approaches referred to in Article 6 of the Paris Agreement.
price and volume determination, but also to transaction costs (e.g.,
development of monitoring plan, registration fees, and verification
• Having the initial report undergo Article 6 technical review
costs) and additional purchase options. Since the main purpose
without material inconsistencies identified.
of these agreements is to reduce GHG emissions, most of the
obligations will be oriented to guarantee the MOs are actually
• A particular regulation being enacted or commissioned.
achieved. Technical aspects of the mitigation activity—MRV and
crediting periods, among others—must be defined in the contract
and are described in the Mitigation Activity Design Document
(MADD). Failure to comply may result in termination, coupled with
or without penalties as discussed in the next section.

Fulfillment of participation requirements in

Article 6 can be set as conditions precedent.
The MOPA must guarantee that for
For example, host countries must establish all transfers with the purpose of NDC
institutional arrangements and processes to compliance, the host country and acquiring
authorize MOs for ITMOs. These decisions Parties apply CAs to avoid double claiming,
would define which body, official, or position which is done through an emissions balance.
in the country would have the authority to
authorize and transfer ITMOs. The host country must report the deliveries
(with CAs) that occur in its Biennial
Other requirements include having a Transparency Report (BTR). If the seller fails
tracking tool for ITMOs and having correctly to comply with this obligation, the buyer
prepared, communicated, and maintained an may suspend the acceptance of ITMOs
NDC. for future deliveries. It is not just the host
country that has reporting obligations; all
participating countries do. Every ITMO
transaction must include a host country CA.
8 GGGI Guideline to Mitigation Outcome Purchase Agreements

3.3.1 Representations and warranties Regarding the volume (quantity):

This part of the contract aims to give one another assurance 1) Annual amounts and a fixed total volume are set in the agreed
about their status and condition relevant to the execution delivery schedule.
and implementation of the agreement. Representations mean
assertions of fact by a contracting Party, usually given to induce 2) More seldom, the total annual volume of MOs derived from the
the other Party to enter into the agreement. On the other hand, policy implementation, without fixing or committing to a specific
warranties are related to a promise that a condition or assertion amount.
was true and accurate at the moment it was made. It is worth
mentioning that nonfulfillment of representations and warranties 3) A share of the MOs generated by the policy; for example,
can be the object of an event of default. keeping a share of the verified MOs in the country while selling the
rest of them internationally.
“Each Party represents and warrants to the other Party on the date
hereof and upon each Delivery of ITMOs under this Agreement As mentioned above, price and delivery conditions must be
that: negotiated and agreed on before signing a MOPA. Regarding the
volume, conditions such as third-party verification and certification
- the Person signing this Agreement on behalf of a Party is duly of MOs might be required.
authorized to sign the Agreement as a representative of the Party;

-it fulfils the reporting requirements under Article 13 of the Paris

Agreement, in accordance with decision 18/CMA.1 and any future
decisions by the Conference of the Parties serving as the meeting
of the Parties to the Paris Agreement (‘CMA’), including the regular
and timely submission of complete Biennial Transparency Reports.”

3.3.2 Price and delivery In the context of a sovereign-to-sovereign

These obligations define what will be sold and bought and what MOPA, the buyer can create incentives
the delivery and payment dates will be. Payment can be established for the seller to apply the CAs, such as
through certain milestones (e.g., upon delivery of ITMOs, or negotiating payment milestones concerning
conditional to the application of CAs). It should be noted that the the application of the CAs for each ITMO
fixed-price approach was commonly used in Clean Development transfer (GGGI, 2021a).
Mechanism (CDM) and Joint Implementation contracts. However,
price determination can be defined in different ways: Other provisions can be part of the
negotiation such as, suspending the
1) Fixed price: This method or approach provides price certainty obligation of ITMO deliveries, not allowing
to the Parties and protects against market price fluctuations. It, ITMOs to be sold in other transactions,
consequently, disregards carbon price fluctuations, exchange rates, retaining part of purchase payment subject
or broader macroeconomic events such as inflation; the price to the CA, or termination rights. Likewise, it
remains constant for the entire length of the agreement. can also prevent or limit upfront payments
(ADB, 2021).
2) Indexed price: This refers to the price of the same carbon
asset traded in other markets. The price will likely fluctuate and
change with each payment (e.g., spot price as published on the
Intercontinental Exchange). 3.3.3 Costs
Costs are related to delivery; for example, issuance and registry-
3) Fixed price + indexed price: This guarantees a minimum related costs. They may include fees associated with the use of the
price for a seller and reduces the downside impact of spot price International Registry for Article 6.2. Taxes, fees, levies, charges,
fluctuations on the unit price. Thus, this approach would set a price etc., are payable pursuant to the MOPA, depending on the relevant
floor but not a ceiling. The Parties will agree on the price index that jurisdiction. The MOPA determines the Party responsible for
will provide the price information. paying such concepts; typically, each Party is responsible for taxes
payable in their own jurisdiction. For example, with respect to each
4) Indexed price + a price floor & ceiling: A minimum price and a
Delivery Amount:
maximum price protects both Parties from significant movements
in the spot price. (a) Seller shall be responsible for the payment of any fees, charges,
levies, Taxes and other costs and expenses relating to such Delivery
5) Escalating price: Prices escalate periodically (e.g., each year or
Amount prior to the date hereof.
every two years).
 GGGI Guideline to Mitigation Outcome Purchase Agreements
9

(b) Buyer shall be responsible for the payment of any fees, charges,
levies, taxes and other costs and expenses relating to such Delivery 3.4.Default and termination
Amount arising on or after the date hereof. Each Party shall bear
This section refers to the possibilities and circumstances in which
its own costs and expenses in connection with the preparation,
the contract will be terminated (e.g., due to the Parties’ fulfillment
negotiation, and execution of this Agreement.
of all their contractual obligations or a material event of default).
This can happen either on a natural course according to the
3.3.4 Call and put options terms stated in the agreement (termination) or by exercising the
The call option means that the seller grants the buyer the right right to terminate the contract completely or partially, due to
(but not obligation) to purchase additional ITMOs at a certain pre- noncompliance with the terms (default). The MOPA should foresee
agreed price within a predefined period. The put option is where and establish provisions for both cases.
the buyer grants the seller the right (but not obligation) to sell
additional ITMOs at a specific pre-agreed price. For example: 3.4.1 Events of default and remedies
“In consideration of Buyer’s agreement to purchase the Contract Events of default refer to the breach of a particular condition,
Certified Emission Reductions (CERs), Seller irrevocably grants representation, or obligation of the agreement. In case of
Buyer (or its nominee) the right, but not the obligation, to acquire their occurrence, the non-defaulting Party may require the
all or part of the Option CERs at the Option Exercise Price (the Call defaulting Party to undertake specific actions or remedies, or
Option).”13 even terminate the MOPA. The specific actions are previously
specified and agreed upon by the Parties. Remedies in a MOPA
between sovereign Parties primarily rely on the suspension of
3.3.5 Right of first offer payments and termination rather than an actual claim for damages.
Where the volume of MOs generated exceeds the contracted Another example of a remedy in these cases can be the right to
ITMOs (“Additional ITMOs”), the Seller may grant the Buyer compensatory ITMOs in the following NDC implementation
the right to purchase all or part of these additional ITMOs. This period.14 For example:
means the Seller must make the offer to the Buyer before selling
additional ITMOs to any third party. In this case, the Seller imposes 1) Events of Default: “The occurrence at any time with respect to a
the economic terms unilaterally to the buyer at the moment of Party of any of the following events constitutes an Event of Default
offer. For example: with respect to such Party: Buyer fails to pay when due any amount
payable by it under this Agreement and such failure is not remedied
“…If at any time and from time to time during this Agreement, Seller within [X] Business Days after written notice of such failure is given
proposes to offer for sale additional ITMOs from the Mitigation to Buyer;”
Activity beyond the applicable Delivery Amount(s) […], Seller shall
provide written notice to Buyer upon each such occasion specifying “The occurrence of any of the following events in respect of a Party
the number of ITMOs proposed to be sold per each Delivery….” shall constitute an Event of Default in respect of that Party: any
Required Authorisations are revoked, suspended, not renewed or
not maintained;”15

2) Remedies: “Upon the occurrence of an Event of Default and

while such Event of Default is continuing, the non-defaulting Party,
at its option, may: suspend performance of any obligation under
this Agreement, including in respect of Buyer, acceptance of a
Delivery Amount or remittance of any Payment Amount otherwise
due notwithstanding the completion of the relevant Payment
Milestone.”
Article 6.2 does not mandate the use of the
share of proceeds or cancellation of ITMOs
for delivering overall mitigation of global 3.4.2 Termination
emissions. However, Parties can agree on Termination occurs when the Parties have fulfilled all their
stipulating it in the MOPA. obligations or when other termination conditions in the MOPA
become effective. The MOPA clearly states the cases in which

14 Global Green Growth Institute, “Mitigation Outcomes Purchase Agreement

(Sovereign Buyer/Sovereign Seller),” Template Version 1.0, last modified January 27,

13 Norwegian Ministry of Climate and Environment, “Certified Emission Reduction 2021, confidential document.

Purchase Agreement,” last modified November 26, 2015, https://www.regjeringen. 15 IETA, “Emissions Reduction or Removal Purchase Agreement,” Version 1.0, last
no/contentassets/86680864084e47118f0086fccc0855fd/template-nmoce- modified February 2023, https://www.ieta.org/resources/Resources/Trading%20
erpa-2016-2020.pdf. In a MOPA under the Paris Agreement, it refers to MOs instead Documents/IETA_Primary_ERPA_Final%20Version.pdf.
of CERs.
10 GGGI Guideline to Mitigation Outcome Purchase Agreements

BOX 3 FORCE MAJEURE

There are common force majeure events such as war and labor unrest, but there are also other events related to
government actions, such as a registry not being available or being suspended, and government changes.

Generally, host country sellers would prefer a large definition of force majeure, while buyers may pursue the
opposite. For example, buyers would request to exclude changes in the national laws of the host country as a
case of force majeure. Therefore, these events must be clearly agreed upon between seller and buyer.

The consequences of force majeure could either terminate the contract or suspend the obligations affected
for a certain pre-agreed period. This scenario can be addressed in different ways: A) To negotiate in good
faith to amend the contract; B) To have a termination without liability (in the event Parties are unable
to agree on amendments); C) To return advance payments made that were not set off against deliveries
(where applicable); D) Others that the Parties agree on.

a Party can terminate and the consequences of this action. 3.4.4 Governing law
Termination can occur in the case of force majeure or change of
law, other mutual agreement cases, or when there is an event of This provision indicates which laws will apply to the resolution of
default that leads to termination. Termination events can be found potential disputes. It is directly linked to resolution of disputes.
in different clauses throughout the MOPA. They may be induced by To ensure a power balance, Parties may consider a neutral law to
unfulfilled conditions precedent or noncompliance of obligations govern the contract (e.g., the laws of a third country). For example:
by any of the Parties (in particular, but not exclusively, delivery and
payment obligations). For example: “The construction, validity and performance of this Agreement and
all non-contractual obligations (if any) arising from or connected
“This Agreement may be terminated at any time: by [either Party by with this Agreement shall be governed by the laws of England
written notice to the other Party] OR [Buyer by written notice] if: excluding that body of law known as conflicts of law.”17
[insert termination events].”

“In the event of a notice of termination of this Agreement, this

Agreement shall become void, and there shall be no liability on the 3.5 Annexures
part of either Party.”

3.5.1 Mitigation Activity Design Document

3.4.3 Resolution of disputes (MADD)
A MOPA will describe the mechanism to solve disputes arising The MADD is a detailed technical documentation that describes
from the MOPA: diplomacy, good faith negotiations, attempting the mitigation activity. It must be prepared in accordance with the
an expert determination procedure, arbitration, or litigation.16 For chosen carbon crediting program and can contain a plan outlining
example: how the activity will contribute to sustainable development
(Sustainable Development Plan). All MOs resulting from the
“The Parties shall endeavor to settle amicably any dispute between implementation of the mitigation activity must be materially
them arising out of or relating to this Agreement or the breach, consistent with the MADD and be authorized. The MADD is
termination, or invalidity thereof (“Dispute”). Upon the written included as an annexure of the MOPA because only the core
request of either Party (“Initial Request”), the Parties shall meet obligations should be placed in the body of the contract. The
promptly to consider the Dispute.” details and specifications of the mitigation’s activity—such as

17 Norwegian Ministry of Climate and Environment, “Certified Emission Reduction

Purchase Agreement,” last modified November 26, 2015, https://www.regjeringen.
16 Resolutions of disputes in a sovereign-to-sovereign MOPA tend to focus on no/contentassets/86680864084e47118f0086fccc0855fd/template-nmoce-
bilateral diplomatic channels. erpa-2016-2020.pdf.
 GGGI Guideline to Mitigation Outcome Purchase Agreements
11

BOX 4 NDC Achievement–Overselling

The sovereign-to-sovereign MOPA may contain

provisions related to monitoring and reporting on
the progress of the NDC. If the BTR shows a change
in the trajectory of achievement of the NDC, the
Parties could agree to take action to solve it. This
is not only for the interest of the host country but
also for the Buyer country, due to technical, legal,
and reputational aspects; a buyer who purchases
an ITMO of a country that has not reached its NDC
target may be considered as contributing to the
failure of the NDC. (GGGI, 2021a)

The sovereign-to-sovereign MOPA may contain

provisions related to monitoring and reporting on
the progress of the NDC. If the BTR shows a change
in the trajectory of achievement of the NDC, the
Parties could agree to take action to solve it. This is
not only for the interest of the host country but also
for the Buyer country, due to technical, legal, and
reputational aspects; a buyer who purchases an ITMO
of a country that has not reached its NDC target may
be considered as contributing to the failure of the
NDC. (GGGI, 2021a)

methodologies, tools, methodological guidelines, or protocols used

to quantify the MOs—are meant to be described in this annexure.

3.5.2 Authorization letter

In this section, the authorization letter certifies that the MOs
are authorized for the first transfer in accordance with Paris
Agreement Article 6, following its successful verification under
specific terms and conditions. It relates to the host country’s
designated authority for authorization, date of authorization,
identification of the cooperative approach and Parties, activity type,
authorized uses, and type of NDC target, among others.

3.5.3 Commercial terms

This contains a schedule of payments and deliveries. Besides,
as mentioned before, payments can be conditioned upon the
completion of pre-agreed milestones, such as applying the CA
made in the NDC, delivery of the relevant amount into the buyer’s
registry account, or submission to the UNFCCC of the information
necessary for CAs.

MOPA training Indonesia, July 2022

12 GGGI Guideline to Mitigation Outcome Purchase Agreements

Appendices
Also, key messages for a strategic design (Appendix 2) are
Appendix 1. Risks for Sellers and presented that intend to facilitate decision-making. The
Buyers information is presented from the point of view of each Party to
raise awareness regarding the interests each will be concerned
These appendices are intended to show the buyer and seller the with.
risks that may arise, as well as ways to address them (Appendix 1).
GGGI Guideline to Mitigation Outcome Purchase Agreements
13
14 GGGI Guideline to Mitigation Outcome Purchase Agreements

Appendix 2. Key Messages for a

Strategic Design and Negotiation of
the MOPA
 GGGI Guideline to Mitigation Outcome Purchase Agreements
15

Appendix 3. Social and Environmental When setting up the authorization procedures, host countries
must specify how the mitigation activity will demonstrate
Considerations compliance with these principles. Examples are prevention of any
negative environmental and social impacts, including air quality and
Host countries may include additional criteria for ITMO biodiversity, social inequality, and discrimination against population
authorization and transfer when it is necessary to ensure that groups based on gender, ethnicity, or age. Some important sections
the activity is in line with Article 6 principles, national regulatory where social and environmental considerations may be included
and legal requirements, and the country’s overall climate and are shown below.
development policy. This includes criteria that demonstrate that
the mitigation activity aligns with Sustainable Development Goals
(SDGs).

MITIGATION ACTIVITY
16 GGGI Guideline to Mitigation Outcome Purchase Agreements

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org/sites/default/files/linked-documents/proposed-establishment-climate-action-catalyst-fund.pdf.

Coates, John. “Contracts: Purposes, Types, Regulation, and Patterns of Practice.” Harvard John M. Olin Center for Law, Economics, and
Business. Last modified April 2015. http://www.law.harvard.edu/programs/olin_center/papers/pdf/Coates_825.pdf.

Falkner, Robert. “The Paris Agreement and the New Logic of International Climate Politics.” International Affairs 92, no. 5 (2016): 1107–
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Fontaine, Marcel, and Filip de Ly. “Chapter 2. Recitals in International Contracts.” Brill-Nijhoff. Last modified January 1, 2006. https://brill.
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IETA. “Emissions Reduction or Removal Purchase Agreement.” Version 1.0. Last modified February 2023. https://www.ieta.org/resources/
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Global Green Growth Institute – Carbon Limits – Climate Focus “Training on Mitigation Outcome Purchase Agreements (MOPA) for
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Global Green Growth Institute. “Summary Report – Designing Governance Structures and Transactional Documentation for Mitigation
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MATS_Summary-Report_FINAL.pdf.

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18
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GGGI Guideline to Mitigation Outcome Purchase Agreements
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