Frontier has unveiled a new template for offtake agreements aimed at promoting the establishment of carbon dioxide removal (CDR) partnerships.
This initiative is in line with Frontier’s commitment to purchasing permanent carbon removal solutions that are set to be delivered within this decade.
The template by Frontier serves as a standardized framework that simplifies the process for suppliers, financiers, and buyers to come together and formalize their carbon removal contracts. By addressing the complexities involved in these transactions, the template aims to encourage more collaborations that are crucial for achieving global climate targets.
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The main concepts covered by the template include a Fixed price & volume and a Project Description that guarantees the supplier will operate the project in a way that aligns with buyer expectations.
It also includes Conditions Precedent and a Commencement Date, meaning a list of conditions must be met in order for the project to deliver carbon removal units (CRUs), while the date at which all these conditions are met is the ‘Commencement Date.’
To maintain transparency throughout the operational process, the contract specifies the Commercial Operation Date (COD), which is particularly beneficial for projects that involve the construction of facilities, indicating that they are prepared to start providing CRUs.
The Delivery stage outlined in the agreement signifies the point at which the buyer obtains certification from the supplier that the removal has been finalized and that the CRUs are compliant with the agreement’s stipulations. It also indicates that the buyer has received the credits issued by the CRU Issuer.
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The contract also encompasses a clause addressing Delivery shortfalls and delays, Termination Rights, and Remedies in the event that the project fails or if a supplier engages in dishonest behavior.
Frontier emphasizes that the agreement contains a protocol, which outlines the criteria for assessing the carbon removal achieved, as well as a Credit Issuer, which is the independent organization responsible for verifying that the credits adhere to the Protocol and for registering them on a public registry.
Another key feature of this agreement is the Right of First Offer, which grants the buyer the opportunity to purchase any surplus tons produced by the project covered by the agreement, as well as future tons from new projects owned or associated with the supplier, according to the specifics outlined in the contract.
