OSCAR: A New Open Standard Agreement for Carbon Removal Transactions

A new contractual framework, The Open Standard Carbon Removal Agreement (OSCAR), was launched during the COP30 to address legal inefficiencies in the carbon dioxide removal (CDR) market. Developed by a group of industry veterans (Glenn Morley, Jason Grillo, and Elena Pérez Celis, with Peter Mayer providing pro bono legal advice), OSCAR aims to serve as a standardized baseline for offtake purchases of carbon removal credits.

Here is a link to the blog post article of CDR.fyi to announce OSCAR’s publication: https://www.cdr.fyi/blog/introducing-oscar-the-open-standard-carbon-removal-agreement.

The primary objective of OSCAR is to streamline a transaction process that is often slowed by lengthy and costly bilateral negotiations. By providing a common starting point, the framework seeks to reduce transaction costs, accelerate deal execution, and mitigate legal risk for all parties involved.

Framework Structure and Application

OSCAR is structured as a balanced and neutral baseline. It will need to be amended on a case-by-case basis to fit the specific technology, risk profile, and commercial terms of a given transaction. For lawyers new to the CDR space, OSCAR can serve as a valuable resource, offering a comprehensive overview of standard and emerging market terms.

OSCAR can be helpful for:

Buyers in providing a foundational framework that legal and procurement teams can start from immediately, thereby lowering internal barriers and building comfort around durable removals;

Suppliers in presenting a familiar, structured contract that reduces buyers' risk and speeds up sales cycles;

Intermediaries in creating consistency across the portfolio and increasing transparency in how deals are structured; and

Lawyers in providing a primer on the CDR market, risk allocation, and contracting norms, enabling legal teams new to the field to get up to speed fast.

Key Commercial Terms Addressed

The framework provides standardized language for several critical commercial deal points, establishing a clear baseline for negotiation:

• Delivery Shortfalls: OSCAR outlines potential remedies for scenarios where a project fails to deliver the agreed volume of carbon removal credits.

• Payment Structures: The template accommodates various payment models, including pre-payment, milestone-based payments, and payment upon delivery.

• Credit Ownership and Claims: It includes provisions to clarify the ownership of the carbon removal credits and the related rights to make environmental claims, a point of critical importance for corporate accountability.

  
  

Conclusion

The introduction of OSCAR represents a step towards standardizing legal practice within the carbon removal industry. By providing a coherent and well-structured contractual baseline, it has the potential to increase transaction efficiency for buyers, suppliers, and intermediaries.

Link to OSCAR’s LinkedIn page: https://www.linkedin.com/company/cdr-oscar/posts/?feedView=all