Who owns the carbon credits when equipment is supplied, financed or leased by someone else?

Question

Senseible · Accepted Answer

Whoever can prove the right to the emission reductions, and that is decided by contract, not by who owns the machine. Verra and Gold Standard both require the project proponent to show documented rights. If the supplier, lender, lessor and user have not agreed in writing, expect no one to be able to register the credits. The Verra VCS Standard requires the project proponent to show right of use, for example through ownership, a law, or a contract that transfers the right to the reductions. Gold Standard asks the project developer to show ownership of, or rights to, the reductions and, for many distributed devices, signed agreements with end users. Both also guard against the same tonne being claimed twice by two parties. You buy the equipment outright: you usually hold the rights, unless your purchase contract assigns them to the supplier. Equipment financed by a bank or NBFC: the lender takes security over the asset, not the reductions, unless the loan says otherwise. Equipment leased: the lessor owns the asset but you operate it and pay for the fuel or power saved, so the contract must say who holds the rights. ESCO under a shared savings contract: the ESCO often asks for the credit rights as part of its return; read the clause. Aggregator or grouped project: each site signs a rights transfer to the project proponent before its reductions can be included. Which party holds the rights to emission reductions and any certificates issued for them. How revenue, if any, is shared, and who pays validation and verification costs. Access to meter data, fuel and power invoices and site visits for monitoring. A promise not to claim the same reductions elsewhere, including in other programmes or schemes. What happens to the rights if the equipment is sold, repossessed or the lease ends. The signed contracts, proof of equipment ownership or lease, commissioning records, and the before and after energy records that show the reduction. Records that show who paid the fuel and power bills help show which party actually realised the saving. This page is general guidance; a lawyer should draft or review the contract.