How Is Climate/Carbon Finance Disbursed?
Overview
An Emission Reductions Purchase Agreement (ERPA) is a legally binding contract between two entities, namely the buyer and seller of ER units, that specifies the terms and conditions for the sale of ERs. The objective of the ERPA is ultimately to incentivize the adoption and expansion of more sustainable land-use practices across entire landscapes and facilitate results-based payments, i.e., the payment of money in exchange for verified ERs. Typically, the terms of an ERPA are agreed during a period of negotiation, during which various issues are discussed, including the anticipated volume of ER units to be generated, the available financing modalities, and the per-unit price of ERs.
