From 10 to 12 October 2023, the first session of the Working Group on the Legal Nature of Voluntary Carbon Credits Project (the “VCCs Project”) was held in hybrid format at the seat of UNIDROIT in Rome. The Working Group was conducted in cooperation with the World Bank and UNCITRAL and was attended by 30 participants, including legal experts and observers from international, regional and intergovernmental organisations, as well as the private sector and academia.
The VCCs Project is a high priority project on the UNIDROIT Triennial Work Programme 2023-2025. Its main objective is to provide guidance on private law issues so as to enhance confidence in VCC transactions and support the development of a well-functioning market which could play a central role in fighting climate change, achieving the goals of the United Nations Framework Convention on Climate Change, in particular the Paris Agreement, and facilitate the fulfilment of the UN Sustainable Development Goals. Given that a significant share of the projects that generate VCCs are located in developing economies, a reliable carbon credit market also provides an opportunity to increase capital flow to emerging markets and provide funding to climate projects that may not otherwise receive adequate support.
During this first session, the Working Group considered the matters raised in an Issues Paper prepared by the UNIDROIT Secretariat, in consultation with UNCITRAL’s Secretariat and with the assistance of the World Bank. The Issues Paper raised several matters for the group’s discussion, including fundamental questions as to the legal nature of VCCs. The Working Group also considered related issues, such as a VCC’s issuance, transferability, and retirement, as well as matters relating to secured transactions and collateralisation, the role of custodians and other intermediaries, the treatment of VCCs in the case of insolvency, as well as the Project’s relationship with the UNIDROIT Principles on Digital Assets and Private Law.
A report of the first meeting of the Working Group will be published in the coming weeks. More information about the VCCs Project can be found on the project webpage.