Forward Sales and Offtake Agreements for Carbon Credits

How selling credits before issuance works, what each side risks, and the contract terms that usually matter most. General guidance, not legal advice.

A forward sale is an agreement to sell carbon credits that have not been issued yet. The seller commits to deliver a quantity of units from a future verification; the buyer commits to take them at an agreed price or formula. When the agreement covers several years of output, it is usually called an offtake agreement.

For Indian developers, forward sales are often how a project gets built or scaled. A biogas programme across village clusters, or an agroforestry project that will not see its first verification for some years, needs cash before any units exist. A buyer who signs early gets a price and a place in the queue for supply they might struggle to find later.

This page explains how forward deals commonly work in the market. It is not legal advice. Contract terms depend on the parties, the project and the governing law, and you should have any agreement reviewed by a lawyer before signing.

How a forward deal usually unfolds

Term sheet. The parties agree headline points: volume, vintage or monitoring period, price, delivery window and any eligibility conditions.
Due diligence. The buyer reviews the project documents, monitoring data and the developer's track record. Forward buyers dig deeper than spot buyers, because they are relying on something that has not happened yet.
Signed agreement. A full contract sets out obligations, conditions and remedies.
Payment. Depending on the deal, this may be on delivery, partly upfront, or in instalments linked to milestones such as validation or verification.
Verification and issuance. The project is verified and the registry issues units.
Delivery. Units are transferred to the buyer's registry account or retired on the buyer's behalf, with serial numbers as proof.

On our marketplace, a lot of this kind is shown with the delivery type Forward, so buyers can filter for it or avoid it. The buyer's comparison of delivery types is in spot, issued and forward credits.

Risks to each side

Risk	Who carries it	What it looks like
Short delivery	Buyer	Verification confirms fewer tonnes than forecast.
Late delivery	Buyer	Verification or issuance takes longer than planned.
Non-delivery	Buyer	The project fails, is abandoned, or loses registration.
Eligibility change	Both	Rules change, or an expected authorisation does not come, so units no longer suit the buyer's purpose.
Price moves up	Seller	The market rises and the fixed price looks cheap by delivery.
Price moves down	Buyer	The market falls and the buyer is locked into a higher price.
Counterparty risk	Both	The other side cannot pay or cannot perform.

A well-drafted agreement does not remove these risks. It decides in advance who bears each one, and what happens if it occurs.

Terms that usually matter most

Volume: firm or best efforts

A firm commitment means the seller must deliver the stated quantity or face a remedy. A best-efforts commitment means the seller delivers whatever is issued, up to a cap. Some deals combine the two: a firm base volume and an optional extra tranche. Developers should be cautious about firm volumes that depend on optimistic monitoring forecasts.

Price: fixed, floor or formula

A fixed price gives both sides certainty. A floor protects the seller from a falling market while sharing upside. A formula might track an index or set different prices for different eligibility outcomes, for example one price if the units receive a corresponding adjustment and another if they do not.

Delivery schedule

The agreement should name a delivery window for each tranche and say what happens if the window is missed. Grace periods are common, because verification timelines in carbon markets often slip for reasons outside the developer's control.

Eligibility conditions

If the buyer needs units for CORSIA, or with host-country authorisation, the contract should say so precisely: which programme, which vintage, what kind of authorisation, and what proof will be provided. Vague wording such as "high-quality units" leads to disputes. Our CORSIA eligible units checklist shows what airline buyers typically require.

Remedies for shortfall

Common approaches include delivering replacement units of equal or better quality from another project, carrying the shortfall into the next period, refunding any prepayment for the missing tonnes, or paying an agreed sum. Each has a different cost to the seller, so read this clause closely.

Prepayment and security

Where a buyer pays upfront, they will often ask for protection: a charge over the project's future units, a parent-company guarantee, or staged payments tied to milestones. Sellers should weigh the value of early cash against the obligations that come with it.

Termination and change in law

Carbon market rules change. Contracts usually say what happens if a standard revises a methodology, an authorisation is withdrawn, or a regulation makes performance impossible.

Advice for Indian sellers

Base forward volumes on verified history where you have it, and on conservative forecasts where you do not.
Keep your PDD, monitoring reports and registry records in order before you approach buyers. Forward buyers will ask for more than spot buyers, as set out in what buyers check before buying.
If you are still seeking authorisation for international transfer, make the contract's price and obligations conditional on that outcome rather than assuming it.
Do not sell the same future units twice. It sounds obvious, but overlapping commitments to different buyers are a real source of disputes.

If you are thinking about offering future issuance, list the lot as Forward on the seller intake form, or talk to the desk first about how buyers are likely to view it.