7. Offtake Agreements as a Bridge to Scale

In today's VCM, each Offtake Agreement is effectively a bespoke contract. Over time, repetition will drive convergence. Certain terms, such as how delivery shortfalls are cured or how double-counting is avoided, are likely to become standardized.

The analogy to the renewable energy sector is instructive. Power Purchase Agreements (PPAs) were a crucial driver of the wind and solar industries. By locking in revenue streams for 10–20 years, PPAs allowed developers to secure financing for projects that otherwise looked risky. Over time, standardized PPA terms reduced transaction costs and created a template that investors, lenders, and rating agencies understood. Offtake Agreements play a similar role for CDR: they offer a structured and credible mechanism to contract for outputs that are new, heterogeneous, and initially expensive.

Standardization has multiple benefits: it lowers legal costs, accelerates deal flow, and allows investors and insurers to benchmark transactions more effectively. At the same time, Offtake Agreements must remain flexible enough to accommodate different pathways, project scales, and buyer needs. The balance between standardization and customization will be one of the defining challenges for the sector in the coming years.

Offtake Agreements can be thought of as the contractual equivalent of infrastructure: they provide the "roads and bridges" through which capital and CDR credits flow. For developers, Offtake Agreements represent long-term demand that can be presented to financiers as evidence of future revenue. For buyers, Offtake Agreements offer clarity on what they are purchasing, under what conditions, and with what remedies in the event of underperformance.