3. Additional Aspect: Conditions Precedent and Milestones

Before delivery obligations take effect, Offtake Agreements often include conditions precedent. These are the contractual prerequisites that must be satisfied to ensure that the CDR credits delivered will be of acceptable quality and integrity.

Conditions precedent may include:

• Successful registration of the project with an approved registry.
• Confirmation that the applicable protocol has been validated.
• Appointment of an independent verifier.
• Provision of project documents, including monitoring plans, risk assessments, and environmental impact reports.
• Evidence of insurance or buffer pool participation.

For early-stage projects, milestones may also be used. These tie specific project events—such as groundbreaking, construction completion, first injection of CO₂, or commercial operations date (COD)—to buyer obligations. In some cases, payment obligations are staged against these milestones, reducing buyer exposure to non-performance.

The combination of conditions precedent and milestones ensures that buyer commitments are not unconditional but rather are linked to demonstrable progress and compliance. This structure encourages discipline in project development while providing assurance to financiers that funds are disbursed only when key risks have been addressed.

OSCAR's Approach

OSCAR does not include conditions precedent because the default provisions in the event of a Generation Shortfall or Delivery Shortfall are sufficient as remedies in the event of a default in cases where payment is made upon or after delivery of the relevant CDR credits.

Before the buyer agrees to make payment prior to the CDR project's commercial operations date, the buyer should conduct additional due diligence regarding the project's viability and may consider negotiating for such conditions precedent to payment.