1. Introduction
The Open Standard Carbon Removal Offtake Agreement (OSCAR) is intended for informational purposes and not as legal advice. It outlines the sale and purchase of CDR credits, which represent environmental attributes associated with the removal and storage of greenhouse gases. The headlines in Section 2 below correspond to the articles in OSCAR.
It is important to note that OSCAR is tailored to U.S. law. International CDR transactions might require adjustments to comply with jurisdictional requirements.
OSCAR is intentionally drafted in a buyer-friendly manner. Its primary purpose is to provide protection for buyers of CDR credits, safeguarding them against the risks of under-delivery, reputational harm, and the possibility that purchased CDR credits are later found to be invalid or non-compliant. At the same time, OSCAR is designed to remain balanced. Many suppliers are early-stage companies or start-ups, and it would be counterproductive to impose obligations that they cannot realistically fulfill. Overburdening suppliers with unworkable commitments would not only jeopardize project viability but also undermine the broader goal of scaling the CDR market. By combining protections for buyers with realistic expectations for suppliers, OSCAR seeks to create a framework that is both credible and commercially sustainable.
An Offtake Agreement is not a one-size-fits-all instrument. Its terms and risk allocations are heavily influenced by the type of CDR pathway deployed, particularly the distinction between durable removals and biological or land-use-based removals.
Durable removals. These pathways typically involve manufacturing or industrial processes, such as biochar production, direct air capture (DAC), or bioenergy with carbon capture and storage (BECCS). They result in physical and measurable products where the captured carbon is stored in a stable form for centuries or longer. Because these removals involve manufactured products or engineered storage solutions, they offer a durability profile that is materially different from that of nature-based methods. OSCAR, therefore, allows for stronger warranties, but in a way that recognizes suppliers cannot take on unlimited liability, especially in early-stage markets.
Biological or land-use-based removals. Pathways such as afforestation, reforestation, or soil carbon sequestration rely on natural processes. Their permanence is inherently contingent on ecological conditions—such as fire, pests, or land-use changes—and therefore carries a higher risk of reversal. In these cases, Offtake Agreements need to allocate risks realistically, making use of tools such as buffer pools or force majeure provisions rather than imposing guarantees that suppliers cannot credibly provide.
Legal practitioners who are accustomed to working primarily with forestry or avoided-deforestation credits may sometimes treat all carbon credits as interchangeable. OSCAR seeks to make explicit the critical differences between durable and biological pathways so that appropriate and balanced risk allocation can be built into the Offtake Agreements. These distinctions include:
Durability horizon. For example, a DAC project may credibly commit to storing carbon for more than 100 years through geological injection, whereas afforestation projects typically have an average permanence horizon of approximately 40 years. Recognizing this, OSCAR frames obligations in line with what can be delivered, avoiding unrealistic parity between pathways.
Physical custody of manufactured products. Durable pathways produce tangible carbon storage products, such as biochar, mineralized carbon, or liquefied CO₂ injected into geological formations, that can be tracked, measured, and verified in ways that biological pathways cannot.
Implications for risk allocation. Because durable removals can credibly provide long-term storage assurances, they justify more robust representations, warranties, and potentially insurance mechanisms. By contrast, suppliers of afforestation or avoided-deforestation projects cannot realistically provide equivalent assurances, and their agreements must therefore rely more heavily on buffer pools, reversal risk accounts, or carefully defined carve-outs. The guiding principle is to hold suppliers accountable for what is within their control, while not penalizing them for risks they cannot manage.
Practical Illustration
A supplier of DAC credits may be able to warrant the permanence of geological storage through verifiable injection into regulated reservoirs. By contrast, a forestry project developer cannot offer the same level of assurance, given the inherent risks of fire, disease, or land-use change. Their agreements, therefore, allocate risk differently, using tools such as buffer pools of CDR credits to absorb reversals or exceptions that excuse liability for events beyond the supplier's control.