2 minute read | August.21.2024
Frontier Climate, LLC, an advance market commitment that seeks to accelerate the development of the carbon removal market, has published a template for carbon removal offtake agreements.
The goal is to make it easier for other buyers and suppliers to sign offtake agreements and build new carbon removal projects.
Orrick advised Frontier in drafting the template.
Frontier is an advance market commitment to buy permanent carbon removal that will be delivered this decade.
Frontier launched in 2022 with the goal of signaling to entrepreneurs and investors that there is at least $1B of revenue for carbon removal companies if they can build and deliver.
The idea is that by being willing to be early customers for new technologies, Frontier can help carbon removal scale faster.
Drafting a carbon-removal contract “sounds simple enough,” Frontier said, but existing templates, such as renewable energy power purchase agreements, don’t work well for carbon removal.
According to Frontier, the challenge is that “carbon removal is still nascent – the technologies are much earlier, and the confidence in the market (especially when prices are high) is low.”
Frontier’s offtake-agreement template takes into account factors unique to such carbon removal transactions.
“We’ve edited and refined our template over the course of seven offtake deals and ~$300M+ contracted...This template is very unlikely to be the final form of carbon removal offtake agreements, but our hope is that it may help other teams save valuable time by providing a decent starting point,” Frontier said.
Robert Lawrence and Sue Cowell led the Orrick team advising Frontier on its template for carbon removal offtake agreements. The team also included Zachary Huey.