Lee International Participates in CERSPA Launch at Carbon Expo 2007

New open-source sale and purchase agreement for CDM projects assists sellers, includes guidance document

COLOGNE, GERMANY — Catherine A. Lee, managing director of Lee International, participated today in the launch of a new open-source agreement template for selling and buying Certified Emission Reductions (CERs) from Kyoto Protocol Clean Development Mechanism (CDM) at an event coinciding with Carbon Expo 2007.

The new template — titled CER Sale and Purchase Agreement or "CERSPA" — was developed by more than 30 lawyers and CDM experts from around the world. The CERSPA provides a simple, balanced, open-source CDM contract that is accessible to sellers and buyers in many countries.

"The CERSPA facilitates the entry of new sellers by leveling the contractual playing field. It is a clear signal of the maturity of a market in which buyers and sellers can participate on an equal footing" said Christiana Figueres, member of executive board of the CDM. Translations in Spanish, Portuguese and Chinese will further promote the equitable participation of sellers who do not speak English as a first language.

The template and related information is available at www.cerspa.org. According to Lee, the web site will "serve as a clearing house for information about the model contract as it evolves. We encourage parties to comment, make suggestions, provide anecdotes on their CDM contract experiences on the site." All proposals for either the guidance document or the contract received on the site will be reviewed and considered by the initiaitve secretariat (Lee International and Climate Focus) for inclusion in the next draft of the CERSPA.

Background

As the carbon market continues to develop, and moves from a buyers market to a sellers market, there is a need to assist project developers and sellers draft and negotiate contracts. Many CDM projects are developed by entities that do not have the means to obtain advice from international legal firms. Unlike many buying institutions, sellers are rarely represented in international forums and do not have the capacity to follow international discussions closely. In most cases, their legal advisors are generalists without specific expertise in the carbon market. In order to benefit from the CDM and the carbon market, it is important that entities selling CERs receive proper legal advice.

Sponsors

The IIC, the private sector lending facility of the Inter-American Development Bank, is the main sponsor of the CERSPA initiative. IIC sees the template as an important contribution to the carbon market as it will help financial institutions to consider an emission reduction sales agreement as collateral for their lending activities. "Based on our extensive experience with credit analysis of projects in Latin America and the Caribbean, we are confident that a template that strikes a balance between the interests of the buyers and the sellers of carbon credits, and their financiers, is critical for the development and financing of CDM projects. The CERSPA initiative will open many doors to smaller-scale developers around the world that may otherwise have been closed" said Sarah Fandell, General Counsel of the IIC.

Climate Focus and Lee International also sponsored the CERSPA initiative and act as the secretariat. "The CERSPA stands out as the first open-source CDM contract that balances the interests of sellers, financial institutions and buyers, and explains the legal and commercial rational behind each clause in the contract" said Robert O’Sullivan, counsel from Climate Focus. Lee added, "from my CDM work in South Africa, it is clear that sellers need access to a model contract that takes into account their specific needs and issues. The CERSPA and guidance document will give sellers a starting point."

For more information on the CERSPA initiative including lists of sponsors and participants, to obtain a copy of the CERSPA and guidance document, and to provide input for future versions please visit www.cerspa.org, www.iic.int, www.climatefocus.com and www.go-worldlee.com.