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Carbon credits, RECs and green attributes only have value if the legal rights are clear.
Who owns them? Who can sell them? When do they transfer? What happens if they are not issued, verified or delivered? These are not technical details. They are the legal terms that determine whether the transaction works.
Shu Pin & Associates advises on the contracts behind renewable energy-related carbon market and environmental attribute transactions including Emission Reduction Purchase Agreements (ERPAs), carbon credit sale arrangements, REC provisions, green attribute clauses and sustainability-related contract terms.
We do not provide a trading platform. We help clients structure, review and negotiate the legal documents behind the deal.
An Emission Reduction Purchase Agreement (ERPA) is the core commercial contract for the sale and purchase of carbon credits. It is not a standard commodity agreement. An ERPA must address credit specifications and the applicable carbon standard, conditions precedent to payment and delivery, representations and warranties as to credit integrity and exclusivity, what happens on delivery shortfall, how changes in carbon accounting methodology are allocated, liability for credit reversal events, and termination rights. For a solar project developer generating carbon credits, the ERPA is a revenue contract that deserves the same legal attention as a Power Purchase Agreement (PPA).
Beyond the ERPA, a carbon credit project requires sound legal foundations: established carbon rights, requisite permits and approvals, compliance with the applicable carbon standard (whether Verra’s Verified Carbon Standard, the Gold Standard, or the applicable product and trading requirements where credits are transacted through Bursa Carbon Exchange), and documentation that satisfies an investor, buyer or acquirer reviewing the project or transaction. The legal documentation must also address ESG disclosure obligations where applicable. Carbon credits that have been sold should not be double-counted, double-sold or used by the seller to make environmental claims that are inconsistent with the sale , which creates greenwashing risk and potential legal exposure under Malaysia’s evolving sustainability and climate disclosure framework.
Environmental attributes do not exist separately from the underlying project contracts. The Bilateral Energy Supply Contract (BESC) under the Corporate Renewable Energy Supply Scheme (CRESS) and the PPA all have green attribute implications. These include who owns the environmental attributes of the electricity generated, whether the offtaker’s sustainability claim is supported by the contract structure, and what happens if the green attributes are separately traded or claimed. Gaps in these clauses create disputes. A corporate offtaker whose BESC does not clearly allocate green attributes to them may find that their sustainability reporting is challenged.
As Malaysia’s sustainability reporting requirements develop, including the National Sustainability Reporting Framework (NSRF) and Bursa Malaysia’s enhanced sustainability reporting requirements for listed issuers, the contractual documentation behind a company’s sustainability claims becomes more important. Green energy supply agreements, carbon offset arrangements, and REC procurement contracts must be structured so that the claims they support are accurate, non-duplicative, and consistent with the applicable reporting framework. Legal review at the contract stage is significantly less expensive than managing a greenwashing claim or a regulatory challenge after the fact.
Shu Pin’s starting point is simple: identify the legal right before drafting the contract.
Carbon credits, RECs and green attributes are not just sustainability language. They are rights that must be clearly owned, transferred, retired, claimed or restricted. If the contract does not say who owns the attribute, who can sell it, who can claim it, and what happens if it is not issued or delivered, the transaction carries legal risk from day one.
The review focuses on the documents behind the transaction — ERPAs, carbon credit sale arrangements, REC provisions, green attribute clauses and sustainability-related contract terms. The key issues are ownership, title, delivery, verification, registry transfer, retirement, non-delivery, double counting, double sale, environmental claims, warranties, indemnities and termination.
The work is legal, practical and document-led: making sure the contract supports the transaction, the attribute and the claim.
Who generate environmental attributes alongside electricity and want to understand how to document, retain, or monetise those attributes through RECs / I-RECs, carbon credits, or ERPA arrangements.
Whose BESC arrangements require careful green attribute allocation to ensure the offtaker’s sustainability claims are properly supported and the developer’s own reporting obligations are not compromised.
Procuring renewable energy under CRESS, a private PPA, or an RECs / I-RECs arrangement, who need the documentation behind their sustainability claims to be accurate, non-duplicative, and aligned with their reporting framework.
Structuring projects for recognised voluntary carbon standards, international voluntary carbon markets, or transactions through Bursa Carbon Exchange, who need ERPAs drafted and the legal foundations of the project documented to satisfy investors, buyers, acquirers and applicable carbon standard and registry requirements.
Subject to Malaysia’s evolving sustainability and climate disclosure requirements, including Bursa Malaysia-listed issuers and large non-listed companies within the National Sustainability Reporting Framework, who need legal advice on the contract documentation behind their sustainability positions.
An engagement in this area typically begins with a conversation about the project or the transaction, whether it is a developer looking to monetise carbon attributes, a corporate buyer structuring a green energy arrangement, or a company reviewing its existing contracts for green attribute compliance.
From that conversation, Shu Pin will give an honest assessment of the legal documentation required and flag any structural issues in the existing arrangements before they become a problem. Shu Pin leads the work personally and works closely with the team throughout the matter.
Malaysia’s carbon market framework is still developing. If you are unsure whether your current contracts or sustainability arrangements are correctly structured for the regulatory changes ahead, that question is worth asking now.
An Emission Reduction Purchase Agreement (ERPA) is a commercial contract governing the sale and purchase of carbon credits or emission reductions between a project developer and a buyer — a highly specialised agreement, not a standard commodity contract. An ERPA must address credit specifications, the applicable carbon standard, conditions precedent to payment, representations and warranties on ownership, title, verification, certification, no double counting and no double sale , delivery shortfall provisions, liability for credit reversal events, and termination rights. A poorly drafted ERPA creates uncertainty over revenue, ownership of the credits, and legal exposure if the environmental claims underpinning the credits are later challenged. Legal review at the drafting stage is significantly less expensive than resolving a dispute after credits have been sold.
Ownership depends on the contract. In a renewable energy project, the electricity, carbon credits, RECs and green attributes should not be assumed to belong to the same party or move together automatically. The project owner may want to retain or monetise the attributes separately. The offtaker may need those attributes to support its renewable energy or sustainability claims. The contract must state clearly who owns the green attributes, whether they are transferred, whether they can be sold separately, and what claims each party is allowed to make. If the contract is silent or inconsistent, both parties may believe they have rights over the same environmental attributes, creating double-counting, double-sale and greenwashing risk.
Green attribute clauses determine who owns, uses, transfers and claims the environmental benefits of the electricity generated. In a renewable energy PPA or BESC, the green attributes should not be assumed to move together unless the contract clearly says so. If the contract is unclear, the buyer may face difficulty supporting its renewable energy claims, while the project owner may face restrictions on selling or claiming the same attributes elsewhere. Clear drafting helps prevent double counting, double sale, inconsistent reporting and disputes over environmental claims.
Yes, they can be separated in some transactions, but the contract must be clear. A renewable energy project may sell electricity under one agreement and deal with RECs, carbon credits or green attributes under another. The legal risk is inconsistency between the documents. If the PPA, BESC, ERPA, REC arrangement or project documents do not align, more than one party may believe it has the right to claim, sell or report the same environmental attribute. Legal review helps ensure the electricity sale, attribute ownership and sustainability claims work together.
Not necessarily. A PPA may say that green attributes are transferred to the offtaker, but that does not always mean the project owner must register, procure, transfer or retire RECs / I-REC(E) or any other certificate for the offtaker’s benefit. This needs to be stated clearly in the contract. The PPA should address whether certificates will be issued, who is responsible for registration, who pays the certification or registry costs, whether certificates must be transferred or retired, when this must happen, and what evidence the offtaker will receive to support its sustainability claims. Without these details, the offtaker may think it has received documentary support for a renewable energy claim, while the project owner may treat the certificate cost as outside the agreed tariff.
Yes. Carbon credit, REC and green attribute contracts should be drafted with environmental claims in mind. The contract should make clear what claim the buyer is allowed to make, what claim the seller must not make, whether the credit or certificate must be retired, and what happens if the underlying credit, certificate or claim is later challenged. This reduces the risk of double counting, misleading sustainability claims and disputes after the transaction has completed.
Malaysia’s carbon framework is developing quickly. Shu Pin will give you an honest assessment of the legal documentation required and flag any structural issues before they become a problem.
Malaysia’s Dedicated Renewable Energy Legal Practice.
We help you get the contract structure right before the risk becomes real.