Legal Status

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Does the project have a legal basis?

The project proponents should be able to demonstrate they have the necessary rights to carbon and land-use to implement the project, and transact Natural Capital Credits.  Documents regarding the project area should be reviewed by legal advisors and a summary statement of this review should be presented in the Project Design Document.

The project proponents should hold the necessary legal rights to perform the project activities for the entire crediting period.

The directors of the project should warrant that the project and/or organisation is not in violation of any applicable laws, regulations and relevant environmental treaties and agreements.  As such, it will be important for the project operators to demonstrate an understanding of the national and local regulatory requirements relevant and applicable to the project.

Carbon Ownership

The Standard requires project developers to hold evidence of necessary use rights to the project area; this includes the carbon rights and/or ownership of land for the project area.

Carbon rights holders are: individuals, institutions, groups or communities that have rights to the benefits (and liabilities) associated with carbon sequestration within a defined area. Where the ownership of carbon benefits is not legally defined, contractual mechanisms apportioning benefits shall be acceptable. This can be established without a formal legal framework, although a formal legal framework defining rights is preferable. All activities should be informed by the principles of FPIC.

This will involve project developers determining who owns the carbon rights and if necessary determining the correct process for obtaining the carbon rights. The diagram below is indicative of a process that a project might go through to determine how carbon rights might be allocated in the project area. In the first instance projects should determine if the host country has a nationally approved mechanism for the allocation of carbon rights.

 Example of how the process for determining carbon rights within a project area might work; carbon rights should be reviewed at intervals throughout the life of the project

Where the law does not explicitly allocate carbon rights, applicable laws for the host country should be assessed to determine if the rights can belong to the person or government that holds the rights to land and forests in the project area. If this is not provided within the legal framework (including customary law) of the host country then private contractual agreements between the claimants can improve legal certainty. In this instance if tree or land ownership is not clear within the project area then the project will need to work with communities, using participatory processes, to establish clear maps of tenure, territory and resource use rights, and from this work with relevant stakeholders to define carbon rights within the area.

To address the possibility of multiple claims for carbon rights to be made within any area, projects should obtain explicit contractual agreements with all potential claimants. Paths to different understandings of carbon rights for the project, through full and effective participation of those impacted by the project, are illustrated in USAID Working Paper on Carbon-Rights Framework pg. 6[1].