akar.earthERPA: Definition
What is an ERPA (Emission Reductions Purchase Agreement)? How results-based carbon payments are contracted, including World Bank FCPF programmes in Indonesia.
An ERPA (Emission Reductions Purchase Agreement) is a contract under which a buyer agrees to pay for verified emission reductions delivered by a seller, often a government running a jurisdictional REDD+ programme. It sets volumes, price, delivery periods, verification rules and how payments are shared.
Why it matters
ERPAs are the main contract form for results-based climate finance. They let donors, multilateral funds and companies pay for measured performance rather than activities. For jurisdictions, an ERPA brings predictable revenue for forest protection and a structure for benefit sharing with communities.
How it works
- The seller prepares an emission reductions programme with a baseline and monitoring plan.
- Buyer and seller sign the ERPA, setting maximum volume and unit price.
- Each reporting period, the seller monitors, reports and has reductions verified.
- The buyer pays for verified tonnes, and the seller distributes payments under an agreed benefit sharing plan.
- Reductions are recorded to avoid double counting; FCPF and ISFL reductions can move from the World Bank’s CATS registry into the ART registry.
The structure is similar to a private offtake agreement, but usually tied to public programmes and safeguards.
Indonesia and Southeast Asia angle
Indonesia has used ERPAs for jurisdictional REDD+, including a programme in East Kalimantan under the World Bank’s Forest Carbon Partnership Facility Carbon Fund, and other provincial programmes under World Bank initiatives. These involve national and provincial governments, benefit sharing with villages and alignment with national carbon rules. Projects inside those provinces must consider nesting and how their reductions relate to the programme.
ERPA payments are often modest relative to total forest protection costs, so jurisdictions combine them with national budgets, donor grants and private finance.
Common mistakes
- Confusing ERPA payments with tradable credits.
- Ignoring benefit sharing obligations attached to payments.
- Overlapping project claims inside a jurisdiction with an active ERPA.
More on finance structures on the climate finance hub.
Frequently asked questions
Who signs ERPAs?
Typically a buyer, such as a World Bank-managed carbon fund or a company, and a seller, such as a national or subnational government or a project developer.
Does an ERPA mean credits are issued?
Not by itself. Payments are made for verified emission reductions. Under some programmes, the reductions can later be transferred into a registry such as the ART registry from the World Bank's CATS registry.