akar.earthOfftake agreement: Definition
What is a carbon offtake agreement? How buyers commit to purchase future credits from a project, the key terms, and the risks for Indonesian developers.
An offtake agreement is a contract in which a buyer commits to purchase a defined volume of future carbon credits from a project, at an agreed price or pricing formula, over a set period. It gives the developer revenue certainty and the buyer secured supply.
Why it matters
Forest carbon projects need money years before the first credits are issued. A signed offtake from a credible buyer helps raise finance from investors and lenders, and can be combined with prepayment. For buyers, especially companies with long-term net zero plans, offtakes lock in volumes of high-quality removals before supply tightens.
Key terms
- Volume: fixed tonnes, a share of issuance or a range.
- Price: fixed, floor plus share of upside, or indexed.
- Quality conditions: standard, methodology, CCP label, rating thresholds, co-benefit labels.
- Delivery schedule and vintages.
- Under-delivery and reversal remedies.
- Corresponding adjustment and authorisation requirements where relevant.
- Termination and change in law clauses.
Read our full guide to carbon offtake agreements.
Indonesia and Southeast Asia angle
Indonesian rules on carbon trading, recording in SRUK and international transfers under Perpres 110/2025 have changed several times. Offtakes for Indonesian projects should address authorisation, domestic registration and what happens if rules change again. Prices for Indonesian credits remain low relative to abatement costs, so developers should model offtake terms carefully before committing large volumes at fixed prices.
Buyers are also increasingly asking for data access rights in offtakes, such as dashboard access, plot-level monitoring results and early warning of reversals. Developers with strong dMRV can offer this as part of the deal, which builds trust and can support better prices. Clear dispute resolution and governing law clauses matter for cross-border deals.
Common mistakes
- Fixed prices for long periods without escalation.
- Vague quality conditions that let buyers walk away.
- Ignoring regulatory risk on exports.
- Over-committing volumes before ex-post data exists.
Government-backed results-based payments use a similar contract, the ERPA. More on the climate finance hub.
Frequently asked questions
Is an offtake agreement the same as a prepayment?
Not always. An offtake agreement commits a buyer to purchase future credits. Payment may be on delivery, partly upfront (prepayment) or a mix.
What happens if the project delivers fewer credits?
That depends on the contract. Common options include reduced delivery without penalty, replacement credits, make-up from later vintages or refunds of any prepayment.