Letter of Authorization and Acknowledgement

The approach paper on Letter of Authorization and Acknowledgement consists of template documents and guidance for countries to authorize carbon market activities and provide assurance that the emission reductions or removals will not be used toward the selling country’s own NDC. In cases where a country determines that a project activity and resulting credits are not authorized, it may issue a Letter of Acknowledgement to mitigate uncertainties for investors. The paper includes general terms and conditions that should be clearly set out to offer adequate certainty for investors to participate in carbon markets. This is intended to ensure clarity and maximize investment and value for the selling country. These terms and conditions can be customized to align with a country’s legislation and policy related to carbon markets. It also includes a Host Country Agreement outlining specific terms conducive to facilitating insurance for breach of a Letter of Authorization. The Letter of Authorization is a key component of a country’s policy and governance framework for carbon markets.