Market Rules

Environmental Market Rules

V2.0 current as at 17 February 2025

INTRODUCTION

Context

Environmental markets provide a mechanism to help align economic interests with environmental outcomes, by enabling environmental improvements to be paid for by those who benefit from them, directly and indirectly.

Nature Markets are a type of environmental market where landholders in a particular geographic area can offer to supply Nature based Projects on their land and third parties can bid for the Biodiversity and Ecosystem Services delivered by these Projects.

Well-designed and governed Nature Markets allocate resources to Nature-based Projects in the places that deliver the greatest benefit for the lowest cost.  By generating revenue streams from the biodiversity and ecosystem services delivered, Nature Markets can unlock the investment needed to scale up nature restoration.

Markets rely on trust. Without trust there is no investment.  And as has been seen from problems in voluntary carbon markets, building and maintaining trust relies on market integrity, which in turn requires effective market governance.

As illustrated in Figure 1, Market Rules are a central element of the governance framework needed to ensure market integrity.  High integrity Nature Markets deliver ‘genuine, lasting and additional environmental improvements which are robustly verified and transparently documented’.

Figure 1 – Nature Market Governance Framework

Although work is underway on some of the building blocks of a governance framework, including the work of the British Standards Institution (‘BSI’) on nature investment standards, there is currently no overall governance framework for Nature Markets in the UK.

About the Market Rules

The Market Rules:

• govern the market arrangements for landholders to submit Offers to supply Nature-based Projects on their land;
• specify how the Environmental Services from Nature-based Projects are to be quantified using approved Standards;
• govern the market arrangements by which third parties can submit Bids for Credits for the Environmental Services;
• specify how a Market Operator must manage the Environmental Market(s), including the issue and management of Environmental Credits;
• govern the Monitoring, Market Balancing and scientific oversight of the Market(s).

Application

The Market Rules apply to a Market Operator(s) that is authorised by the Board to operate an Environmental Market and has entered an agreement with the Board to provide Market Oversight.

The Market Rules also apply to individuals, businesses and organisations that register with the Market Operator as Market Participants and must be given effect through the Market Agreements with the Market Participants.

DEFINITIONS

Allocation Certificate means a written certificate issued by the Market Operator to a Local Planning Authority confirming the allocation of Environmental Credits required to meet a Credit Buyer’s planning obligation.

Assurance means the process by which the data collected through the Performance Monitoring Programme is used to provide confidence in the Environmental Services generated by Delivered Projects in a particular geographic area for a specific Performance Monitoring Period in accordance with Rule 7.2.

Baseline Data means information and data that must be provided by a Project Supplier about their land and land use(s) to set the environmental baseline for calculating the Environmental Services from a Nature-based Project.

Bridging Certificate means a written certificate issued by the Market Operator confirming the allocation of Bridging Credits required to meet a Credit Buyer’s planning obligation for the Bridging Period.

Bridging Credits means Environmental Credits from fixed-term Nature-based Projects to provide mitigation or offset an environmental impact, until Environmental Credits are available from on-going Projects.

Bridging Period means a term during which a Credit Buyer’s Credit Requirement is met through Bridging Credits until Environmental Credits are issued.

Buyer Payment(s) means the amount(s) of money that a Credit Buyer must pay to the Market Operator for the supply of Environmental Credits in accordance with an Environmental Credit Supply Agreement.

Certification means the application of a Standard(s) by the Market Operator to quantify the Environmental Service(s) expected to be delivered by a Registered Project.

Certification Record means the record in the Project Registry of how a Certification Standard has been applied to a Registered Project.

Certification Statement means a document that records the results of the Certification of a Nature-based Project.

Certified Project means a Registered Project that has been through the Project Certification process set out in Rule 2.2.

Contracted Project means a Project for which a Nature-based Project Agreement has been executed between a Project Supplier and the Market Operator.

Collaboration Agreement means an agreement between the Market Operator and an organisation(s) to work together to facilitate the development and operation of an Environmental Market in a particular geographic area(s).

Confirmation means a Confirmation of Successful Buyer Bid Notification, Confirmation of Successful Investor Notification or Confirmation of Successful Supplier Notification (as applicable).

Competent Authority has the meaning set out in Section 7 of the Conservation of Species and Habitats Regulations 2017.

Compliance Monitoring means the monitoring required to ensure that the Project Supplier maintains the Nature-based Project in accordance with the Project Specification and the Management Plan set out in the Nature-based Project Agreement.

Confirmation of Successful Buyer Bid Notification means the notification issued by the Market Operator to the Credit Buyer confirming (i) that their Buyer Bid for Environmental Credits in a Market Round has been successful and (ii) all key terms of the successful Buyer Bid.

Confirmation of Successful Investor Bid Notification means the notification issued by the Market Operator to the Credit Investor confirming (i) that their Investor Bid for Environmental Credits in a Market Round has been successful and (ii) all key terms of the successful Investor Bid.

Confirmation of Successful Supplier Offer Notification means the notification issued by the Market Operator to the Project Supplier confirming (i) that their Supplier Offer to deliver a Registered Project in a Market Round has been successful and (ii) all key terms of the successful Supplier Offer.

Credit Buyer means a Market Participant registered under Rule 1.4.2 b). 

Credit Buyer Bid (‘Buyer Bid’) means the amount of money that an Environmental Credit Buyer commits to pay for a specific number(s) and type(s) of Environmental Credit(s) in a Market Round.

Credit Investment Requirement means the quantity of Environmental Credits that a Credit Investor wishes to purchase in a Market Round and provides to the Market Operator in accordance with Rule 3.5.3.

Credit Identification Number means the unique number for each Environmental Credit created when the Credit is issued.

Credit Investor means  a Credit Buyer that does not have a requirement  to acquire the rights to Environmental Credits to meet a regulated or voluntary obligation in a Market Round.

Credit Investor Bid (‘Investor Bid’) means the amount of money that an Environmental Credit Investor commits to pay for the rights to a specific number(s) and type(s) of Environmental Credit(s) in a Market Round.

Credit Registry means the system established and managed by the Market Operator managing the rights to Environmental Services from Nature-based Projects, including issuing, transferring and redeeming Environmental Credits. 

Credit Requirement means a regulated or voluntary requirement for a Credit Buyer to obtain a specific quantity of a particular Environmental Service(s).

Credit Reserve means the Environmental Credits that must be retained by the Market Operator as a reserve for the purpose of Market Balancing.

Credit Rights means the rights to the Environmental Credits that will be issued for the Environmental Services generated by an Accredited Project once it is Verified.

Delivered Project means a Nature-based Project that the Market Operator has Validated in accordance with Rule 4.3.1.

Duration means the length of time for which an Environmental Credit or Bridging Credit is valid.

Eligible Area means a geographic area where Nature-based Projects that meet the relevant Project Specification will be able to generate Environmental Credits for use as mitigation or offsetting for a particular regulatory obligation, or to meet a Credit Buyer’s voluntary obligation or commitment

Environmental Credit means the market instrument(s) that represent the property rights to a standard quantity of an Environmental Service deemed to be delivered by a Registered Nature-based Project under a relevant Standard.

Environmental Credit Buyer (‘Credit Buyer’) means a Market Participant who is registered to buy Environmental Credits in the Environmental Market.

Environmental Credit Certificate means a certificate issued by the Market Operator as evidence of the ownership of Environmental Credits and their status as at the date of the certificate. 

Environmental Credit Supply Agreement (ECSA) means an agreement between the Market Operator and a Credit Buyer to supply Environmental Credits, incorporating (i) the relevant Standard Terms and Conditions and (ii) the relevant details from the Confirmation of Successful Buyer Bid Notification.

Environmental Credit Investment Agreement (ECIA) means an agreement between the Market Operator and a Credit Investor for the rights to Environmental Credits incorporating (i) the relevant Standard Terms and Conditions and (ii) the relevant details from the Confirmation of Successful Investor Bid Notification.

Environmental Market means a marketplace operated in accordance with these Market Rules, where landholders in a particular area can offer to supply Nature based Projects on their land, and third parties can bid for the rights to the Environmental Services delivered by these Projects.

Environmental Markets Board (‘Board’) is the body established to oversee the operation of Environmental Markets by Market Operators authorised under these Market Rules. 

Environmental Services means the biodiversity, water quality, flood mitigation carbon sequestration and other outcomes delivered by Nature-based Projects.

Guide Prices means a guide to offer and bid prices that the Market Operator may elect to provide to Market Participants in the Market Opportunities Statement.

Investor Payment(s) means the amount(s) of money that a Credit Investor must pay to the Market Operator for the rights to Environmental Credits in accordance with an Environmental Credit Investment Agreement.

Management Plan means the plan for managing and maintaining a Nature-based Project to the required Project Specification.

Market Account means an account of a Market Participant in the Market Operator’s Trading Platform.

Market Agreements means contracts entered into by the Market Operator for the purpose of operating the Environmental Market, including but not limited to Market Deeds, Nature-based Project Agreements and Environmental Credit Supply Agreements.

Market Assurance Statement means a reconciliation of the environmental outcomes from Delivered Projects accredited ex-ante in accordance with the relevant Certification Standard(s), and the environmental outcomes estimated to have been delivered based on the data from the ex-post Performance Monitoring Programme.

Market Balancing means the process by which the number of Environmental Credits available from a Market is adjusted to resolve any difference between the quantity of Environmental Services accredited and the Environmental Services delivered in a geographic area.

Market Bids means the Buyer Bids, Investor Bids and Project Supplier Offers made during a Market Round.

Market Close means the point in time at which Market Trading in a Market Round ends.

Market Deed means a deed between the Market Operator and a Competent Authority for the operation of an Environmental Market. 

Market Information means information provided to Credit Buyers, Credit Investors and Project Suppliers during a Market Round about the status of their Bids and Offers in the Market.

Market Operator means a party approved by the Board to operate an Environmental Market and has entered into an agreement to be overseen by the Board. 

Market Operating Procedure means the procedure approved by the Board that must be followed by the Market Operator to ensure the Environmental Market is being operated in accordance with the Market Rules.

Market Opportunities Statement means the documents issued by the Market Operator for a Market Round, setting out the opportunities in a geographic area, to supply Nature-based Projects and buy Environmental Credits.

Market Oversight means the activities undertaken by the Environmental Markets Board to ensure compliance with these Market Rules. 

Market Participant means a person who has met the relevant registration requirements for participation in an Environmental Market.

Market Round means a period of time set by the Market Operator during which Supplier Offers and Buyer Bids and Investor Bids can be made.

Market Rules means the rules established for participation in, and operation of Environmental Markets.

Matching and Allocation Rules means the rules by which Project Supplier Offers, Buyer Bids and Investor Bids are matched and the net surplus allocated to establish the payments to be made for each Market trade.

Market Schedule means the key dates and times for submitting Project Supplier Offers and Buyer Bids in a Market Round.

Market Trading means the process by which Project Suppliers offer to supply Nature-based Projects and Credit Buyers bid to buy Environmental Credits in a Market Round.

Nature-based Project (‘Project’) means a habitat creation, restoration or improvement project that delivers Environmental Services.

Nature-based Project Agreement (‘NBPA’) means an agreement between the Market Operator and a Project Supplier for the supply of a Nature-based Project, incorporating (i) the relevant Standard Terms and Conditions and (ii) the relevant details from the Confirmation of Successful Supplier Offer

Participant Registry means the system established and managed by the Market Operator for registering Market Participants. 

Performance Monitoring means measuring one or more of the Environmental Services delivered by a Project or sample of Projects to calibrate or recalibrate a Standard.

Performance Monitoring Period means the period over which the environmental outcomes from Nature-based Projects in a geographic area are monitored and verified in accordance with the Performance Monitoring Plan.

Performance Monitoring Plan means the plan for monitoring the environmental outcomes from a sample of Delivered Projects approved by the Board.

Performance Monitoring Programme means the monitoring activities that deliver the Performance Monitoring Plan.

Performance Monitoring Programme Manager means a person appointed by the Market Operator to deliver the Performance Monitoring Plan.

Pre-Market Project Review means the process set out in rule 3.3.

Project Data means information about a Nature-based Project necessary to calculate the Environmental Services delivered by the Project in accordance with relevant Standard(s).

Project Registry means the system established and managed by the Market Operator for registering Nature-based Projects and maintaining the records of Project Accreditation and Compliance.

Project Supplier means a Market Participant who is registered to supply Nature-based Project(s) to the Market under Rule 1.4.2 a).

Project Supplier Offer (‘Offer’) means the amount of money for which a Project Supplier commits to supply a Nature-based Project in a Market Round.

Project Specifications means the technical specifications that the Nature-based Project is required to achieve under a Nature-based Project Agreement.

Registered Agent means a person registered with the Market Operator as the agent of a Project Supplier or Credit Buyer.

Registered Project means a Nature-based Project that has been registered by the Project Supplier with the Market Operator for sale in a Market Round in accordance with Rule 2.1.

Registration Requirement has the meaning given to it in rule 1.4.2.

Registry means the Participant Registry, Project Registry and Credit Registry managed by the Market Operator.

Retire means to amend the status of Environmental Credits that have been used by a Credit Buyer to meet a voluntary or regulatory obligation to ensure that they cannot be transferred or sold.

Scientific Advisory Group (SAG) means the group of scientific specialists established by the Board to advise on the Standards and Performance Monitoring Plans to apply to the Environmental Markets.

Settled Project means a Registered Project that is the subject of a Market Agreement between the Market Operator and the Project Supplier formed automatically at Settlement. 

Settlement means Confirmation by the Market Operator of the successful Offers and Bids following a Market Close and the relevant Supplier and Buyer Payments that must be made.

Standard means a method for calculating the quantity of an Environmental Service delivered by a Nature-based Project approved for use in an Environmental Market(s) by the Board.

Standard Organisation means the governing body of a Standard.

Standard Terms and Conditions means the terms and conditions that will be incorporated into the relevant Market Agreement formed automatically between the Market Operator and a successful Market Participant on Settlement. 

Supplier Payment(s) means the amount(s) of money that the Market Operator must pay to the Project Supplier for the delivery of a Nature-based Project, in accordance with a Nature-based Project Agreement.

Trading Platform means the electronic system used for managing Supplier Offers, Buyer Bids and Market Settlement.

Validate means the process for confirming that Projects have been delivered to the required Project Specification(s).

Verify means the process for evaluating the environmental services delivered by Projects.

PART 1: PURPOSE, OBJECTIVES AND MARKET PARTICIPATION

1.2   Objectives

The Objectives of the Market Rules are to:

a)     set out the criteria and process for authorising a Market Operator

b)     establish the conditions for participation in an Environmental Market

c)     ensure the Environmental Services from Nature-based Projects are certified in accordance with approved Standards

d)     ensure that Market Bidding, Matching and Allocation occurs in an orderly, informed and fair manner during each Market Round 

e)     set out the mechanism for monitoring, verifying and balancing the Environment Services delivered through an Environmental Market

f)      provide for collaboration between the Market Operator and an organisation(s) in a particular geographic area.

2.1    Project Registration



2.1.1       A Nature-based Project may only be registered with the Market Operator by a Project Supplier or their Registered Agent.

2.1.2       A Nature-based Project will only be registered if:

a)     the required Baseline Data and Project Data has been supplied in accordance with the relevant Project Specifications; and

b)     The Project Supplier has agreed:

i.     to make an Offer in a Market Round to supply the Project;

ii.     to be bound by the Market Rules; and

iii.     to be bound by the terms and conditions of a Nature-based Project Agreement if their Offer becomes a Settled Offer.

2.3   Standards

2.3.1       Content of Standards

Standards for quantifying the Environmental Services from a Nature-based Project must set out: 

a)     the Environmental Service(s) covered by the Standard;

b)     the units by which the Environmental Service is quantified;

c)     the type(s) of Nature-based Project covered; 

d)     the Baseline Data and Project Data required;

e)     the procedure by which the Baseline Data and Project Data is to be used to calculate the number and type of Environmental Credits to be registered to a Nature-based Project;

f)      the tool(s) and model(s) that may be used to calculate the Environmental Credits;

g)     the purpose(s) for which the Environmental Credits may be used including:

                      i.                  environmental improvement

                     ii.                  mitigation of environmental impact.

2.3.2       Approval of Standards

a)     Standards must be approved for use in the Environmental Market(s) by the Board.

b)     A Standard must meet the content requirements of Rule 2.3.1 to the satisfaction of the Board.

c)     The Standards approved under these Rules are set out in Appendix 1 as varied from time to time.

d)     The Standards to apply in a particular Environmental Market may be varied in accordance with a Collaboration Agreement as set out in Appendix 5.

2.3.3       Proposals for New Standards

a)     If proposals for new Standards that cover additional categories of Environmental Service are submitted to the Board for approval, the Board must consult on the proposed Standard and seek advice from the Scientific Advisory Group prior to its approval.

b)     In approving a new Standard, the Board must have regard to:

i.           established legal and regulatory principles that apply to a particular type of Environment Credit;

ii.           the advice of the Scientific Advisory Group and any peer review submitted by the proponent;

iii.           the cost and practicality of providing the specified Baseline Data and Project Data;

iv.           the public availability of any tools or models required to quantify the Environmental Services generated by a Nature-based Project;

v.           evidence provided to support the Standard and the results of testing;

vi.           the principle that lack of absolute scientific certainty should not be used as a reason to delay action; and

vii.           the capacity to cost effectively monitor and verify the Environmental Services.

PART 3:  MARKET PROCESS

3.1    Expression of Interest

a)     The Market Operator may call for expressions of interest in participating in an Environmental Market by issuing a draft Market Opportunities Statement for a Market Round.

b)     Project Suppliers must express their interest in supplying Nature-based Projects on the Trading Platform, including:

i.         the type(s) of Project with reference to the Project Specifications

ii.         the area and location of the Project(s)

           iii.         any other information required by the Market Operator.

c)     Environmental Credit Buyers and Investors must express their interest in buying Environmental Credits through the Trading Platform including:

           i.         the type of Environmental Credits

           ii.         the Duration of the Environmental Credits

           iii.         the purpose of buying the Environmental Credits

Expressions of Interest are not binding.

3.2 Market Opportunities Statement

3.3 Pre-market Project Review

Prior to the commencement of each Market Round, a pre-market review of Registered Projects should be carried out with the relevant government bodies and regulators.

3.3.1       England 

In England the pre-market review will include where applicable:

a)       Natural England to confirm that the Registered Projects are in the relevant geographic areas and are of project types that are capable of constituting nutrient mitigation under the Habitats Regulations  and/or Biodiversity Gain under the Environment Act.

b)       Environment Agency to confirm that the Registered Projects are in the relevant geographic areas and are of a project type that are capable of complying with the Water Framework Directive and other regulatory approvals.

c)       The relevant Local Planning Authority(ies) to ensure that the Environmental Credits from Projects are capable of being used by developers to meet relevant planning obligations.

d)      The responsible authorities appointed by the Secretary of State to lead on preparing Local Nature Recovery Strategies to confirm the Eligible Projects are aligned with the agreed priorities for nature recovery.

3.3.2       Wales 

In Wales the pre-market review will include where applicable:

a)       Cyfoeth Naturiol Cymru, Natural Resources Wales to confirm that the Registered Projects are in the relevant geographic areas and are of project types that are capable of constituting nutrient mitigation under the Habitats Regulations, and/or 

complying with the Water Framework Directive and other regulatory approvals.

b)       the relevant Local Planning Authority(ies) to ensure that the Environmental Credits from Projects are capable of being used by developers to meet relevant planning obligations, or local priorities for environmental improvement.

3.4 Matching and Allocation Rules

3.4.1       Approval

The Matching and Allocation Rules for an Environmental Market must be approved by the Board prior to the Market Operator opening a Market Round.

3.4.2       Additionality

The Market Operator must ensure additionality by only settling trades that involve:

a)       quantified environmental improvements above a baseline; and

b)       Projects where there is no legal obligation on the Supplier to undertake that Project.

3.4.3       Application

The Matching and Allocation Rules to apply to a Market Round must be in accordance with any Market Deed or Collaboration Agreement that applies to that Environmental Market.

3.5 Participation in a Market Round

Prior to opening a Market Round, the following confirmations, acknowledgements, and agreements from Project Suppliers, Credit Buyers and Credit Investors must be obtained.

3.5.1       Confirm Project Registration

The Market Operator must obtain from the Project Supplier confirmation of their Project Registration(s) for the Market Round.

3.5.2       Confirm Credit Requirements

The Market Operator must obtain from the Credit Buyer confirmation of their Credit Requirement for the Market Round.

A Credit Requirement for a Market Round will only be accepted by the Market Operator if the Credit Buyer provides evidence of:

a)     a regulated Credit Requirement from the relevant Competent Authority(ies);or

b)     a voluntary Credit Requirement established by a public policy statement or commitment.

3.5.3       Confirm Credit Investment Requirements

The Market Operator must obtain from the Credit Investor confirmation of their Credit Investment Requirement for a Market Round.

3.5.4       Market Rules and Agreements

As a condition of participation in the Market Round, the Market Operator must obtain and maintain satisfactory evidence from Project Suppliers, Credit Buyers and Credit Investors (or their Registered Agents) of their:

a)     acknowledgement of, and agreement to be bound by the Market Rules;

b)     acknowledgement and acceptance of the Standard Terms and Conditions of the relevant Market Agreement that applies to the Market Round; and

c)     acknowledgement of, and agreement to be bound by the Standard Terms and Conditions of the relevant Market Agreement that will be deemed automatically effective if their Offer or Bid is successful in the Market Round.

3.6    Market Rounds

3.6.1       Market Opening

The Market Operator will open a Market Round by:

a)     issuing a Market Opportunities Statement;

b)     publishing a Market Schedule for the Market Round;

c)     electing whether to publish Guide Prices for the Market Round.

3.6.2       Market Bidding

a)     Project Supplier Offers must be made:

i.         by a Project Supplier or their Registered Agent;

ii.         in response to the Market Opportunities Statement; 

iii.         within the timeframes set out in the Market Schedule; and

iv.         through the Trading Platform.

b)     Credit Buyer Bids must be made:

i.         by a Credit Investor, Credit Buyer or their Registered Agent;

ii.         to fulfil a regulated or voluntary requirement to make an environmental improvement, or to secure mitigation or offset an environmental impact;

iii.         in response to the Market Opportunities Statement; and

iv.         within the timeframes set out in the Market Schedule; and

v.         through the Trading Platform.

3.6.3       Market Close

At Market Close:

a)     winning Offers and Bids will be determined in accordance with the Matching and Allocation Rules; and 

b)     the Market Operator will advise Project Suppliers, Credit Buyers and Credit Investors whether they have been successful in the Market Round, by way of the relevant Confirmation.

3.7    Market Contracts

3.7.1       Market Agreements

At Settlement:

a)     a Nature-based Project Agreement will be deemed to have come into effect between the Market Operator and the successful Project Supplier;

b)     an Environmental Credit Supply Agreement will be deemed to have come into effect between the Market Operator and the successful Credit Buyer;

c)     an Environmental Credit Investment Agreement will be deemed to have come into effect between the Market Operator and the successful Credit Investor.

3.7.2       Standard Terms and Conditions

Prior to the start of a Market Round the Market Operator will publish:

a)     the Standard Terms and Conditions for the Market Agreements; and

b)     Templates of the Confirmations.

PART 4:     PROJECT AND CREDIT VERIFICATION

PART 5: CREDIT ISSUE AND MANAGEMENT

This Part sets out the rules for how a Market Operator must issue and manage Environmental Credits in accordance with the Environmental Credit Lifecycle illustrated below.

Figure 4 - Credit Life Cycle

5.1    Transfer of Rights to Credits   

Once a Project Supplier has entered into a Nature-based Project Agreement, the Market Operator must assign the rights to the Environmental Credits from the Project Supplier to:

a)     Credit Buyers, subject to each Credit Buyer entering into an Environmental Credit Supply Agreement; and

b)     Credit Investors, subject to each Credit Investor:

i.         entering into an Environmental Credit Investment Agreement; and

ii.         making all of the payments required by the Environmental Credit Investment Agreement.

5.2   Issuing Environmental Credits

5.2.1       Credit Issue

a)     If the Market Operator is the Standards Organisation for a particular class of Environmental Credit, it may, once a Nature based Project has been verified in accordance with Rule 4.1:

i.         issue the relevant Environmental Credit to a Credit Buyer in accordance with the rights to the Environmental Credits they hold; and

ii.         where the Nature-based Project meets the requirements set out in the Market Opportunities Statement, certify the Environmental Credits as compliant. 

b)     If the Market Operator is not the Standards Organisation for a class of Environmental Credit, it may, once a Nature-based Project has been delivered in accordance with Rule 4.1, submit the necessary evidence to the relevant Standards Organisation to meet their requirements for registration, delivery and/or credit issue. 

c)     The Market Operator may only issue Environmental Credits to meet a regulated obligation if the Credit Buyer provides written evidence of their Credit Requirement in accordance with 3.5.2(b). 

d)     The Market Operator may only issue Environmental Credits to a Credit Buyer that has made all of the payments required by the Environmental Credit Supply Agreement.

e)     Each Environmental Credit issued must have a unique Credit Identification Number.

f)      Environmental Credits will be issued electronically and held on the Market Registry in the name of the Credit Buyer.

5.3    Environmental Credit Certificates

5.3.1       On written request, the Market Operator will provide a Credit Buyer with an Environmental Credit Certificate for the purpose of:

a)     providing evidence of the Credit Buyer’s rights to Credits and/or Issued Credits;

b)     submitting Environmental Credits to a regulator or other Competent Authority.

5.4   Environmental Credit Management

5.4.1       Fixed Term Credits

a)     The Market Operator may provide fixed-term Environmental Credits to a Credit Buyer:

i.         to meet a fixed term obligation for environmental mitigation or offsetting;

ii.         as Bridging Credits to provide short term mitigation until Environmental Credits purchased for on-going mitigation are issued.

b)     The Market Operator must ensure that Issued Credits for a fixed term are retired or transferred at the end of the term.

5.4.2       Redeeming Credits

a)       On the instruction of a Credit Buyer the Market Operator will redeem the number of Environmental Credits necessary to meet a particular voluntary or regulated obligation.

b)       Where Environmental Credits are being redeemed to meet a planning or other regulatory obligation the Market Operator will provide the Competent Authority with an Allocation Certificate that includes:

i.         confirmation of the Credit Buyer’s ownership of the Environmental Credits;

ii.         the Credit Identification Numbers of the Environmental Credits being redeemed;

iii.         how to access to relevant information from the Market Registries to enable the source and duration of the Environmental Credits to be confirmed.

5.4.3       Retiring Credits

a)       The Market Operator will:

i.         automatically Retire Environmental Credits that have been purchased by a Credit Buyer to meet a specific voluntary obligation; or

ii.         on the advice of the relevant Competent Authority, Retire the Environmental Credits that have been purchased and submitted by a Credit Buyer to meet a specific planning or other regulatory obligation.

b)       The Market Operator will amend the Credit Registry and notify the Credit Buyer of the Environmental Credits that have been Retired.

5.4.4       Unused Credits

A Credit Buyer who holds rights to Environmental Credits to meet a specific regulated obligation, or owns Issued Credits but no longer has the specific obligation to secure mitigation or obtain offsets for which they were purchased, must notify the Market Operator; and either:

a)     request the Environmental Credits be applied to another Credit Requirement for mitigation or offsets registered with the Market Operator; or 

b)     make the Environmental Credits which have already been issued to it available for sale in a future Market Round; or

c)     voluntarily Retire the Environmental Credits.

5.4.5       Transfer of Environmental Credits

A Credit Buyer who holds Environmental Credits to meet a specific obligation to secure mitigation or obtain offsets, may request transfer of Environmental Credits to another person if:

a)     the Credit Buyer sells or transfers the development or activity to which the mitigation or offset obligation applies, to another person; and

b)     the new owner of the development or activity agrees to register as a Market Participant and comply with the Market Rules.

PART 6: COMPLIANCE MONITORING AND ENFORCEMENT

6.1    Compliance  Monitoring, Reporting and Management

6.1.1       Compliance Monitoring

The Market Operator must:

a)     monitor a Project Supplier’s compliance with the Nature-based Project Agreement for the term of the agreement.

b)     ensure that arrangements are in place with the relevant Local Planning Authority or a Covenanting Body to ensure that the Project Supplier maintains and monitors the Nature-based Project beyond the term of the Nature-based Project Agreement.

6.1.2       Compliance Reporting

The Market Operator must ensure that a Project Supplier is under a legally binding obligation to report on their compliance with:

a)       the requirement to maintain the Project in accordance with the Project Specification; and

b)       the Project management requirements set out in the Management Plan for the Project.

The Market Operator must ensure that the necessary Compliance Reporting requirements are set out in the individual Market Agreements with Project Suppliers.

6.1.3       Compliance Management 

The Market Operator may enter into an agreement with a Competent Authority to provide Compliance Management Service for an agreed term, including:

a)       undertaking compliance monitoring;

b)       providing consolidated annual reports of Project Supplier compliance in a particular geographic area;

c)       notifying any non-compliance and working with Project Suppliers to remedy the non-compliance.

6.2    Enforcement

The Market Operator must ensure that Project Supplier compliance is enforceable either by:

a)       enforcement by a Competent Authority under a relevant land use and management agreement;

b)       enforcement under a Conservation Covenant by a designated responsible body; or

c)       enforcement in contract under an on-going Nature-based Project Agreement.

PART 7: PERFORMANCE MONITORING AND MARKET BALANCING

7.2   Market Balancing

7.2.1       Purpose

The purpose of Market Balancing is to establish and manage a Credit Reserve to ensure that the number of Environmental Credits traded in the Environmental Market does not exceed the Environmental Services delivered by Projects in the relevant geographic area.

7.2.2       Credit Reserve

Prior to opening a Market Round the Market Operator must obtain the Board’s approval of:

a)     the level of the Credit Reserve to be applied in each Market Round; and

b)     the number of Environmental Credits from each Market Round to be held in the Credit Reserve.

In approving the Credit Reserve, the Board must consider the Catchment Market Operator’s assessment of the contractual, compliance and performance risks across the portfolio of Projects registered for the Market Round. 

7.2.3       Market Balancing

Where the report prepared under rule 7.1.6 a) identifies a difference between the estimate of the ex-ante Environmental Services accredited for a Market Round and the estimate of the ex-poste outcomes delivered by the Delivered Projects, the Market Operator will:

i.         release Environmental Credits from the Credit Reserve for sale in future Market Rounds where the ex-poste estimate exceeds the ex-ante outcomes accredited; and

ii.         issue new Environmental Credits for sale in future Market Rounds if the ex-poste estimate exceeds the ex-ante outcomes accredited by more than the Credit Reserve for that Market Round.

or 

iii.         redeem and Retire Environmental Credits from the Credit Reserve where the ex-ante outcomes accredited exceeds the ex-poste estimate of outcomes delivered; and

iv.         secure additional Environmental Credits through Contracted Projects, if the ex-poste estimate is less than the ex-ante outcomes accredited by more than the Credit Reserve for that Market Round.

PART 8: MARKET GOVERNANCE

8.1     Authorisation of a Market Operator

8.1.1       Purpose

The purpose of a Market Operator is to develop, establish and run an Environmental Market in a defined geography.

8.1.2       Authorisation

The Board may authorise a Market Operator to operate an Environmental market in accordance with these Market Rules, if it is satisfied that the Market Operator meets the Appointment Criteria.

8.1.3       Authorisation Criteria

The Appointment Criteria for a Market Operator are:

a)     Organisational and technical capacity

The Market Operator must demonstrate that it has the necessary organisational and technical capacity to operate the Environmental Market in compliance with the Market Rules.

b)     Financial resources

The Market Operator must have resources or access to resources so that it will have the financial viability and financial capacity to meet the obligations of a Market Operator under the Market Rules.

c)     Suitability

The Market Operator must be a suitable person to operate an Environmental Market, including but not limited to the absence of a finding by an authority regarding. conduct involving deception or dishonesty.

d)     Enforceability

The Market Operator must enter an agreement with the Board to operate the Environmental Market(s) in accordance with the Market Rules and establish legally binding arrangements with Market Participants to ensure that they are similarly required to comply with the Market Rules.

8.1.4       Authorisation Guidance

The Board will assess a potential Market Operator against its published Authorisation Guidance which will include a template agreement with a Market Operator.

8.2   Temporary withdrawal of authorisation of a Market Operator

8.2.1       Suspension

The Board may temporarily withdraw its authorisation of a Market Operator if it is satisfied that the Market Operator has failed to meet its obligations under the Market Rules, and has:

a)    been given notice to remedy the breach of the Market Rules within a reasonable timeframe; and

b)    failed to remedy the breach of the Market Rules within the specified timeframe. 

8.2.2       Lifting a Suspension

The Board may lift a suspension of a Market Operator if it is satisfied that the Market Operator has:

a)    has remedied the breach of the Market Rules and will be able to meet its obligations to comply with the Market Rules in the future; and

b)    continues to meet the Appointment Criteria.

8.3   Withdrawal of authorisation of a Market Operator

The Board may withdraw its authorisation of a Market Operator if it is satisfied that the Market Operator:

a)    has materially failed to meet its obligations under the Market Rules, and will not be able to meet these obligations in the future; or

b)    no longer meets the Appointment Criteria.

8.4   Market Exit

The agreement required as a condition of authorisation under rule 8.1.3 d) must set out the procedure to be followed in the event of voluntary or involuntary market exit by a Market Operator.

Market exit arrangements must include how:

a)     Market Agreements with Project Suppliers and Credit Buyers, will be assigned or novated.

b)     Funds held by the Market Operator for the purpose of Compliance and Performance Monitoring will be transferred to the Local Planning Authority or other designated body.

c)     Any other obligations of the Market Operator, including under any Market Deeds or Collaboration Agreements will be met.

8.5   Market Deeds and Collaboration Agreements

8.5.1       The Market Operator may, with the approval of the Board enter into a Market Deed or other form  of agreement with a Competent Authority to operate an Environmental Market to supply Environmental Credits that enable third parties to meet a particular statutory obligation or regulatory requirement.

8.5.2       The Market Operator may, with the approval of the Board enter a Collaboration Agreement to develop and deliver an Environmental Market in a particular geographic area(s).

8.5.3       A Collaboration Agreement may include arrangements to:

a)     secure funding to develop an Environmental Market(s)

b)     manage the use of funds

c)     work with landholders to develop a pipeline of Projects

d)     pay for the costs of market development

e)     hold the rights to Environmental Credits for future sale through the Market(s).

8.5.4       A Market Deed or Collaboration Agreement may vary the Market Rules as they apply to a geographic area(s) as set out in Appendix 5.

8.5.5       Any changes to the Market Rules after the date of a Market Deed or Collaboration Agreement will only have effect in the specific geographic area(s) if agreed by all parties to that agreement.

APPENDIX 1: APPROVED STANDARDS

The Standards that have been approved for use in the [X] Markets are set out here: Approved Standards

APPENDIX 2: STANDARD TERMS AND CONDITIONS FOR A NATURE-BASED PROJECT AGREEMENT

Contact the relevant Market Operator for further information.

APPENDIX 3: STANDARD TERMS AND CONDITIONS FOR AN ENVIRONMENTAL CREDIT-SUPPLY AGREEMENT

Contact the relevant Market Operator for further information.

APPENDIX 4: MARKET RULES TO APPLY IN THE [GEOGRAPHIC AREA]

In accordance with Rule 8.5, the Market Operator has entered into a Market Deed/Collaboration Agreement with [party A],[party B]….and [party n] for the operation/development and operation of the [Name] Environmental Market.

In accordance with the Market Deed/Collaboration Agreement it has been agreed to vary the Market Rules to apply in the [Name] Environmental Market as follows:

EXAMPLE