4 minute read | April.21.2026
For buyers: Purchasers of carbon removal units (CRUs) benefit from make good clauses to ensure reliable delivery of CRUs under a long-term agreement. Without these protections, buyers risk being unable to substantiate their public carbon targets if a seller fails to deliver.
For sellers: Sellers of CRUs benefit from make good clauses by having a structured path to remedy a non-delivery of CRUs – avoiding an event of default and early termination of the agreement.
In a long-term carbon removal purchase agreement, it is imperative to ensure delivery of CRUs to the buyer, while protecting against the risk of financing concerns for the seller. For this reason, designing a make good strategy that fits the needs of both parties is important.
If the seller fails to deliver CRUs by a certain date for reasons other than a force majeure event, the seller can have the opportunity to replace the shortfall of CRUs with CRUs from the same project. Buyers prefer this especially in the carbon market because there is often a wider variety of characteristics which differentiate CRUs from project to project than in other markets (such as energy).
Where delivery from the same project is not possible or not sufficient, the CRU shortfall may also be satisfied by CRUs from other projects. To ensure similarity in CRUs, the parties agree to certain objective criteria that the replacement CRUs from other projects must satisfy in order to qualify such as (a) vintage, (b) type or technology of project (e.g., direct air capture, afforestation/reforestation/revegetation (ARR), or bioenergy with carbon capture and storage (BECCS)), (c) geographical location, (d) created in the same CRU registry, and/or (e) with similar durability and quality as the project under the agreement.
Where the seller is unable to deliver CRUs – from the same project or replacement projects (due to price or availability) – the seller may be required to pay liquidated damages for the CRU shortfall in an amount of dollars per CRU. While sellers may wish to cap these liquidated damages, buyers should consider that the seller may continue to pay liquidated damages without ever having to deliver CRUs.
Parties may also consider a mechanism in the offtake agreement which would extend the delivery deadlines in order to give the seller a longer time period to deliver CRUs. Buyers should cap this time period and consider increasing the required delivery amount in exchange for the granting of a delivery extension. Sellers benefit from a delivery extension because they can correct the shortfall issue (if curable) and/or have a chance to deliver subsequently generated credits.
Some CRU registries automatically allocate a certain amount of CRUs generated from the project to a buffer pool held by the registry, and in the event of a force majeure or loss event, the registry delivers CRUs from the buffer pool to the buyer under a purchase agreement. Accordingly, it is important to understand the particular requirements and guidelines of the registry for the project so that the parties can assess in light of their particular make good strategy.
There are a variety of ways to ensure delivery of CRUs under a long-term carbon removal agreement. While negotiating these make good strategies, it is to the benefit of both parties to ensure that such clauses retain the financeability of the agreement and allow buyers to meet their carbon targets.
A make good clause is a contractual provision that sets out the steps a seller must take to remedy a failure to deliver carbon removal units (CRUs) to a buyer. Rather than triggering an immediate default, it gives the seller defined options to cure the shortfall while ensuring the buyer can still meet its carbon targets.
A buffer pool is a reserve of CRUs that certain registries automatically set aside from a project’s generated units. If a force majeure event or project loss occurs, the registry can draw on the buffer pool to deliver CRUs to the buyer – providing an additional layer of protection beyond the contractual make good provisions.
Lenders and investors financing carbon removal projects will scrutinize the terms of long-term offtake agreements. Make good clauses that expose a seller to uncapped liability or overly burdensome obligations can make a project harder to finance. Well-drafted clauses balance buyer protection with terms that allow the agreement to remain bankable.
Read our previous installment of Carbon Capsule: Carbon Removal vs. Renewable Energy Offtakes: What’s the Difference?