Transaction Structure & Claim Use Guidance

This page provides public-facing guidance on the transaction structure associated with the project and the permitted use of related climate claims. Its purpose is to reduce ambiguity for buyers, counterparties, auditors, regulators, and communications teams by clearly stating what is, and is not, being transferred or asserted.

 

1. Purpose of This Guidance

Climate-related transactions increasingly face scrutiny not only for what is sold, but for how resulting claims are used.

Misunderstanding the nature of the transaction or overstating its implications is a leading source of:

• Greenwashing allegations
• Disclosure inconsistency
• Contractual disputes
• Regulatory and litigation risk

This guidance is designed to prevent those outcomes.

 

2. Nature of the Underlying Project

The project is an emissions avoidance project based on the permanent non-extraction of hydrocarbons at an onshore site in Los Angeles County, California, USA.

The project:

• Prevents emissions at the source
• Enforces permanence through ownership and legal restraint
• Has been independently validated under ISO 14064-3

It is not a traditional offset or removal project.

 

3. What Is Being Transacted

Depending on the transaction context, a counterparty may acquire one or more of the following:

1). A Representational Climate Claim

A documented, defensible claim that a defined quantity of greenhouse gas emissions has been avoided through permanent non-extraction.

This claim is:

• Grounded in ownership and enforceability
• Quantified conservatively
• Independently validated

2). A Right to Reference the Claim

A contractual right to reference the avoided emissions claim for:

• Internal accounting
• ESG reporting
• Sustainability disclosures
• Voluntary climate statements

Subject to defined use and language constraints.

3). Supporting Documentation Access

Access to:

• Methodology documentation
• Validation reports
• Project summaries and evidence necessary to support disclosure

 

4. What Is Explicitly Not Being Transacted

Unless explicitly stated in a transaction agreement, the following are not transferred:

• Ownership of the underlying mineral or subsurface asset
• Control over extraction decisions
• Authority to independently reinterpret or expand the claim
• Regulatory compliance credits or allowances
• Guarantees of regulatory acceptance

The transaction does not convey ownership—only defined rights to reference a validated avoidance outcome.

 

5. Claim Use Boundaries

Permitted Uses (Illustrative)

Subject to contractual terms, counterparties may:

• Report avoided emissions in voluntary sustainability disclosures
• Reference the claim in ESG or climate-related reporting
• Use the claim internally for climate accounting or strategy

All uses must remain consistent with documented scope and limitations.

Prohibited or Restricted Uses

Absent explicit agreement, counterparties may not:

• Represent the claim as a compliance instrument
• Assert equivalence to regulated emissions allowances
• Expand the claim beyond validated quantities or scope
• Imply endorsement by regulators or standards bodies

Claims must not be overstated or recharacterized.

 

6. Language & Representation Guidance

To reduce misrepresentation risk, counterparties are expected to:

• Use precise language (e.g., “emissions avoided through permanent non-extraction”)
• Avoid shorthand that implies removal, offsetting, or compliance crediting
• Disclose material assumptions and limitations where relevant

Suggested language may be provided as part of transaction documentation.

 

7. Relationship to Disclosure Obligations

Counterparties are responsible for ensuring that:

• Use of the claim aligns with their own disclosure obligations
• Climate statements are consistent with financial and risk disclosures
• Public representations can be substantiated with documentation

Jedon Kotler does not assume responsibility for how third parties integrate claims into their own disclosures beyond agreed representations.

 

8. Risk Allocation & Responsibility

Transaction agreements typically clarify:

• Scope of representations made by the project sponsor
• Limitations on claim use
• Responsibility for downstream disclosures
• Treatment of regulatory or standards evolution

This clarity is intentional and risk-reducing.

 

9. Why This Structure Is Used

This transaction structure:

• Preserves ownership-based permanence
• Prevents claim inflation or misuse
• Aligns with audit and legal defensibility standards
• Reduces greenwashing and misrepresentation risk

It prioritizes clarity over convenience.

 

10. Registry / custody clarification

The transaction structure is designed to distinguish clearly between the underlying environmental claim and the administrative pathway used to document, custody, transfer, or retire that claim. Depending on the transaction pathway, project-related interests, claims, or credits may be recorded or managed through designated registry or institutional custody infrastructure. Any such infrastructure serves a recordkeeping, settlement, or retirement function and does not replace the project’s ownership-based legal foundation, methodological basis, or quantified emissions accounting.