Harnessing carbon credits: The role of SPVs
In the rapidly evolving landscape of voluntary carbon markets, innovative financial structures are essential to support the development of climate-friendly projects. Special Purpose Vehicles (SPVs) have emerged as a powerful tool enabling tax and regulatory efficiency and attracting vital investment. In this article, Neelam Domah, Commercial Director, explores how SPVs operate within carbon credit markets and highlights the benefits they bring to both project developers and buyers.
What is a Carbon credit?
A carbon credit is a tradable certificate that represents the right to emit one metric ton of carbon dioxide (COn) or an equivalent amount of another greenhouse gas. Carbon credits are created by projects or initiatives that reduce, avoid, or remove greenhouse gas emissions, such as renewable energy development, reforestation, or carbon capture technology. They can be traded in compliance markets, where government regulations mandate emissions caps, or in voluntary markets, where companies offset emissions to meet net-zero or ESG commitments. In this way, carbon credits function both as an environmental tool and a financial instrument.
Benefits of using SPVs in carbon credits
SPVs are a separate legal entity created to ring-fence a specific project, asset, or investment. For companies involved in creating or acquiring carbon credits, SPVs provide multiple benefits:
For developers, an SPV isolates project risks from the parent company, simplifies verification and ownership, and makes it easier to attract financing by providing transparency over revenues from credit issuance.
For buyers, SPVs act as dedicated holding structures for carbon credit portfolios, enabling tax and regulatory efficiency, simplified reporting for ESG purposes, and easier resale or trading. Ultimately, SPVs provide the governance, risk isolation, and financial clarity that underpin confidence in carbon credit markets.
Our experience in East Africa and broader African markets
Ocorian has been working extensively in the East African markets with companies generating carbon credits and creating SPVs to support these initiatives. The region has emerged as a significant hub for carbon credit projects, particularly in renewable energy, forestry, and conservation. Across the broader African markets, the use of SPVs for carbon credit projects has become highly prevalent. Ocorian is actively involved in establishing and managing these structures, helping developers secure investment, align with global ESG standards, and unlock international markets for African-generated credits. This extensive experience positions us as a trusted partner for clients seeking to leverage Africa’s potential in the carbon credit space.
How Ocorian can support carbon credit projects and acquisitions
Carbon credits sit at the intersection of environmental responsibility and financial innovation. Success in this space requires robust structures, credible governance, and regulatory expertise. Ocorian acts as the structural and governance backbone for carbon credit creation, financing, and acquisition, allowing clients to focus on value creation while we ensure compliance, transparency, and operational excellence.
We establish and manage SPVs across key jurisdictions such as UAE, Mauritius, Luxembourg, Netherlands, etc, ensuring compliance, accounting, and governance. We provide independent directors and verification oversight to build trust and credibility Ocorian brings deep expertise in fund administration, governance, and regulated business support, making us an ideal partner for carbon credit initiatives.
To learn more about incorporating a company, contact our team today and download our useful jurisdictional SPV guide.