New biomethane regulation requires more robust contracts to avoid financial risks and ensure environmental traceability.
The recent regulation of the Biomethane Certificate of Origin (CGOB) by the National Agency of Petroleum, Natural Gas, and Biofuels (ANP) has introduced an unprecedented dynamic in the clean energy sector: the separation of the environmental attribute from the biomethane molecule. This split allows the CGOB to be traded, transferred, and used independently, paving the way for compliance with decarbonization regulatory targets.
This new landscape requires producers, marketers, and consumers to reassess their operations and, most importantly, their contractual structures. While the primary concern was previously energy supply security, the ownership and management of the environmental attribute have now become as crucial as the gas molecule itself.
The Evolution of Contracts in the Biomethane Sector
With the decoupling of the environmental attribute, the negotiation of the CGOB demands unprecedented attention and care. The possibility of autonomous trading of the certificate, provided traceability and control rules are respected, imposes significant contractual challenges.
It is essential that contracts clearly define who holds ownership of the environmental attribute, who can use it for regulatory purposes, and how the certificate will be transferred and ultimately disposed of. This complexity elevates the importance of agreements as essential tools for risk allocation.
Mitigating Risks with Solid Contractual Frameworks
The sophistication of the certification regulatory model is reflected in the need to incorporate new requirements into contracts. In addition to traditional elements such as volume, price, and term, biomethane purchase and sale agreements must now address the ownership of the environmental attribute, the transfer of which is not automatic.
Clauses on representations and warranties, audit rights, record-keeping, and responsibilities in case of certificate loss or invalidation are gaining prominence. Preventing “double counting” — the improper use of the same environmental attribute by different agents — becomes a critical point, and the solution lies in well-structured contracts that detail ownership, use, and destination.
CGOB contracts should include duties of cooperation, information provision, communication of relevant events, and auditing. Objective criteria for accountability must also be established for cases where certification failures or information inconsistencies compromise the certificate’s validity.
Technical Note No. 4 and Next Steps
Recently, the ANP presented the draft of Technical Note No. 4, which details the practical audit procedures and rules for Origin Certification Agents (ACOs) to validate the issuance of the CGOB. The document establishes independence requirements for auditors, minimum operational history for certification, and rigorous auditing routines.
While Technical Note No. 4 advances the structuring of the Decarbonization Program, it may impose operational challenges. Excessive bureaucratic requirements could increase costs and create bottlenecks in an still-developing market. The definition of barriers to prevent double counting between CGOB and CBIOs (from RenovaBio) remains a topic of debate, aiming for a balanced and fair regulatory environment for monetizing environmental attributes.
The new regulatory structure, therefore, demands contractual adaptation to ensure legal certainty, economic efficiency, and the environmental credibility of biomethane, consolidating it as a fundamental pillar of the energy transition.
