MECHANICS | The EPAF brings the World Bank’s Pilot Auction Facility model for international offsets to benefit conservation in the U.S. The EPAF will auction long-term, minimum price guarantees to project developers, landowners, and green investors working on projects with the potential to generate environmental credits—including carbon offsets or Low Carbon Fuel Standard Credits. To begin, EPAF price guarantees will be structured as a put option.
Put options are a financial contract that gives the holders the right, but not the obligation, to sell assets (in this case, environmental credits) at an agreed-upon strike price. The strike price will be determined at an auction.
The EPAF anticipates running its first auction in the third quarter of 2018.