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Support for Emissions Reduction Fund Project Finance

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28 January 2016
​​ ERF

​​The Clean Energy Regulator and the Clean Energy Finance Corporation have collaborated to develop a Tripartite Deed to support financing of Emissions Reduction Fund projects.

A Tripartite Deed with the Clean Energy Regulator and a project participant allows a financier (in this case the Clean Energy Finance Corporation) to include the carbon abatement contract in its finance security package, thereby providing a secure government-backed cash flow stream for the financier and enhancing the credit profile of the participant.

What is a tripartite agreement?

A tripartite agreement is a standard agreement between three parties often required by project financiers. It is also sometimes referred to as a step-in deed, consent deed, three-party agreement or side agreement. This type of agreement in the Emissions Reduction Fund allows the financier (in this case, the Clean Energy Finance Corporation) to assume the role of the project participant in the event of default under the carbon abatement contract.    

How does this agreement support financing of Emissions Reduction Fund projects?

This agreement allows financiers the opportunity to “step-in” to assume responsibility for the carbon abatement contract should the participant find itself unable to deliver the required amount of Australian Carbon Credit Units (ACCUs), as agreed in the contract.

By formalising this arrangement the financier can provide funding for Emissions Reduction Fund projects with added confidence. This type of agreement will provide more financing opportunities for projects, which will contribute to greater emissions reductions in the Australian economy.

A tripartite agreement is often required by a project financier before committing funds for a project. It provides added security to the financier, and may lower the risk profile associated with investing in Emissions Reduction Fund projects

Can other financiers use this type of agreement?

Yes, this has been developed as a standard agreement that can be used by other financiers. Contact the Clean Energy Regulator if you wish to discuss this type of contractual arrangement.

What financing is available for Emissions Reduction Fund Projects?​

Information about potential financing options is available on the Clean Energy Finance Corporation website. 

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