The standard carbon abatement contract includes the capacity for a “conditions precedent”. Conditions precedent are events or circumstances that must occur before the delivery and payment obligations of the contract come into force.
Conditions precedent can be used to give you time to establish third party agreements (including agreements to sell part of the projects’ abatement), obtain regulatory approvals, or meet other conditions that are required to establish your project.
The Clean Energy Regulator can also use conditions precedent to assure itself that the project that supports the contract is established, genuine, and capable of generating the contracted abatement.
Conditions precedent must:
The Clean Energy Regulator will not accept a condition that:
Conditions precedent can be proposed by you or the Clean Energy Regulator but must be agreed to by both parties for you to be eligible to qualify to participate in an auction.
Column A conditions precedent are for the sole benefit of, and may only be waived or deferred by, the Clean Energy Regulator.
If you have not started your project, you will be required to have a Column A condition precedent stating that the project has begun to be implemented. This is to ensure the contracted project is established and will be used for the delivery of abatement. The following condition must be added:
Each project specified in Item 2 of these Commercial Terms must have begun to be implemented.
The date __ / __ / ____ has occurred.
Each condition (if any) specified under section 28(2) or 28A(2) of the
Carbon Credits (Carbon Farming initiative) Act 2011 (Cth) (the CFI Act) in each declaration made under section 27 of the CFI Act in relation to each projects specified in Item 2 of these Commercial Terms, has been removed from the relevant declaration.
You can also propose Column B conditions that relate to regulatory approvals or third party agreements that are required for your project to proceed. You should only propose these if they are in addition to the conditions of your project declaration. Column B conditions precedent include:
The Column B conditions you propose must be measurable, and include specific details that clearly determine the basis of their fulfilment. Examples include:
If you are unsure of the wording of the condition you wish to propose then please contact the Clean Energy Regulator prior to submitting your auction qualification.
Column C conditions precedent are for the benefit of the Clean Energy Regulator and the seller and may only be waived or deferred with the consent of both.
If any of the project(s) included in the offer are:
then the Clean Energy Regulator will require the following condition precedent to be included in the offer:
That the Buyer and the Seller are each satisfied, each acting in its sole discretion and based on evidence provided to the Buyer by the Seller by no later than seven business days prior to the Conditions Precedent Expiry Date, that the Seller is likely to meet its obligation under the Contract to Deliver the Agreed Quantity of Contract Units in accordance with the Delivery Schedule. Capitalised terms used in this condition precedent have the meanings given to them in the
documentasset::Code of Common Terms of the Contract to which this condition precedent pertains.
The conditions precedent expiry date is the final date that all conditions precedent must be fulfilled or waived. The contract will automatically lapse if all conditions precedent are not fulfilled or waived by the conditions precedent expiry date.
The conditions precedent expiry date should provide a reasonable period of time for the condition(s) to be met, allowing for potential delays. The Clean Energy Regulator will not accept a conditions precedent expiry date that is greater than 18 months from the contract date (five business days after the auction).
The delivery period (for example, seven years) of your contract will normally commence on the conditions precedent expiry date or an earlier date as nominated by you if all conditions are fulfilled earlier. To further understand the conditions precedent expiry date and how it influences the delivery schedule and the amount of abatement that can be delivered refer to the delivery schedule calculator.
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