We have developed a set of principles to guide Clean Energy Regulator staff in their administration of carbon abatement contracts and our expectation that sellers will fully meet their delivery obligations under the contract. The principles are:
These principles will be used whenever a Clean Energy Regulator delegate is required to make a discretionary decision or exercise a power in relation to a contract, for example, when deciding whether to:
The above principles are underpinned by the Contract Management Plan. The purpose of the contract management plan is to provide guidance to Clean Energy Regulator staff involved in the management and administration of carbon abatement contracts from award to completion. This contract management plan will be used by Clean Energy Regulator staff to monitor the performance of sellers under the contracts and to guide the agency’s response to non-performance.
Each seller must deliver their agreed quantity of Australian carbon credit units.
Each seller proposes their own delivery schedule.
If a seller has a delivery failure it can suggest that the project is underperforming or that the seller misrepresented its intentions when completing its contract documentation. In such a case where the Clean Energy Regulator considers that Emissions Reduction Fund monies are not targeting genuine abatement, we may, in accordance with the contract, seek buyer’s market damages or terminate a contract.
We will consider any request for early delivery of Australian carbon credit units based on its merits, taking into consideration availability of funding and the viability of the relevant project(s).
We will, acting in good faith, make reasonable endeavours to agree on potential amendments to conditions precedent (including conditions precedent expiry dates) or delivery schedules proposed by a seller, but will always put the interests of the Commonwealth first in any negotiation.
We will not negotiate over:
We will deal with all seller enquiries efficiently and effectively, with accurate information but not advice. We will provide routine reminders of key contract milestones, upcoming deliveries and conditions precedent expiry dates.
We have developed a standard
documentasset:Carbon Abatement Contract Novation Deed that should be used to vary contractual arrangements. The novation agreement should be used where a different person or legal entity is taking over the rights and obligations under your contract. A novation effectively substitutes one contract party for another party without changing the rights and obligations under the original agreement. A novation gives rise to a new agreement on the same terms as the original agreement, with the original agreement being discharged.
There is some flexibility in the contract for a seller that has an underperforming project, and there is also some flexibility for us in how we deal with a non-compliant seller. Our preferred remedy will be the one that appears, based on the facts at the relevant point in time, most likely to maximise carbon abatement at least cost.
Our exercise of discretion under the contract will be fair, having regard to how other sellers would expect to be treated, and proportionate, taking into account the particular facts of the situation.
We will treat information relating to a seller, including unit price, in confidence, and such information will only be made available to Clean Energy Regulator staff and other persons envisaged in
Clause 11.1.1.a with a need to know for their duties. We also expect sellers to treat their unit price in confidence.
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