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Managing carbon abatement contracts

22 October 2015

ERF

To enter into a carbon abatement contract with the Commonwealth is to enter into a commercial arrangement with rights and obligations enforceable through the courts, similar to other contractual arrangements entered into between parties.

Emissions Reduction Fund contracts are managed in accordance with the Clean Energy Regulator’s C​ontract Management Principles​ and ​contract management plan​​ which reflect best practice in contract management and guide our response to non-performance and informs any discretionary decision-making in regards to contracts.​​

Contract management is the active management over the duration of the contract to assist the parties to meet their contractual obligations, to ensure satisfactory performance and to provide a framework for dealing with events or issues that have not been anticipated within the contractual terms. One of the key risks to the Emissions Reduction Fund is if projects do not deliver their contracted level of abatement. The management of those contracts is an important action that the Clean Energy Regulator applies to mitigate the risk of non-delivery.

Effective contract management is essential to assist us in:

  • Facilitating project progress in accordance with the anticipated timetable
  • meeting ​contractual obligations
  • monitoring the performance of the seller
  • maintaining good relationships and communication with the seller
  • handling and resolving issues or disputes which may arise​
  • maintaining the agreed allocation of risk with the party best placed to manage that risk
  • managing and mitigating risks that could impact contract performance.

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 (co​ntracts) 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.

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