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For an Emissions Reduction Fund (ERF) project to be eligible for an advance payment pilot it must:
The following are ways a project can be linked or added to a Contract:
A fixed delivery contract may have multiple projects added and may enter into multiple Advance Payment Terms Schedules, provided the Contract has sufficient time and volume to accommodate the obligations under each. Separate applications need to be submitted for each project and the Clean Energy Regulator will assess each application for suitability.
Connecting a project to a contract supports the administration of the advance payment and the associated contractual obligations. However, it also results in the project being subject to Carbon Abatement Contract conditions and may impact the ability of the project to come forward for an additional contract. See the
ERF Auction Guidelines for further information about contract eligibility.
For optional delivery contracts, the Seller will be obligated to deliver the agreed number of ACCUs to acquit the advance payment, comparable to obligations under a fixed delivery contract. However, delivery of the remaining balance of the total Agreed Quantity of the optional delivery contract will remain optional.
The following resources may help you to decide if your project is eligible for an advance payment:
documentasset:Advance payment eligibility decision tree
documentasset:Soil and activity data provision template
The above eligibility criteria are intended as a guide. Nothing herein obligates the Clean Energy Regulator to enter into an Advance Payment Addendum, agree to any Advance Payment Terms Schedule or provide advance payment for any project. In assessing a request for advance payment, the Clean Energy Regulator will consider a number of matters, including but not limited to the suitability of the project and Seller and confirmation that existing obligations under the relevant Contract are able to be met.
The initial advance payment request form may be submitted to the Clean Energy Regulator through the General Submission section in the
Client Portal by an Authorised Representative of the Contract.
The form will identify the ERF project and Carbon Abatement Contract that the request relates to. Where a project needs to be added to a fixed delivery contract as part of this request, signed confirmation of the project proponent’s agreement (where different from the Seller) must be provided to the Clean Energy Regulator.
An amount of up to $5,000 can be requested. This amount will be calculated using the Contract Unit Price and rounded down to the nearest whole number of ACCUs. The minimum amount of an advance payment is $2,000.
Seller requests the maximum available advance payment amount using a Carbon Abatement Contract with a Unit Price of $12.19.
The number of ACCUs is calculated as 5000 divided by $12.19, which equals 410.172.
It is not possible to deliver 0.172 of an ACCU so this number must be rounded down to a whole number of 410 ACCUs.
The actual advance payment amount is then calculated as 410 x $12.19.
The Seller may be able to receive a maximum advance payment of $4,997.90
Note – the unit price is the price the Seller bid at an ERF Auction and has a contract for.
The identified whole number of ACCUs is the Advance Payment Quantity that will need to be delivered to acquit the Advance Payment Amount. While this number of ACCUs will be transferred from the existing Contract Agreed Quantity and Delivery Schedule to a separate fixed Advance Payment Prepaid Quantity and Delivery Schedule, the total volume of ACCUs committed under the Contract will remain the same.
Separate Advance Payment Scheduled Delivery(s) to acquit the Advance Payment Quantity must be nominated. These will need to fall within 5 years of when the advance payment terms schedule is agreed and be set on different dates than existing scheduled Deliveries.
Setting different dates for Advance Payment Scheduled Deliveries from other Contract Scheduled Deliveries will assist in the management of the Contracts and help reduce confusion when units are being delivered in
Australian National Registry of Emissions Units (ANREU).
The request form will also identify existing Scheduled Deliveries under the Contract that will be reduced to offset the new advance payment deliveries – these will need to be agreed by the Clean Energy Regulator and may be subject to negotiation.
The submitter of the form will also indicate their agreement to the data provision and sharing requirements of the advance payment.
The Clean Energy Regulator will consider your request in line with the eligibility criteria and if agreed the Carbon Abatement Contract Seller will be sent, and asked to enter into, a legally binding Advance Payment Addendum (the Addendum) and agree to an Advance Payment Terms Schedule (Terms Schedule).
The Addendum and Terms Schedule will also set other items such as:
Documentasset:Advance Payment Addendum – fixed delivery
Documentasset:Advance Payment Addendum – optional delivery
A copy of the Addendum package will be sent to the Seller, including:
The Addendum needs to be signed by authorised officers of the Seller and a signed copy returned to the Clean Energy Regulator for counter signature within 90 days of receipt.
Once the Clean Energy Regulator signs the Addendum the Advance Payment Terms come into effect, and the Seller will be sent confirmation of this as well as a copy of the fully signed Addendum.
The Advance Payment Amount is a contribution towards upfront baseline sampling costs. After entering into the Terms Schedule, the Seller will have up to 18 months to have baseline testing conducted on a Carbon Estimation Area of the Project and submit a notice to the Clean Energy Regulator. Notices can be submitted to the Clean Energy Regulator through the General Submission section in the
Client Portal by an Authorised Representative of the Contract.
The notice must include:
The advance payment claimed at this time must not exceed actual baseline soil sampling costs and must also be a whole number multiple of the contract price (equivalent to a whole number of ACCUs).
If the amount claimed is less than the amounts agreed to in the Advance Payment Terms Schedule then the number of ACCUs representing the difference between these amounts will be added back to the contract Delivery Schedule. Payment will be made within twenty (20) business days of receiving a complete notice to the bank account specified in Item 5 of the Contract Commercial Terms.
The sharing of data that may help contribute to improving ERF soil methods and support the National Soil Strategy and National Greenhouse Gas Inventory is a requirement of the advance payment. To support these developments, data will be shared with the Department of Industry, Science, Energy and Resources and the Department of Agriculture, Water and the Environment.
The Seller in the Terms Schedule will be required to ensure that the following information is provided to the Clean Energy Regulator in an agreed format until the Carbon Abatement Contract is fulfilled:
Soil data and management information will be required to be submitted via email within nine (9) months of testing results being available and may contribute towards information needing to be submitted later when applying for credits.
The Clean Energy will accept data and information provided from the Project Proponent, an agent or the Seller, however the Seller is ultimately responsible for ensuring this is provided. Not providing the required data and information as agreed may result in an act of default under the Carbon Abatement Contract.
The Advance Payment will be acquitted through the
delivery of the agreed Advance Payment Quantity of ACCUs in ANREU. The timing of when the units are to be delivered is set through an Advance Payment Delivery Schedule at the time of entering into the Addendum and Terms Schedule.
When acquitting the advance payment, ACCUs can be made from any source (such as another project or the private market) and do not need to be from the project directly connected to the contract. This applies for both fixed delivery and optional delivery contracts.
If an Advanced Payment Scheduled Delivery is unable to be met, the Seller must provide a notice to the Clean Energy Regulator and the Seller and Clean Energy Regulator will use all best endeavours to negotiate a revised Advance Payment Delivery Schedule.
The Clean Energy Regulator would be unlikely to agree to a revised Delivery Schedule that resulted from volume being substituted to meet a non-Advance Payment Scheduled Delivery under the Contract and would not agree to the volume being substituted to meet an alternative higher priced contract. Further, when negotiating a varied delivery schedule as part of an Advance Payment Delivery Failure, the Clean Energy Regulator may request that Contract Scheduled Delivery dates occurring prior to a varied Advance Payment Delivery Failure milestone are also moved to reduce this risk.
Debts due against advance payment amounts will be recovered with interest from the time due, in accordance with the
Clean Energy Regulator’s debt recovery principles.
An Advance Payment Terms Schedule is completed once the final Advance Payment Schedule Delivery has been made and all the Advance Payment Prepaid Quantity for a Terms Schedule has been acquitted. However, commitments made (warranties), including in relation to providing data in an agreed format may still continue for the remaining duration of the Carbon Abatement Contract.
If the Carbon Abatement Contract has any additional projects with advance payments still to be acquitted the obligations for these continue in keeping with the Terms Schedule associated with supporting each additional project.
All other obligations under the existing Carbon Abatement Contract will also continue.
The below resources may help you to identify if you are eligible for an advance payment and understand the advance payment requirements and process and you can also
call or email us directly with any questions.
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