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Delivery failure

11 August 2023

All Kyoto Australian carbon credit units (ACCUs) for fixed delivery contracts must be delivered on the dates set in the carbon abatement contract delivery schedule, and you are encouraged to take steps to ensure you meet these obligations. A delivery not made in full by the scheduled delivery date is considered a delivery failure.

If you determine that your contracted project is not able to generate sufficient units to meet your delivery schedule, you must attempt to:

  • source Kyoto ACCUs from another ACCU Scheme project, or
  • purchase Kyoto ACCUs from the secondary market.

If you think that you are going to miss a delivery under contract, you should contact the Clean Energy Regulator (CER) immediately.

The CER takes delivery failure seriously and may view multiple failures as an indicator of ineffective contract management. This can impact on our willingness to agree to revised delivery schedules or to enter into a contract with you at future auctions.

Delivery failure notice

If you are unable to deliver the set amount of Kyoto ACCUs on time, you will need to send a delivery failure notice to the CER. Delivery failure notices must include the:

  • number of Kyoto ACCUs that will not be delivered
  • reason for the failure and the steps being taken to address it
  • the anticipated duration of the failure, and
  • the proposed revision to the delivery schedule.

Authorised representatives must provide a reason for the delivery failure. The CER may request evidence of these reasons. These negotiations may impact their good standing with the CER and their eligibility for future exit windows. Where a seller holds multiple contracts, their eligibility for the exit arrangement is informed by their conduct across all such contracts.

Following notice of a delivery failure both parties must make reasonable endeavours to agree to a revised delivery schedule. 

The CER will consider proposed revisions to the delivery schedule according to the following principles:

  • In general, delivery milestones will not be renegotiated where there are sufficient ACCUs available in the proponent’s or agent’s Australian National Registry of Emissions Units (ANREU) holding account to meet delivery obligations.
  • All other things being equal, the CER will not agree to rescheduled milestones if a contract holder or agent was issued ACCUs which were subsequently transferred to a third party resulting in a delivery shortfall.

The CER will generally not reduce the total amount of Kyoto ACCUs to be delivered.

The CER will not agree to a variation and will consider market damages when:

  • we do not believe you will be able to deliver units from your project and you do not have the capacity to source these units from other projects or the secondary market, and
  • when the agreed quantity has not been delivered by the contract’s end date.

If you are having trouble managing your delivery schedule, see the CER’s interactive contract delivery schedule calculator, which will help to manage project timing requirements.

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