Following the 4 March 2022 announcement on transitional arrangements for Emissions Reduction Fund (ERF) fixed delivery contracts, holders of fixed delivery contracts will have the opportunity to exit their fixed contracts over time with the Commonwealth on payment of an exit-fee. Fixed delivery contract holders will then be able to sell their ACCUs for higher prices on the private market.
The Clean Energy Regulator is consulting on how to ensure a fair sharing of the financial benefits that result from exiting fixed-contract delivery obligations between the parties involved.
Benefits refer to the additional revenue obtained or expected to be obtained over and above the net exit fee that results from exiting fixed delivery contract milestones and selling the ACCUs for higher prices than the ERF contract may have provided for. Benefit sharing refers to how this revenue is to be distributed between the relevant parties.
The Clean Energy Regulator will consult on an expectation that landholders, project proponents and carbon service providers will reach agreement on how benefits are to be shared. The benefit sharing arrangement could broadly reflect the agreement parties struck in their service agreements to deliver the carbon abatement contracts.
The consultation will commence from Monday 14 March with the benefit sharing arrangements to be finalised by late April. If you would like to be involved in this consultation, please contact ERF-Contracts@cleanenergyregulator.gov.au.
A reminder: an Expression of Interest process is now open for parties who intend to opt-in to the initiative and have delivery milestones falling due between 4 March 2022 and 30 June 2022. These transitional arrangements include the option to postpone near term contract delivery milestones if needed.