Under a fixed delivery carbon abatement contract, you must ensure you can deliver the agreed quantity of Australian carbon credit units (ACCUs) set out in the delivery schedule.
If your project can’t deliver the agreed quantity of ACCUs by the due date (milestone), you can:
- source the difference from your other projects or the secondary market
- apply for the permanent exit arrangement (previously operating as the fixed delivery exit arrangement pilot windows).
Expressions of interest (EOI) are open
You must complete this EOI process by 30 June 2026, so the permanent exit arrangement can start on 1 July 2026.
About the permanent exit arrangement
The permanent exit arrangement gives you the option to make an exit payment (contractually referred to as Buyer’s Market Damages) instead of delivering ACCUs under your carbon abatement contract.
The permanent exit arrangement allows eligible sellers to apply to fulfill their contractual obligations by receiving a 60% discount on their exit payment, after they deliver at least 25% of the outstanding volume of ACCUs (as at 1 January 2025).
The discount acknowledges that market and policy settings have changed since the introduction of carbon abatement auctions and fixed delivery contracts in 2015.
Before you apply
Eligibility
To qualify, you must:
- enter into the Fixed Delivery Exit Arrangement Variation Deed before 1 July 2026, which requires:
- engaging in good faith negotiations to revise the delivery schedule to be consistent and periodic
- committing to fulfil all outstanding contractual obligations by 31 December 2030
- accepting that no further changes to the delivery schedule are permitted – this means that the 20% undelivered carry over provision in existing contracts will no longer apply
- committing to deliver at least 25% of the outstanding contractual volume (as at 1 January 2025) to be eligible for a 60% discount on exit payment
- resolve any outstanding delivery failures and pay any outstanding exit payments
- submit a benefit sharing declaration form and provide evidence showing you’ve met the benefit sharing requirements (where applicable).
Fulfilling your contract obligations
To fulfil your contract obligations under the permanent exit arrangement, you must deliver and pay the exit payment with respect to your outstanding contracted volume by 31 December 2030.
We will not negotiate delivery schedules after you have entered into the Fixed Delivery Exit Arrangement Deed.
This timeframe for fulfilling obligations by 31 December 2030 considers that most fixed delivery carbon abatement contracts were entered into between 2015 and 2020 for initial durations of 7 to 10 years.
Fixed Delivery Exit Arrangement Variation Deed
The objective of the new contract exit arrangements is to provide a consistent, sustainable and equitable approach to managing obligations under fixed delivery carbon abatement contracts.
The Fixed Delivery Exit Arrangement Variation Deed streamlines and amends some contract terms to reflect the requirements of the permanent exit arrangement. In summary, these changes include:
- a 60% discount on the exit payment after at least 25% of the outstanding contractual volume (as at 1 January 2025) has been delivered – this affects how the exit payment will be calculated upon submission of a Fixed Delivery Exit Application form
- a streamlined calculation process for Buyer's Market Damages (BMD) to reduce overall administrative costs where we are required to calculate BMD under the contract
- amendments to the negotiation mandate requiring renegotiation of delivery milestones where a seller has agreed to the permanent exit arrangement terms through the variation deed
- the 20% undelivered carry over provision will no longer be available
- a delivery schedule that provides a consistent and periodic pathway to fulfilling contractual obligations without backloading contracted volume
- delivery schedules can’t be rescheduled once the variation deed is entered into.
Our contract management principles have also been updated to reflect the above changes and to clarify the obligations under the deed. As part of this update, sellers that don’t act in accordance with the agreed variation deed can expect us to seek the full damages outlined in the deed, in relation to the simplified exit payment process.
The execution requirements for the variation deed differ for corporations and individuals.
- Corporations: electronic execution is permitted, provided it complies with section 127 of the Corporations Act.
- Individuals: wet ink signatures are mandatory. This is because carbon abatement contracts are governed by ACT law, and the variation deed cannot be executed electronically under these provisions.
Rescheduling contract milestones
If you want to apply for the permanent exit arrangement and have contract milestones due before 30 June 2026, you can request to reschedule these milestones to 30 June 2026. This extension gives you time to consider participating in the arrangement.
To request to reschedule your 2025 contract milestone, submit a Contract Variation – Delivery Failure form in Online Services.
If the contract term is scheduled to expire before 30 June 2026, contact us at erfcontracts@cer.gov.au for help.
You can continue to deliver ACCUs under the contract and be paid the contract price
Any ACCUs that have been delivered from 1 January 2025 onwards will contribute towards your eligibility for the discounted exit payment under the Fixed Delivery Exit Arrangement Variation Deed.
How to apply
Make sure you meet the eligibility criteria and are familiar with your contract obligations.
Follow these steps to apply for the permanent exit arrangement.
The EOI process for the permanent exit arrangement is open. You must complete this process by 30 June 2026, so the permanent exit arrangement can start on 1 July 2026.
You’ll get an email from us with instructions on how to submit your EOI. To participate, simply reply to the email and provide:
- a proposed delivery schedule for each carbon abatement contract outlining the intended timeline for fulfilling the outstanding contractual volume by 31 December 2030
- a completed benefit sharing declaration form and evidence showing you’ve met the benefit sharing requirements (where applicable).
- any extra information that may support the process, such as delivery capacity.
This process provides a structured pathway to agree on varied contract terms for the permanent exit arrangement.
We will issue the new delivery schedule and make changes in line with the deed.
Once both parties (the seller and us) have agreed to the delivery schedule, both parties must sign the Fixed Delivery Exit Arrangement Variation Deed.
Once we agree to the revised delivery schedule, no further changes are permitted as per our contract management principles.
To qualify for the discounted exit payment, you must deliver at least 25% of the outstanding contract volume of ACCUs (as at 1 January 2025).
You may fulfil this delivery across multiple delivery milestones. You may also choose to make early deliveries against future milestones.
You need to submit the invoice to receive payment for the delivered ACCUs.
Where you don’t deliver and don’t intend to deliver ACCUs in line with the agreed delivery schedule in the deed, you must submit a Delivery Failure Notice form via Online Services and contact us at erfcontracts@cer.gov.au.
After you have completed the delivery of at least 25% of the outstanding contract volume (as at 1 January 2025), you must submit a Fixed Delivery Exit Application Form via Online Services for any undelivered volume at each milestone. This must be completed at least 2 weeks before your scheduled milestone delivery date.
You’re eligible for a 60% reduction in the exit payment for the non-delivered milestone volume if you’ve delivered at least 25% of the outstanding contract volume (as at 1 January 2025).
If you also want to partially deliver ACCUs for a milestone that you’re submitting a Fixed Delivery Exit Application Form for, you must complete the delivery first.
If you don’t intend to submit a Fixed Delivery Exit Application Form, you must submit a Delivery Failure Notice and contact us at erfcontracts@cer.gov.au.
If we approve your Fixed Delivery Exit Application Form application, we’ll give conditional approval along with an exit payment invoice.
You must pay the invoice by the milestone due date.
Once we receive the full exit payment, we’ll confirm that you’ve been released from contractual claims for the delivery of the nominated ACCUs within that milestone.
Example scenarios
A seller has a fixed carbon abatement contract with 10,000 ACCUs outstanding across 4 milestones, and their contract expires in 2030.
To participate in the permanent exit process, the seller submits an expression of interest, which includes the final delivery schedule. If the schedule is approved, we send the variation deed to the seller for them to sign (step 1).
After we agree to the proposal, the seller delivers 2,500 ACCUs against the first milestone (step 2).
They don’t plan to deliver any ACCUs against the second milestone and they submit a Fixed Delivery Exit Application Form (effective 1 July 2026) 2 weeks before the second milestone date (step 3).
Since they’ve delivered 25% of the outstanding ACCUs (i.e. 2,500 ACCUs), they’re eligible for the 60% discount on the exit payment for the second milestone (step 4).
As they have fulfilled their commitment to 25% delivery for the contracted quantity of ACCUs, they may exit all remaining milestones and receive a 60% discount by submitting an additional Fixed Delivery Exit Application Form at each milestone.
They retain the option to continue delivering more ACCUs and be paid the contract price.
If a seller chooses not to, or is unable to, participate in the permanent exit arrangement, they remain bound by the terms of their existing contract.
If they can’t meet these obligations, we’ll manage the contract in accordance with our contract management principles.
Background
Carbon abatement contracts are commercial agreements between us (acting on behalf of the Commonwealth of Australia) and a seller. Fixed delivery contracts are linked to at least one ACCU Scheme project. However, ACCUs may be sourced from many projects or from the private market to meet delivery obligations.
On 4 March 2022, changes were announced to the Commonwealth Government administration of fixed delivery contracts. Under the initial pilot fixed delivery exit arrangement, the government piloted 4 windows that allowed sellers to meet their contractual obligations without delivering ACCUs. Instead, sellers could make an exit payment based on their contract price and the number of outstanding ACCUs for a given milestone.
The fourth pilot window trialled a partial delivery requirement where sellers had to deliver at least 20% of their milestone before being eligible to exit the remaining milestone volume. The process was conducted in accordance with existing carbon abatement contract terms.
The pilot fixed delivery exit arrangement was in response to a maturing ACCU market with many buyers and provided an orderly transition towards a more flexible contract management framework. To support this transition and mitigate instability generated by these changes, we also agreed to temporarily reschedule delivery milestones, with the most recent extension to the end of 2025.
This new permanent exit arrangement process allows government to maximise ACCU supply for the Safeguard Mechanism, while also providing increased flexibility in how sellers use their own generated ACCUs to best position Australia in meeting emissions reduction objectives.
Safeguard facilities and permanent exit arrangements
Exiting a contract delivery milestone does not count as delivery of ACCUs to the Commonwealth for the purposes of the Safeguard Mechanism (i.e. ‘deemed surrender’) and will not reduce the net emissions number of a safeguard facility.
The facility emissions can only be reduced through:
- surrender of ACCUs and Safeguard Mechanism credit units to the Commonwealth by the facility
- sale of ACCUs to the Commonwealth under an eligible carbon abatement contract.
For more information about the Safeguard Mechanism, please contact safeguardbaselines@cer.gov.au.
Market information
The volume of ACCUs released under exit arrangements are published on the carbon abatement contract register to support transparency and inform market decisions. This includes more information on deliveries under contracts.
Exit arrangements are optional and reduce the quantity of ACCUs required to be delivered under fixed delivery carbon abatement contracts. The volume of ACCUs released from contractual obligations may not equal the volume of ACCUs released to the market.
ACCUs may not be released to the market for several reasons, including if:
- ACCUs were delivered as scheduled under contract
- ACCU delivery was rescheduled using existing flexibility arrangements
- sellers have agreements with private buyers, which prevents ACCUs released under exit arrangements from going on the spot market.
There are around 84 million ACCUs scheduled to be delivered under fixed delivery carbon abatement contracts. We will continue to manage carbon abatement contracts in line with our contract management approach and contract management process.
The Quarterly Carbon Market Report provides information on ACCU holdings and trading.
Previous exit windows
Insights from previous exit windows have shaped the development of the permanent exit arrangement. This new process marks a significant shift from the traditional implementation and management of fixed delivery carbon abatement contracts, offering greater flexibility for eligible sellers.
Outcomes from previous exit windows are detailed below.
| Window | ACCUs released |
|---|---|
| First pilot exit window (4 March 2022 to 30 June 2022, with an extension available under transitional arrangements to 31 August 2022) | 2.6 million |
| Second pilot exit window (1 July 2022 to 31 December 2022, with an extension available under transitional arrangements to 28 February 2023) | 1.7 million |
| Third pilot exit window (1 January 2023 to 30 June 2023, with an extension available under transitional arrangements to 31 August 2023) | 4.1 million |
| Fourth pilot exit window (1 July 2023 to 31 December 2024) | 4.5 million |
| Permanent exit arrangement (1 January 2025 to 31 December 2030) – results will be published at the same time as contract register updates |