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 fixed delivery exit arrangement.
About exit arrangements
The fixed delivery exit arrangement gives you the option to make an exit payment instead of delivering ACCUs under your carbon abatement contract.
The exit payment is calculated by multiplying the contract price by the quantity of outstanding ACCUs for the milestone.
Fourth exit window
The fourth pilot exit window is now open. The application form is available in the Client Portal.
This exit window includes milestone delivery dates from 1 July 2023 to 31 December 2024.
The fourth pilot exit window is informed by the ACCU Review Implementation consultation conducted by the Department of Climate Change, Energy, Environment and Water.
Eligibility
We will assess your eligibility to participate after we receive your exit application.
Before you apply, make sure you meet the eligibility criteria and have made any necessary contract variations.
You are also expected to manage your secondary market transactions to make informed decisions on your ability to deliver or participate in the exit window.
Settings have changed for the fourth pilot exit window
The fourth pilot exit window includes the following changes:
- The window for eligible deliveries is from 1 July 2023 to 31 December 2024 rather than the previous 6-month window period.
- You must deliver at least 20% of the applicable delivery milestone you are exiting. This must be done before you submit your exit application.
To be eligible, you must:
- have a delivery milestone due between 1 July 2023 and 31 December 2024
- meet the minimum partial delivery requirement of 20% of the applicable delivery milestone
- satisfy the requirements in the benefit sharing framework
- continue to comply with the contract and not have outstanding contractual obligations relating to delivery failures
- remain in good standing by conducting any negotiations with us in good faith.
Where you hold multiple contracts, your eligibility is informed by your conduct across all your contracts.
While benefit sharing requirements need to be satisfied, the exit arrangement does not impose additional requirements relating to the sale or other use of ACCUs.
Deadlines
You must submit your exit application by whichever date occurs first:
- at least 2 weeks before your scheduled milestone delivery date
- by 1 December 2024.
We will provide further advice to you about your application due date along with the eligible exit volume and minimum partial delivery requirement.
How to apply
Before you apply, make sure you meet the eligibility criteria and are familiar with your delivery obligations.
We will advise you of your application due date along with the eligible exit volume and minimum partial delivery requirement. If you already know this information, you can proceed with the steps below.
Follow these steps to apply for a fixed delivery exit arrangement.
Before you submit your application, you must deliver at least 20% of the applicable delivery milestone you are exiting.
Exiting an entire delivery milestone
For example, if you’re exiting a milestone of 1,000 ACCUs, you will need to deliver at least 200 ACCUs before submitting your exit application.
If a portion of your ACCUs is rescheduled because it can’t be delivered or exited, the 20% will be calculated on the remaining milestone delivery.
Exiting a partial delivery milestone
For example, if your original milestone is 1,000 ACCUs, but 400 of those ACCUs have been rescheduled to a later milestone, the remaining milestone volume will be 600 ACCUs. Of the revised milestone of 600 ACCUs, you will need to deliver at least 120 ACCUs before submitting your exit application.
The 20% delivery milestone applies to each specific milestone and exit application. We won’t accept larger deliveries on behalf of another contract milestone.
We can’t return any ACCUs that have been delivered under a carbon abatement contract. This also includes ACCUs that are delivered before applying for the exit arrangement and used to meet the minimum partial delivery requirement.
You must submit a Notice of Non-Delivery and Offer to Settle through the Client Portal.
If you are not exiting the total volume of the milestone delivery, a delivery failure application must be submitted and resolved before commencing an exit application. We will assess your delivery failure in line with contract management principles before agreeing to any rescheduling.
You need to complete a separate application for each milestone. This ensures that we can track ACCU deliveries for auditing and compliance purposes.
You must meet partial delivery requirements for each milestone and provide confirmation that you have met your minimum partial delivery requirement.
After you submit an application, you can still deliver your milestone per existing contractual arrangements.
However, if you deliver ACCUs that are subject to an exit arrangement application, you will void your application and any associated conditional approval.
If you are planning to make any additional partial deliveries, you should deliver the ACCUs before you apply. This means you won't need to seek conditional approval multiple times.
Conditional approval gives you confidence to carry out third-party transactions before you make an exit payment to us.
If we determine that your application is eligible, we give you conditional approval and send an invoice for the exit payment.
The conditional approval will lapse if the full exit payment is not received by the milestone delivery date.
If conditional approval lapses, existing delivery and payment processes will apply. Conditional approval will also be void if:
- any of the sellers under the contract change
- the parties covered by the benefit sharing framework change
- you deliver ACCUs included in your exit arrangement application after we give conditional approval
- there are changes to your bank account details after you submit your application.
We use the bank account nominated in the carbon abatement contract for refunds.
If you change the nominated bank details or any other contract details, you need to submit a new exit arrangement application after the changes are made.
We calculate the exit payment by multiplying the contract price by the quantity of ACCUs to be released.
The quantity of ACCUs to be released is the outstanding volume of the delivery milestone that is nominated in the exit application.
GST is not payable on exit payments.
We must receive full payment of the invoice before or on the nominated delivery milestone date.
We will not provide payment plans or extensions to pay the exit payment invoice. If you are unable to pay the invoice by the nominated scheduled milestone date, you must email erfcontracts@cer.gov.au before the invoice is due.
Once you have paid the invoice, we will email you to confirm receipt of the exit payment and that obligations have been met.
If you have made a mistake with your exit fee payment, you may be able to have some or all of it refunded. Requests can be sent to erfcontracts@cer.gov.au and will be assessed on a case-by-case basis.
Delivery obligations
Sellers are expected to comply with their contract delivery obligations and should be prepared to exit or deliver against applicable milestones by the scheduled delivery date.
You are required to deliver the contract milestone in full if:
- you haven’t met the exit arrangement requirements
- you don’t pay your exit payment invoice on time.
For delivery milestones scheduled after 31 August 2024, we will consider proposed revisions to the delivery schedule on a case-by-case basis and in line with our contract management principles.
Safeguard facilities and 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 Credits 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
When the window opens, we publish information on the volume of ACCUs scheduled for delivery during the current window.
After the window closes, we publish the volume of ACCUs that were released because of the exit arrangement for that window. We publish this information on the carbon abatement contract register to support transparency and inform market decisions.
Exit arrangements are optional. This means the volume of ACCUs scheduled for delivery in the current window may not equal the volume of ACCUs released and made available to the market.
ACCUs may not be released to the market for a number of reasons, including:
- ACCUs are delivered as scheduled under contract
- ACCU delivery is rescheduled using existing flexibility arrangements
- sellers enter into agreements with private buyers, which prevents ACCUs released under exit arrangements from going on the spot market.
The contract register contains more information on deliveries under contracts.
The Quarterly Carbon Market Report provides information on ACCU holdings and trading.
Current exit window
| Window | Estimated ACCUs released under the 4th exit window |
|---|---|
| Fourth pilot exit window (1 July 2023 to 31 December 2024) | We expect between 9 to 15 million ACCUs will be released to the market during this exit window. This excludes between 2 to 4 million ACCUs to be delivered under contracts to meet the 20% minimum partial delivery requirement. Sellers with volume currently under negotiation as part of our carbon abatement contract management process may not be able to participate in this exit window, and therefore these ACCUs may also not be released to the market. |
Previous exit windows
| 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 |