ERF application process

Annotations:

• http://www.cleanenergyregulator.gov.au/ERF/Want-to-participate-in-the-Emissions-Reduction-Fund

1. Application
   1. Online application to register project

      Annotations:

      • This includes: Information about you, so that we can be sure of your identity and assess you against the Fit and Proper Person test requirementsA Forward Abatement Estimate covering the crediting period for your project. This will be:25 years for savanna burning projects20 years for avoided deforestation projects25 years for all other sequestration projects and7 years for all other emissions reduction projects.Note that this is not necessarily the same as the contract period for a carbon abatement contract.A question about your legal right to conduct the project.
      1. Fit and Proper Person status

         Annotations:

         • If you have not already had your identity confirmed and been assessed against the Fit and Proper Person requirements you will need to complete and submit the necessary AFP National Police Check form. If you are involved with other schemes or activities administered by the Clean Energy Regulator, you may have already met the identification procedures and passed the Fit and Proper Person test. However, if you have been assessed against the fit and proper person test as part of a previous application and your circumstances have changed you must notify the Clean Energy Regulator.
         1. Open an ANREU account

            Annotations:

            • If you do not already have an ANREU account you will need to apply to open an account. This does not have to be done at the time you apply to register your project, but it will need to be done for you to receive any Australian Carbon Credit Units (ACCUs) generated by your ERF project. You must have applied to open an ANREU account by the time of your first project report. You will not be able to receive ACCUs without an ANREU account.
            1. Eligible interest holder consent

               Annotations:

               • If you are applying to register an area-based emissions avoidance project or a sequestration project under the Emissions Reduction Fund, you must submit signed eligible interest holder consent forms from all persons or organisations that have a specific legal interest in the land on which your project will run. This this can be done at the time you apply to register your project, or later. If it is not done at the time your project is registered, it will receive conditional registration only. You will be required to obtain signed eligible interest holder consent forms before submitting your first project report. Failure to do so may result in the project owner not receiving Australian carbon credit units (ACCUs).
               1. What happens next?

                  Annotations:

                  • We will assess your application and if you are successful we will register your project. As part of our assessment, we must be satisfied that: you are who you claim to beyour project meets all eligibility criteria of the Actis consistent with an applicable method, andyou are a fit and proper person—a fit and proper person has no prior convictions or history of non-compliance under a range of laws. When a decision has been made by the Clean Energy Regulator, you​ will be notified of the outcome. If a decision has been made to register your project, its details will be published on the Emissions Reduction Fund Register. The register lists information about each project registered under the Emissions Reduction Fund including the number of Australian carbon credit units (ACCUs) issued.
2. Contracts and auctions

   Annotations:

   • If you have completed step one and registered your project you can apply to enter into a carbon abatement contract with the Clean Energy Regulator to sell your Australian carbon credit units (ACCUs). The contract is a standardised sale and purchase agreement that commits the Clean Energy Regulator to purchase ACCUs at the contracted price with payment to be made a short time after delivery. To secure a contract you must complete an auction qualification application, auction registration application, and bid successfully at an auction run by the Clean Energy Regulator. The contracted price will be the price you bid into the auction.
   1. Auctions
      1. Complete auction qualification

         Annotations:

         • The auction qualification process commits you to the code of common terms and commercial terms of the carbon abatement contract. During auction qualification you will provide: information about your project registrationan indication of the total quantity of units you would agree to provide as part of the contractinformation about your ANREU account. You may be asked to provide evidence on the financial aspects of your project. You may also nominate conditions precedent for the contract. Certain aspects of your project may not be finalised yet, such as project finance or planning or regulatory approvals. You may identify these as conditions precedent as part of the commercial terms. The primary obligations in the contract – the schedule for delivery and purchase of Australian carbon credit units – will only come into effect once you meet any conditions precedent. During auction qualification, you can nominate an authorised representative who can complete activities on your behalf. If you nominate an authorised representative, we will be able to accept notices from nominated representatives without the need to provide further proof of authority each time. How do you complete auction qualification? You must submit an auction qualification form for the project that you wish to be covered by a carbon abatement contract. Auction qualification applications must be submitted through the client portal A sample auction qualification form is available to help you submit your application in the client portal. When do you complete auction qualification? Your auction qualification form must be received at least 20 business days before the auction date that you wish to participate in. We will review the information you provide to us and notify you if you have qualified to take part in Emissions Reduction Fund auctions. Once you qualify for an auction you will be eligible to participate in all auctions over a twelve month period.
         1. Complete auction registration

            Annotations:

            • Once you are qualified to take part in an Emissions Reduction Fund auction you must register to participate in each auction. The auction registration process commits you to the delivery terms of the carbon abatement contract. During auction registration you will provide information about: the total quantity of ACCUs to be delivered under the contractthe contract period (that is, the period over which you will deliver the abatement).the dates that ACCUs are to be delivered (your delivery schedule), andthe quantity of ACCUS to be delivered by those dates. You may also nominate an authorised bidder during auction registration. We will not register a participant for an auction if: a registration for the projects that will be bid at that auction already exists. Each project can only be bid once per auction.the project will deliver less than 2 000 Australian carbon credit units per year on average over the term of the contract.This does not apply to projects that were registered before 13 December 2014.How do you complete auction registration? You must submit an auction registration form for the auction that you wish to participate in. Auction registration must be submitted through the client portal. When do you complete auction registration? Your auction registration form must be received at least 5 business days before the date of the auction you are registering for. We will review the information you provide to us and notify you if you are registered to take part in the auction. You can revise the information you provide in your auction registration up to 5 days before the auction. No revisions or registrations will be accepted after 5 days before the auction. Nominating a delivery schedule You will need to nominate a delivery schedule for the ACCUs you will earn from your project. The delivery schedule will require you to deliver a certain amount of ACCUs to the Clean Energy Regulator at nominated points in time. The delivery schedule is binding. The contract does not allow you to vary the delivery schedule, except in the event of a delivery failure or force majeure. You may be able to vary your delivery schedule by completing a notice and providing it to the Clean Energy Regulator. Authorised bidder At the time that you register to participate in an auction, you must also nominate an authorised bidder(s) to submit an auction registration application and bid on your behalf. The authorised bidder can bid at auction and complete future auction registration.
            1. Participating in an auction

               Annotations:

               • ContentsThe auction formatDetermining successful bidsBenchmark priceVariable volume thresholdAuction guidelines To participate in an auction you must have completed auction qualification and auction registration. We will confirm and publish each auction date and bidding window (that is the opening and closing time for receiving bids) at least ten weeks before an auction is due to occur. The auction format The auction is a single-round, pay-as-bid, sealed-bid auction format. This means that the outcome will be determined on the price you submit. Bids are sealed so that bidders will not see what others are bidding. If you are successful at the auction, you will be paid for the Australian carbon credit units you deliver under the contract at the price you bid at the auction. If a project is not successful it can be rebid into a subsequent auction. Each bid made at an auction will relate to one or more projects registered for the Emissions Reduction Fund. If a bid is successful, the participant will automatically enter into a contract with the Clean Energy Regulator on behalf of the Commonwealth of Australia covering the project(s) related to the bid. A participant making a successful bid will be paid the price under the contract that they bid. You must submit bids through AusTender as the online bidding platform. AusTender is the Australian Government's online procurement information system. The auction bid form will be available for download from AusTender during the bidding window. The form includes the contract identifier, the bid (unit price in words and numbers), details of the authorised bidder and their signature. If you register to participate in an auction, you will be provided with information about how to bid through AusTender. We have provided a Sample bid form for information only. This is a sample form only as the official auction bid form can only be downloaded from AusTender by authorised bidders during the bidding window. The form must be submitted via the AusTender system – it must not be mailed or emailed outside of AusTender. Determining successful bids We will select projects to contract with solely on the basis of the bid price. Participants with the most competitive prices will be successful. To assess bids we will use a systematic tool to select value for money bids using parameters, including the benchmark price, determined before the auction. We will engage an independent probity advisor to assess and report on the probity of the second Emissions Reduction Fund auction. The advisor will assess business processes, separation of roles and responsibilities, and confidentiality of information such as auction bids and abatement volumes. Benchmark price We will set a benchmark price for each auction. The benchmark price is the maximum amount we will pay for emissions reductions. Any bid that is higher than the benchmark price for that auction will automatically be excluded from consideration at that auction. Each auction will have a unique benchmark price which will not be disclosed. Variable volume threshold The Clean Energy Regulator can purchase between 50 and 100 per cent of emissions reductions offered at each auction at prices below the benchmark price. Auction guidelines The Clean Energy Regulator will conduct auctions in accordance with auction guidelines. The Guidelines for the second ERF auction provides information about how the second auction will be conducted, including information on auction schedules, eligibility, bidding, suspension and cancellation, participant disqualification and information publication.
               1. Contracts

                  Annotations:

                  • Make sure that you: Understand the contract termsChoose an appropriate contract lengthUnderstand the contract powers and obligations that will apply to you The Carbon Abatement Contract v2.0 is a standard contract that all successful bidders will enter into.
3. Reporting and auditing

   Annotations:

   • All Emissions Reduction Fund participants must report on their projects at regular intervals. Reports may need to be accompanied​​ by an audit report, if required in the project's audit schedule, verifying that the abatement achieved and reported on is accurate.
   1. Reporting

      Annotations:

      • All Emissions Reduction Fund participants must report on their projects at regular intervals, regardless of whether you have a contract to sell your Australian carbon credit units (ACCUs) to the Australian Government. Reports on abatement achieved may need to be accompanied by an audit report verifying that the abatement achieved and reported on is accurate. Reporting requirements Your report will include information and calculations on abatement achieved. Each method contains specific and detailed instructions that should be used to calculate abatement. The method will also include other information that should be included in your report. You should ensure that you are familiar with the reporting and record keeping requirements for the method you choose. Failure to provide a project report to the Clean Energy Regulator may attract a civil penalty. Reporting frequency Under the Emissions Reduction Fund, you can choose when to report on your project as long as you adhere to the minimum and maximum reporting periods (periods between reports). The first reporting period begins at the start of your project’s crediting period.  Each new reporting period begins immediately after the previous reporting period. All reporting periods must be within your project’s crediting period. In general, a reporting period can be as short as six months, as long as two years for emissions avoidance projects or five years for sequestration projects. However, a reporting period can be less than 6 months, and as short as 1 month, if the net abatement for the period is 2 000 tonnes of carbon dioxide equivalent or more. You must submit a project report to the Clean Energy Regulator within six months of each reporting period, unless your method specifies otherwise. Assessment of project reports In most circumstances your project report will be processed within 90 days. You will receive email notification that your report has been processed. The notification will include an abatement statement for the reporting period advising the volume of ACCUs you will be issued. The ACCUs earned by your project in the reporting period will be issued into your specified Australian National Registry of Emissions Units (ANREU) account. The Clean Energy Regulator may require further information from you. If the information is not provided as requested, the Clean Energy Regulator may refuse to consider or take any further action in relation to any application for ACCUs included in your project report. Auditing project reports Some of your project reports will need to be accompanied by an audit report prepared by a registered category 2 or 3 greenhouse and energy auditor. Your project's audit schedule will indicate which project reports must be accompanied by audit reports.
   2. Auditing

      Annotations:

      • For most projects, a minimum of three scheduled audits across the seven plus year crediting period is required. All scheduled audits will need to establish reasonable assurance that the abatement achieved and reported on by a project is accurate.
      1. Audit requirements

         Annotations:

         • Under the Emissions Reduction Fund, the Clean Energy Regulator will adopt a risk-based approach to audit. This approach balances the need to streamline audit requirements with the need to uphold the integrity of ACCUs. For most projects, this approach to audit will mean a minimum of three scheduled audits across the seven plus year crediting period. All audits will need to establish reasonable assurance that the abatement achieved and reported on is accurate. Audit requirements All audits must be undertaken by a category 2 or 3 auditor registered under the National Greenhouse and Energy Reporting Regulations 2008. For further information, please see About the National Greenhouse and Energy Reporting scheme. The costs of audits are your responsibility. We recommend that you engage your auditor early when developing your project. This is to ensure you can establish costs, if bidding into an auction, and to ensure sound reporting and record keeping processes are established from the outset. You must make all necessary documents and information, including data records, receipts and other supporting documentation available to the auditor. We have developed Guidance for Audits under the ERF to help you understand the audit framework. Audit types There are three types of audits under the Emissions Reduction Fund. Initial audits An initial audit report must be submitted with the first report for your project, submitted between six months and two years into the crediting period, or five years into the crediting period for sequestration projects. Project reports can be submitted up to six months after the end of the reporting period. In some cases, a project may report more frequently than every six months. In these cases, the initial audit must cover a period of at least six months and must be submitted with the final report covering the six month period. For more information read the Guidance for Audits under the ERF on audits under the ERF. An initial audit report will provide confidence that the implementation of your project is in accordance with the legislative requirements. It is recommended that you complete and submit this audit report as soon as possible after the initial six month period. The initial audit will cover the: project registration and assessment of the forward abatement schedulereport for the first reporting period, including accuracy of the measurement of abatement to dateoperation of the project, andall other matters relating to the establishment and operation of the project in accordance with the Carbon Credits (Carbon Farming Initiative Act) 2011 and method relevant to the project.Subsequent audits Subsequent audit reports must be submitted in line with the project audit schedule, received at the time of project registration. The subsequent audit schedule is intended to ensure your project is audited across periods of peak abatement, providing assurance over the maximum number of ACCUs issued across the crediting period. Scheduled audits are used to establish reasonable assurance that the abatement achieved and reported by a project is accurate. Subsequent audits will cover a minimum reporting period of 12 months. Unscheduled additional audits There are three triggers where additional unscheduled audits may be required. These are: a single report claiming over 100 000 t CO2-e of abatementa previous audit report with a qualified audit opinion. For example, an auditor may qualify their report when some audit evidence was not able to be obtained, andvariance from:the project's expected abatement estimateother similar projects, orthe general abatement profile of the method used by the project.Audit frequency The Clean Energy Regulator will set an audit schedule for your project. The audit schedule is provided at the time of project registration. The audit schedule sets out the level of assurance, frequency, and scope of audits required for your project. For most projects, a minimum of three scheduled audits across the seven plus year crediting period is required. The number of scheduled audits will depend on your project size in terms of average annual abatement expected to be generated. The number of subsequent audits required for a project depends on the abatement forecast in the project's forward abatement estimate. TheCarbon Credits (Carbon Farming Initiative) (Audit Thresholds) Instrument 2015 (Audit Threshold Instrument) which sets out the audit threshold, will be used as a basis to determine the number of audits to be scheduled.
4. Delivery and payment
   1. Contract management

      Annotations:

      • Emissions Reduction Fund contracts are managed in accordance with the Clean Energy Regulator’s contract management principles and contract management plan which guide our response to non-performance and inform any discretionary decision-making in regards to contracts.
      1. Delivery of units

         Annotations:

         • If you have a contract with the Clean Energy Regulator you must deliver Australian carbon credit units (ACCUs) according to the schedule in your contract. The delivery transaction will occur in Australian National Registry of Emissions Units (ANREU) and must be made from your ANREU account.
         1. Claiming units

            Annotations:

            • You must complete the relevant form to claim ACCUs for a reporting period. This form must be submitted with your project report. Complete applications will be fully assessed within 90 days, once received. The Clean Energy Regulator may make a request for further information to complete an assessment, and in most cases a single request only will be made. A deadline for responding to a request for further information will be set and if missed, the Clean Energy Regulator will take no further action. In this situation, you will need to resubmit your application if you wish to proceed.​ Receive your abatement statement and ACCUs into your ANREU account Once your claim for ACCUs is approved, you will receive an abatement statement from the Clean Energy Regulator advising how many ACCUs your project is entitled to receive for the reporting period. The ACCUs will be transferred to your ANREU account. Find out more about the delivery of units.
            1. Delivery of units

               Annotations:

               • You need to ensure you have left sufficient time to be issued your units in order to meet the delivery schedule set out in the contract. The assessment period for project offsets reports and the issuance of Australian carbon credit units (ACCUs) is legislated as 90 days from receipt of a complete and correct application. Sellers are advised to allow sufficient time for submitting these reports to and processing by the Clean Energy Regulator. Giving due consideration to these timeframes will reduce unnecessary delays in the issuance of ACCUs needed to meet contracted delivery obligations. Emissions abatement is purchased in the form of Kyoto ACCUs. Each ACCU represents one tonne of verified carbon emissions or equivalent abatement achieved. On each scheduled delivery date the seller must sell to the Clean Energy Regulator the quantity of ACCUs outlined in the delivery schedule in their contract. The transaction must occur directly from the seller’s Australian National Registry of Emissions Units (ANREU) account to the Clean Energy Regulator’s ANREU account. Delivery is deemed to have occurred when the ACCUs are received in the Clean Energy Regulator’s ANREU account. The seller must send the Clean Energy Regulator an invoice in relation to each delivery made. It is the seller’s responsibility to take all reasonable steps to ensure they have been issued units or otherwise acquired units to sell to the Clean Energy Regulator on the scheduled delivery date. Early delivery of units You can deliver all or part of a quantity of ACCUs due on a delivery date ahead of the due date. The Clean Energy Regulator will accept an early delivery of ACCUs if it is within the same financial year as the scheduled delivery date. To deliver your units before the due date, you should notify us at least 5 days before you deliver the units and provide information about: the quantity of ACCUs that will be delivered earlythe total number of ACCUs that should be delivered at the scheduled delivery point, andthe day that you will transfer the ACCUs. The Clean Energy Regulator may accept an early delivery in a different financial year to the scheduled delivery. To deliver ACCUs early in a different financial year, you must give us at least 20 business days’ notice and provide information about: the quantity of ACCUs that will be delivered earlythe total number of ACCUs that should be delivered at the scheduled delivery point, andthe day that you will transfer the ACCUs. Before you transfer the ACCUs across financial years, you must ensure that we will accept the early delivery of ACCUs. Non-delivery of units (delivery failure) You must deliver the quantity of ACCUs on the dates that they are due according to the delivery schedule in your contract. If you are not able to deliver the number of ACCUs required by a scheduled delivery point from your own project, you may be able to purchase ACCUs on the secondary market to allow you to deliver your scheduled quantity and fulfil your obligations. If you are aware that you are not likely to meet your scheduled delivery quantity by the scheduled delivery date you must tell the Clean Energy Regulator as soon as possible. If a scheduled delivery is not made in full it is considered a delivery failure and the difference between the quantity delivered and the quantity due is a delivery shortfall. Following notice of a delivery failure both parties must make reasonable endeavours to agree on a revised delivery schedule. If the revised delivery schedule is reasonable and credible it will be agreed. The total amount of ACCUs to be delivered under the contract will not be revised. Further, the contract period will not be extended and the final scheduled delivery date will not be postponed past the contract period. ​
            2. Payment for units

               Annotations:

               • Once ACCUs have been transferred from your ANREU account to the Clean Energy Regulator account, you will be paid at the price agreed to at auction and set out in the contract. Payment for the ACCUs will be made within 20 business days of the date the delivery occurred. ​ You need to ensure you have left sufficient time to be issued your units in order to meet the delivery schedule set out in the contract.​​Payment by the Clean Energy Regulator for the purchase of ACCUs will be made to the seller’s nominated bank account within 20 business days of receipt of an invoice for delivery or the date on which delivery occurs.The seller must send the Clean Energy Regulator an invoice in relation to each delivery including:The account number of the seller’s Australian National Registry of Emissions Units (ANREU) account from which the delivery has been or will be made.The scheduled delivery date to which the delivery relates.The number of ACCUs delivered.The amount payable by the Clean Energy Regulator for that delivery.The contract identification number.Incorrect invoices will not be accepted and will be returned to the seller.
               1. ACCUs as financial products

                  Annotations:

                  • Australian carbon credit units (ACCUs) are a financial product under the Corporations Act 2001. You should seek independent legal and/or financial advice about your individual circumstances. The Australian Government has now made the Corporations Amendment (Emissions Reduction Fund Participants) Regulation 2015 (Regulation) which exempts a carbon abatement contract from the definition of a 'derivative' and a 'financial product' for the purposes of the Corporations Act 2001. The exemption means that a person is not required to hold an Australian financial services (AFS) licence to provide advice about, or enter into, a carbon abatement contract. As explained in the explanatory statement to the Regulation, the Australian Government has decided to progress this exemption separately from the other proposed exemptions for aggregators and carbon service providers. The Australian Securities and Investments Commission has published information about carbon markets and financial services.
                  1. Tax treatment of ACCUs

                     Annotations:

                     • A number of provisions apply to Australian carbon credit units (ACCUs), including: The proceeds of selling an ACCU will be 'assessable income on revenue account' in the income year the ACCU is sold or surrendered.The A New Tax System (Goods and Services Tax) Act 1999 has been amended to provide that supplies of Kyoto ACCUs and non-Kyoto (eligible) ACCUs will be GST-free.Sellers of ACCUs will be deemed to have received market value for an ACCU in certain circumstances (for example, transactions between related entities). You can obtain further information about ACCUs and the tax implications of undertaking Emissions Reduction Fund activities by contacting theAustralian Tax Office. You should obtain professional advice about the tax treatment of ACCUs for your own situation.
      2. Understanding contracts

         Annotations:

         • http://www.cleanenergyregulator.gov.au/ERF/Want-to-participate-in-the-Emissions-Reduction-Fund/Step-2-Contracts-and-auctions/understanding-contracts
         1. Contract management principles

            Annotations:

            • http://www.cleanenergyregulator.gov.au/ERF/Want-to-participate-in-the-Emissions-Reduction-Fund/Step-2-Contracts-and-auctions/understanding-contracts/contract-management-principles
            1. Managing carbon abatement contracts

               Annotations:

               • To enter into a carbon abatement contract with the Commonwealth is to enter into a commercial arrangement with rights and obligations enforceable through the courts, similar to other contractual arrangements entered into between parties.​Emissions Reduction Fund contracts are managed in accordance with the Clean Energy Regulator’s C​ontract Management Principles​ and ​contract management plan​​ which reflect best practice in contract management and guide our response to non-performance and informs any discretionary decision-making in regards to contracts.​​​ Contract management is the active management over the duration of the contract to assist the parties to meet their contractual obligations, to ensure satisfactory performance and to provide a framework for dealing with events or issues that have not been anticipated within the contractual terms. One of the key risks to the Emissions Reduction Fund is if projects do not deliver their contracted level of abatement. The management of those contracts is an important action that the Clean Energy Regulator applies to mitigate the risk of non-delivery. Effective contract management is essential to assist us in: Facilitating project progress in accordance with the anticipated timetablemeeting ​contractual obligationsmonitoring the performance of the sellermaintaining good relationships and communication with the sellerhandling and resolving issues or disputes which may arise​maintaining the agreed allocation of risk with the party best placed to manage that riskmanaging and mitigating risks that could impact contract performance. The purpose of the undefined​ is to provide guidance to Clean Energy Regulator staff involved in the management and administration of carbon abatement contracts (co​ntracts) from award to completion. This contract management plan will be used by Clean Energy Regulator staff to monitor the performance of sellers under the contracts and to guide the agency’s response to non-performance.