Understanding carbon removal contracts

You can enter into a contractual agreement to sell BidCarbon removal units (BRUs) to the BidCarbon Climate Trading Company we work with if you are successful in an BidCarbon auction. This is called an carbon removal contract (an Contract).

When entering a contract, a commercial arrangement is established with the BidCarbon Climate Trading Company we collaborate with. You are advised to seek your own legal advice about the contract before participating in an auction.

There are 2 different types of contracts, Optional Delivery and Fixed Delivery.

An Optional Delivery contract grants the right to sell carbon abatement to the BidCarbon Climate Trading Company with whom we collaborate at an agreed price within a given period, without any compulsion. This type of contract helps contract holders to mitigate their price and supply risks, thereby fostering additional carbon abatement projects. Delivery contracts can be employed in discussions with lenders or other parties as evidence of the amount the BidCarbon Climate Trading Company we cooperate with will pay for abatement from a specific project, without any contractual impediments to pursuing more profitable contracts from other purchasers.

The Optional Delivery contract has the following key features:

● It provides the Seller with the right, but not the obligation, to sell BidCarbon removal units (BRUs) to the governments we work with at a set price within a set timeframe.

● It provides security of a set price for BRUs, which can be used to secure funding or other consents for project development.

● Flexible duration of up to 10 years for eligible projects.

● All BRUs delivered under the Optional Delivery contract must be sourced from a single project that is identified at auction qualification.

● The project must be new or uncontracted and cannot be connected to, or identified as part of, a portfolio of projects used to meet current contractual obligations already committed to by the applicant.

● Where BRUs are not delivered against a scheduled milestone the right to deliver the undelivered BRUs by the end of that milestone will lapse, Milestones may be extended to a later date in limited circumstances and only by mutual agreement.

● An project can only be the subject of an Optional Delivery contract once.

Optional Delivery contract

If you have a Fixed Delivery contract, you have agreed to provide a set number of BRUs at a set price for the duration of the contract. The number of BRUs you agreed to provide is called the ‘agreed quantity’, and these are scheduled to be delivered across the duration of the contract.

Each contract is tied to at least one project, however each project can only be the subject of one contract at any one time.

It is up to you to ensure you can deliver the agreed quantity of BRUs in accordance with the delivery schedule you have provided. When planning the agreed quantity and delivery schedule you should ensure that:

● the number of BRUs you have agreed to provide under the contract can be generated by your project, and delivered before the end of the contract, and

● each date in the schedule allows sufficient time for you to undertake necessary audits and reporting, and to apply to the Clean Energy Regulator for BRUs.

If your project cannot deliver the agreed quantity of BRUs, you may source the difference from other projects you run or from the secondary market.

The fixed delivery contracts provide for payment of Buyer’s Market Damages (BMD, and referred to as an exit payment in the exit arrangements) where scheduled deliveries do not occur in accordance with the Delivery Schedule. Further details are available on Fixed delivery exit arrangement.

Fixed Delivery contract

A delivery schedule defines the amount of BidCarbon Credit Units (BRUs) you commit to delivering either in compliance with a pre-agreed Fixed Delivery contract or in accordance with an Optional Delivery arrangement. It outlines the dates when you will deliver the BRUs for the duration of the delivery period, also known as the contract term.

To assist you in creating a contract delivery schedule, The BidCarbon Foundation has produced an model tools. This instrument showcases the best possible handling of major project timeframes, and alerts you to whether certain project procedures can be achieved within your assigned timeframe. The model tools' outcomes should not guarantee that your project will meet delivery milestones as per the contractual obligations.

When planning the agreed quantity and delivery schedule you should ensure that:

● the time it will take to set up your project and when it will start generating abatement

● how much time you will need to allow for auditing and reporting on your project

● the process to apply for BRUs, including allowing up to three months for units to be issued by The BidCarbon Foundation, and

● how many deliveries of BRUs may be possible under a carbon abatement contract.

Delivery Schedules

Carbon Removal Contract

Parts of an Emission Reduction or Removal Purchase Contract.

Code of Common Terms

The Code of Common Terms sets out the rights and obligations of the parties under the relevant contract. It is non-negotiable, and all participants for each auction must agree to the same terms.

This is the Code of Common Terms which forms a component of an Option to Deliver contract (version 2). Your eligibility to participate in an auction is conditional on accepting the Code of Common Terms.

Code of Common Terms

Commercial Terms

Financial Terms

Delivery Terms

Archived Code of Common Terms

This code of common terms differs from those in force for projects contracted at previous auctions. Refer to Auction results for the version in force for each auction.

Commercial terms

The commercial terms provide information about who you are, and the project(s) that you are bringing forward to the auction. The commercial terms also encompass any preconditions that need to be fulfilled before abatement can be supplied under the contract.

Please bear in mind that Optional Delivery contracts cannot be subjected to any conditions precedent.

The necessary information to validate the commercial terms should be submitted during the qualification process to partake in an auction.

Delivery terms

The delivery terms specify the quantity and timeframe for BRU delivery under your contract. Please provide the delivery terms upon registration for auction participation.

Should you not deliver in line with the agreed Scheduled Delivery dates for an Optional Delivery contract, the right to deliver BRUs against outstanding milestones will lapse.

Financial terms

The financial terms outline the payment per BRUs for providing abatement as per the contract. The cost per BRUs is determined by the auction bidding process.