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Environmental Products Information


Environmental Products Market OverviewEnviro-Products-Market-Overview.png

AFMA has prepared an overview of key Environmental Products Schemes operating in Australia.

Environmental Products Conventions

AFMA supports a system of industry accepted standards and conventions that provide a reference point for market practices. The Environmental Products Conventions reflect current market practices and are kept updated by the Environmental Products Committee.

The conventions were amended in March 2021 to update the product descriptions and indicate the established market practice of physical settlement for forward and spot transactions.

Environmental Products Documentation

Spot Contract

A contract template for spot purchase/sale of environmental products is available here.


Amendments to the spot contract were finalised in March 2021 to address instances of seller delivery default:

  • The amendments introduce a Seller Delivery Default provision at clause 6 which will cover situations where a Seller fails to transfer the agreed quantity of environmental products on the transfer date (unless the transfer is affected by a settlement disruption event).
  • While the contract leaves it open to parties to agree on the replacement cost per each undelivered unit, the standard wording provides for the Buyer to determine the market value of the commodity on the transfer date. This is because in the event that a Seller fails to deliver the agreed quantity to the Buyer, the Buyer will need to acquire units from other parties to cover any shortfall.
  • Instances of Buyer payment default remain covered by the Interest provision at clause 5, with the Buyer required to pay a default interest rate on any late payment.
Addendum for Forward Contracting  

The spot contract is not recommended for use when trading significant volumes or when dealing forward. For forward transactions, counterparties should refer to an ISDA®-based agreement, with terms and conditions as outlined in the AFMA Environmental Products Addendum at section 3.11 of the subscription-based Guide to Australian OTC Transactions.


Execution and Settlement Guide for Environmental Product Transactions

AFMA has published a guidance note to help ensure the smooth execution and settlement of transactions for the purchase and sale of renewable energy certificates and other environmental products.