4.1 If at any time:
(a) the amount of Allocated Allowances for a Scheme Year or other relevant period is set or reduced below the Emissions Baseload; and
(b) the Verified Emissions exceed, or the parties agree that they are likely to exceed, the Allocated Allowances,
the cost of procuring additional Allowances to cover any difference between the Allocated Allowances and the lower of the Verified Emissions and the Emissions Baseload (the "Allowances Variance") shall be borne by the Board in accordance with this paragraph 4 (Allocated Allowances and Trading) and paragraph 5 (Adjustments to Monthly Service Payment).
4.2 If at any time, the Emissions Baseload is increased for the reasons specified in paragraph 3 of this Section H of Part 18 of the Schedule (Payment Mechanism), then the Board shall compensate Project Co so that Project Co is in a no better no worse position than it would have been had there been no change in the Emissions Baseload.
4.3 Within twenty (20) Business Days of Project Co becoming aware that an Allowances Variance has occurred, or is (in Project Co's reasonable opinion) likely to occur, Project Co shall so notify the Board, together with:
(a) Project Co's proposals for a strategy to mitigate, to the extent it is reasonably possible to do so, the additional costs that will be incurred as a result. This may include, without limitation, proposals for the forward purchase of Allowances to cover the Allowances Variance or, as appropriate, measures to provide protection against changes in the price of Allowances during the relevant Scheme Year, taking account of the date after which it is not reasonably possible, or does not represent value for money, to purchase adequate protection against the volatility or unpredictability of prices for Allowances; and
(b) Project Co's reasonable estimate of the adjustment (upwards or downwards) it believes should be made to the Monthly Service Payment to reflect those additional costs that will be incurred as a result of the Allowances Variation, on the assumption that costs are mitigated, if possible, in accordance with Project Co's proposed strategy.
4.4 The Board shall notify Project Co within ten (10) Business Days of receipt of Project Co's notification pursuant to paragraph 4.3 (Allocated Allowances and Trading) if it agrees with Project Co's proposed strategy and estimate of costs and, if it does not agree, the reasons why not. If the parties cannot agree the strategy for mitigating costs and/or the appropriate amount of any adjustment to the Monthly Service Payment, either party may refer the dispute for resolution under Part 26 of the Schedule (Dispute Resolution Procedure).
4.5 Project Co shall use all reasonable endeavours to implement the strategy agreed or determined in accordance with this paragraph 4 (Allocated Allowances and Trading). In selling and purchasing Allowances (or taking other measures in connection with the sale and purchase of Allowances) to cover the difference between the Allocated Allowances and the Verified Emissions, Project Co shall at all times use, and procure that the Designated Operator shall use, reasonable endeavours to maximise the revenue and minimise the cost, provided that this shall not:
(a) prejudice the Designated Operator's right to enter into reasonable forward purchase agreements or other reasonable measures in order to mitigate risk, in accordance with the strategy agreed or determined in accordance with this paragraph 4.5 (Allocated Allowances and Trading); or
(b) require the Designated Operator to enter into transactions that are not in accordance with Good Industry Practice or expose it to material credit risk.
4.6 If Project Co notifies the Board that, in its judgement, better terms for the purchase or sale of Allowances (or the taking of measures to mitigate the cost of the purchase or sale of Allowances) are available by participating in arrangements available to NHS organisations, the Board will, if requested to do so by Project Co, use reasonable endeavours to facilitate the use of such arrangements for the purposes of this Agreement.
4.7 For the avoidance of doubt, if as a result of a Qualifying Variation (including but not limited to any renewable energy installations) there is a reduction in the Emissions Baseload or an increase in Allocated Allowances then Project Co shall compensate the Board for any increased income received by Project Co as a result of a reduction to the Emissions Baseload or increase in Allocated Allowances pursuant to such Qualifying Variation, to the extent such increased income arises from the sale of Allocated Allowances.