Australian carbon credits price hits over one-year low

Market: Emissions
12/07/23

The price of Australian Carbon Credit Units (ACCUs) has fallen to their lowest level in over a year, because of increased supply and the preference of some major polluters to look in-house to cut emissions.

Prices for Generic ACCUs, each of which equate to 1t of CO2, fell below A$26 in early July before rebounding to A$28.50 on 12 July, according to New Zealand and Australian investment and advisory group Jarden. This is well below the average spot price of A$38/t recorded for January-March. This sharp fall in prices over the past fortnight is partly the result of increased supply and also a lull in demand as a safeguard mechanism came into force on 1 July.

The federal Clean Energy Regulator (CER) issued nearly 1.5mn ACCUs in the two weeks to 9 July, leading to a jump in supply. By comparison there were around 24mn ACCUs in the system on 31 March with predictions of 18mn to be issued in 2023, implying an average of around 350,000 ACCUs a week.

The jump was largely attributable to the CER releasing a backlog of Human Induced Regeneration (HIR) ACCUs that relate to planting of new vegetation on previously cleared land. These types of ACCUs have been under review after concerns were raised about their validity as mechanisms for reducing the overall amount of carbon in the atmosphere.

Concerns about the integrity of the HIR ACCUs has seen the premium paid for these over generic ACCUs fall from around A$7/t a year ago to zero at some points in the past six months. The HIR ACCU price was at a A$2/t premium to the generic ACCU on 12 July, according to Jarden.

July also saw the start of the safeguard mechanism in Australia under which large polluters can buy ACCUs to offset emissions with a price cap set at A$75/t. This had been expected to increase demand, but many firms are focused on cutting their own emissions to hit the mandated 4.9pc/yr reduction target, before using ACCUs to offset the more difficult to abate parts of their businesses.

By Jo Clarke

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09/05/25

White House ends use of carbon cost

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Carbon credit method may limit Australia's ACCU supply

09/05/25

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09/05/25

Carbon credit method may limit Australia's ACCU supply

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09/05/25

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