Carbon

Carbon markets: ACCU price drops to four-month low

Eric Barker 21/01/2025

Carbon

AUSTRALIAN Carbon Credit Units have started this year by dropping to a four-month low, with a key industry benchmark opening this week at $35.65.

Since opening this week, the Jarden indicator has dropped a further $1, trading at $34.25 at the time of this report.

The softening of the market has ACCUs back around the same price they were hovering through most of last year, before a spike in October/November sent the indicator above $40 for the first time in three years.

Many reasons were given for the spike in prices last year, with big emitting companies coming to market at the same time to meet their compliance requirements – under the Federal Government’s safeguard mechanism.

Generating ACCUs has become a tough task in recent years, with more scrutiny on carbon farming methodologies and compliance requirements. The Federal Government has been working on some methodologies for years now and others have been cancelled – like the beef herd methodology.

Competition for land that can produce ACCUs has also increased.

The situation had pushed many companies needing credits to stock up on ACCUs while it was cheaper to buy them than produce them.

Is election speculation starting to creep in?

Some have suggested that the carbon market has now gone into a slight holding pattern while companies wait for some key events to pass – mainly the Federal election this year.

The safeguard mechanism was a policy under the previous Coalition Government, however, it was not as strict on the companies it covered. While opposition leader Peter Dutton has indicated that he will change climate targets if elected, he has not mentioned much about the safeguard mechanism.

There is some pressure from within the party to ditch climate targets, which will no doubt be ramped up with the term of the newly elected United States president Donald Trump officially starting today.

One of the president’s first orders of business was take America off the Paris Agreement, a global effort to limit climate change. His announcement was followed up by Nationals MP Matt Canavan calling on Australia to do the same and ditch its net zero by 2050 target.

Another prospect is a Labor Government with more Greens influence, which will likely put more pressure on safeguard companies to secure ACCUs.

Companies and banks moving away from voluntary net zero targets is also bubbling away in the background.

 

 

 

 

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