THE carbon market is currently trading in record volumes, with Australian Carbon Credit Units trading well above the daily average volumes and in some instances 20 times.

According to a weekly update from Reputex energy, more than one million ACCUs were traded in one day for the first time on record last week.

ACCU prices have been relatively stable for most of this year, with the Jarden price indicator opening this week at $36.40. But there has been a response to the latest uptick in demand, with prices rising about 11pc in the six weeks to about $37.20

Guy Dickinson is the head of markets and projects Clima, which generates and trades ACCUs.

He said the carbon market turns over about $1m-1.5m/day on average and on a good day about $6m-$7m. He said on the record day last week it turned over about $23m – which is about 5pc of the entire year’s supply in a single day.

“Ultimately it is coming to a point where it cost more than $36 to generate an ACCU, so it is easier to purchase them on the spot market without any project delivery risks,” he said.

Land values a consideration

Last year, the Federal Government updated its main policy used to generate demand for ACCUs – called the Safeguard Mechanism. It requires big emitters, like mines and energy companies, to offset emissions if they exceed a certain threshold.

The policy was in place before Labor was elected and set a National Defined Commitment to reduce emission by 43pc from 2005 levels. However, Labor changed it to make baseline emissions thresholds decrease by 4.9pc over the next six years until 2030. This means that demand is increasing for ACCU’s every year.

Mr Dickinson said March 2026 Demand for ACCU will double in March 2026 for compliance needs.

Since the policy changed, there has been major competition for land assets with potential to generate ACCUs, with emitters likely to need a significant supply in the coming years.

Mr Dickinson told Beef Central a lot of the land that could produce large amounts of ACCUs at low cost had been purchased. He said the carbon potential had become more marginal for the remaining blocks on the market, especially as the standards for methods becomes highly scrutinised.

“A lot of the first-tier carbon assets are gone and we are now looking at second tier assets in methods such as plantings where the purchasers need to think about the terminal value of the land and other complexities,” he said.

“For example, if you buy a property worth $6000/ha and plant trees on it, then you are potentially looking at a land asset worth $1500/ha. These type of equations are driving the emitters to spot market.”

No surprises with uptick in demand

The carbon market has also had some bad press this week, with articles raising concerns about the conduct of the industry’s regulator and benefit-sharing agreements between carbon developers and traditional owners.

Mr Dickinson said many had been expecting companies to the spot market for large numbers of ACCUs since the policy had changed and many companies had moved in the past month.

“If you are having to deal with all of this noise and uncertainty, then the spot market becomes a beacon of light for those who are cashed up,” Mr Dickinson said.

“More emitters are realising that they need to buy these things and it takes time to get it through corporate channels and make these big decisions.”

Another issue for ACCU supply has been one of its main methodologies, called Human Induced Regeneration, finishing up last year with nothing to replace it.

The Department of Energy and Climate Change is currently working HIR into a new methodology called Integrated Farm and Land Management – which will allow multiple projects to be stacked into one.

But the department is struggling to draft it and it last said the methodology will be written by the end of this year before being sent for its next round of approvals.

Mr Dickinson said he was expecting IFLM to add more supply, with developers likely requiring significant lead time to work with it. He also said the latest criticism on the regulator will put more pressure on it  to maintain high standards, which adds costs to the price of producing an ACCU.