AUSTRALIA’s carbon market has softened in recent weeks after going over $40 for the first time in three years last month.

According to the Jarden ACCU benchmark, the market started to fall at the beginning of this month and has been hovering around $38/ACCU for the past fortnight – it peaked at $42.50 in November.

The latest drop in prices has largely been put down to an increase in supply as speculators came into the market to capitalise on the increase prices.

Head of projects and marketing with Clima, Guy Dickinson pointed out that prices usually increase at the end of the year – with the market rising at the end of last year and spiking dramatically the year before.

Mr Dickinson said a lot of the emitting companies, who are required to offset their emissions under the safeguard mechanism, came to market at a similar time for a variety of reasons, which drove the spike in prices and record volumes that were traded.

“It dropped $3 in 24 hours and that’s basically where the market stayed – it is the new normal for a while,” he said.

As Mr Dickinson pointed out in this earlier article, the cost of producing ACCUs has increased a lot in the past year – as prime ACCU producing land has been snapped up pushing emitters towards securing credits from the spot market.

Some key methodologies that are used to generate large numbers of credits are still in development and have been for a while.

Another factor playing into the carbon market is the upcoming Federal election, which is evidently pushing board rooms to put off decision making.

Soil carbon still moving slowly

This year has been first year with soil carbon credits being available to the market. Mr Dickinson said they were being offered at a $10-$11 premium to the market with not many bidders.

While some big issuances of ACCUs were made last year, only project with small volumes of credits have been issued this year – with 17 projects now officially receiving credits.

More soil carbon credits are expected to come onto the market next year, as projects start to become eligible for their second round of baseline testing.

One market participant told Beef Central that registering soil carbon projects had been largely supported by the Clean Energy Regulator, who were processing registrations quicker than ever before.