Click to enlarge. Australian Carbon Credit Units have dipped for the first time in more than six months. Picture: Jarden

THE price of Australian Carbon Credit Units (ACCUs) has dropped off in the past two weeks after more than six months of fast growth.

ACCUs were this week trading at $51/tonne of CO2 equivalent after reaching about $57/tonne at the start of this month – eroding all the gains the market made over January.

While the price has dropped, the market is completely different to this time last year when the price of ACCUs was hovering around $16.

Most of the growth happened in the second half of last year when companies were competing hard for a low supply of ACCUs to offset their emissions – forcing prices to triple in six months. (Click here for previous Beef Central’s article)

Reputex Energy CEO Hugh Grossman said a large portion of the buyers last year were investors and speculators looking to capitalise on the booming market. He said many of them started liquidating credits at the start of February putting downward pressure on the price.

“Over the last couple of weeks there has been a little bit of profit taking from that segment of the market because they saw $57 as a reasonable price,” Mr Grossman said.

“There’s also been a supply squeeze in the market over the past 12 months and this latest liquidation has eased that a bit.”

Mr Grossman said other carbon trading schemes across the world have also had a similar trajectory to the ACCU – with a steady rise last year and a decline this month.

“A lot of the decline in the global market is due to flat demand which is really just a seasonal factor,” he said.

“Most of the buying is done voluntary by corporates, so you generally have peaks and troughs around reporting periods.”

Busiest trading month on record

For the ACCU, record numbers of credits have been traded on the spot market this February – reflecting strong demand along with supply.

“It’s a really interesting situation because prices are down but it’s against a lot higher demand,” Mr Grossman said.

“It shows how much selling there has been of late, which has really alleviated that supply squeeze in the short term.”

Mr Grossman said the recent decline in prices was expected to only be short-term, with more growth in the ACCU market forecast. He said politics and the upcoming Federal Government election were likely to play a role.

“There are always peaks and troughs in any type of regular cycle with prices – but we expect the market to continue to grow over the next 12 months,” he said.

“Australia has adopted a net zero target, although there isn’t very robust policy in how it will achieve that target.

“But we are seeing more corporates set their own net zero targets and get into the market voluntarily. As more corporates make pledges that makes the outlook positive.

“I think this latest drop will really only be a blip in the market.”