UPDATE: Carbon price may double to $35/t in 2030 for industry sector

With the electricity sector locked into the National Energy Guarantee (NEG), other sectors of the economy will be called on to contribute to Australia’s 2030 target, with high emitting energy, materials and industrial facilities bracing for larger emissions cuts to reach Australia’s 2030 goal.

Unlike the electricity sector, large industrial facilities are subject to high abatement costs, and will subsequently rely heavily on external abatement sources to ‘fill the gap’ to 2030. As this occurs, we expect carbon contract prices to increase considerably from 2020, with greater demand for offsets, and the need for more expensive abatement, resulting in prices growing to $35/t in 2030.

In line with this price curve, we expect the value of the Australian carbon offset market to grow to more than $2 billion in the year 2030, or around $10 billion through to 2030, underpinned by large energy, materials and industrial facilities.

In this update, we present our outlook for carbon offset demand and prices to 2030, accounting for future target scenarios, and the balancing of internal and external abatement costs for industry.