In our Carbon Market Tracker for June, we outline our forward estimates for the supply of Australian Carbon Credit Units (ACCUs) issued year-on-year to FY18 under the CFI framework and the proposed Emissions Reduction Fund (ERF), examining the timing interaction between the repeal of the Carbon Price Mechanism, the continuation of the carbon true-up period and the commencement of the ERF.
Over 4.3 million new ACCUs have been issued in 2014, taking the cumulative number of credits issued by the Clean Energy Regulator (CER) to 6,130,273 since December 2011. More than 1.2 million ACCUs have been issued in Q4 alone, with supply continuing to be dominated by compliance demand from the CPM.
Until February 2015, CFI proponents will benefit from dual sources of demand from both the ERF and high emitters under the carbon true-up, with industry effectively ‘competing’ for credits with the ERF, even if the CPM repeal goes ahead.
In light of the ongoing crediting rate of current projects and strong pipeline of approved projects, we estimate nearly 6.5 million ACCUs will be issued in FY15 alone, with the greater part of this stock to be absorbed by the final CPM true-up, tightening supply in the Emissions Reduction Fund.
