The Australian carbon spot price climbed to $16.63 per tonne on Monday, a 10-month high, as pressure continues to grow for the Morrison Government to commit to a more ambitious net-zero emissions target. The carbon spot price has grown 5% from a 12-month low of $15.80 recorded over May-June of last year, recovering to pre-COVID levels seen in February-March 2020.
The prospect of Australia setting a more ambitious long-term emissions target has triggered a bullish outlook for carbon offset prices, driven by the return of the United States to the Paris Agreement, the likelihood of stronger climate action by the Biden administration following recent Senate runoff elections in Georgia, and market optimism ahead of the postponed Conference of the Parties (COP 26) – now to be held in Glasgow in November.
As the threat of punitive international action grows – such as carbon border fees or quotas on carbon-intensive goods into Europe and the US – the writing is therefore on the wall for Australia to fall into line with the net-zero objectives of the Paris Agreement, with a net-zero target likely to be the lesser of two evils for the government to avoid any further muddying of its relationships with key export markets.
