Carbon Markets

ACCU spot rally continues as prices climb 103% calendar year-to-date

Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

The spot price for Australian Carbon Credit Units (ACCUs) climbed to $33.50/t on Thursday, a new record high, as tight supply, increased voluntary buying and the prospect of a net-zero emissions target pushed the market higher.

RepuTex’s ACCU spot price assessment, which commenced in 2018, has now doubled over the 2021 calendar year, growing 103% from $16.52/t at the start of January. The Australian market has outperformed European Union Allowance (EUA) prices over CY21, with prices in the EU ETS closing 77% higher on the year to €57.78 (A$89) on Tuesday.

As we have noted in recent updates, increased buying from investors and intermediaries, along with corporate voluntary demand, has driven strong gains over CY21. In particular, increasing contracting demand from the corporate sector has led to a tight supply setting in the spot market, with new issuance being set aside to fulfill large bilateral contracts (>100,000 units) for both spot and forward delivery. The lower volume of surplus supply has therefore created a bullish environment for spot prices, where demand continues to outweigh supply, even at much smaller volumes.

In addition to voluntary demand, compliance buyers continue to accumulate ACCUs to surrender against their multi-year baseline under the Safeguard Mechanism. The conclusion of some multi-year baselines is likely to see compliance demand grow more than ten-fold from under 100,000 units in FY21, further supporting the current price rally.

We continue to anticipate an uptick in issuance over the December quarter, however, it remains a seller’s market underpinned by (increasingly less) un-contracted supply. The bulk of this new issuance is expected to be delivered to existing Fixed Delivery contracts under the Emissions Reduction Fund, or set aside to fulfill larger bilateral contracts, with limited supply expected to be made available to smaller spot buyers.

Increasing momentum for a national net-zero emissions target also remains a supportive factor for market prices. While the real-world impact of a new national target will be negligible unless it is legislated and embedded into existing policy, the macro environment is hard to ignore, with sellers becoming increasingly bullish as they leverage the positive macro story and tight supply conditions to drive prices higher.

To view our latest Carbon Market Outlook, please click here, or view our recent webinar “What is driving Australian carbon offset prices, and where to next?” to learn more about the current state of play in the Australian carbon market, and our expectations for price development.

Kind Regards
The RepuTex Team
Australian Energy Markets

Take a tour of our EnergyIQ platform

RepuTex research is published via our EnergyIQ platform, which provides decision makers with visibility of the latest market prices, supply-demand fundamentals, and forward-looking intelligence to drive key trading and business decisions.

Click here to take a tour now, or contact our Client Services team.

LATEST UPDATES

  • Carbon Markets

    INSIGHTS: Election 2022 – Market impacts, and where to next for the ALP’s “Safeguard Mechanism 2.0”?

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The Federal Election has been run and won, with the Australian Labor Party (ALP) confident […]

    Research Insights | May 24th, 2022
  • Carbon Markets

    UPDATE: Carbon Offset Market Report – ACCU spot and forward prices trade higher, premium units trade in volume

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The Australian carbon offset market sprung back to life last week, with renewed demand from […]

    Research Insights | May 13th, 2022
  • Carbon Markets

    UPDATE: Election scenarios – Possible outcomes and implications for ACCU prices

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    With just two weeks to run until the Australian federal election, the 47th Parliament is […]

    Research Insights | May 10th, 2022
  • Carbon Markets

    UPDATE: Options market comes to life as buyers hedge against price increases

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The options and futures market for Australian Carbon Credit Units (ACCUs) came to life late […]

    Research Insights | May 9th, 2022
  • Carbon Markets

    UPDATE: Carbon Offset Market Report – Incentive for ERF exit weakens as ACCU market softens, issuance closes in on 110 million

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The local carbon market briefly awoke from its recent slumber over the last week, with […]

    Research Insights | May 5th, 2022
  • Download this free report

    To start your free download, simply fill in the below form. You will also receive our future updates, event invitations, and research insights by email.
    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone