The price of Australian carbon credit units (ACCUs) reached $18.50/t on Monday, a record high, driven by market anticipation of more ambitious climate targets, potentially as early as April of this year.
RepuTex’s ACCU benchmark price index is up 12% calendar year-to-date, with the current price surpassing the previous high of $17.54/t recorded in November 2019.
The surge in prices comes amid increasing interest in the carbon offset market from voluntary participants, fuelled by companies investing in offsets to meet net-zero emissions targets, and expectations that the Australian Government will set tougher targets for cutting emissions, leading to further price increases.
As noted in earlier updates, we believe that moves by the government to tighten the ambition of Australia’s emissions reduction target will continue to have the effect of boosting the price of offsets over time, creating a one-way bet for market participants similar to dynamics in the European Union Emissions Trading Scheme (EU ETS), where prices have reached a record high of €39 (A$61) on the back of the EU’s new 2030 target, and its long-term pathway to net-zero emissions by 2050.
We continue to forecast price increases over the medium- and longer-term, with market direction ultimately expected to align with our scenarios for the scale up of emissions reduction targets (1.5-2 degrees) under the Paris Agreement.
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The RepuTex Team
Australian Electricity Markets
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