Following the commencement of the new Safeguard Mechanism scheme on 1 July 2023, compliance entities will become the largest buyer of carbon offsets in Australia, making up over three-quarters of ACCU demand through to 2030.
While the market is well covered by inter-dealer brokers, large spot and forward contracting is generally undertaken on a bilateral basis, leaving room for information imbalances in negotiations and price inefficiency in contracting.
These risks are heightened by the immature nature of the Australian carbon market, with little transparency on pricing, no standardised products, and no guidelines to define the integrity of different offset projects. This regularly sees buyers fall prey to false marketing of premium products due to the incorrect pricing of additionality, permanence, vintage, and locational factors.
Changes to the Safeguard Mechanism further increase the risk of information imbalances where parties are not equally informed of policy detail, leading to unfavourable pricing of contracts.
A detailed understanding of policy and market nuances are therefore critical to guide contracting with more sophisticated counterparties.
Our Procurement Support Service
To overcome these risks, RepuTex has today launched a new Procurement Support Service to help buyers to build their knowledge, then approach the market to transact.
Buyers are then supported to approach the market via the design of custom auction processes, giving access to more competitive prices and greater probity in transacting.
This process is backed by our leading price data and forward curves, which provide a trusted benchmark for counterparties to negotiate and price their agreements.
Our Procurement Support Service encompasses three components:
- Policy and market analysis: Undertake scenario analysis to model regulatory risks under the new Safeguard Mechanism and understand market pricing dynamics.
- Approach to market: Design of customised auction processes to approach the market – including reverse-auctions, group purchasing, and competitive tenders – with suppliers pre-qualified to fit your delivery terms and criteria.
- Benchmark pricing data: Draw on our leading price data and forward curves as a trusted benchmark for negotiations and an ongoing mark for writing contracts.
We work with you to customise a pathway that fits your business needs, providing you the support you need to enter the market with confidence.
For more information about this service please contact:
Kyle Hamilton
Associate Director, Markets
Kyle.hamilton@reputex.com
T (+61 3) 9600 0990 | M (+61) (0) 474 284 759
