On 3 May 2024, the Department of Climate Change, Energy, the Environment and Water (DCCEEW) published a Reform Options paper to improve the integrity of landfill gas (LFG) crediting, in response to recommendations made in the 2022 Chubb Review. Specifically, the paper outlines the government’s preferred options to increase the default crediting baseline for all LFG projects from 30% to 36%, increasing 1.9% per annum, with many larger, older projects currently receiving baselines of either 0% or 24%, grandfathered in from former schemes.
In this briefing, we consider the impact of the government’s preferred options to improve the integrity of LFG crediting on forecast ACCU supply, and the broader impacts on the ACCU market.
While higher crediting baselines would slightly decrease LFG issuance, modelling indicates that expected crediting extensions for LFG projects – which we assume will be 5 years – would lead to a material net increase in supply from FY25, the point at which many large, older LFG projects reach the end of their current 12-year crediting periods. This large boost in supply would provide well-timed support to the market – coming at a point when we had previously forecast a tightening in market balance – while counterbalancing recent changes to CAC exits (new 20% minimum delivery rule), and flagged delays to the Integrated Farm and Land Management (IFLM) method.
We therefore expect the government’s preferred LFG reform settings to have a material impact on forecast ACCU issuance from existing and new landfill gas projects, with implications for near-term market dynamics.
This analyst briefing (PDF) “Potential Impact of Landfill Gas Reform Options on ACCU Supply and Market Dynamics” is published under our Carbon Intelligence service.
Click below to access this report.
