Carbon Markets

MARKET WRAP: The State of the Australian Carbon Market – August Review 2023

Our State of the Australian Carbon Market report for August 2023 has now been published, reviewing activity in the Australian carbon market over the last month.

ACCU issuances rose strongly in August, with a monthly record of over 3.5 million units issued, underpinned by issuances to landfill gas facilities. Spot prices were volatile amid increasing issuances, with prices trading up over the month for more liquid Generic and HIR products. Initial trades for Environmental Plantings (EP) were recorded at $58-60/t in the brokered market, in line with our calculated assessment, following the first transactions for EPs in the bilateral market in mid-2022. Total spot contracting was down month-on-month, however, a strong step-up in activity remains clear since January, coinciding with the release of the government’s Safeguard Mechanism reform package. Generic ACCUs again led activity behind a new record high for ‘No-Avoided Deforestation’ Generic ACCU volumes as global buyers continue to turn away from nature-based avoidance projects. Total voluntary cancellations grew over the month, with CERs continuing to drive total volumes, however month-on-month ACCU cancellations fell – and remain well below 2022 levels – suggesting the local ‘flight to quality’ remains patchy as larger volumes flow toward lower-cost units.

The State of the Australian Carbon Market provides a snapshot of monthly activity in the Australian carbon market, reviewing key events, pricing and volumes for spot and forward contracts, along with our short-to-medium term market outlook.

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