Our latest Carbon Market Outlook (CMO) for the Australian carbon compliance and voluntary markets has now been published.
This quarterly CMO presents our detailed modelling and expectations for Australian Carbon Credit Unit (ACCU) and Safeguard Mechanism Credit (SMC) prices over a 10-year horizon, along with underlying supply-demand fundamentals.
Analysis presents our Central Case forecast, or in-house view of market development. This is complemented by scenario analysis which considers alternative pathways for market development, along with key economic, market, and policy sensitivities.
Specifically, our “Accelerated Decarbonisation” and “Slow Decarbonisation” scenarios evaluate the pace and scale of onsite action by Safeguard Mechanism facilities – the material driver of Australian carbon credit demand and price development – based on capital costs sensitivities for industrial decarbonisation technologies.
This CMO implements several key updates since our last report (September 2024).
Most notably, modelling incorporates the impact of coal mine methane emissions reporting reform, aimed at addressing the under-reporting of Australia’s coal mine methane. As noted in earlier updates, we estimate that site-specific reporting will materially decrease total reported coal mine methane emissions under the Safeguard Mechanism, before the future tightening of the Method 2 framework potentially causes a significant increase in covered emissions. In the near-term, this has led to a material change in forecast covered emissions – and SMC issuance – leading to a material re-balancing of the market and expected prices over our forecast period.
We therefore expect coal mine methane reforms to materially impact Australian carbon market dynamics, which is a key focus of our bottom-up modelling presented here.
Modelling also incorporates emissions reduction actions announced in FY24 annual reports, and updates to forecast LNG, metallurgical coal, and thermal coal production.
This CMO is published under our Australian Carbon Intelligence service. Click below to access the report, or click here to take a tour of our EnergyIQ platform.
If you have any questions on this modelling, contact our Client Services team.
