Our latest Long Term Carbon Market Outlook to 2050 has now been published, presenting RepuTex’s view of Australia’s carbon market across all legislated Safeguard Mechanism compliance periods through to 2050.
Analysis indicates that, while a large pipeline of industrial decarbonisation projects has been announced by Safeguard Mechanism facilities, committed investment remains slow, with many companies reluctant to commit capital amid increasing uncertainty over long-term policy durability.
While some recent external forecasts paint an optimistic picture of industrial decarbonisation – with large volumes of onsite action keeping forecast prices below $55/t to 2035 – we do not share this view, with regulatory risks and weak investment conditions reinforcing our belief that carbon price risks remain firmly to the upside.
This is reflected in our Central Case, with a higher price pathway – underpinned by slower, progressive decarbonisation investment and greater reliance on offsets – remaining a more plausible outcome.
Moreover, should the current investment environment persist, we see potential for higher emissions to increase ACCU demand beyond our Central Case, placing further upward pressure on prices – with low forecast prices increasingly difficult to reconcile with the slow pace of the decarbonisation project pipeline. We therefore view large volumes of onsite action, and the lower price outcomes that depend on them, as materially less likely – if not implausible under current conditions.
We test this thesis within our new “Current Pathway” scenario, published for the first time in this long-term Outlook, which models today’s regulatory risks and weaker investment conditions persisting over the longer term, with only Committed and Probable decarbonisation projects proceeding, alongside shorter-payback opportunities.
Outcomes indicate that, should current conditions persist, industrial abatement would fall well short of longer-term requirements – with increasing reliance on ACCUs materially strengthening price pressure and raising upside risks.
Alongside our new Current Pathway scenario, modelling extends our Central Case and core scenarios through to 2050, complemented by a “Higher Fossil Fuel Production” pathway, accounting for continued higher LNG and coal production. Together, these scenarios provide a broader view of key long-term structural risks – and the implications for long-term ACCU demand and price formation.
Forecast outcomes for all scenarios can be accessed via our Long Term Forecast Explorer >>
If you have any questions, contact our Client Services team via email.
Kind Regards,
The RepuTex Team
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