OUTLOOK: Long-term carbon price, supply and demand outlook (Q4 FY19-20)

As the federal government considers major changes to its climate policy framework, including crediting Safeguard Mechanism facilities for emissions below their baselines and a long-term emissions target ahead of COP 26, the long-run price of Australian Carbon Credit Unit (ACCU) offsets remains a key signal for investment in large-scale emissions abatement, and a benchmark for price formation of potential new Safeguard Mechanism Credits (SMCs).

In particular, the Paris Agreement is a key driver of our long-term offset price expectations, with the long-run price underpinned by the cost and availability of external offsets to meet a 1.5-2°C carbon budget between 2015-50.

In this outlook, we model Australia’s long run carbon offset price from 2020-50 to achieve and maintain carbon neutrality. Analysis considers a Base Case target trajectory consistent with the current policy. Scaled-up target scenarios are also considered, including net-zero emissions by 2040 and 2050, reflecting ‘high’ and ‘medium’ offset price scenarios in line with the Paris Agreement, and a ‘low’ offset price forecast in line with current policy.

As policymakers and large-emitting companies seek to make informed long-term decisions to reach net-zero emissions, modelling provides an important reference point for future investment and policy decisions and the development of the carbon market under more aggressive action on climate change.

Restricted Access

This is a subscriber report. Please login to access this content.

Not a subscriber?

To learn more about our research services for the Australian energy and emissions markets, click the button below, or email our subscriptions team.

Sign up for regular insights

LATEST UPDATES

  • CO2 offset price of $30-100/t for Australia to reach and maintain net-zero emissions

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    As the federal government considers major changes to its climate policy framework, including crediting Safeguard […]

    Research Insights | June 23rd, 2020
  • OUTLOOK: Long-term carbon price, supply and demand outlook (Q4 FY19-20)

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    As the federal government considers major changes to its climate policy framework, including crediting Safeguard […]

    Research Insights | June 23rd, 2020
  • The King Review: Government steps toward a baseline and credit scheme

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The federal government today released the findings of its Expert Panel review (the King Review), […]

    Analyst Alerts, Research Insights | May 19th, 2020
  • UPDATE: Australia’s Expert Panel Climate Policy Review – What to Expect?

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    2020 is shaping up as (another) key year for Australian climate policy, with the government’s […]

    Research Insights | May 13th, 2020
  • Where to for wholesale electricity prices under a 1.5-2°C “Step Change” scenario?

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    In part two of this two-part series we discuss our long-term expectations for wholesale electricity […]

    Research Insights | April 28th, 2020
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone