Carbon Markets

UPDATE: ACCU prices rise as Safeguard Mechanism position paper spurs market confidence, forward activity

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

Market certainty brought about by the release of the Safeguard Mechanism reform position paper, and bullish sentiment attributed to the nature of the changes, helped to spur an uptick in prices and traded volumes in the ACCU offset market, with almost 800,00 units transacted across the brokered spot and forward markets last week – just short of the weekly record set in November last year.

Higher volumes and positive sentiment saw prices for spot Generic ACCUs (Landfill Gas, Avoided Deforestation) climb $1.75 on the week (5.1%) to $35.50/t on Friday, with HIR ACCUs trading up $2.00 (5.8%) to $36.75/t. In the forward markets, both Generic and HIR CAL 23 contracts traded upwards, indicating confidence in the Safeguard Mechanism policy reform, market integrity, and the increasing willingness of participants to use derivatives to hedge against risk.

As noted in our earlier update, structurally, we are now comfortable that the government’s design proposal takes key steps to addresses potential market weaknesses, including oversupply and integrity risks attributed to SMC issuance, with the government’s “hybrid” baseline approach mitigating the risks of relying on outdated industry average (default) values in the early years of the scheme. We expect the robust nature of the new emissions baseline framework to drive continued uplift across the market, subject to surplus issuance eligible to exit the ERF program, with ACCU offsets to provide the largest source of initial liquidity within the new Safeguard 2.0 market.

This report analyses current activity in the Australian and international voluntary carbon markets, including spot and forward price dynamics, and prices by underlying project methodologies. Analysis considers Australian Carbon Credit Units (ACCUs) and voluntary offsets across key international registries including Verra, Gold Standard, the American Carbon Registry, and the Climate Action Reserve.

Restricted Access

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

Become a Carbon Insider today

Unlock our latest analysis, briefings and price information with our new Carbon Insider service.

Click below to see our plans.

Sign up for regular insights

LATEST UPDATES

  • Carbon Markets

    UPDATE: Liquidity, prices continue to rise as bullish sentiment drives record traded volumes

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

    The Australian Carbon Credit Unit (ACCU) market saw strong gains in both price and volume […]

    Research Insights | January 23rd, 2023
  • Carbon Markets

    UPDATE: ACCU prices rise as Safeguard Mechanism position paper spurs market confidence, forward activity

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

    Market certainty brought about by the release of the Safeguard Mechanism reform position paper, and […]

    Research Insights | January 16th, 2023
  • Carbon Markets

    IN FOCUS: Safeguard Mechanism policy threads the needle to addresses structural concerns

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

    The government yesterday presented its detailed design proposal for the Safeguard Mechanism emissions compliance framework, […]

    Research Insights | January 11th, 2023
  • Carbon Markets

    ON POINT: Summary of proposed Safeguard Mechanism 2.0 policy positions

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

    The below summary of proposed policy positions is derived from the Government’s policy position paper, […]

    Research Insights | January 11th, 2023
  • Carbon Markets

    MR: Safeguard Mechanism reform to trigger a “structural change” in Australia’s carbon market

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

    MELBOURNE, January 10, 2023 – The government has today presented its detailed design proposal for […]

    Research Insights | January 10th, 2023
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone