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risks attributed to SMC issuance, with the government’s “hybrid” baseline approach mitigating the risks of relying on outdated industry average (default) values in the early years of the scheme.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.
