The spot price for Australian Carbon Credit Units (ACCUs) fell 14% on the week as uncertainty continues to weigh on the market following renewed criticism of regeneration projects under the ERF. Prices have now unwound the gains made after the federal election, retreating back towards the de-facto floor price under the ‘ERF exit’ program. A significant increase in ACCU issuance also contributed to the softening in prices, with over 2 million ACCUs issued over the past three weeks as the Regulator catches up on delays to project registrations, variations and issuances to end FY22.
As expected, voluntary cancellations were strong over FY22, reflecting the increasing volume of corporate net-zero pledges, with 12.2 million credits surrendered in the ANREU – up 27% from FY21. While total volumes were strong, 90% of all cancellations were in the form of low-cost international Certified Emissions Reductions (CERs). Despite the increasing ‘flight to quality’, voluntary buyers therefore remain driven by price, with preferences for quality remaining less important than meeting voluntary commitments at a reasonable cost.