UPDATE: Carbon Offset Market Report – Market reacts positively to Safeguard Mechanism consultation as activity increases

Prices for generic Australian Carbon Credit Units have rallied in response to the release of the government’s Safeguard Mechanism discussion paper, rising 6% to $28/t on Thursday. The upswing puts an end to recent declines that have seen prices fall 26% from $35/t at the start of July to a calendar year low of $26/t on Tuesday, driven by increasing uncertainty around the impending Chubb review and the growing availability of ACCUs under the ‘ERF exit’ program. ACCU prices remain stratified, with large premiums for nature-based offsets suggesting that voluntary buyers continue to make purchasing decisions based on the perceived benefit of each sub-type and individual project. However, as the ALP’s proposed reform for the Safeguard Mechanism comes into focus, opportunistic buyers are beginning to focus on generic ACCUs ahead of an expected increase in compliance buying demand.