Carbon Markets

UPDATE: Election scenarios – Possible outcomes and implications for ACCU prices

With just two weeks to run until the Australian federal election, the 47th Parliament is set to play an important role in determining the development pathway for the Australian carbon market – be it the continuation of the current “voluntary” market setting under the Coalition, or a transition to a more robust “compliance” framework under the ALP’s re-worked Safeguard Mechanism framework.

While the Australian carbon offset market approaches the 2022 federal election on a much stronger footing than in 2019 – underpinned by bi-partisan support for net-zero emissions and record growth in corporate voluntary demand – the local market also faces considerable challenges, with upside forecast to be weighed down by a surplus of ACCU supply from existing carbon farming projects as proponents begin to exit their ‘fixed delivery’ carbon abatement contracts under the ERF.

In addition, questions remain over the role of proposed Safeguard Mechanism Credits (SMCs), which also enjoy bi-partisan support, with the development of low-cost industrial credits to potentially trigger a “two-speed” carbon market, while threatening to erode both compliance and voluntary investment in ACCU offsets.

Expectations that a change in government will “significantly increase” demand for ACCUs is therefore far from certain, with SMC creation – informed by policy design, industrial abatement costs, and investment decision making – to have considerable implications for forward ACCU price and market dynamics.

In this Market Update, we present scenarios for ACCU market development based on potential election outcomes, informing the probability of possible policy settings, and the alignment of outcomes to our medium-term price expectations.

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

    INSIGHTS: Election 2022 – Market impacts, and where to next for the ALP’s “Safeguard Mechanism 2.0”?

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

    The Federal Election has been run and won, with the Australian Labor Party (ALP) confident […]

    Research Insights | May 24th, 2022
  • Carbon Markets

    UPDATE: Carbon Offset Market Report – ACCU spot and forward prices trade higher, premium units trade in volume

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

    The Australian carbon offset market sprung back to life last week, with renewed demand from […]

    Research Insights | May 13th, 2022
  • Carbon Markets

    UPDATE: Election scenarios – Possible outcomes and implications for ACCU prices

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

    With just two weeks to run until the Australian federal election, the 47th Parliament is […]

    Research Insights | May 10th, 2022
  • Carbon Markets

    UPDATE: Options market comes to life as buyers hedge against price increases

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

    The options and futures market for Australian Carbon Credit Units (ACCUs) came to life late […]

    Research Insights | May 9th, 2022
  • Carbon Markets

    UPDATE: Carbon Offset Market Report – Incentive for ERF exit weakens as ACCU market softens, issuance closes in on 110 million

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

    The local carbon market briefly awoke from its recent slumber over the last week, with […]

    Research Insights | May 5th, 2022
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone