The emergence of discounted Safeguard Mechanism Credit (SMC) offers reignited activity in the traded market late last week, however, beyond short-term volatility, the gradual erosion of market support is more closely tied to broader uncertainties – most notably, the upcoming federal election.
In this Carbon Weekly report, we break down activity in the Australian exchange-traded and OTC carbon markets (spot and derivatives) over the past week, including key trends and drivers, our latest pricing and benchmarks, and our daily forward curves.
Volumes surge on Safeguard Mechanism Credit-led sell off
Total traded volumes across the Australian exchange-traded and over the counter (OTC) carbon markets grew to 1.44M last week – 54% above the 6-month rolling average of 934k. The spot market accounted for 1.1M, with activity continuing to be dominated by Generic No-Avoided Deforestation ACCUs (60%) – of which likely includes some HIR ACCU volume traded under the Generic No-AD label. Remaining volumes split across Generic ACCUs (17%) and HIR ACCUs (7%), with less regular contributions from swap volumes (9%) and SMCs (4%).
Last week saw typical daily volumes through to midweek before the emergence of discounted Safeguard Mechanism Credit (SMC) offers reignited activity late week. A sharp sell-off followed on
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