Traded volumes in the Australian Carbon Credit Unit (ACCU) market surged in the September quarter of 2022, with volumes for Generic units (landfill gas, avoided clearing) growing to a record high last month behind the increasing participation of trading houses and liquidity providers, and increasing demand from compliance entities under the Safeguard Mechanism, acting in advance of expected regulatory changes.
Key highlights for the September quarter of 2022 include:
- Traded volumes in the ACCU brokered market surged in Q3 2022, growing 22% from Q2, or a fivefold increase from the same period in 2021.
- 62% of all trades over the quarter were for Generic (landfill gas, avoided clearing) ACCUs, with the balance for Human Induced Regeneration (HIR) units. Volumes for Savanna Fire Management (SFM) projects were low in the broker-traded market, yet direct contracting demand for these units remains strong.
- The brokered share of the ACCU market increased to an average of 29% over FY 2021-22, doubling from 14% in 2020-21, reflecting improving liquidity, and the increasing participation of trading houses, intermediaries and financials.
- Overall, ACCU prices came off over the September quarter, with prices down for all categories. More recently, prices have reverted to an uptrend, with rates of change now swinging back into the positive for our short- and long-term indicators.
- While uncertainty continues to weigh on the market, the December quarter will see the release of updates for the Chubb Review (supply-side) and Safeguard Mechanism reform (demand-side), with each representing a potentially positive event for ACCU market development. Potential upside, however, remains subject to the scale and speed by which any supply constriants are imposed on the market, and the environmental integrity of new Safeguard Mechanism Credits (SMCs).
This quarterly report provides a snapshot of key price and data trends in the Australian carbon offset market over the September quarter of 2022, and summarises the key events that are likely to shape market development over the upcoming months.