The 2020-21 financial year saw rapid growth in the Australian carbon market, with a surge in voluntary demand driving record ACCU issuance, and record spot prices, with the market breaking new ground on an almost weekly basis.
The State of the Australian Carbon Market 2021 provides a snapshot of activity in the Australian carbon market over the 2020-21 fiscal year, reviewing the value of the local market based on underlying activity across the Emissions Reduction Fund, Safeguard Mechanism, and voluntary markets. In doing so, analysis considers growth and key trends in market fundamentals, including project registrations, ACCU issuance and demand, along with market prices and our forward expectations.
Key findings include:
- FY21 saw total demand of 25,041,178 (for all units) in the Australian carbon market, a 20% increase on FY20. Two-thirds (65%) of all demand was in the form of ACCUs with the balance in the form of Certified Emissions Reductions (CERs) (35%).
- The ERF made up 58% of FY21 demand (for all units), followed by voluntary actors (38%) and liquidity and speculators (3%). Compliance demand (Safeguard Mechanism) made up just 0.4% of total FY21 demand.
- Voluntary cancellations grew to 9.56 million in FY21, a 45% increase from FY20. International CERs made up 90% of total FY21 voluntary demand (8.64m), with ACCUs making up the balance (10%).
- In line with total demand and unit prices, the total value of the Australian carbon market is estimated to be $226 million in FY21. ERF deliveries made up 80% of total market value ($180m), followed by voluntary activity (14%, $31.3m) and speculative activity (6%, $13m). High emitting companies covered by the safeguard mechanism made up just 0.7% of all investment in carbon offsets, or $1.5m.
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