Australian Carbon Credit Unit Bullrun could push prices up to $60 per tonne

The Australian Carbon Credit Unit Bullrun could push prices up to $60 per unit as businesses snap them up at a frenetic pace as they make voluntary pledges to reach net zero emissions.

However, the frenzy of activity pushed prices up to record levels of $47 per tonne at the end of 2021, an increase of 180 percent over the previous year. 

To put this into perspective, in our last blog post about ACCU’s published in August 2021, the price had hit a record all-time spot high of $26.

Market Consultancy Reputex has predicted a trading supercycle that could push ACCU spot prices up to $60 per tonne.

The frenzy of activity is spurring calls on the federal government to stabilise the market by increasing the supply of credits for voluntary buyers as the Australi.

Credits can currently be bought through brokers or directly from those who generate them, but Australia’s Carbon Credit Unit Exchange is set to open for trading in early 2023.

Australian carbon credit unit bullrun outpaces Europe

The Reputex research shows the Australian rally in 2021 has surpassed even the 146 percent increase in the European carbon market, where prices recently dramatically rose from €50 in late July to a high of €90.75, before falling back toward €80 (A$126).

At the moment, the tight supply of credits in Australia is connected to the large volume of ACCUs contracted to the Commonwealth’s Emissions Reduction Fund.

Businesses are all making the push to offset their carbon emissions as consumers make the shift to spend their cash with entities that are actively doing something about climate change.

The majority of these credits – around 210 million contracted for delivery over 7-10 years – are locked away from private buyers under “fixed delivery” contracts with the Clean Energy Regulator.

This has inflated the price for voluntary buyers, as they face increasing competition to access a smaller pool of available ACCUs, which are generated via approved emission reduction projects that avoid land clearing, re-vegetate land or cut emissions from landfill sites.

The Federal government has recently expanded the program to include carbon capture and storage projects.

Cut emissions first – Grattan

Tony Wood, the Grattan Institute’s energy and climate change program director, advised caution when relying on ACCUs as an emissions-reduction tool in a position paper produced in the lead up to the Glasgow climate talks in November 2021.

Mr Wood acknowledged carbon offsets are an essential tool for Australia to reach net zero emission.

But in the paper, he argued that the federal government should require businesses to take an “avoid emissions first” approach and beef up the integrity of the opaque carbon offset system.

The report, titled Towards Net Zero: Practical Policies to Offset Carbon Emissions, argued governments should formulate policies that prioritise cutting emissions, leaving carbon offsetting for processes that are difficult to immediately decarbonise.

This comes as ASX-listed companies wanting to offset their emissions are being urged to conduct their own due diligence on federal regulator-approved farm land carbon credits amid fresh criticism that at least one in five are based on dubious methodologies.

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