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Carbon market snapshot

A regular update provided by a range of market participants and commentators. Today's guest commentary is provided by Market Advisory Group.

Spot trades:

Spot trades as at midnight Thursday:

  • ACCUs: $29.68 (up $1.58, or 5.6% on last week)
  • LGCs: $47.25 (down slightly)
  • EUAs (DEC22): AU$134.60 (up slightly)
  • NZUs: NZ$76.40

Data: TFS Green/CORE markets platform and Jarden.

Commentary:

With many more ACCUs set to enter the market as a result of the new exit regime for fixed delivery contracts, and growing public scrutiny of the carbon market, buyers are starting to become choosier – and this is reflected in prices.

It's a natural evolution, as Australia moves from having one dominant buyer that purchases solely on price (the federal government) to a market comprising private buyers with diverse purchasing goals and criteria.

Many of those private buyers are also becoming more risk averse, and are moving away from ACCUs derived from ERF methods that they perceive as having integrity issues, towards those that retain strong public support, or have proved less controversial.

For example, Tuesday saw a trade of 5,000 savanna-burning ACCUs (which have social co-benefits) at a price of $35 each.

The next day a parcel of 10,000 generic, unspecified ACCUs traded $6.50 lower at $28.50, while two parcels of human-induced regeneration ACCUs traded at $30.50.

This emerging trend towards price stratification within the ACCU market is in line with international voluntary markets, where prices for a unit under the same scheme can range from between US$0.50 cents to US$30.

However, there is a constraint – the diversity of ACCU supply is still very limited.

For example, 80% of ACCU supply so far in FY22 has come from human-induced regeneration (40%), landfill gas (25%) and avoided deforestation (15%).

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