AUSTRALIAN Carbon Credit Units have taken a big dive in the past month, dropping more than $7 since the start of June.
According to market information service Jarden, ACCUs opened today at $28.25 – down from $35.50 at the start of June and $38 in May.
Last time the ACCU price was this low was in May last year after former energy minister Angus Taylor allowed credit holders to exit Government contracts, triggering a surge in supply on the open market and another shock caused by Australian National University professor Andrew MacIntosh calling the market a “fraud”, sparking “the Chubb-review”.
The latest dip in price has been put down to a significant increase in supply, with the Clean Energy Regulator issuing close to 1m ACCUs last week.
Part of the issuance was the first ever credits allocated to large scale soil carbon projects – with two Qld producers receiving more than 150,000 ACCUs combined.
However, the majority of the issuance was a backlog of Human Induced Regeneration projects, which is one of the most common methodologies and covers many projects in the mulga-lands of Western Qld and NSW.
HIR projects were reportedly on hold while the Federal Government reviewed the methodology through its Chubb-review – with the Clean Energy Regulator last week responding to criticisms of the methodology and allowing the projects to yield credits.
The HIR methodology is set to expire at the end of September this year – Beef Central will have more on what that might mean.
Demand slows as Safeguard Mechanism kicks in
On the demand side, the Federal Government’s Safeguard Mechanism kicked in at the start of July – meaning to country’s largest emitters will have to offset their emissions if they exceed a certain baseline. That baseline will decline yearly until 2030.
Companies covered by the Safeguard Mechanism will be able to earn “Safeguard Credits” if they keep their emissions below the baseline.
Some companies are reportedly taking a similar approach to Nestlé, who recently announced it was going to invest in de-carbonising its own supply chain first – rather than purchasing carbon