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Nov 191 min read

ACCU Prices Spike Amid Supply Concerns and Regulatory Delays

Australian Carbon Credit Unit (ACCU) prices have reached a one-and-a-half-year high, with Generic ACCUs assessed at A$42.15/mtCO2e and Human-Induced Regeneration (HIR) ACCUs at A$42.35/mtCO2e. This surge is largely driven by concerns over future supply shortages, exacerbated by delays in finalising new project methods from the Clean Energy Regulator (CER).


 

Kakariki Capital's Founder and Chief Investment Officer, Izzy Jensen, was featured in S&P Global’s coverage of this critical market trend, providing key insights:


  • Demand Outstripping Supply: Strong end-user demand, particularly from Safeguard entities, is pushing prices higher. As supply constraints worsen, some developers predict prices could surpass A$45-50/mtCO2e by year-end.


  • Regulatory Bottlenecks: Expired and delayed methods, like Human-Induced Regeneration (HIR) and Integrated Farm and Land Management (IFLM), are slowing project registrations and credit issuance.

    "Delays from the CER are creating uncertainty in the market, particularly for financial investors. Without policy and regulatory clarity, Australia risks restricting the capital flow needed to fund essential projects," Jensen noted.


  • Challenges of Interim Solutions: While soil carbon projects are seeing increased registrations, they face challenges like low credit yields and predictability issues, making them unlikely to fully replace HIR in the short term.


 

Key Takeaways


  1. Supply Uncertainty: Delays in launching new methods are creating significant mid-to-long-term supply concerns, with an undersupply of credits expected by 2026-27.

  2. Rising Prices: The tightening supply and looming compliance deadlines under the Safeguard Mechanism are driving price spikes.

  3. Urgent Need for Action: Developers must utilise existing methods to avoid further delays in credit issuance, while the CER must prioritise policy and method finalisation to attract investment.


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