The price of Australian Carbon Credit Units, or ACCUs, is expected to increase by 56% in a year, from A$45/tCO2e ($31/tCO2e) in September 2024 to A$70/tCO2e in September 2025, Australian bank ANZ said in a report published Sept. 19, adding that emission allowance prices in New Zealand and China are expected to remain stable in the near term.
ANZ said the significant increase in ACCU prices will be driven by strong demand signals from Australia's compliance emission trading mechanism called Safeguard Mechanism.
In the past two years, the Australian government has significantly tightened the policies that regulate emissions under this compliance mechanism, making all emission-intensive companies in the country face tightening ACCU supplies and steadily increasing prices.
"In August, the ACCU market experienced significant growth, with traded volumes soaring to 2.8 million units – marking the third-highest monthly total on record and more than double July's volume," Daniel Hynes, senior commodity strategist with ANZ, said in the report, adding that 44% of the trade volume was Human Induced Regeneration, or HIR ACCUs.
In September, strong demand helped push ACCU prices to a 16-month high dating back to May 2023, ANZ added.
Platts, part of S&P Global Commodity Insights, assessed the price of HIR at A$37.45/tCO2e Sept. 19, up 5.6% from the previous month's level.
ANZ forecasts the price of New Zealand Units, or NZUs, will be NZ$51/tCO2e ($32/tCO2e) in September 2025, on par with the current level.
The New Zealand government has come up with policies to reduce the number of units available in the market, taking effect from the first auction in 2025, ANZ said, adding that the market currently suffers from severe oversupply and weak demand.
"New Zealand has managed to sell carbon units at only one of its quarterly auctions since late 2022, and the latest one in June received zero bids," Hynes said in the report.
ANZ forecast the price of China Emission Allowances, or CEAs, to be at Yuan 91/tCO2e ($13/tCO2e) in September 2025, which also remains unchanged from the current level.
China recently released policies to expand its compliance emission trading scheme to new sectors from 2025, including steel, cement and aluminum. ANZ said, according to the policies, companies in these sectors will have sufficient CEA supplies and will not face significant compliance costs.
ANZ also expected the compliance market prices and global voluntary carbon market prices to converge.
"The gap between compliance and voluntary markets continues to narrow, as recently established compliance programs appear more lenient on the inclusion of carbon offsets," Hynes said.
Voluntary carbon credit issuance volume totaled 16.7 million units in August, down by 20% month on month, ANZ said, adding that credits from energy generation contributed most to the issuance volume and offsets from reforestation projects doubling month on month despite the reduction in total issuance volume.
Monthly demand for carbon offsets returned to growth in August, rising 18% month on month to 10.2 million units, the report showed.
