2024 was an eventful year for the Australian Carbon Credit Unit (ACCU) Scheme. Alongside policy and legislative changes, the year marked greater traded volumes and improved liquidity, and an overall growth in the number of Scheme participants. We take a look at the year that was and the key upcoming developments for 2025.
2024 was an eventful year for the Australian Carbon Credit Unit (ACCU) Scheme. Alongside policy and legislative changes, the year marked greater traded volumes and improved liquidity, and an overall growth in the number of Scheme participants.
The year was bookended by strong market activity.
An impressive month-on-month ramping of traded volumes occurred in parts of the year, strongly influenced by compliance demand. The market also appeared to mature in 2024, as more participants hedged against future price risk with more complex products—derivatives trading seeing a threefold increase to 6.11 million, up from 1.88 million across 2023.
Across the year, various updates took place in the ACCU Scheme. These include the acceptance to the findings of the Chubb Review, updates to several methodologies, and the launch of a draft plan on the creation of a registry and exchange.
This article will explore key ACCU market highlights from 2024, including:
January 2024 saw a soft opening with 1.4 million ACCUs being traded on the over the counter (OTC) market. While this was about 23% lower than December 2023’s total, it was typical for the expected pattern at the start of the year.
February then saw a 60% increase in activity, with March strengthening by another 7% to close off Q1 at over 6.18 million ACCUs traded. This spike was expected ahead of the March cutoff date for Safeguard buyers.
Following the elevated levels of activity pre-cutoff, increased trade volumes and market depth continued well into 2024, breaking previous records. While trade activity softened midyear, with the lowest volumes for 2024 seen in July, trader engagement picked up once again in August to mark the start of a three-month streak in liquidity growth.
As reported on the CORE Markets platform, just shy of 30 million ACCUs were exchanged across the year, averaging some 2.5 million units each month.
In contrast, according to the Clean Energy Regulator’s (CER) latest registry update (December 18th), project developers generated 18.74 million ACCUs across the year, falling just shy of the revised issuance target of 19 million.
The Scheme also saw substantial year-on-year growth in the number of project developers. According to CER data, 152 new project developers issued ACCUs for the first time in the year to December 18th, 2024, representing an increase of nearly 20%.
Please note: the volume reported in this article refers to an aggregated volume between all types of OTC ACCU contracts (including futures and other derivatives), unless otherwise stated.
Various developments across the ACCU policy landscape drove the strengthening of the market during the late months of the year. These developments included:
As Safeguard driven compliance activity increased throughout the year, the price spread between the two mostly commonly generated ACCUs - Generic and Human Induced Regeneration (HIR) units – reduced.
As reported in our ACCU Market Monthly Report, December saw Generic, Generic No AD (No Avoided Deforestation), and HIR ACCUs trade at level across the month. Read more here.
For several years, HIR units traded in greater volumes than any other individual methodology. A carbon sequestration methodology, HIR projects regenerate native forests by altering land management practices.
At one point, HIR spot ACCUs commanded a premium of $6.10 per unit. In 2024, however, participants witnessed a tightening in the market. The price spread first narrowed in March, held between zero and $3.00 across much of the year, then tightening to parity in November, with Generic and HIR spot ACCUs trading level throughout December, until year’s end.
This price convergence is potentially caused by the limited number of cost-viable options when supply was tight during approaching compliance due dates. There also remains uncertainty surrounding the Integrated Farm and Land Management methodology, which broadly overlaps with HIR. We are expecting to hear further updates later in 2025.
Despite the narrowing price differential between HIR and Generic ACCUs, other premium methodologies continue to command a strong price premium into 2025.
Methodologies like Savanna Fire Management+ and Environmental Plantings are commonly purchased at a price premium. Savanna Fire Management+ denotes projects with First Nations community management or participation, while Environmental Plantings projects are often valued higher for their nature-based co-benefits.
Demand for premium methodologies most often comes from voluntary buyers who are focused on managing reputational risk and alignment with brand values. But this is not always the case.
While compliance buyers often wish to source ACCUs at the lowest possible cost, some will have more comprehensive sourcing criteria. Just like voluntary buyers, they seek to connect with their customers and local communities.
These organisations are looking to minimise risk and extend their positive impact beyond a tonne or carbon removed or abated. As such, extensive due diligence is part of their carbon sourcing process.
Currently the due diligence process is often complex, expensive and time consuming, often hampered by lack publicly available data.
The CORE Markets platform provides market participants with the tools and data to identify, evaluate, buy and sell carbon projects, and to speed up the due diligence process. While our advisory and markets team offers strategy, commercial and transactions support. Get in touch to see how we can help.
Since 2021, options trading has been a growing segment of the market. ‘Call’ and ‘put’ options enable the purchaser to buy or sell, respectively, a predetermined number of ACCUs at a specific date in the future. These trades may indicate where participants believe the price of ACCUs will go, and a growing frequency of derivatives trading indicates a maturing market.
2024 saw an increase of some 325% in the volume of derivatives traded, with 6.11 million in options trading across the year, compared to 1.88 million in 2023. Call trades traced the profile of the year’s curve, featuring some parcels exchanged in the low thirties, reflecting early uncertainty on the year to come.
After rebounding in April, however, reported call options appeared to reflect a bullish outlook for the remainder of the year. From Q2 until the market’s peak in November, call options were agreed at a differential of a dollar or more to the then-monthly average price.
Looking ahead to next year, the strike prices of last year’s options trading with 2025-expiry (excluding outliers) was agreed between $28.00 and $42.00, lower than what was set from 2023’s trades for the following year.
The CORE Markets team produces a quarterly ACCU market supply, demand and price forecast. Learn more here.
2025 is shaping up to be another big year in the ACCU market. Developments will continue to emerge and those already on the horizon include the following:
The ACCU market in 2024: A review of the biggest volume year in the scheme’s history
2024 was an eventful year for the Australian Carbon Credit Unit (ACCU) Scheme. Alongside policy and legislative changes, the year marked greater traded volumes and improved liquidity, and an overall growth in the number of Scheme participants. We take a look at the year that was and the key upcoming developments for 2025.
2024 was an eventful year for the Australian Carbon Credit Unit (ACCU) Scheme. Alongside policy and legislative changes, the year marked greater traded volumes and improved liquidity, and an overall growth in the number of Scheme participants. We take a look at the year that was and the key upcoming developments for 2025.
Recent milestone decisions in Article 6 and CORSIA markets have been eagerly awaited and welcomed by carbon market participants. Coupled with tightening global compliance, they represent a significant opportunity for project developers and provide all market participants, including investors and corporate buyers with greater confidence to make decisions – a critical factor to stimulating supply. We discuss the latest developments and present a blueprint to leverage the opportunity.
