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ACCU Market Monthly Report - April 2024

ACCU Market Monthly Report - April 2024

This report provides an overview of the month’s Australian Carbon Credit Unit (ACCU) market activity along with key developments and milestones.

ACCU Market Monthly Report - April 2024

Introduction

This report provides an overview of the month’s Australian Carbon Credit Unit (ACCU) market activity along with key developments and milestones.

Please note: This report provides an overview of the key developments in the Australian carbon market. Our in-market team produces daily and detailed updates and trade reports to CORE Markets software subscribers and clients. Contact us to find out more.

ACCU market overview for April '24

ACCU market highlights

  • The ACCU market exhibited continued price volatility in April and trading volumes grew further; 2.519 million units transacted in the reported market in comparison to the previous month's figure of 2.499 million.
  • Despite the market experiencing further erratic price movements in April, the spot Generic ACCUs closed almost sideways to their opening level, starting the month at $33.90 and moving to a slightly softer close of $33.75. Similarly, the spot Human Induced Regeneration (HIR) ACCUs first printed at $33.75 and ended at $34.00.

    However, the sentiment throughout the month was more bearish, with $31.50, the lowest traded level in April, being this year’s price trough and the cheapest price dealt since 30th November 2023 for spot Generic ACCUs in the reported market.

    The progressively growing ACCU holdings and the forecasted existing and new projects points to a large and growing surplus in the near term. This appeared to weigh on the market at times across the month.

    Additionally, the ample period before the next ACCU surrender deadline in March 2025 has been reflected in a fall in engagement from compliance buyers in April.
  • The market saw convergence between HIR and Generic prices continue, with the circa $0.25 spread that was established at the end of the previous month being maintained in April. The HIR price erosion has been a catalyst for transaction flow in the market, with compliance buyers who may be less discerning with regards to methodology-specific attributes being content with taking HIRs when pricing is almost on par with Generics.
  • Strong optionality interest has continued in April, with four ACCU Calls trading, which amounted to 350k in the reported market, potentially partly in anticipation of the Clean Energy Regulator’s (CER) announcement regarding the exit window for the carbon abatement contracts (CACs).

    The fixed delivery exit arrangement’s fourth pilot window was opened on 26th April, with the window for eligible deliveries being from 1st July 2023 to 31st December 2024 as opposed to the previous 6-month timeframe.

    Additionally, a minimum delivery figure was set for sellers at 20% of the applicable delivery milestone. However, the changes made were largely expected and although Generic ACCUs spiked to $34.50 on the day of the announcement, there was seemingly no lasting effect on the prices in the secondary market, which softened again the day after.

    The diversification of derivative trades being witnessed appears to be a positive function of the improved liquidity in the market.
Learn more about our ACCU Market Forecast Report, a method-specific ACCU market supply, demand and price forecast

Method-specific price movements and volumes traded

ACCU price

  • Generic spot ACCUs opened the month with a trade agreed at $33.90 on 2nd April, a step higher than the previous month’s closing trade of $33.75 on 27th March. Prices then saw some volatility on the 4th April, opening at $32.75 before bouncing to $34, then finally closing at $33.50.

    The Generic spot price crept lower around the middle of April, reaching the month’s low of $31.50 on April 12th. From here, Generic ACCUs slowly gained some momentum, with the spot price reaching the April high of $34.50. April closed at $33.75 however, representing a 0.44% decrease from its opening level.
  • Spot prices in April for Human-Induced Regeneration (HIR) ACCUs opened at $33.75 on 4th April. HIRs ranged between $33.25 and $33.75 at the beginning of the month, before quickly declining to the month’s low of $31.50. From here however, HIR ACCUs saw a modest recovery, with the price slowly improving, reaching April’s high of $34.00. This closing price subsequently re-established HIRs premium of $0.25 over Generics, the same level as that of the previous month’s close.
  • ACCU derivatives traded in April, such as Sep24 $35 and $36 ACCU call options in 100k and 75k priced at $2.30 and $1.75 respectively; Feb25 $37.00 Call option priced at $3.00 in 100k; and two HIR/NO AD ACCU swaps, priced at $0.25 in 50k.

ACCU volumes traded

In April, 2.519 million ACCUs traded in the reported market, a 0.8% increase from March’s 2.499 million  units. Generic ACCUs made up 74.22% of April’s reported trades, with around 1.855 million Generic ACCUs reported, 695k had the NO AD tag.

HIR ACCUs accounted for 23.6% of the ACCU market, with 589k reported units traded in April. This marks a significant 15.5% increase from March’s 510k HIR units, when HIR ACCUs accounted for 20.4% of the market.

Peak trading volumes were seen on the 4th of April, where over 460k ACCUs were reported, the largest of these being Generic spot ACCUs trading at $34.00 in 100k. Further significant volume was seen at the end of April, where around 325k ACCUs were reported trading. The largest of these being Sep24 and Feb25 ACCU call option parcels in 100k, priced at $2.30 and $3.00, with strikes at $35.00 and $37.00 respectively. ACCU forwards also traded in April, the most significant being on the 4th, where an Oct24 ACCU forward traded at $34.83 in 30k.

Learn more about our ACCU Market Forecast Report, a method-specific ACCU market supply, demand and price forecast

ACCU supply, issuance & project registration

ACCU issuance has declined significantly in comparison to March, with just over 583,000 ACCUs issued in April. This represents a 68.5% decrease from March’s total of 1.85 million ACCUs issued. The Clean Energy Regulator estimates around 20 million ACCUs to be issued in 2024, compared to 17.2 million issued the previous year.

A total of 18 new projects were registered to begin creating ACCUs. Among these registrations, Terra Carbon initiated three Native Forest Management Regrowth (NFMR) projects in Queensland, focusing on establishing permanent native forests through assisted regeneration practices. Concurrently, LGI introduced two Landfill Gas projects in Queensland and New South Wales, while developers in Victoria and New South Wales registered three Soil Carbon projects. The Soil Carbon projects were registered by Agriprove Solutions, including the Gear Carbon 1-3 projects in Victoria. Additionally, two projects owned by Corporate Carbon were voluntarily revoked, although they had not been issued any ACCUs.

Stay up-to-date with ACCU market developments

  • Learn more about our ACCU Market Forecast Report, a method-specific ACCU market supply, demand and price forecast.
  • Talk to us about your market approach and how CORE Markets can support your strategic and transactional needs across ACCU market, environmental market and clean energy markets.
  • Request a demo of our carbon markets analytics platform, which includes ACCU market data across major methodologies, including forward price curves.
  • Track the Generic ACCU price, it’s updated on our website each day.
  • Sign-up to receive our regular carbon and clean energy insights – including this ACCU Market Monthly Report – directly in your inbox. Simply click the ‘Subscribe now’ button on the bottom of this page.

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