ACCU Market Monthly Report - August 2024

ACCU market overview for August 2024

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ACCU market highlights

• ACCU trade volumes jumped and credit prices eventually climbed across the month August as participants engaged strongly with the market. Price movements remained subdued for the first three weeks of the month, before increased trading volumes and upward price momentum pushed Human Induced Regeneration (HIR) and Generic spot ACCUs to their highest prices since March.
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• Opening at $34.50, Generic spots traded between $34.25 and $34.50 with minimal volatility until the 20th. HIR spots also started the month at $34.50 and remained rangebound for the first three weeks in August, trading between $34.50 and $34.85.
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• After the 20th, both methodologies saw greater volatility and overall price growth. Generic and HIR spot ACCUs closed the month at $35.25 and $35.40 respectively, each reaching $35.60 on the 28th of the month, the highest price since March of this year.
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• Trading volumes were also up substantially in August, totalling 2.07m credits traded, returning to levels seen before the July slump. Generic ACCUs totalled 800k in reported trades, with 655k HIR spots traded in the same period, comprising 45% of the market.
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• After a stable July, both Generic and HIR spot ACCUs opened with trades at $34.50, with HIR spots trading at a $0.35 premium soon after. HIR spots commanded a premium across much of August of between $0.25 and $0.50, with a spike to $0.75 on the 20th.
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• Forward market activity was strong during the month with close to 450k ACCUs being agreed, while the escalation rate on those trades reduced from circa 5% to closer to 4.5%.
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• Trading of derivatives was up slightly in August, with 200k Generic credits transacted across two trades late in the month.
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• The launch of the ACCU futures product saw a very slow start with a handful of 5k trades in the Mar25 contract taking place across the month.
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Learn more about our ACCU Market Forecast Report, a method-specific ACCU market supply, demand and price forecast

ACCU method-specific price movements and volumes traded

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ACCU price

• Generic spot ACCUs opened at $34.50 with a trade on the 1st up $0.75 on July’s opening. Prices remained level until early in the second week, where the price decreased to $34.25 and held to mid-August, before settling again at $34.50, and remaining there to the 20th. This period saw minimal volatility, with parcels exchanged within a narrow price band. The fourth week of August brought greater fluctuations, starting with a sharp increase to $35.05 on the 21st, followed by a dip to $34.85, before levelling off once again at $35.05 on the 26th. The price then rose sharply on the 28th to the monthly high of $35.60, the highest traded price since March. Prices moderated somewhat in time for August’s closing, with the final trade exchanged at $35.25, up 2.2% on August’s opening.
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• While opening level with Generic spots, HIR spot ACCUs saw an early jump to $34.75, before gradually returning to $34.50 by the 9th. The methodology rose once again to $34.75 later in the day, where prices hovered until the 20th. Mirroring the growth of Generic spots, HIR spots rose $0.50 to $35.25, before a week of sustained upward pressure pushed prices to their monthly high of $35.60. Moving alongside Generic spots, HIR spots closed the month at $35.40, up 2.6% from August’s opening.
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• HIR spot ACCUs retained their premium across the month, fluctuating alongside significant price movement. HIR spots commanded an extra $0.50 over Generic spots early in the month, before narrowing to a $0.25 spread on the 5th. As HIR prices strengthened on the 9th, the spread broadened again to $0.50 and hovered there until the 13th, where the difference returned to approximately $0.25. Prices rose roughly in parallel around the 20th, with the spread between $0.35 and $0.50, spiking to the monthly high of $0.75. Late volatility saw prices reach parity at $35.60 on the 28th, finally closing with a $0.40 spread.
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• Premium ACCU methodologies traded in somewhat higher volumes in August compared to July. This includes a trade early in the third week of August of a bundled parcel of 14,500 Savannah Fire Management (SFM) spot units, 7,500 Native Forest from Managed Regrowth units and 9,500 Avoided Clearing units at $34.30  per unit.  Another parcel of 60k SFM spots also traded in $35.50 late in the month.

ACCU volumes traded

• In August, some 2.07 million ACCUs traded in the reported market, up 60% on July’s volume. This comprises a strong return to levels seen earlier in the year, prior to the July slump. By comparison, approximately 2.14 million units traded in June.

• Notably, at 610k credits traded, HIR ACCUs accounted for 30.2% of the market in August, up on July’s figure of 25%.

• Peak trading volumes were seen late in the month, with 150k Generic and 50k HIR spot ACCUs traded on the 28th. The month’s largest parcel was exchanged on this day, a trade in 85k Generic spots (NO AD) at $35.50.
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• ACCU swaps also traded in August, the most significant being a 50k Generic/NO AD parcel at $0.30 on the 8th.
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• Forward market activity was up substantially on the previous month, with 65k HIR forwards, 265k NO AD forwards, and 150k Generic forwards reportedly traded in the month. Interestingly the forward curve, which had sat around 5% in recent month for shorter dated forwards softened to circa 4.5% carry by the latter part of the month.
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• The market saw two derivatives trades during the month: a $35.50-$27.00 put spread at $2.48 in 100k, alongside a $39.00 strike call at $2.53 in 100k with expiry set as July 25 on both. While up on July’s volumes, August failed to reflect the uptake in derivatives trading which was seen earlier in the year.
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• The ACCU Futures product saw modest activity levels across the month with a handful of 5k lots agreed. The carry rate above spot tended to be in the low 4% range, perhaps a reflection of the fact that the contract is for generic units and buyers are likely to receive units that are less sought after in the OTC market.

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

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ACCU supply, issuance & project registration

• The Clean Energy Regulator’s latest issuance period in late-August saw 647k ACCUs of various methodologies registered. While substantially up on the previous issuance period’s total of 317k, registrations remain down on pre-July levels. The Clean Energy Regulator (CER) aims to issue at least 20m ACCUs this year, 2.8m more than 2023. At the end of August more than 9.6m ACCUs had been issued in the year to date, about 48% of its expected yearly issuances.
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• Approximately 45% of total issuances in the CER’s latest issuance period were allotted to various projects from two entities. Terra Carbon received 130k ACCUs for 19 registered projects underway in Queensland and New South Wales. Since its first registration, Terra Carbon has been the recipient of nearly 23 million credits.
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• Three entities within the French transnational company Veolia earned nearly 165k credits, one of which, a South Australian Landfill Project earning 86k ACCUs, was the largest allotment for a single project in August. LGI Limited Total also received a substantial parcel of 53k ACCUs in the same period.
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• In other news the Carbon Abatement Contract exits, part of the Fixed Delivery Exit initiative, the Clean Energy Regulator reports only modest volumes thus far, with 1.05m credits being released as of writing. It appears the exit process is taking substantially longer than many had expected, with the CER having estimated the release of at least nine million certificates in the current window (July 1st 23’ to December 31st 24’).

Other market developments

On the 28th of August, the Office of Minister for Climate Change and Energy Chris Bowen released a response to the Climate Change Authority’s 2023 Review of the Carbon Credits (Carbon Farming Initiative) Act 2011, from which the ACCU Scheme was created.

The 2023 Review found that the ACCU Scheme is fundamentally well designed and made 15 recommendations to further enhance the Scheme. This includes proposed measures to reaffirm the continued effectiveness of older projects in their ability to sequester carbon, and the scheme’s capability to deliver outcomes for First Nations Australians. For more information on the recommendations of the Review, click here.

Since its inception, the ACCU scheme has undergone various changes to improve the efficacy, integrity, and reporting mechanisms of its registered projects. Now reaching a more mature phase, the ACCU market is looking to extend the improved integrity standards, which are applied to new projects, to those projects which date back to earlier phases of the Scheme.

The Government agreed with all fifteen of the report’s recommendations, agreeing to three and agreeing in principle to twelve. The response notes that many of the issues raised are either already being addressed, or with strategies in-development in line with findings from the earlier Independent Review of ACCUs (the Chubb Review).

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