ACCU Market Monthly Report - February 2025

ACCU market overview for February 2025

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ACCU market highlights

• In a noteworthy month for the ACCU market, activity remained heightened as prices once again tracked lower across the month, with concerns around Safeguard Mechanism Certificate (SMC) issuance and the looming election weighing on the market.
• Generic, No Avoided Deforestation (No AD), and Human-Induced Regeneration (HIR) spot ACCUs saw greater volatility. The Generic spot market opened at $35.00, peaked at $35.40 on the 14th, before a selloff saw the market close at the monthly-low of $33.50. The No AD and HIR spot market followed a similar profile, as the different methodologies continued to trade at parity.
• The first Safeguard Mechanism Credits (SMCs) were issued early in February, with the CER announcing the issuing of 8mil units across 57 entities late in the month. Though the Climate Change Authority projected FY-24 issuance to exceed 9mil, the announcement prompted a bearish response from market participants, precipitating the late-February selloff.
• The month was also noteworthy for the first ever SMC trades, with CORE Markets brokering the trades at a discount of $0.80 to the Generic spot’s closing price that day. There had been low expectations for SMC trade activity given tax treatment and the ability of participants to carry forward the units, but February's action has given hope the market's activity may yet be significant.
• Market activity was elevated across February, totalling 3.31mil ACCUs exchanged. Despite totalling 550k lower than January’s sum, volumes remained elevated ahead of the Clean Energy Regulator’s (CER) compliance deadline on March 31st.

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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

• The ACCU market saw greater fluctuations across February, as once again the spot market for Generic, No AD and HIR units softened month-on-month.
  Level with January’s close, Generic and No AD spot ACCUs opened the month with trades at $35.00 before softening to $33.70 and $33.60 respectively. HIR spots followed suit, with the first February trades on the 10th tracking down $0.65 across the day and closing at $33.85.
• A session of increased No AD volumes (155k on the 14th) saw a rising tide lift all boats to bring Generic ($35.40), No AD ($35.50) and HIR spots ($35.75) to their monthly highs.
• After dropping sharply once again to the mid-$34.00’s in the days that followed, the market crept upwards towards month’s end, before elevated trade levels on the 28th (totalling more than 400k) saw the market driven down substantially to close.
• Generics and HIRs were trading at $34.80 on the 27th and closed the month at $33.50 (down $1.50 at $1.90 month-on-month, respectively), while No AD parcels closed at $33.40, down $1.60 from January’s close.
• Once again, the spread between Generic and HIR spot ACCUs remained at parity across February. Despite experiencing substantial price fluctuations across the month, Generic and HIR spots traded level, with No AD spot ACCUs broadly leading market movements due to increased volume and trade frequency. The spread ticked upward to $0.10 in the final days of February, though it is expected that the most liquid ACCU markets will continue to trade level.
• Filled at $34.00, the first SMC trade took place at a discount to the Generic spot level. With 8mil units issued, the ACCU market responded with a selloff in the month’s final sessions, as the market considered the prospects of softer-than-expected future ACCU demand.

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ACCU volumes traded

• Trading activity remained elevated in February, as heightened volumes persisted in anticipation of the Safeguard Mechanism’s upcoming compliance deadline.
• Though down on recent months, some 550k fewer than January’s total, the 3.31mil ACCUs exchanged in February clears 2024’s monthly average (2.33mil) by nearly a million units.
• No ADs once again outstripped other methodologies, with 1.5mil ACCUs (incl. spots, forwards and derivatives) exchanged, comprising approximately 45% of all traded volume. HIR volumes, however, were particularly softer, with just 320k traded in the month. This is the lowest monthly total since February of 2024, and sits well short of last year’s monthly average (470k).
• Following the trend of recent months, Generic volumes were outpaced by No ADs, but increased optionality saw more than 1.48mil Generics exchanged, with derivatives comprising 1.1mil of the month's sum. More broadly, February's options volume exceeded January’s total by 22%, and comprised one third of the monthly volume.
• Trades of premium methodologies were lower once again in February, with one 5k parcel of Plantation Forestry ACCUs filled mid-month.
• The elevated activity of recent months suggests that Safeguard participants have been more strategic in their compliance buying in anticipation of the Mechanism’s deadline, highlighted by the gradual softening of monthly traded totals from Nov-24’s peak (4.38mil).
• The figures for the same time last year, by comparison, saw monthly traded volumes building towards the Mar-24 deadline, with an increase of 33% from Feb-24. It remains to be seen, however, whether any surprises await the ACCU market from unmet compliance demand.

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ACCU supply, issuance & project registration

Please note: Issuance data is current at the time of writing, using the Clean Energy Regulator’s most recent data release dated 20 February. As such, it does not include issuance data for the remainder of February. CORE Markets will provide an update to issuance data as it becomes available.

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• Issuance data in the month to February 20th saw a decrease in generation, with total ACCU issuance reaching 835k. How the rest of February shapes up remains to be seen, but more-than 2.5mil new units would needed to surpass January’s bumper figures of 3.36mil.
• As expected, HIR ACCUs were generated in the greatest quantity, totalling 389k in the month to the 20th. After strong representation in January, Landfill Gas issuance reached 281k, comprising a third of the whole, as 92k Avoided Deforestation units were generated.
• Landfill Operations (236k) and LGI (44k) comprised the bulk of the period’s Landfill Gas generation, with Landfill Operations receiving the single largest issuance. Terra Carbon was also strongly represented, with 168k issued in the release, alongside 133k to RegenCo.

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Other market developments

• In February, the CER projected a substantial rise in excess emissions under the Safeguard Mechanism, with 9.2 million tonnes of CO2e projected for the 2024-25 financial year. This marks a significant increase from previous years (up from 1.2 MtCO2e the year prior), as the revamped Mechanism now reduces company baselines annually.
• At the end of the fourth exit window, the Regulator confirmed the exit of 4.5mil Carbon Abatement Contracts, well-short of the revised target of between 7 and 13 million. This raised questions as to the likely future issuance for many projects currently in the pipeline and prompted the Regulator to make specific mention of rescheduled Soil Carbon ACCUs as contributing to the CAC shortfall.
• The Emissions Reduction Assurance Committee (ERAC) also launched a review of the 2021 Soil Organic Carbon Sequestration method, aimed at ensuring offset integrity. Since its establishment, more than 300k ACCUs have been generated using the methodology.
• Meanwhile, the tight election contest continues to spur market uncertainty, with participants concerned as to potential changes to the Safeguard Mechanism as a result of a possible Coalition victory. It is interesting to note that, despite voting against earlier revisions the Coalition has not flagged any changes to the Mechanism should it win the upcoming election.

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Stay up-to-date with the ACCU 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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