ACCU Market Monthly Report - January 2025

ACCU market overview for January 2025

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ACCU market highlights

• January marked another busy month for the ACCU market, as prices slid to four-month lows after the holiday break amid heightened levels of trading activity.
• Generic, No Avoided Deforestation (No AD), and Human-Induced Regeneration (HIR) ACCUs retraced levels seen before the mid-November peak, softening across January to land at $34.10 before recovering at month’s end.
• Market participants traded in large volumes in anticipation of the Clean Energy Regulator’s (CER) first issuance of Safeguard Mechanism Credits (SMCs) in early February. A bearish sentiment prevailed over January, exacerbated by uncertainty surrounding the new U.S. administration, and the impending Australian election.
• The volume of Carbon Abatement Contract (CAC) exits remains unmoved at 3.995mil for the year. While the Clean Energy Regulator (CER) may publish further exits for 2024, the figure remains well-short of the revised estimate of 7-13mil.

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ACCU method-specific price movements and volumes traded

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ACCU price

• After steady declines across December, ACCU prices softened once again in January. Generic, No Avoided Deforestation (No AD) and Human-Induced Regeneration (HIR) spot ACCUs opened at $36.75, the monthly high, before dropping early. Sustained selling pressure brought the market lower across the month, with HIR spots bottoming out at $34.00 on the 22nd, and the Generic spot temporarily breaching the $34.00-level with a trade at $33.75 the same day. No AD spot ACCUs ebbed to their lowest point on the 24th, with a trade at $33.90.
• As in recent months, the most frequently exchanged ACCU methodologies traded at parity. The HIR spot, which at one point commanded a premium of more than $5.00 over Generics, has for the last few months remained level with Generic and No AD spot ACCUs. This remained the case across January, except for the 15th and 20th of January which saw premiums of $0.15 and $0.10 respectively, before parity swiftly returned on both occasions.

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ACCU volumes traded

• Traded volumes remained elevated in January, with some 3.85mil ACCUs of various methodologies and tenors exchanged across the month, down on November’s record total but pipping December’s total by 30k.
• Derivatives traded in large volumes with market participants eager to hedge early in the year, totaling 1.04mil in options trading over the month. Forwards trading was down on December’s figure (320k), totaling just 260k exchanged.
• Generic, No AD and HIR spot ACCUs traded in similar volumes to December, with Generic (538k) and HIR (523k) spots marginally up and No ADs (1.52mil) down slightly on last month's figures.
• Across spots, forwards and derivatives, No AD ACCU volumes strengthened once again in January, comprising 52% of all traded units, up from 48% in December and 44% in November.
• Reported trades of premium methodologies remained soft in January, with one Savanna Fire Management parcel in 10k exchanged at $34.00.

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ACCU supply, issuance & project registration

• The issuance period to January 31st saw healthy generation across various tenors and methodologies. HIR ACCUs retained their place at the top of the pile with 1.21mil units issued, and Landfill Gas ACCUs were well-represented after strong issuance late in 2024, with 901k units issued from LMS Energy from various projects.
• After gradually increasing across recent months, facilities method ACCUs rocketed over the holiday period and January to reach their strongest monthly result. Issuance was spurred by intensified industrial decarbonisation efforts, notably from Orica Australia's Kooragang Island project, generating 492k across the period via the installation of new equipment.
• Project developers also accrued Avoided Deforestation ACCUs in substantial numbers, totalling 390k (12% of total issuance). Following impressive issuances late last year, issuance of Savanna Fire Management units was softened to just 1.5% of total issuance (50k), while alternative waste units were kept to 74k across the month.
• LMS was the single largest recipient of ACCUs between December 18 and January 31, with nearly 620k units generated across thirteen projects.

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

Other market developments

• In January, the Emissions Reductions Assurance Committee (ERAC) made representations to discontinue the Beef Cattle Herd Management, due to the method's insufficient discount factor used to account for seasonal variation in emissions intensity (4%). This was compounded by the findings that many eligible crediting activities for the method were becoming standard practice, thus lacking sufficient additionality.
• With the Coalition remaining unclear on its stance regarding the ongoing administration of the Safeguard Mechanism, market participants eagerly await the passage of the upcoming election and clarification on the future of the Scheme.
• The Federal Government’s announcement of a $2 billion Green Aluminium Production Credit scheme will support energy- and emissions-intensive smelters in their transition to renewable energy. Reported emissions at Queensland’s Boyne Smelter, according to Safeguard Mechanism data, produces 908 thousand tonnes of CO2 per year.
• Finally, the CER announced a replacement to the 2015 Audit Thresholds Instrument, to be rolled out in April. The revised Audit Thresholds Instrument 2025 will seek to "support a risk-based approach to compliance," according to the Regulator, with low-risk reforestation projects being offered alternative assurance arrangements requiring no scheduled audits. The revamped Instrument may enable greater accessibility for smaller proponents to participate in the scheme.

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Stay up-to-date with the ACCU market

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