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ACCU Market Monthly Report - May 2024

ACCU Market Monthly Report - May 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 - May 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 May '24

ACCU market highlights

  • The ACCU market continued to trade relatively range-bound this month, with prices transacting mostly sideways across May. Generic spot ACCUs opened at $34.00 and closed at $33.25, whilst Human Induced Regeneration (HIR) spot ACCUs started the month at $34.50 and moved to a close of $34.00.
  • Trading volumes also shrunk for the first time this year, with 2.191 million being reported on the secondary market, a 13% decrease from April’s reported volumes of 2.519 million.
  • The HIR and Generic spot levels reestablished their spread at the start of the month. HIR spot ACCUs traded at $34.50 on the 3rd May, whilst Generic spot ACCUs traded at $34.00, setting the HIR to Generic premium at $0.50. The spread converged towards the middle of the month, potentially more of a function of low liquidity on the HIRs as opposed to price erosion, before moving back to the circa $0.50 differential, largely due to a boost in HIR-specific interests including a 150k trade on 27th at $33.00.

    The return of the spread was likely a reflection of the differing preferences amongst buyers present this month as well as HIR integrity concerns abating.
  • Steadier price movements and lower trading volumes may be a result of the awaited developments across multiple methodologies. As well as the currently underway updates to the Integrated Farm Land Management method (IFLM), the government is also expected to amend the Environmental Plantings and Savanna Fire Management methods. Anticipation of these changes may be feeding into a sense of uncertainty in the market on a methodology-specific level.
  • Interest in derivates has continued to grow this month, with options contributing to 22.8% of traded volumes. The emergence of more sophisticated trading this year a strong indication of the market maturing and a diversification of incoming participants. The focus on 2025 contracts is likely a result of anticipatory trader engagement with the newly reformed Safeguard Mechanism.
  • A major point of focus for the market remains the potential for Carbon Abatement Contract (CAC) exits, given the 18 month window from 1st July 23 to 31st Dec24 is now open. Participants are closely watching to observe whether increased volume from exited CACs will impact the market.

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

ACCU price

  • Generic spot ACCUs opened at $34.00 on 2nd May, a slight jump from April’s closing level of $33.75. They remained steady at this level until dropping to $33.85 on 8th May. From here the price crept lower into the end of the month, reaching monthly lows on $32.50 on 23rd May, before recovering to its closing level of $33.25, a 2.21% decrease from the month’s opening.
  • Human-Induced Regeneration (HIR) Spot ACCUs opened at 34.50 on 3rd May, an almost 1.5% increase from April’s close of 34.00. HIR ACCUs remained at this level however, until prices declined heading into the second half of May. From an agreed trade of $34.25 on May 13th, the HIR spot price dropped to the month’s trough of $33.00 on May 14th before recovering to $33.50 on May 29th, and then closing the month at $34.00. The close price increased the Generic/HIR premium to $0.75, an increase from last month’s $0.50 spread.
  • ACCU derivates also traded in May, such as a Dec24 $30 ACCU Put option in 200k priced at $1.10 on 6th May, and a Mar25 $29 ACCU Put option in 100k at $1.25 on 30th May. In addition, two Dec24 $30-$37 ACCU Collars in 100k at $1 traded on 9th May.


ACCU volumes traded

In May, 2.191 million ACCUs traded in the reported market, representing a decrease of over 13% from April’s 2.519 million units. Generic ACCUs made up 73.5% of the ACCU market, with 1.611 million units traded. Of these units, 840k had the NO AD tag.

HIR ACCUs accounted for 580k of reported trades, almost 26.5% of the ACCU market. This is a 1.5% decrease from April. However, although the total traded volume of HIR ACCUs decreased in May, its market share increased by almost 12.3%.

Peak trading volumes were seen on 9th May, with a total of 326k ACCUs having been reported, the largest being two Dec24 $30-$37 ACCU Collars in 100k priced at $1.00. However, other significant days, such as 6th May, showed reported volumes of 295k. Here, the largest trade of the month, a Dec24 $30 ACCU Put option in 200k traded at $1.10.

ACCU Forwards also traded in May, the most significant of these being two Dec24 ACCU forwards at $34.96 in 63k on 9th May, and a Nov25 ACCU NO AD forward at $36.65 in 50k.

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

ACCU supply, issuance & project registration

In May, an estimated 1,256,253 ACCUs were issued, a significant 115.5% increase in comparison to April, where issuance was just over 583,000. The Clean Energy Regulator (CER) estimates around 20 million ACCUs to be issued in 2024, compared to 17.2 million issued the previous year.

  • The issuance of ACCUs showcased a dynamic landscape with various projects receiving credits. The CER revealed that approximately 78,500 ACCUs were delivered to the government under contract between April 22 and May 1. GreenCollar's Tripodi Native Forest avoided deforestation project played a significant role in this issuance, delivering almost the entire volume of units, totalling 63,800 ACCUs. This project, with a contract signed in 2015, is expected to deliver around 953,000 ACCUs to the government over a 10-year period and has already handed over 836,500 units.
  • The CER also issued nearly 164,000 ACCUs to 15 projects between April 29 and May 5, representing a significant uptick compared to the previous issuance. Among the projects, Terra Carbon's avoided deforestation projects in New South Wales and Kimbriki Environmental Enterprises' landfill gas project in Sydney stood out, receiving substantial shares of ACCUs.
  • Terra Carbon's projects received around 30,000 ACCUs, while Kimbriki Environmental Enterprises' project received the largest share of ACCUs to a single project, totalling approximately 32,000 units. Notably, Kimbriki Environmental Enterprises' project, registered in 2015, has accumulated nearly 100,000 ACCUs over its lifetime. Additionally, six new projects, all soil carbon projects owned by Agriprove Solutions, were registered to begin generating ACCUs in May. These projects included the Cohen 1-3 projects in Queensland and the Staley and Wade 1-2 projects in South Australia.

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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