ACCU Market Monthly Report - May 2025

ACCU market overview for May 2025

• ACCU prices strengthened in May, driven by renewed policy certainty following the re-election of the Albanese Labor government. The outcome signalled continuity in climate and energy policy, particularly around the Safeguard Mechanism, reinforcing market confidence.
• Despite this, overall trading activity was comparatively subdued, as is typical in the months following the March 31st compliance deadline when liquidity generally eases until the new financial year. Still, May 2025 volumes nearly doubled those recorded in May 2024, reflecting a steadily expanding market.
• For the second straight month, prices in the Generic, No Avoided Deforestation (No AD), and Human-Induced Regeneration (HIR) markets posted month-on-month gains. Demand outpaced supply across the month as earlier seller flow dried up following April’s eleven-month price low, pushing No AD spot ACCUs to a monthly high of $35.90, with Generic and HIR following closely.
• By comparison, prices in mid-2024 remained below $34.25 amid muted post-deadline compliance demand. In that cycle, a surge of last-minute buying ahead of the March 2024 cutoff drove prices sharply higher, followed by a more pronounced drop-off in market activity through April and May of that year. That experience appears to have shaped buyer behaviour in the most recent cycle – many Safeguard entities began procuring as early as August 2024, helping to distribute demand more evenly and support steadier trading conditions through May 2025.
• As Labor settles into its second term, attention turned to the fractured Liberal-National Coalition which has since reconvened with what appears to be a revised stance on key energy policies. This includes signs of softening its anti-renewables and pro-nuclear position, now advocating to lift the nuclear moratorium rather than pushing for federally funded plants.
• While Labor is positioned to advance climate policy, its approval of a 40-year extension to Woodside’s North West Shelf gas project signals the enduring role of gas and continued reliance on market-based mechanisms beyond 2050. This highlights the ongoing importance of regulatory tools like the Safeguard Mechanism and provides an indication of the role of compliance buying into the future.
• Consultation is open until June 12th on the drafting of a new Landfill Gas method, set to replace existing methodologies. Higher default emissions reduction baselines have been proposed as part of the new method, increasing from between 0- and 24% year-on-year to 30- to 39% year-on-year, as part of an effort to address integrity concerns raised in the Chubb Review. Existing projects may transition and receive up to 12 years’ crediting extension. Landfill gas projects under the existing methodology, dominated by a few large operators, accounted for 62% of April’s ACCU issuance.

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Method-specific ACCU price movements and volumes traded

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ACCU price

• For the second consecutive month, prices for Generic, No AD, and HIR spot ACCUs climbed. Generic ACCUs rose 2.5% month-on-month to close at $35.80, with No AD reaching $35.90 and HIR closing at a monthly high of $35.65 on the 30th.
• Various derivatives trades also took place in the month, with put strikes between $30.00 and $33.00 for expiries between June 2025 and March 2026. This indicates an appetite for downside protection as a hedge for bullish positioning.  
• Safeguard Mechanism Credit (SMC) market activity was more pronounced in May, as the nascent market saw minimal trading the month prior. A total of 160,000 spot SMCs were exchanged across May, with the discount for spot SMCs compared to Generic ACCUs narrowing from $1.90 on April 29th to $0.80 on May 28th.
• As the first issuance of credits took place just before the Mar-25 compliance deadline, activity levels are tipped to grow ahead of next year’s cutoff date, with Safeguard entities afforded more time to include SMCs as part of their compliance surrenders.

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ACCU volumes traded

• Monthly traded volumes trended downwards once again in May, with 2.36 million units exchanged in spot trades, forwards, and derivatives across the month. Activity was sharply down nearly 32% from April’s volume, and down more than 46% from Nov-24’s pre-compliance peak.
• Nevertheless, while overall trade activity was softer than recent months, the ACCU market still saw greater levels of activity than May 2024 (1.2 million total in 24’), once again signalling growth year-on-year.
• While overall volumes were down from April, bucking the trend were the forwards markets – evidently revitalised following the election – with some 230,000 forward units reported in the month. With tenors out to March 2026, the forwards trading conveyed a bullish outlook, exchanged above the then-current spot levels.
• As in recent months, No AD ACCUs comprised the bulk of spot trading (87% of the 1.2 million spots exchanged), with some 87% of forwards volumes also comprising No AD units. Pure Generic unit volumes were once again bolstered by derivatives trades, comprising 85% of the total 700,000 derivatives exchanged. Following the trend of recent months, HIR market activity contracted once again in May, sharply down nearly 180,000 units across spot trades, forwards and derivatives, totalling 185,000 units reportedly traded.

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ACCU price forecast

To help market participants better model their commercial position, the CORE Markets team has developed a unique method-specific ACCU price forecast.

We believe demand preferences will vary among buyer groups, the costs of developing new ACCUs will vary by methodology and that this will be reflected in the market for the foreseeable future.

The CORE Markets ACCU price forecast is created by our environmental markets advisory team with data from our carbon analytics platform.  

The model is continuously tested and refined with the help of an expert industry working group.

In addition to the base model, the CORE Markets team can provide a full suite of scenario analysis forecasts on a bespoke basis.

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ACCU demand

ACCU demand trends are considered in detail in our monthly analysis as available to Carbon Intelligence Package subscribers.

This includes:

• ACCU retirements
• SMC market activity
• Method-specific ACCU demand forecast
• Compliance hedging strategies

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ACCU supply

ACCU issuances

• The Clean Energy Regulator provided updated issuance data for April, the most recent reporting period. Total issuance across all methodologies reached some 1.99 million ACCUs in April, an increase of some 60% on March, and higher still than Feb-25’s total of 835,000.
• Even so, issuance is yet to reach the levels seen late last year and into January, with the variability of certain proponents – LMS Energy’s 1 million units in April as an example – playing a role in influencing greater volatility month-to-month.
• After only 25,000 units issued the month prior, Landfill Gas (LFG) ACCUs were generated in strong volumes, totalling 1.25 million units. A total of 114 projects from 43 individual proponents were issued ACCUs in April, with LMS Energy’s 1 million LFG ACCUs comprising the majority, across 44 projects.
• Projects generating Avoided Deforestation and HIR ACCUs received 316,000 and 237,000 units, respectively, with HIR generation down approximately 62% from March.

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Carbon Abatement Contracts

For commentary on Carbon Abatement Contracts and the projected volumes of ACCUs in the Cost Containment Mechanism, explore our Carbon Intelligence Package - a digital subscription for deep market insights, cutting edge financial and physical data, advanced analytical tools and access to market experts.

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ACCU supply forecast

ACCU supply trends are considered in detail in our monthly analysis as available to Carbon Intelligence Package subscribers.

This includes:

• ACCU by-method supply forecast  
• Spotlight on the ACCU methodology pipeline

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Stay up-to-date with the ACCU market

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