ACCU Market Monthly Report - October 2024

ACCU market overview for October 2024

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ACCU market highlights

• October saw a consecutive record-breaking month for trade volumes in 2024, as a sharp increase in options activity more than made up for a slight drop in spot and forwards trading.
• Prices for various methodologies and tenors continued their sustained improvement from September, with Generic, No Avoided Deforestation (No AD), and Human-Induced Regeneration (HIR) spots trading at their highest level since April 2023. Market participants tightened the spread further in October, with HIR ACCU spots level with Generics across most of the month.
• Carbon Abatement Contract (CAC) exits jumped substantially from September’s figures, ticking over 3.7m units mid-month, according to the Clean Energy Regulator.

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

• ACCU pricing hit yearly highs in October, the month began with selling pressure, before a steady and persistent move higher took place. A strong second half saw Generic, No AD and HIR spots all post substantial gains to reach their strongest prices for the year-to-date. Late October saw the strongest prices for ACCUs since April 2023.
• Generic, No ADs and HIRs all tracked tightly across the month, hitting lows on the 8th October followed by sustained buying across the rest of the period. No ADs and HIRs both dipped to a low of $35.90, before rebounding to end the month at $38.50 and $38.60 respectively. The Generic spot market opened with a trade at $37.00, before also trading at a monthly-low of $35.90 on the 8th and closed on the monthly-high of $38.50.
• The premium between Generic and HIR credits has continued to narrow in recent months, with the spread reaching parity for much of the month. Premium spreads tightened as prices rose across the month, initially opening with a $0.50 difference before narrowing to $0.25 on the 3rd and widening again briefly to $0.35 on the 14th. From that point onward, however, the spread all but disappeared, maintaining parity for much of the second half of the month before closing at $0.10.
• Pricing for Environmental Plantings enjoyed an elevated level in October, with spot agreed at $49.00 in 10k, though liquidity remains thin. With the base price of generic ACCUs rising, this could lead to more trading within the high-cost method with spreads expected to tighten.

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ACCU volumes traded

• Volumes trended upwards yet again in October, as higher prices coincided with a sharp increase in ACCUs exchanged, surpassing last month’s yearly-best figure to reach 3.49m ACCUs traded. October was shaped by strong results for options parcels, No ADs and Generics, surpassing September’s total by some 697k.
• Optionality trended sharply upwards in October, comprising 1.37m of the total. By comparison, 500k in options traded across August and September combined. Market participants had expected a greater appetite for more complex structures in the ACCU market, which appears to have now materialised as participants seek to hedge exposures and open positions ahead of the 2025 elections.
• Across spots, forwards and options, No AD ACCUs grew from 1.24m units exchanged in September to 1.56m in October, an approximate 26% increase. Generic ACCUs saw substantial growth, too, with an extra 256k units traded over September’s figure to reach a total of 1.40m. HIR ACCUs remained broadly level with previous months, trading in 521k across October. This compares to 370k in September, and 630k in August.
• Premium methodologies were dormant in October, with a single Environmental Plantings parcel given in 10k.

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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

• October issuance dropped from September’s bumper figures, with the monthly total (1.12m) down nearly 60%. HIR ACCUs remained strong as in September, comprising 55% (613k) of the October sum, alongside Landfill Gas units with 25% (280k). Savanna Fire Management units remained elevated with 10% of total issuance (115k), though down significantly on September's numbers. The sustained growth in both issuances and traded volumes, combined with climbing prices are evidence of a carbon market in good health.
• Late in October, it was revealed that the CER had revised its projected yearly issuance to 19m units, down one million on initial projections. The revised figure is attributed to a lower-than-expected creations volume from new projects. Regardless, if achieved, the revised projection surpasses last year's total issuance by more than two million ACCUs.
• Also in October, the Carbon Abatement Contract exits finally saw an uptick that many participants were anticipating. Mid-month, the total number of units exiting the CACs climbed from 2.5m to 3.7m. This volume still represents a small portion of the estimated exit volume, forecasted between 7 to 13 million before 31st December 2024 (figures from Q2 quarterly carbon market report).

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Other market developments

• Late in the month, Climate Change and Energy Minister Chris Bowen announced at the Australasian Emissions Reduction Summit in Melbourne that four new ACCU methodologies would be progressed to the next stage of development.
  
  The methodologies were selected from a pool of 39 proposals and include revised versions of the existing Native Forest Management, Avoided Deforestation, and Savanna Fire Management methodologies, alongside a new proposal for the management of hoofed animals in coastal and floodplain wetlands.
  
  Further detail around the highly anticipated Integrated Farm and Land Management methodology was a notable omission from Minister Bowen’s comments.

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