This report is produced monthly and provides a high-level overview of the key developments in select compliance and voluntary carbon markets, biodiversity markets and Sustainable Aviation Fuel credits (SAFc).
In this month's Global Environmental Market Report, we cover key developments in select compliance carbon markets and provide an overview of the month in the voluntary carbon market.
The coverage also includes an update on emerging biodiversity markets and Sustainable Aviation Fuel credits.
*Please note: This report is designed to provide a high-level overview of the key developments in compliance and voluntary carbon markets. 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.
This month we cover key developments in the Australian, New Zealand and European compliance carbon markets.
Have a read of the Comprehensive ACCU Report from February, 2025.
February saw continued volatility in the ACCU market, with trading volumes reaching 3.31mil amid softening prices and uncertainty surrounding Safeguard Mechanism Credit (SMC) issuance and the upcoming federal election. Market sentiment remained bearish, with the issuance of 8mil SMCs prompting a late-month selloff.
Spot market prices softened further, with Generic, No Avoided Deforestation (No AD), and Human-Induced Regeneration (HIR) ACCUs tracking lower across the month. Opening at A$35.00, Generics peaked at A$35.40 on the 14th before falling sharply, closing February at A$33.50. No AD and HIR units followed similar trajectories, with No AD parcels closing at A$33.40 and HIR at A$33.50. The first-ever SMC trades occurred, priced at a A$0.80 discount to Generic ACCUs, adding to market speculation on future demand.
Despite the decline in volumes from January’s 3.85mil, trading remained elevated ahead of the March 31st compliance deadline. No ADs accounted for the largest share of activity, comprising 1.5mil traded units (45% of total volume), while HIR volumes fell to 320k—marking their lowest level since early 2024. Options trading surged, exceeding January’s total by 22% and comprising one-third of the month’s transactions.
Issuance slowed, with just 835k ACCUs generated by February 20th, requiring more than 2.5mil new units by month-end to match January’s 3.36mil total. HIR projects led supply with 389k units issued, while Landfill Gas followed at 281k. Key recipients included Terra Carbon (168k) and RegenCo (133k).
Regulatory developments saw the Clean Energy Regulator (CER) project a significant rise in excess emissions under the Safeguard Mechanism, estimating 9.2Mt CO2e for FY24-25. Meanwhile, the fourth exit window confirmed the departure of 4.5mil Carbon Abatement Contracts—well short of expectations. The Emissions Reduction Assurance Committee (ERAC) launched a review of the 2021 Soil Organic Carbon Sequestration method, reflecting ongoing concerns over offset integrity.
Political uncertainty remains a key market factor, with the federal election looming. Concerns persist regarding potential changes to the Safeguard Mechanism under a Coalition government, despite no policy adjustments being formally proposed. Market participants will be closely watching developments as compliance deadlines approach.
For a comprehensive update on the ACCU market, read our monthly ACCU Market Monthly Report
Learn more about our ACCU Market Forecast Report, a method-specific ACCU market supply, demand and price forecast
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The NZU market traded lower across February and then softened once again ahead of the March quarterly auction. Also in the month, the Government confirmed the drafting of a carbon capture and storage (CCS) program, to be rolled out later in the year with the aim of decreasing the offsetting obligations of participating entities.
After closing January at NZ$64.35, the market opened the month with trades on the 3rd at NZ$63.90 and, indeed, peaked early, reaching the monthly high on February 4th (NZ$64.10). A lack of buyer flow at the elevated level soon brought the market lower to NZ$63.20 on the 11th.
Following further declines, reaching the monthly-low of NZ$62.75 on the 19th, the Coalition Government’s announcement of the upcoming CCS methodology buoyed market sentiment, lifting the spot NZ$0.85 higher to NZ$63.60 on the 21st, before softening once again at month’s end.
Trades in the month’s final sessions saw the spot close at NZ$63.25, down NZ$1.10 month-on-month. Participants now look ahead to the second auction for the year, where 1.5mil NZUs will be available at an increased floor price of NZ$68.00.
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The EUA Dec-25 benchmark started February on a weaker note, shedding 3.5% on the 4th as broader concerns surrounding potential US tariffs triggered heavy selling. Prices fell to an intraday low of €80.10 before settling at €80.96, marking the busiest trading day of the year. Despite strengthening natural gas, carbon markets decoupled from fundamentals, with speculative adjustments dominating price action.
A brief rally on the 11th, driven by cold-weather demand, saw EUAs peak at €84.25 before retreating to €82.94 as buying eased. The 13th brought renewed weakness, with prices dropping 2.8% to settle at €80.29, mirroring declines in gas and power amid reports of Ukraine peace talks and EU gas price cap discussions. Despite seven consecutive weeks of net-long positioning by funds according to COT data, speculative momentum continued to overshadow fundamentals.
By the 21st, EUAs had fallen for four straight days, reaching a six-week low of €72.26 before closing at €72.67. Selling pressure intensified amid “headline madness,” with traders citing stop-triggering and speculative repositioning as key drivers. A technical bounce on the 23rd lifted prices 1.7% to €73.90, but EUAs still posted a 7.3% weekly loss, the largest in a year. Germany’s announcement of 12.3 Mt EUA cancellations provided brief support, but weak industrial demand weighed market sentiment.
February ended with a volatile session on the 28th, as a 10% surge in gas prices propelled EUAs 2.5% higher to €72.78. A strong auction and options-related hedging sparked buying, though market sentiment remained cautious. February closed with EUAs down 15%, marking the product’s worst February decline in nine years. Traders pointed to €44.00/MWh as a key support level for gas, with speculation over Russian supply resumption adding further uncertainty. Looking ahead, positioning ahead of the March 26 options expiry is expected to shape near-term price action.
In February, retirements outstripped issuances for the second consecutive month across the four largest registries (20.9mil retirements vs 17.3mil in Jan.), as issuances ticked down for the third consecutive month, totalling 14.2mil.
Participants hinted that the softening issuance figures across the four largest registries were not reflected in other registries, hinting that project developers may be moving away from traditional registries.
Forestry and land-use projects led with 11.5 million credits retired, followed by renewable energy (4.8 million) and energy efficiency (1.6 million). Issuances rose slightly to 18.2 million, increasing the surplus but failing to slow demand.
Following an earlier ruling from a Kenyan court that the Northern Rangeland Trust (NRT) Soil Carbon projects had failed to procure free prior and informed consent, standard-setter Verra announced mid-month that the projects may yet receive credits, pending an ongoing appeals process. Participants will look to Verra’s upcoming decision on the appeal to see the effect on supply of soil carbon credits. The project spans nearly two million hectares, with the goal of sequestering 50mil tonnes of carbon dioxide over thirty years.
Following the end of the CORSIA Phase-1 pilot phase in January, analysts observed a softening in eligible futures contracts, with the Dec-25 contract dropping 5% to US$15.50 in the week to February 7th. This may be attributed to uncertainty surrounding the ongoing involvement of US-based airlines, in response to the rhetoric of the new Trump administration. Liquidity, however, appeared to improve for Phase 1-eligible contracts, with open interest increasing from less than 150 lots in the first week of February to 225 lots mid-month across Dec-25 to -27 futures. Following the renewed interest, the ICE Phase 1 Dec-25 futures contract rallied over US$1.00 to reach $16.25 on Friday 7th.
Analysis confirms that the surplus across the four largest registries has shrunk from its height in Dec-24 (750mil), contracting to 739mil at February’s end. Corporate retirements bolstered the month’s figure, led by Italian energy firm Eni, which retired 7.7 million nature-based credits across Malaysia, Colombia, and Central Africa.
Looking ahead, participants are watching the US administration’s stance on voluntary markets and potential supply constraints, with Verra and CAR issuances declining. An ICVCM decision on cookstove crediting methodologies is expected next month, shaping future market trends.
Global biodiversity markets have seen some promising advancements and significant international cooperation in February.
Most notably, UN Biodiversity COP16 resumed in Rome and reached a funding agreement and a roadmap to COP19 2030.
In Australia, two Cassowary Credit pilot projects have been launched, and a new methodology for replanting native ecosystems was introduced under the Nature Repair Market. However, the Nature Positive Bill 2024 did not pass Parliament.
According to S&P Platts, Sustainable Aviation Fuel (SAF) produced under the EU scheme was last priced at US$1,800/MT, while global jet fuel was trading at US$714.18/MT.
Over 4,600 tonnes of SAF linked to SAF credits have been retired in February 2025, almost double the January retirement levels. This is equivalent to more than 14,600 tonnes of CO2e abated.
The SAF that was used in the EU achieved an emissions reduction of 94.18% compared to a jet fuel baseline, while the SAF used in US achieved an average of 81.7% of emissions reduction. This difference is due to the varying level of SAF in the jet fuel mix.
The associated credits retired were used for the purpose of Scope 1 abatement, with almost 80% for direct aviation-related emissions. The remaining were used for other indirect aviation-related emissions.
All of these credits were developed using either HEFA or co-processed HEFA methodologies with feedstock such as tallow from the US and used/ waste cooking oil from Malaysia and Indonesia.
Countries where the benefits of these credits have been claimed include the US and Netherlands.
Learn more about SAF and SAF credits in our recent article
The events outlined in this month’s update highlight the evolving nature of global carbon and environmental markets and the complexity of the net zero transition.
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Global Environmental Markets Report - February 2025
