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.
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.
January saw another busy month for ACCU trading with volumes reaching 3.85mil, edging out December’s total amid ongoing price declines. Trading activity remained elevated, particularly in anticipation of the Clean Energy Regulator’s (CER) first issuance of Safeguard Mechanism Credits (SMCs) in early February and the Safeguard Mechanism cutoff date on March 31st. A bearish sentiment persisted amid market uncertainty surrounding the new U.S. administration and Australia’s upcoming federal election.
Spot market prices continued their downward trajectory, retracing to five-month lows. Generic, No Avoided Deforestation (No AD), and Human-Induced Regeneration (HIR) ACCUs opened at A$36.75 before sliding across the month. HIR bottomed out at A$34.00 on the 22nd, while Generic briefly dipped to below the A$34.00-level to A$33.75 the same day. No ADs touched a low of A$33.90 on the 24th. As in recent months, parity between these methodologies was undisturbed, except for minor deviations on the 15th and 20th.
Issuance remained strong, with 1.21 million HIR ACCUs leading the total supply. More than 3.3mil units were issued between data releases on December 18th and February 3rd. Landfill Gas ACCUs were also generated in large volumes with 901k units issued, largely from LMS Energy. Industrial decarbonisation efforts drove record issuance of facilities method ACCUs, with Orica Australia’s Kooragang Island project generating 492k units. Avoided Deforestation issuance reached 390k, while Savanna Fire Management units softening to just 50k. LMS was the largest single recipient, receiving nearly 620k ACCUs across thirteen projects.
Elsewhere, the Beef Cattle Herd Management method is to be sunsetted following representation from the Emissions Reductions Assurance Committee (ERAC), with insufficient additionality being among the reasons cited. The Coalition’s unclear stance on the Safeguard Mechanism leaves market participants awaiting clarity on future direction in the lead-up to the election, while the CER’s upcoming Audit Thresholds Instrument revision aims to ease compliance for low-risk reforestation projects.
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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January saw increased volatility in the NZU market. Opening the month with units exchanged at NZ$64.00, prices started to soften by week's end, landing at the monthly-low of NZ$62.25 on the 9th. Increased selling pressure at around this time was attributed to New Zealand farmers selling off large stocks of forestry credits, in an attempt to supplement revenue in the face of softer livestock prices.
The market soon recovered, with parcels exchanged above the NZ$64.00 level on the 14th. Following a sixty-cent loss to the 21st, prices surged to their highest levels in some thirteen months, briefly hitting $NZ65.15, before naturalising shortly thereafter to just below NZ$64.00. The market strengthened in the final days of January, increasing sixty cents in the two days to January 31st, to close the month at NZ$64.35, up thirty-five cents on January's opening.
Market participants look ahead to the next quarterly auction, slated for March, in which 1.5mil NZUs will be available for purchase. Prices have strengthened in recent weeks, increasing to meet the auction's floor price of NZ$68.00 amid concerns of a deficit in future supply.
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The EUA Dec-25 benchmark began the year with prices up on 2024’s close, trading above €74.08 on the 2nd, fuelled by a strengthening gas market amid shortages in the North Sea. After a brief dip to €71.55 on the 9th, prices surged consistently across the month, reflecting the start-of-year buying for speculative participants.
Reports of Ukrainian and Russian military activity near critical European gas pipelines saw buyers retake earlier levels, hitting €76.69 on the 13th. Sustained buyer flow produced an uninterrupted bullish streak across the rest of January, before demand appeared to dry up around the €81.00-level.
After softening late in the month, a last-minute surge drove prices to a high of €83.92 in the final sessions, closing January at €83.82, up fifteen percent across the month.
January retirements outstripped issuances across the major registries of the voluntary carbon market to produce the largest surplus of retirements since January of 2024, in what was an otherwise-subdued month for price movements.
Though down on Jan-2024’s figure of 20.3mil, retirements were higher than last year’s monthly average(14mil), totalling nearly 17.3mil across the month. Issuances, meanwhile, dropped sharply from 32.4mil in the last month of 2024 to nearly 15.3mil in Jan-25, some two million short of retirements.
Following the International Civil Aviation Organisation’s (ICAO) announcement of the eligibility of four new standard bodies to supply credits to the CORSIA offsetting scheme, Carbon Pulse reported that some participants have noted that focus may be shifting from the CCP label to whether a project is CORSIA-eligible.
Now in Phase 1, CORSIA mandates that airlines from member states are obligated to buy offsets, which is expected to drive demand. Outlook for demand in the coming year is also influenced by the agreement reached surrounding Article 6 and ITMOs (Internationally Transferrable Mitigation Outcomes), which may spark greater buyer flow towards projects in developing regions.
Credit prices of the twenty most-commonly traded household projects, however, failed to reflect the positive developments in this sphere, with the average price starting the month at US$3.77, before strengthening to around US$4.21 mid-month, then softening at January's close around the US$2.72-level, losing some thirty percent on the month. The average price of the twenty most-frequently retired REDD projects opened the month at US$2.81, strengthening to US$3.69 around the 21st, before naturalising at month's end just below US$3.60.
Market participants await the effects of the new US administration on the VCM, with indicators pointing to a possible tightening of supply in the wake of softening American investment.
Biodiversity received increasing attention at the first global event of the year – The World Economic Forum's Annual Meeting– alongside climate and other critical economic risks. The launch of the Australian Nature Repair Market is expected in February of this year, but some uncertainty remains.
Among the many developments across biodiversity finance in the world, the updates below are highlights e relevant to the development of biodiversity credits.
There is some uncertainty around the official launch of the Australian Nature Repair Market. The launch of the registry and market in general is expected in February 2025, however the project methodology details and Biodiversity Assessment Instrument (the calculator model used to measure the project impact) are still in development.
Carbon Pulse reported that, while such uncertainty around the project administration is common, there is still one critical component of the market which the government has yet to address – and that is demand. There is still a significant potential in this market, but there needs to be more support from policy developments.
Here's one positive progress in other states: South Australia launched a consultation to review on their draft Biodiversity Bill.
January saw a total of 15,843 credits being traded in this market, the largest volume ever traded on the first month of the year, with more than half (58%) being retired for compliance purposes.
Over 70% of credits traded were ecosystem credits, while the remaining are species credits.
Please find below a snapshot of what transactions have occurred this month as captured in the NSW BOS Credits Transaction Register.
In terms of demand, based on the NSW BOS Credit Demand Register, there were several requests for ecosystem and species credits which are summarised in the table below:
Biodiversity and nature markets are a quicky evolving space. The CORE Markets team has released an introductory guide on the topic. Learn more here
Sustainable Aviation Fuel has been receiving more spotlight in the last year with around 40 schemes to develop SAF supply emerging to date across various countries.
In this new section of our monthly report, we will be reviewing some notable updates in this space.
Key recent developments include:
In terms of SAF credits, some market activity has emerged in the international space. Almost 4,000 tonnes of SAF linked to SAF credits have been retired in December 2024, and over 2,500 tonnes in January 2025, which is equivalent to over 13,000 and 9,000 tonnes of CO2e abated, respectively.
The associated credits retired are all used for the purpose of Scope 1 abatement, with over 65% for direct aviation-related emissions. The remaining are used for other indirect aviation-related emissions.
All of these credits are developed using either HEFA or co-processed HEFA methodologies. Countries where the benefits of these credits have been claimed for include the US, Canada, UK, 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.
To discuss your unique requirements, get in touch with our team today to explore how we can help.
Global Environmental Markets Report - January 2025
