This report is produced monthly and provides a high-level overview of the key developments in select compliance and voluntary carbon and biodiversity markets.
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.
*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.
In June, the ACCU market experienced relatively stable prices with marginal movements. Generic spot ACCUs opened at A$33.00, dropped to a low of A$32.75 on June 11, and peaked at A $34.60 on June 18, before closing at A$34.25, a 3.8% increase from the start of the month.
Human Induced Regeneration (HIR) spot ACCUs started at A$33.85, rose to A$34.95 on June 18, and ended the month at A$34.50, reducing the Generic/HIR premium to A$0.25 in June, from A$0.75 in May.
Trading volumes in June were slightly down by 2.15% from May, with 2.144 million units traded.
Generic ACCUs dominated the market, comprising 79.5% (1.704 million units), with 67.7% of these having the NO AD tag. HIR ACCUs accounted for 15.8% (338k units), a 42% decrease from May. Peak trading volumes occurred on June 18, with 626k ACCUs traded.
Significant ACCU trades included a Savanna Fire Management spot trade at A$34.50 and a Savanna Fire Management with Indigenous co-benefits trade at A$50.00.
ACCU derivatives also saw active trading, with notable trades such as a Feb25 A$29 ACCU Put option and a Dec24 A$37 ACCU Call option.
ACCU issuance increased by 22.3% from May, with 1,537,091 units issued. The Clean Energy Regulator (CER) projects around 20 million ACCUs to be issued in 2024, up from 17.2 million in 2023.
Significant issuances included 257,000 ACCUs to LMS Energy’s Landfill Gas projects and 81,415 units to Emissions Abatement Solution’s Gindalbie HIR project. Other notable issuances were to Weemabah’s Moombidary HIR project and various projects by Corporate Carbon and AgriProve Solutions.
Interest in derivatives continued, indicating market maturity and long-term engagement by larger entities and financial institutions. Discussions on Carbon Abatement Contract (CAC) exits remained a focus, with participants closely monitoring the market impact of increased volumes from exited CACs.
For a comprehensive update on the ACCU market, read our June '24 ACCU Monthly Market Report
Learn more about our ACCU Market Forecast Report, a method-specific ACCU market supply, demand and price forecast
It was initially a hot start to the month for NZUs, opening at NZ$50.00 on the 3rd June on the back of some momentum seen towards the end of the previous month, following the coalition's lack-lustre allocation to climate initiatives in May’s budget.
However, the momentum quickly waned, with the price topping out only two days later at NZ$56.00 on the 5th June, before proceeding to bleed-off once again, hitting a low of NZ$48.00 by 19th.
June also saw the second ETS auction of the year come and go, this time falling to clear. This was no surprise, given the floor price of NZ$64.00 which had the auction’s NZUs on offer ~NZ$15.00 above the secondary market price.
While this outcome was expected, it does little for market confidence short term. However, if the remaining auctions in September and December also fail, the units that had been offered through the auctions across the year would be cancelled and thus removed from the available supply.
The price managed to regain some ground over the last week of the month, to close at NZ$50.50 – virtually flat on the month, and approximately in the middle of the prior two months trading range, indicative of a market lacking direction and confidence.
The EUA prices experienced a volatile month in June 2024, with the benchmark Dec24 contract influenced by various market dynamics. The month began with a decline, as the Dec24 contract opened at €73.89 on 3rd June, dropping 2% from the previous month due to bearish natural gas prices.
Mid-month, the market saw significant fluctuations. On 5th June, prices fell sharply by 3% to €72.33, reflecting continued bearish sentiment in the natural gas market moving through the summer period. However, a temporary recovery occurred on 7th June, with prices inching up by 0.4% to €72.10 amidst a cautious energy market.
The second half of the month was marked by heightened volatility around the options expiry. On 17th June, prices plummeted over 3% to a six-week low of €68.28 as option traders unwound their hedges. This trend continued with prices hitting €68 on 18th June. Following the expiration of the June options contract, there was a significant rise on 20th June, with prices climbing by 3% to €70.33 driven by profit-taking activities.
The latter part of June saw a consistent downward trend. On 21st June, prices fell by 1.6% to €69.22 due to a bearish natural gas market and increased selling pressure. The decline continued, and by 27th June, prices had dropped by 1.5% to below €67 as investment funds reduced their holdings.
The month concluded with the Dec24 contract settling at €66.67 on 28th June, marking a decrease from the month's opening and reflecting the overall bearish sentiment influenced by natural gas prices and market trading activities.
In June, prices in the voluntary carbon market remained stable, as trading volumes in the secondary market were low and liquidity was thin. However, despite the lack of volatility in the market, there have been some moments of significance.
The beginning of June saw an announcement from The Integrity Council for the Voluntary Carbon Market (IC-VCM), having approved seven carbon crediting methodologies, that are now eligible to use the high integrity ‘Core Carbon Principles’ (CCP) label. The CCP label can now be used on approximately 27 million credits issued by projects that reduce GHGs by capturing methane and destroying ozone-depleting substances from discarded equipment. This label provides a quality stamp for the offsets and intend to restore confidence in the VCM.
To comply with the UN aviation agency ICAO’s Corsia decarbonation scheme, airlines are set to spend US$600m on offset credits in 2024, an estimate made based on expectations that demand for Corsia-eligible emissions units (EEUs) would be between 9 and 31 million units in 2024. Airlines and airports are expected to be the primary buyers of EEUs, to comply with the Corsia target of reducing their emissions by 85% of 2019 levels over the 2024-2026 period. The majority of EEUs available, with only a handful of carbon standards and registries being fully accredited by ICAO to supply credits, are from Guyana’s REDD scheme.
Further, a large REDD voluntary carbon project in Mozambique has been planned, that will span approximately 4 million hectares. It is expected that this project will benefit over 318,000 local community members through income generation and direct revenues from carbon.
Verra has suspended 27 of CQC’s implicated cookstove projects as a precautionary measure, as CQC claimed in late June that its founder was guilty of wrongdoing that allegedly resulted in the over-issuance of millions of cookstove credits.
VCS Clean cookstoves have been lower in June, as sellers search for buyers, the market has softened over the month with V20 African cookstoves offered at US$3.50 at the end of June.
Both issuance and retirement levels in the Voluntary Carbon Market (VCM) demonstrate its resilience and highlight growing participation. In June, retirements totalled an estimated 4,027,949 across the VERRA and GS schemes. Although the strong figures seen at the beginning of the year have gradually declined, they remain higher compared to the previous year's volumes.
Iin other news, Microsoft has committed to purchasing 500,000 carbon dioxide removal (CDR) credits from Occidental Petroleum's direct air capture (DAC) division, 1PointFive, over the next six years. This marks the largest single acquisition of CDR credits facilitated by DAC to date and highlights the growing adoption of climate technologies as a means for organisations to reach net-zero emissions.
We are around three months away from the sixteenth meeting of the Conference of the Parties to the Convention of Biological Diversity (COP16). A 9-day meeting in Nairobi towards the end of May agreed on a set of consolidated targets for the UN summit to be held in October.
COP16 objectives include the need to increase finance, high-tech biology, Indigenous people’s engagement and greater world cooperation to reach our global nature positive goal. Nature and biodiversity market proponents view this as a positive step to improve areas which have not met initial high integrity parameters.
Update on reporting standards and governing bodies
European Union (EU)
Americas
Asia Pacific
The Australian Government has agreed to set the national 30 by 30 target and to include Other Effective area based Conservation Measured (OECM). A new consultation is currently running to review the draft national roadmap to achieve this target.
Australian Biodiversity Credits Public Pricing Benchmark
Biodiversity and nature markets are a quicky evolving space. The CORE Markets team has released an introductory guide on the topic. Learn more here
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 - June 2024
Designed for decision-makers with carbon market exposure, the ACCU Market Forecast Report serves as a critical tool for investors, project developers, and sustainability leaders. As new data and insights become available, we incorporate them into our forecast model. See what’s new in the Q3 forecast model.
