The price of Australian Carbon Credits (ACCUs) has dropped 35.3% in the last 30 days, the largest decline since 2017.
One of the reasons for the fall seems to be an increased supply of credits which has in turn caused larger buyers to scale back their exposure.
Another factor is the invasion of Ukraine by Russia which has caused sharp sell-offs in carbon credits across the globe with the European carbon credit price (EUAs) which has dropped ~30% in the space of 12 days.
Despite this, farmers and landholders could still be looking at a ten digit reward for sequestering carbon with improved practices, after the government allowed them to join the market for Australian credits.
Landowners have already delivered 76 million tonnes while the total agreed amount is 188 million tonnes of CO2.
“This is a big win for the carbon credit market getting more supply out there, a big win for the customers, a big win for those holding the credits, and for the government as we can use the money for further abatement,” said Energy Minister Angus Taylor.
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Should farmers and project owners take advantage of the new opportunity, the government also stands to benefit.
The previously agreed upon amount of $12 per tonne won’t be due and the Commonwealth will get an additional payment in the vicininty of $1.5-2 billion based on the price range for the last month.
At current prices project owners could be looking at a profit of $2.5 billion for the remaining 112 million tonnes of unsold contracts.
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The Australian government stated that they are taking a steady approach to increasing ACCU liquidity for the market and provide a level playing field for sellers “regardless of when they commenced”.
Additionally, the government said that the generated funds will be recycled back through the Emissions Reduction Fund, providing resources to fund even more projects and creating a virtuous circle.
