Australian carbon credits are soaring, as prices establish new record highs after sky-rocketing some 209% in 2021.
This is what trading experts would characterize as a carbon credit bull market.
And it is good news for the environment, as growing prices suggest a growing interest in carbon credits that essentially serve one purpose: reducing carbon emissions.
However, in Australia’s case, there would appear to be a catch.
Artificially boosting supply?
Namely, the government regulatory body titled the Clean Energy Regulator has been accused of purposely lowering the prices on carbon credits in order to make it easier for major oil and gas corporations to offset their emissions whilst continuing to produce ‘dirty’ energy.
One of the means to slash the amount of CO2 emitted as a result of human activities is by introducing carbon credits that make it very expensive for carbon polluters, such as big corporations, to continue releasing carbon dioxide and other greenhouse gas (GHG) into the atmosphere.
Businesses and organizations can purchase carbon credits, or Australian Carbon Credit Units (ACCUs), as they are called in Australia, to cancel out or offset their emissions.
And as it is, a year ago, the price ACCUs was at A$16 per metric ton, whereas in the beginning of January 2022, a year later, prices peaked at A$55 per ton, representing a massive upswing.
The soaring prices are the result of large-scale interest from big companies that seek to stock up on carbon offsets while prices have not gone up further, which they likely will.
On the flipside, however, accusations against the Clean Energy Regulator are that it is intentionally trying to limit the price increase by boosting carbon credits supply.
At least, that is what data from last year’s Q3 Carbon Markets report suggests.
According to the report, demand for carbon credits was only up 24% over the previous 12 months.
Projections for the total Australia carbon credit unit supply, however, were for a total of 17.3 million units, which would be disproportionately higher.