Australian Carbon Credit Units (ACCUs) are a pivotal part of Australia's climate strategy, priced around $33 as of mid-2024. These units allow entities to offset carbon emissions and have seen a dynamic pricing landscape, reflecting significant market activity and regulatory changes.
In 2023, around 17.2 million ACCUs were issued, with expectations to issue at least 20 million ACCUs in 2024 due to increased crediting applications and new projects.
The future demand for ACCUs is projected to increase sharply. By 2030, new ACCU supply contracted is estimated at 80 million units,which will only cover about two years of abatement demand.
In 2022 alone, the market saw transactions of approximately 23 million ACCUs, indicating a robust trading environment.
ACCUs represent a critical component in Australia’s strategy to mitigate climate change by allowing entities to offset one tonne of carbon emissions.
Currently priced at around $34 each, according to the latest figures from S&P Global Platts, the ACCU market is becoming an attractive option for industries looking to enhance their environmental credentials.
Analysis suggests that ACCU prices might need to reacharound A$100 per tonne to drive significant investment in carbon capture and storage projects, considering the step-change in abatement costs projected by CSIRO.
Adoption of Net Zero commitments among Australia's top 50 S&P ASX-listed companies have increased from about 30% in 2019 to 90% in recent years, with many using carbon offsets to support their strategies. This shift is expected to significantly boost demand for ACCUs
Among the new ideas under consideration is a pioneering proposal to award ACCUs for activities that reduce the need for new textile production by recycling garments.
This initiative is expected to appeal to environmentally conscious consumers and contribute significantly to reducing the national carbon footprint.
Textiles are a major polluter globally, accounting for a significant portion of greenhouse gas emissions due to their production and disposal processes.
Australia ranks as one of the highest consumers of textiles per capita globally, with significant imports of new clothing.
Each year, over 200,000 tonnes of textiles are discarded, landing in landfills and contributing to methane emissions. By recycling clothing, not only are these emissions curtailed, but the demand for imported new textiles diminishes, further lowering the country's carbon emissions.
The proposal to integrate textile recycling into the ACCU scheme has been met with positive public feedback. Advocates argue that this not only supports environmental goals but also addresses economic concerns by lowering expenses for consumers through incentivised recycling programs.
The financial benefits could be particularly appealing given the rising cost of living and the current economic climate.
The demand for ACCUs is projected to rise, driven byAustralia's regulatory frameworks like the Safeguard Mechanism and the voluntary commitments by businesses to reach net-zero emissions.
The introduction of innovative ACCU earning methods, such as those proposed for recycling textiles, is expected to further stimulate the market. This is backed by government and private sector engagement, aiming to refine methodologies and expand eligible activities within the carbon credit system.
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