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Q2 2023 | Australia’s Carbon Market Consolidates 

June 22, 2023

Australian Carbon Credit Units Industry Insights and News – June23 Quarter 

In brief 

The federal government released its implementation plan for the Independent Review of Australian Carbon Credits (the Chubb review’) in June 2023. The plan sets out the government’s intended timing and approach for each of the 16 Chubb Review recommendations.  

The March 2023 Quarterly Carbon Market Report (QCMR) was released by the Clean Energy Regulator (CER) in May. The report projected ACCU supply scarcity as demand increases in response to the safeguard mechanism reforms.    

The  Safeguard Mechanism (Crediting) Amendment Act 2023 passed through both houses of Parliament in late March 2023. This introduced tradable, below-baseline Safeguard Mechanism Credits, creating an additional incentive for driving at-source emissions reductions by covered facilities. Further refinements to scheme rules are expected before they take effect on 1 July 2023. 

As for Q1 2023, ACCU spot prices have been consistently in the $33.70-$39.70 range through the quarter. The entry of compliance buyers (safeguard mechanism) remains a key force for local market participants to watch.    

Chubb Review Implementation Plan  

The government has prioritised changes to ACCU scheme governance, certain methods and publication of previously protected information such as Carbon Estimation Areas (CEAs) over the first six months of 2023.   

HIR Method 

While the Chubb Review found the HIR Method to be sound, it recommended changes to evidentiary requirements under the method. The CER has developed guidance for HIR projects accordingly.  

Avoided Deforestation Method 

The Avoided Deforestation Method has been revoked preventing new avoided deforestation projects from registering under the ACCU scheme. These changes do not affect existing projects. Current avoided deforestation projects will continue to be issued credits until the end of their crediting period (15 years).  

Implementation Priorities 

Implementation priorities for the second half of 2023 include developing the specific role for the new Integrity Committee (Carbon Abatement Integrity Committee) and moving responsibility for Australian Government purchasing of ACCUs out of the CER and into another (to be defined) government body. 


CER Quarterly Carbon Market Update 

The CER predicted demand for ACCUs would rise materially as facilities covered by safeguard mechanism prepare to meet their future obligations.  

The trading volume in Q1 2023 reached a new record with 13m ACCUs transacted in the secondary market. The average transaction parcel size was up 61% compared to Q1 2022. Auction 15 contracted 7.9m tonnes of carbon abatement for optional delivery at an average price of $17.12. In Q1 2023, a spot price convergence between generic ACCUs and those from human induced regeneration (HIR) projects occurred. HIR ACCUs had been attracting a $1 to $2 premium.  

The CER expects incremental increase in new ACCU supply in the near term. It noted the difficulty of  predicting ACCU supply out to 2030 with a range of factors at play.  

On May 30, the CER issued its ACCU Scheme Compliance and Assurance Framework paper as the first of a series of products responding to a recommendation of the Chubb Review on the need for simple documents to better explain the scheme.  

Safeguard Mechanism 

On 11 April 2023, the  Safeguard Mechanism (Crediting) Amendment Act 2023 (the Act) became law. The Act requires Australia’s largest emitting facilities to significantly reduce emissions by an estimated total of over 200 million tonnes of carbon dioxide equivalent (CO2-e) by 2030. The amended Safeguard Rules, released on 5 May 2023, set out an overall scheme-wide decline rate of 4.9% per year to 2029-30. That means the abatement task will get bigger each year. This baseline decline rate applies to all Safeguard facilities from 1 July 2023.  

In addition to ACCU demand from Safeguard Mechanism reforms, the CER has observed rising demand for ACCUs from businesses wanting to voluntarily reduce their net emissions. Key drivers of this trend are increased interest in low emissions products and services from investors, customers and supply chains as well as the government’s proposed introduction of mandatory climate-related financial disclosure for large Australian companies. 


The impact of the Safeguard Mechanism will soon begin to be felt. At the end of Q1 2023, there were about 24m ACCUs in the Australian National Registry of Emissions Units (ANREU) and the CER expects to issue just over 18m ACCUs in 2023. In its latest outlook, the CER has commented that market intelligence and spot ACCU trade volumes suggest there is currently sufficient available ACCU supply in the market at around $37 to meet short-term demand. However, this is likely to change from July 2023 as more Safeguard entities seek to secure the future supply they need. 


This report is for information purposes only and is not intended as an offer or solicitation for wholesale clients as defined in s761G of the Corp[orations Act 2001 (Cth). This report does not take into account the investment objectives, circumstances, financial situation or particular needs of any particular person and does not constitute personal advice. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision. Evolution Trustees (AFSL 486217) does not guarantee repayment of capital or any particular rate of return. Past performance is no guarantee of future performance. Statements of fact in this report have been obtained from and are based upon sources that Evolution Trustees believes to be reliable, but Evolution Trustees does not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions and estimates included in this report constitute Evolution Trustees judgement as at the date of this communication and are subject to change without notice. This article may contain forward-looking statements regarding our intent, belief, or current expectations with respect to market conditions. Readers are cautioned not to place undue reliance on these forward-looking statements. Evolution Trustees does not undertake any obligation to revise any forward-looking statements to reflect events and circumstances after the date of this website.

About Evolution Trustees

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