What is the ACCU price outlook?

The outlook for the price of Australian Carbon Credit Units (ACCUs) is a topic of significant interest for stakeholders in the carbon farming industry. As of June 2024, a generic ACCU's spot price is approximately $33. 

Current Market Dynamics

The current ACCU market is shaped by several key drivers:

  • Regulatory Support: Australia's commitment to achieving net-zero emissions by 2050 has bolstered the demand for ACCUs. The federal government’s Safeguard Mechanism requires large emitters to offset their emissions, driving up demand for carbon credits.

  • Corporate Demand: Increasingly, businesses are setting ambitious sustainability targets, further fuelling the demand for ACCUs as they seek to offset their carbon footprints.

EY Report Insights

According to the EY report, "Australia’s Safeguard Mechanism and the Transition to Net Zero," the demand for ACCUs is expected to rise significantly. Key points from the report include:

  • Policy Enhancements: Enhancements to the Safeguard Mechanism are anticipated to tighten emissions caps, which will likely increase the demand for ACCUs.

  • Market Confidence: Ongoing regulatory support and clear policy signals are expected to sustain market confidence and encourage investment in carbon projects.

McKinsey Report Insights

The McKinsey report, "A Blueprint for Scaling Voluntary Carbon Markets to Meet the Climate Challenge," provides additional context on the broader market trends:

  • Voluntary Market Growth: The voluntary carbon market is poised for substantial growth as more companies commit to net-zero targets. This increased participation will likely boost demand for ACCUs.

  • Price Projections: McKinsey’s analysis suggests that as the market scales, the price of carbon credits, including ACCUs, could see upward pressure due to the rising demand outpacing supply.

Future Price Outlook

Considering the insights from these reports, the outlook for ACCU prices is optimistic. Key factors contributing to this positive trajectory include:

  • Increased Demand: Both regulatory and voluntary markets are set to drive demand higher.

  • Supply Constraints: While supply is expected to grow, particularly through new carbon farming projects, the pace may not fully match the rapid increase in demand, thereby supporting higher prices.

  • Market Maturity: As the market matures and trading and verification mechanisms improve, ACCUs are likely to become more valuable.

Conclusion

The price of ACCUs is projected to rise in the foreseeable future, driven by robust demand from regulatory requirements and voluntary corporate commitments. Current trends and expert reports from EY and McKinsey support this positive outlook. By participating in carbon farming projects, you contribute to environmental sustainability and potentially benefit financially from the anticipated increase in ACCU prices.

For more detailed insights and personalised advice on maximising the benefits of your soil carbon farming project, feel free to contact Carbon Sync's team of experts.