Many markets in one: Valuing risk, opportunity and co-benefits in the ACCU market

Authored by CORE Markets.

Predominantly compliance-based and homogenous by design, the Australian carbon market has many characteristics of the heterogenous voluntary carbon market. This brings complexity but also opportunity for market participants to expand their positive impact and deliver nature and social benefits.

ACCU market complexity brings risk and opportunity

There is more interest in the Australian carbon credit market than ever before.

Continually reducing emissions baselines under the Safeguard Mechanism are driving internal emission reduction initiatives at large emitters. This process of re-engineering takes time, and many will need to offset residual emissions through carbon credit purchases. Often for the first time.

But the Australian market is unique among other compliance-based carbon markets. It can be described as many markets in one.

While market analysts often refer to ACCU price movements as a single price, the market has multiple unit valuations depending on the individual project characteristics, method type and associated co-benefits. In fact, the most highly valued methodology has changed hands at over a 90% premium to the generic price.

For ACCU market participants this brings both risk and opportunity.

To optimise both, ACCU buyers, seller and investors must be stay up to date with this complex of commercial market considerations in order to support astute decision making.

In this article we explore:

  • Unique characteristics of the ACCU market and co-benefit valuations
  • Fundamentals driving current ACCU price stratification
  • Implications for market participants.

Read the full article here.