AFRĬorporate polluters had rushed to voluntarily lock in offsets and speculators sought to exploit the momentum, particularly after Australia promised to cut emissions to net zero by 2050 ahead of last November’s UN climate summit in Glasgow. Government intervention in the carbon market sparks mass sell off. The price of units in the spot market tripled over the year leading up to the changes to a record peak of $57.10 in late January. The offsets are issued by the government-run ERF to project developers such as farmers or carbon trading groups like Green Collar and Corporate Carbon that manage portfolios of land that lock up or sequester carbon. How do Carbon Credit Units work?ĪCCUs provide a way for big polluters to offset their emissions by buying the credits – a tonne of CO² per unit – either on the spot market or via long-term contracts. Still, critics say the rule change, made without public consultation, has dented confidence in the government’s management of the market and could damage the economics of some carbon offset projects, stymieing new developments and constraining supply. “This is a big win for the carbon credit market getting more supply out there, a big win for the customers, a big win for those holding the credits, and for the government as we can use the money for further abatement,” Taylor said when he announced the rule change in early March. Taylor says some of these savings will go to into new carbon offset projects. It could also deliver a multimillion-dollar windfall to the nation’s farmers and carbon traders, and generate as much as $2.68 billion for the Commonwealth. They will be able to offset their emissions at a cheaper rate.
The price plunge benefits corporate polluters including oil & gas giant Chevron, which is in the market for 5.13 million tonnes of offsets including ACCUs.
What do the recent rule changes to Australian carbon credits mean for farmers and investors? AP The next day, Energy Minister Angus Taylor confirmed market chatter, making a long-rumoured intervention in the market to allow millions more carbon credits to surge into the exchange, stripping $18 from the price within three days. The cost of Australian Carbon Credit Units – a special category of carbon credits created under the controversial federal emissions reduction fund scheme – stood at $47.10 a tonne on March 3. The price of Australia’s boutique carbon credits crashed 38 per cent to $29 in three days following the Morrison government’s move to relax rules to let carbon offset project developers break long-term contracts to cash in on high spot prices.
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