Carbon Credit Markets on the Rise: ACCU Prices to Jump 75% by 2025

The price of Australian Carbon Credit Units (ACCUs) is expected to increase by 75%, reaching AUD70 per tonne of CO2 equivalent by 2025, according to a report by Australian bank ANZ. The surge is driven by heightened demand from major emitters under the Safeguard Mechanism and a slowdown in credit issuance.

ANZ also raised its short-term price forecast for ACCUs to AUD45 ($29), up from AUD40 ($26), projecting further growth to AUD65 ($42) by mid-2025. Compliance requirements are identified as a primary factor, with entities under Australia’s emissions reduction framework boosting demand.

Recent figures place Generic ACCU prices at AUD41 ($26.5), slightly below their peak of AUD42.60 ($27.6) earlier this year. However, supply constraints remain a concern. The Clean Energy Regulator issued just 14 million tonnes of ACCUs in the first three quarters of 2024, putting this year’s total on track to fall short of last year’s 17.2 million tonnes.

Although uncertainty surrounding Australia’s 2025 federal election could impact investor confidence, the anticipated price surge may counterbalance these effects. Critics have also pointed to the Coalition’s lack of clarity on the Safeguard Mechanism, highlighting perceived gaps in the scheme's effectiveness.

In New Zealand, carbon prices are also climbing. New Zealand Units (NZUs) recently reached an eight-month high, trading above NZD64 ($38) per tonne. Market activity is fueled by expectations of tighter supply in 2025, though delays in government decisions on free allocations for steel and aluminium sectors have left buyers cautious.

These trends reflect a significant shift in regional carbon markets, driven by tightening supply and growing compliance needs.