Carbon Credit Surge in Australia: Q1 Breaks Records as Grants Boost Supply

Australia’s carbon market kicked off 2025 with a powerful surge, reaching record trading volumes and securing millions in fresh government support for carbon credit projects.

Data from the Clean Energy Regulator (CER) shows that 30.9 million Australian Carbon Credit Units (ACCUs) were traded in the first quarter—marking the highest quarterly volume on record. A large portion of this activity was driven by companies regulated under the Safeguard Mechanism, which accounted for 22.1 million units.

A koala lounging in a eucalyptus tree  in the lush woodlands of southeastern Queensland, Australia. AI generated picture.

The Safeguard Mechanism, designed to cap emissions from the country’s biggest polluters, has played a pivotal role in ramping up demand. But the CER also noted a shift: some large emitters are increasingly investing in internal emissions reductions, suggesting a more balanced approach between credit purchasing and operational abatement.

Although ACCU issuances slowed to 3 million in Q1—down from 6.2 million the previous quarter—regulators remain confident. The CER expects crediting to accelerate in upcoming quarters as pending applications are processed, keeping annual issuance on track to meet its 19–24 million forecast.

Meanwhile, Queensland is strengthening the supply side with a major investment in land-based carbon initiatives. The state government has awarded approximately $11.69 million (AUD18 million) to eight projects through its $327 (AUD500) million Land Restoration Fund.

‘These projects will not only generate carbon credits and help landholders act as environmental stewards—they’ll also support biodiversity and improve habitat connectivity,’ said Andrew Powell, Queensland’s Minister for Environment and Tourism.

Among the selected projects is a six-year savanna fire management initiative, co-led by the Kowanyama Aboriginal Shire Council, which received the largest grant of AUD6.56 million. Other supported efforts range from native forest restoration to avoided land clearing and regeneration, involving organisations like GreenCollar and Rainforest Rescue. In total, the projects will cover over 315,000 hectares across the state.

With demand rising and new investments flowing, Australia’s carbon credit ecosystem is gaining serious traction—paving the way for a more resilient and nature-focused economy.