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Australian carbon credit unit supply

18 October 2019

Data on the supply of Australian carbon credit units (ACCUs) indicates the volume of ACCUs likely to come forward to meet the various sources of demand in the market. There are currently three main sources of supply for ACCUs:

  • existing Emissions Reduction Fund (ERF) projects
  • new and expanded Emissions Reduction Fund projects, and
  • ACCUs held in the Australian National Register of Emissions Units (ANREU).

Registered Emission Reduction Fund projects

Supply from registered projects has increased significantly from 15.4 million total ACCUs issued by the end 2014–15, to 68.8 million ACCUs by 30 September 2019. As shown in the cumulative registered projects graph below, project numbers have also increased significantly from 278 projects at the end of 2014–15, to 786 projects registered now.

While vegetation, waste and savanna burning projects continue to make up a large proportion of the project portfolio, projects registered under methods such as energy efficiency, industrial fugitives and agriculture have increased their share in recent years.

*Source: Clean Energy Regulator. *2019–20 data is as at 30 September 2019

The graph below shows the number of ACCUs issued has been dominated by vegetation, waste and savanna burning projects with ACCUs issued to energy efficiency projects from 2016–17 and industrial fugitives and transport projects from 2018–19.

In March 2019, the first issuance to a soil carbon project was published on the ERF Project Register signalling a new source of supply emerging.

Total ACCUs issued in 2018-19 (13.7 million) was 1.5 million higher compared to 2017-18 (12.2 million. This is the highest level of ACCU issuances in a financial year to date.

Source: Clean Energy Regulator. *2019–20 data is as at 30 September 2019

Emissions Reduction Fund projects supply data

ACCU supply data is published each week on the Clean Energy Regulator Emissions Reduction Fund project register, including a description of the project, project location, project method, whether the project is currently contracted, and the number of ACCUs issued to each project.

The ERF occurs through projects across Australia, and in many cases, through activities on the land. These projects are area-based and include increasing soil carbon, expanding opportunities for environmental plantings, and reforestation.

The Clean Energy Regulator publishes mapping files for all ERF area-based projects. These are updated weekly with the ERF Public Register and are now available on the National Maps website.

It is important to note that for sequestration projects the project area does not generally represent the actual extent of a project activity which is generally a subset of the project area. These subset areas are known as Carbon Estimation Areas (CEA) which are defined by rules set out in the individual ERF methods. A project can contain one or many CEAs.

New and expanded projects

Additional supply of ACCUs may be required from new and/or expanded Emissions Reduction Fund projects to meet future demand. There are currently over 30 Emissions Reduction Fund methods to register projects under.

The graph below shows that different lead times exist for new projects depending on the method. Emissions Reduction Fund projects generally take between one to two years from when they are registered before they are issued their first ACCUs. Once projects are registered, they may then generate ACCUs for 7 to 25 years, depending on the method.

Source: Clean Energy Regulator. *2019–20 data is as at 30 September 2019

ACCUs in the Australian National Register of Emissions Units

The number of ACCUs held in the Australian National Register of Emissions Units (ANREU) indicates the maximum supply potentially available to the market at a point in time. New supply through issuances of ACCUs occur throughout the year as participants submit claims for units for projects, while demand occurs through ACCU deliveries, surrenders, cancellations and relinquishments.

While a surplus of ACCUs may be available in ANREU at any one time it is not a clear indicator of liquidity in the market. It is likely only a proportion of the ACCUs in ANREU may be available to trade on the secondary market, as some may be held or banked for future demand.

The below table shows the net balance of ACCUs in the market at 30 September 2019 and quantifies the aggregate demand from various sources over the period from 2012.

ACCU market balance as at 30 September 2019

ACCUs issued68,812,557
Emission Reduction Fund contract deliveries47,261,346
Carbon pricing mechanism surrender^14,458,807
Voluntary and state/territory government1,081,422
Safeguard mechanism surrender*531,099
ACCU relinquishments+113,617
Balance#5,366,266

^ The carbon pricing mechanism was repealed, with effect from 1 July 2014.

* Safeguard mechanism surrender does not include deemed surrenders.

+ Please see more information on ACCU relinquishments.

# While a balance of ACCUs may be available in ANREU at any one time, only a proportion of these ACCUs may be available to trade on the secondary market as ACCUs may be held or banked for future needs (e.g. delivery under contract, safeguard liability or voluntary cancellation).

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