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Quarterly Carbon Market Report December Quarter 2022

Key highlights for the fourth quarter of 2022 include record Australian carbon credit units (ACCUs) transactions, a large step up in large-scale renewables investment and a rebound in small-scale solar PV installations.

Contents

Highlights

Confidence renewed in the ACCU market

  • The proposed Safeguard Mechanism reforms and outcomes of the Independent Review of ACCUs have driven renewed interest in Australia’s carbon markets.
    • In the 2 weeks following the release of the Review and draft reforms, ACCU spot prices hit a 9-month high with reports of more than 3.2 million ACCUs in spot and forward trades.
  • 17.7 million ACCUs were issued in 2022, whilst total holdings of ACCUs doubled to 22.7 million. New issuances are expected to exceed 18 million in 2023.
  • 2022 saw a record 23 million ACCUs transacted in the secondary market, more than triple that of 2021.

Investment surges for large-scale renewables

  • In 2022 developers committed to building 4.3 gigawatts (GW) of new large-scale renewable energy capacity. This is a near 50% increase from 2021.
    • 60% of total investment was announced in the second half of the year – demonstrating growing confidence in Australia’s renewable energy policy and market settings.
  • This large step up in investment is critical to transition our electricity system to 82% renewable energy by 2030 to meet Australia’s legislated 2030 emissions reduction target.
  • Renewable electricity met a record 35% of demand in the National Electricity Market (NEM) in 2022.
  • 2.5 GW of new capacity was approved for large-scale generation certificate (LGC) creation in 2022. A similar level of capacity is expected to be approved in 2023.
  • Eligible generation supported by LGCs reached 44,000 gigawatt-hour (GWh) in 2022, up from 39,000 GWh in 2021.
  • Non-RET demand for LGCs jumped by 1.6 million in 2022 to 7.4 million LGCs – effectively increasing total demand by 23% above the legislated target.
  • There is an effective deficit of about 15.5 million LGCs owing to shortfall refund despite supply increasing materially year on year for the last 3 years.

Small-scale solar PV saw strong recovery in Q4

  • Small-scale solar PV rebounded strongly in Q4 leading to 2.8 GW installed in 2022 – the third highest installed capacity on record.
  • If this trend continues, households and businesses could install record additional capacity in 2023.
  • In 2022, almost 7% of rooftop solar PV systems were installed with concurrent battery storage, up from 3% in 2021.


Data workbook

The Quarterly Carbon Market Report data workbook - December Quarter 2022 contains additional data and visualisations not available in the report. Additional data sets and graphs are included in this workbook to provide the market with more information on the performance of the schemes administered by the Clean Energy Regulator.

Note: Supplementary Figure 2H was added to the data workbook on 31/03/2023.

  • documentasset:QCMR data workbook – December Quarter 2022
  • RET Administration Report

    The December 2022 Quarterly Carbon Market Report has been tabled in Parliament on 14 June 2023 and is now the Renewable Energy Target Administration Report as required under section 105 of the Renewable Energy (Electricity) Act 2000. The report contains key information and statistics covering the operation of the Act during 2022.

  • documentasset:RET Administation Report 2022

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