Many of you will be interested to know if COVID-19 has had any impact on the carbon market.
For those with Carbon Abatement Contracts through the Emissions Reduction Fund, everything has been continuing as before. In fact, the CER (Clean Energy Regulator) has done a great job at transitioning their systems and updating their software, with recently-submitted Offsets Reports being assessed in quicker-than-usual time, which we applaud.
For the non-government, or commercial sector (sometimes called the secondary market), there was quite a lot of activity prior to COVID-19, but still some activity in the past month or so. The most recent spot trades done in the Australian market showed pricing of $16.50/ACCU, and an option to purchase ACCUs in 2021 at a price of $18.50/ACCU at a strike price of $1.10/ACCU. Both of these transactions occurred in the last week of March and early April. The most recent auction results published by the ERF on Friday 3 April, also showed an average price above $16 for the first time ever. These markers suggest carbon pricing may not be as impacted by COVID when compared to other commodities.
Globally, 2020 may show a temporary decline in emissions, with movement bans in place to prevent further spread of the virus. This has not solved the emission challenges, but perhaps it has brought to light the influence of human behaviour on emissions, and the ability we have to shape our future through decision-making post-pandemic.