Raj Aggarwal (Chief Investment, Trading & Commercial Officer)
Trading activity in ACCUs has recently seen a significant uplift. For example, the West Australian Environmental Protection Authority has mandated that new oil and gas projects buy a portion of ACCUs. We expect to see this filter through with the first project to have taken a final investment decision recently in WA – the Waitsia gas field. A number of resource companies are considering ACCUs as part of their strategy to decarbonise, and number of state governments are becoming more active as potential buyers of carbon credits. The expectation is that this sector will continue to see significant activity and an increase in pricing and volume during 2021, as more companies consider offsetting as part of their sustainability strategy.
Contracting methods are also becoming increasingly sophisticated. Options contracts, long-term, short-term and ERF Contracts are all evolving as the market changes. Delivery dates are becoming increasingly long-dated and options around delivery are being retained by buyers and sellers.
The December 2020/ January 2021 period itself was relatively quiet in terms of trading which is now unusual for this time of the year. Prices continue to remain around $16-$17 per ACCU during this period. Reputex reported in mid January that spot prices reached a 10-month high ($16.63)
ACCU = Australian Carbon Credit Unit
ERF Contract: Emissions Reduction Fund Contract
Decarbonise: a company may look to ‘decarbonise’ by actively seeking to reduce the carbon emissions generated by the company’s business activities or by offsetting their emissions that are difficult or impossible to reduce in the short - to medium - term.