ACCU prices rise on steady demand; NZUs rangebound
Quantum Commodity Intelligence – Australian Carbon Credit Unit (ACCU) prices rose in the week to October 18 on steady demand, while New Zealand Units (NZUs) continued to trade in a tight range below the auction floor price.
At least 398,000 spot ACCUs traded between October 14-18.
The volume size flipped in terms of categories, with the 'human-induced regeneration' (HIR) credits accounting for a majority of trades at 253,000 tonnes of carbon dioxide equivalent (tCO2e) and the 'no-avoided deforestation' (No-AD) category representing most of the 145,000 t traded within the Generic basket.
The 'No AD' category represents generic carbon credits without the avoided deforestation method, while HIR credits are generated from interventions to regenerate native forests.
Generic No-AD ACCUs last traded at AUD37.50($25.17)/tCO2e, with HIR last changing hands at AUD37.50/tCO2e on Thursday. No trades were heard on Friday as the market went quiet after a flurry of activity the previous day.
HIR volumes included a direct project specific trade at AUD38/tCO2e for 88,000 t.
"Yesterday, someone reached out and literally paid a whole bunch of offers," a carbon trader said adding that HIR, Generic and No AD were all bought at the same price and around the same time.
Market sources said it was likely to be a trading house instead of a Safeguard entity.
There were strong volumes seen for forwards and options also, with a total of 388,000 tCO2e traded over the week, mostly for No AD units.
CME launched ACCU futures on Monday, with a March 2026 contract traded at AUD39/tCO2e for 5,000 t.
"People are probably getting a bit more sophisticated as they have started to understand what their requirements are," a second trader said, adding that the market was seeing some buying of spot and then selling of forwards.
The demand for options and forwards seems to be increasing as more speculators enter the market, but limited participants were offering such units as the compliance requirements for such transactions can be onerous, the first trader said.
Australia's Clean Energy Regulator issued a total of 661,619 carbon credits over September 15-29, with HIR projects accounting for the biggest share of the issuance, followed by landfill gas, according to data released on Wednesday.
CER issued a combined 353,753 ACCUs to 30 HIR projects, representing over half of all volumes. Landfill gas-based projects received the next biggest issuance at 178,047 ACCUs, with the majority of those going to LMS Energy's seven projects.
NZUs rangebound
NZUs traded in a tight range of NZD63.00 ($38.27)-63.40/tCO2e ahead of the last quarterly auction of the year, with at least 302,900 t heard changing hands over October 14-18.
There is less selling and urgency in the market, and it's quieter than earlier in the year, said Nigel Brunel, managing director at Marex New Zealand.
"Most of the liable entities are quite well hedged and they will continue to use their banked NZUs. Small and medium-size forestry owners are selling," Brunel said.
New Zealand's last 2024 auction in December will offer more than 11 million units, with all the units set to expire, if a certain number of participants fail to bid above the floor of NZD64/tCO2e.
There is a higher chance of partial auction clearance, a carbon trader said, adding that compliance buyers are likely to buy at current levels as the auction floor will rise to NZD68/tCO2e in 2025.
"A lot of people want to get the auction out of the way and see how much is sold and how the market reacts," the trader said.
The price may rise above NZD64/tCO2e but is not likely to go much higher before the auction, according to the trader.
The NZ government said that the first auction for 2025 will be held on March 19, and will offer just 1.5 million NZUs, with another 7.1 million units locked up in the cost containment reserve (CCR).
CCR units are meant to stabilise the price amid high volatility and can only be released if the bids touch at least NZD193/tCO2e, a level more than double of the auction floor.