THE price of Australian Carbon Credit Units has seen a small rally in the past month as the Federal Government announced its plans to reduce emissions by 62-70pc by 2035.

According to Jarden, ACCU prices opened this week around $37 after hovering between $34-35 for most of the year.

The market had started its rally before the Government announced the target, with several commentators saying that traders had anticipated the announcement.

ACCUs normally have a rally at the end of the year, with big emitting companies that are covered by the Federal Government’s “safeguard mechanism” required to report their emissions accounts at the end of October. They then need to purchase ACCUs if they have emitted more than they are allowed and retire them by the end of March.

Last year saw ACCU prices reach $42 in November in the middle of the reporting period.

While there are predictions of ACCUs significantly increasing in price before the end of the decade, the market has been relatively subdued this year. That has mainly been put down to an abundance of supply.

However, the Government’s reluctance to make decisions about the carbon market has created some concern about the long-term supply of ACCUs needed to help companies meet the targets.

The Government has been working on a methodology called Integrated Farm and Land Management for years and last year cancelled a methodology that allows producers to generate ACCUs for making cattle herds more efficient.

Largest soil carbon issuance this year

ACCUs are continuing to be issued for soil carbon projects, which is the only agriculture-based methodology at this stage.

Carbon developer AgriProve last week announced its Barwick Carbon Project at Kaniva Vic had been issued 10,548 ACCUs.

The last time that many ACCUs were issued for a soil carbon project was at the start of last year, when Carbon Link’s Cheyenne project was issued more than 12,000.

While 34 soil carbon projects have now been issued ACCUs, none of them have been able to get anywhere near the issuances made in 2023, when three projects were awarded 94,000, 85,000 and 66,000. Soil carbon projects have generated totals of 1000-3000 instead.

Government backs “reforestation” for its new target

When the Government announced its 2035, it also released its six sectoral plans for how the economy will transition to net zero by 2050 – including one for agriculture.

The different ways emissions will be offset by 2025 according to the Agriculture net zero plan.

The ag plan spoke about which carbon methodologies are likely to do the heavy lifting, with “reforestation” tipped to be the main one.

It also said soil carbon, savanna fire management, forest regeneration and blue carbon.