The Clean Energy Regulator’s (CER) latest Quarterly Carbon Market Report (QCMR) shows that carbon markets are at an important juncture with key developments including:

  • Record levels of new renewable energy capacity are being added as the transition to 82% renewable energy gathers pace.
  • Carbon markets are beginning to adjust to the first compliance period for the reformed Safeguard Mechanism, with increased demand for Australian Carbon Credit Units (ACCUs) in response to declining emissions baselines. 
  • Safeguard facilities and the electricity sector each currently represent about 30% (60% in total) of Australia’s greenhouse gas emissions.

Between 7.2 and 7.5 gigawatts (GW) of new wind and solar capacity is now expected to be added under the Renewable Energy Target (RET) for 2024, exceeding the previous record of 7.16 GW of capacity set in 2020, according to the 2024 quarter 3 QCMR.

CER Acting Chair and CEO Carl Binning said there’s been a substantial jump in approved capacity of large-scale renewable energy power stations that are reaching first generation in 2024. 

‘We expect more than 4.2 GW of large-scale renewable energy capacity will be accredited for entry to the Renewable Energy Target in 2024. 

‘A big contributor has been Australia’s two largest wind farms, MacIntyre (923 MW) and Golden Plains Stage 1 (756 MW), that have now been approved under the RET. These two mega projects are still commissioning and will take time to reach full generation.’ 

The large-scale generation certificate (LGC) spot price fell recently to about $27.25, in part due to improving long term supply outlook. This year we expect about 51,000 gigawatt hours (GWh) of generation for wind and solar power stations, well above the annual statutory target of 33,000 GWh. Voluntary cancellations of LGCs to prove the use of renewable energy will represent about 10,000 GWh of demand additional to the target.

In the small-scale renewables space Mr Binning said, ‘Australian households and small businesses continue their love affair with rooftop solar with an estimated 3.15 GW of rooftop solar installed this year.’  

Emissions data for all Safeguard facilities has now been reported for the 2023-24 financial year. Safeguard and related entities now hold 27.5 million Australian Carbon Credit Units (ACCUs), 61% of total holdings and we expect some still need to, and will, acquire the ACCUs they need to meet compliance obligations. 

The spot ACCU price has continued to increase and is now $42.50 off the back of strong trading activity by Safeguard entities. We will monitor the market closely as we approach the Safeguard compliance period that concludes 31 March. We expect about 19 million ACCUs to be issued for the year which will be a record.

For more detail, read the latest QCMR.