The fourth pilot exit window for the fixed delivery exit arrangements has closed. The window covered delivery milestones between 1 July 2023 and 31 December 2024.
During this window, 4.5 million Australian carbon credit units (ACCUs) exited, and 2.4 million were delivered. This means the cost containment measure now holds 3.9 million ACCUs.
For the first time since exit arrangements were introduced in 2022, this window required sellers to deliver at least 20% of the delivery milestone to the Australian Government. Deliveries exceeded the 20% minimum partial delivery requirement, with some contracts delivering in full.
In April 2024 when the window was announced, we expected between 9 and 15 million ACCUs to exit. This was revised to between 7 and 13 million in the Q2 2024 Quarterly Market Carbon Report due to more ACCUs being rescheduled to a later date than expected. Of around 20 million ACCUs eligible for delivery in the exit window, 13.3 million ACCUs were rescheduled as part of our carbon abatement contract management approach.
Our approach is underpinned by contract management principles. These principles state that we may agree to revised delivery schedules if the seller doesn’t have sufficient ACCUs available to meet their delivery obligations. A number of the existing contracts in the portfolio have been unable to deliver during the period in which projects were being recruited, consents obtained and projects have not yet begun to report and claim ACCUs. The soil carbon project portfolio is an example of investment that has not yet flown through to ACCU issuance with close to 600 projects registered but over 90% of projects not due to report until after 2025.
The CER only agrees to reschedule a delivery milestone where the seller is able to provide a plausible plan to deliver this milestone in future. The CER won’t agree to reduce the total volume or terminate contracts where the seller has access to ACCUs. This includes ACCUs from projects that are not part of the contract. Negotiations don’t involve the contract price.
We don’t expect significant impacts to the overall supply to the ACCU market between now and 2030. The total portfolio of all ACCU projects, including those that are not subject carbon abatement contracts, are performing consistently with our expectations and as reported in the 2024 projections published by the Department of Climate Change, Energy, the Environment and Water: Australia’s emissions projections 2024 - DCCEEW.