Strong results in Australia’s carbon markets sets high expectations for 2021

The latest Quarterly Carbon Market Report confirms steady growth in our carbon markets over the first quarter of 2021 and signals strong results for the remainder of the year.

Emissions reduction from the schemes administered by the Clean Energy Regulator are conservatively expected to reach 57 million tonnes of carbon dioxide equivalent (CO2-e) in 2021, up 7% from 2020.

The Clean Energy Regulator is examining an alternative method looking at the emissions intensity of thermal generation displaced by the additional renewable energy generation. This new method indicates total emissions reductions from these schemes could be as high as 75 million tonnes of carbon dioxide equivalent in 2021.

The Emissions Reduction Fund Auction 12, contracted 6.8 million tonnes of forward carbon abatement for a total commitment of $108 million. Once again optional contracts were preferred (9/10), signalling the market has embraced flexible risk mitigation measures.

The quarter saw the highest trading activity of ACCUs on record, with 1.6 million ACCUs traded through 97 transactions.

Rooftop solar under the Small-scale Renewable Energy Scheme (SRES) showed solid growth in Quarter 1 2021 with 792 MW installed. This is up 28% on the Quarter 1 2020 result. The Clean Energy Regulator expects 3.5 to 4 GW of rooftop solar capacity to be added in 2021.

The supply of LGCs remains on track for 37 million to 40 million over 2021, with 9.2 million LGCs validated in Quarter 1 2021.

While no major large-scale project reached financial close in Quarter 1 2021, projects backed by a power purchase agreement continued to grow to 3.7 GW. This is the highest level ever tracked by the Clean Energy Regulator.

Hence the Clean Energy Regulator maintains an expectation of between 2 and 3 GW of large-scale renewables capacity reaching financial close in 2021, a similar capacity to that of 2020.

To support rapidly increasing voluntary demand to reduce emissions, the Clean Energy Regulator is seeking a partner or partners to create an Australian carbon exchange. EOIs closed on 20 June 2021.

Read more about carbon market data and insights in the full report.