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Australia’s carbon market set for big changes in the years ahead

The release of the Chubb Review and the government’s position paper on changes to the Safeguard Mechanism further solidify a paradigm shift for Australia’s carbon market. 

8 March 2023

The latest publication by Vivek Dhar, CBA's Director Mining and Energy Economics, "ACCU markets look balanced from 2023-24 to 2029-30," discusses changes in the carbon market and future uncertainty surrounding carbon markets.

To reach net zero by 2050, the global community needs to both reduce and remove carbon emissions. And carbon reduction will be achieved through a combination of new technologies and practices, as well as major demand shifts. The Australian Carbon Market is centred on the creation, sale, purchase and surrender of the Australian Carbon Credit Units (ACCUs).

Consumers or businesses that want to offset their emissions can purchase credits from project developers, this may either be organisations and institutions voluntarily electing climate targets (being the voluntary market), or high emitting facilities obliged to surrender ACCUs in order to reduce their emissions and stay below their baselines.

Vivek explains the recent changes to the Safeguard Mechanism imply a significant increase in Australian Carbon Credit Unit (ACCU) demand from 2023-24 to 2029-30. He also discusses the Chubb Review’s conclusion that the ACCU framework is “essentially sound” suggests that new ACCU supply should not be too adversely impacted, and CBA’s view that the ACCU markets will be balanced from 2023-24 to 2029-30.

Read the full report

CBA’s Global Economic and Markets Research (GEMR) team publishes a wide range of economic and financial research each week covering the latest data, trends, policy developments and topical issues in Australia and other major economies. To access these publications please visit the GEMR website.

Our Economic Expert

Vivek Dhar has worked as Commonwealth Bank’s lead mining and energy commodities strategist since late 2014 after working as a junior analyst for 4 years. Prior to working at Commonwealth Bank, Vivek interned at Deutsche Bank and Siemens. He holds a Bachelor of Engineering (Electrical) and a Bachelor of Commerce (Finance and Economics) from the University of Melbourne.

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