The Australian government has set some ambitious climate targets with the June 2022 submissions under the Paris Agreement seeing Australia commit to reducing greenhouse gas emissions to 43 percent below 2005 levels by 2030 and achieving net zero emissions by 2050.
To reach this goal, Australia needs to continue pursuing avenues to reduce carbon emissions across all industries. The creation and acquisition of carbon credits is Australia's key to achieving its targets.
AUSTRALIAN CARBON CREDIT UNIT SCHEME
Australia's carbon credit program, the Australian Carbon Credit Unit Scheme (ACCU Scheme) saw 17.7 million carbon credits issued in 2022-the largest issue of carbon credits per year since its inception. The ACCU Scheme allows landowners and businesses-called project proponents-to undertake greenhouse gas emissions reduction projects and sequestration projects in exchange for carbon credits.
The ACCU Scheme held its fifteenth auction in March 2023 where the Australian Government (represented by the Clean Energy Regulator) undertook a reverse auction to enter contracts to purchase carbon credits from project proponents. Auction 15 resulted in the Clean Energy Regulator contracting for 7.9 million tonnes of carbon abatement at an average price of $17.12. You can see the results of the auction here.
EVOLVING PRIVATE MARKET
In addition to the boom in the government's acquisition of carbon credits, the private market for carbon credits is quickly evolving. In response to the increase in demand, the Clean Energy Regulator is in the process of contracting with a successful tenderer for the implementation of the Australian Carbon Exchange-an exchange platform for trading Australian carbon credit units to streamline the trading process, reduce transaction costs, and increase pricing transparency of carbon credits. It is anticipated the Australian Carbon Exchange platform will be delivered in late 2023 to early 2024, so keep an eye out for this launch.
NEXT STEPS?
We have seen increased enquiry by landowners and prospective investors exploring the opportunity to increase the value of land, earn additional revenue, and become involved in sustainable corporate practices through the ACCU Scheme. This demand will only continue to rise in the lead up to the 'climate positive' 2032 Brisbane Olympic Games.
Our Factsheet sets out what you need to know about Australia's carbon credit scheme. Check it out here.
If you have any questions or want to discuss how we can assist you, please reach out to partner Kristy Dorney, lawyer Sarah Salesse, or a member of our Real Estate team.