Carbon credits surge as corporate seek abatement but Trump era dims appetite

The value of Australian carbon credits increased by almost a third to $1.1bn last year, a report by research and advisory company RepuTex has found.

Carbon credits can be created by planting trees. Picture: National Geographic

The value of Australian carbon credits jumped nearly 30 per cent in 2024, a new report has found, as heavy emitters increased buying to meet their emission reduction requirements.

The findings of the RepuTex report underscore the impact of the Safeguard Mechanism, which forces the country’s 215 largest emitters to reduce emissions by about 5 per cent each year.

RepuTex said the value of Australian Carbon Credit Units rose to total $1.1bn in 2024, a 28 per cent increase from the previous year when the market was worth $871m.

RepuTex said the increase was driven by heavy emitters meeting their increased commitments. The carbon research and advisory company said some 35 million ACCUs were traded last year – as Australia became the fifth biggest carbon-compliant scheme in the world.

Under the scheme, those covered can either invest in processes to reduce emissions or buy abate credits and the data indicates that many are choosing abatement at least initially

RepuTex chief executive Hugh Grossman said companies were beginning to make investments to switch away from abatement but this took time.

“As companies begin to invest in large-scale decarbonisation projects which can take time to develop, we expect ACCUs to remain the primary source of least-cost abatement for Australia’s carbon market, with more significant onsite decarbonisation unlocked later in the decade” Mr Grossman said.

“By allowing companies to choose how to reduce emissions, the market is therefore seeking out the most cost-effective way to decarbonise.”

But RepuTex said the inauguration of Donald Trump as US President has weighed on Australian carbon market activity. The value of an ACCU fell to $34 a tonne last week, well down on the $42.55 it hit in November ahead of the US election.

Mr Grossman said the prospect of weaker global emission reduction ambitions and the uncertainty of a looming Australian federal election were weighing on the market.

The federal Coalition would need to operate coal and gas-fired power stations longer if it is to harness nuclear as a fuel source. Picture: Getty Images)

“We are seeing increased uncertainty around the start of the Trump 2.0 era and the upcoming federal election; however, we expect final compliance buying and some more opportunistic forward hedging to lift near-term prices,” Mr Grossman said.

“Locally, it remains to be seen if the return of Trump will embolden the right, or whether fear of a ‘Trump planet’ will drive voters to the political centre.

“While we could see Australia’s national ambition slow should there be a change of government, the prospect of a minority government and supportive crossbench lessens the prospect of more disruptive risks to current climate policy.”

Mr Trump has already pulled the US out of the Paris climate agreement, under which signatories commit to reducing emissions by 43 per cent from 2005 levels by 2030 and reach net zero emissions by 2050.

The Australian government insists there will be no withdrawal and its plan to meet the 2030 target – through a rapid growth of renewable energy sources – is on target to be met.

The Coalition, in contrast, says the 2030 plan is unviable and it will instead seek to build seven nuclear-powered stations to reach the 2050 net-zero goal.

But with the first nuclear power station unlikely to be ready until 2037, the Coalition would have to run coal and gas-fired power stations for longer – which places at risk the 2030 commitment.

Originally published as Carbon credits surge as corporate seek abatement but Trump era dims appetite