Clean Energy Regulator picks registry, exchange partners ahead of trading expansion
The ASX has been picked to work with the Clean Energy Regulator to set up a carbon market exchange.
The Clean Energy Regulator will develop a new register of carbon units, alongside plans to develop an exchange for trading carbon assets, with the Australian Securities Exchange.
In a note issued on Tuesday the CER, which oversees Australia’s carbon emissions scheme, said it had contracted the Trovio Group to develop a new register for carbon market assets in a move the regulator said was aimed at improving transparency for buyers and sellers.
The CER said it wanted to develop the new register in a bid to consolidate the different registers currently held by the regulator, which cover a variety of carbon scheme assets.
These include Australian Carbon Credit Units, international units, large-scale generation certificates, and small-scale technology certificates.
According to the CER, the new register would also support any new future units and certificates, including the planned Safeguard Mechanism credit units, and Guarantee of Origin certificates which cover renewable energy, hydrogen, and other low emissions products.
The Renewable Energy Target will run until 2030 and requires companies to purchase and surrender a certain number of carbon units every year via the CER.
The regulator said the proposal from Trovio Group would see the creation of a customisable digital registry for carbon units which “will integrate seamlessly with other systems and enable direct transfers between trading partners”.
The CER said the modern registry platform was expected to be operational by the second half of 2024.
Speaking earlier to The Australian CER boss Mark Williamson said he wanted to see competition in the carbon market. “We have a tight market now,” he said.
“The climate risk disclosure regime should progressively, when it’s legislated, will create a lot more demand through the transparency put on businesses’ claims and whether or not they’re reducing net scope to electricity emissions,” he said.
In a post on Linkedin Mr Williamson said the new register would “form the foundation of a world class carbon market that will play an important role in helping Australia meet its 2030 and 2050 emissions reduction targets”.
“In addition to the exchange trading option and direct transfers between trading partners, we will be looking to allow other trusted digital trading platforms to connect to the new carbon register in the future,” he said.
The registry forms a key pillar of the CER’s plans to develop an Australian Carbon Exchange, in a bid to offer trading for Australian Carbon Credit Units.
The CER said it would be working with the ASX to “assist the development of a carbon exchange model”.
The exchange will initially allow the trading of Australian Carbon Credit Units, but the CER said the market had the potential to support the trade in other units and certificates as well. The exchange would also offer spot market trading.
However, the CER said the launch of an Australian Carbon Exchange was conditional on a number of regulators approving the scheme, noting in early 2024 there was to be roundtables of “carbon market participants, advisers, digital carbon platform operators and regulators to discuss the detail of the proposed new trading options”.
Expressions of interest in the Australian Carbon Exchange closed in June 2021, with 13 short-listed parties selected to participate in more detailed rounds by the CER.
The CER noted it was “difficult to predict” when the Australian Carbon Exchange would launch, pointing to late 2024 and early 2025 as rough dates.
Australian carbon markets have grown in recent years, as more companies moved to voluntarily offset emissions through purchasing credits.
Sydney-based trading house FEX Global recently moved to launch trading in futures contracts of large-scale generation certificates, in a move welcomed by industry operators as offering a chance to secure future price certainty around the products.
The ASX has also signalled plans to launch a suite of carbon futures products in 2024.
This comes alongside its work with the CER on the exchange.
The ASX said it would launch futures contracts for Australian Carbon Credit Units, large-scale generation certificates, and New Zealand emissions units.
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