Australian carbon credit unit price rose to more than a 1.5- month high on higher traded levels and strong buying activity on Nov. 29.
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Register NowPlatts, part of S&P Global Commodity Insights, assessed the price of Generic Australian Carbon Credit Units, or ACCUs, at A$32.25/mtCO2e ($21.35/mtCO2e) Nov. 29. The Generic ACCU price was last assessed at the same level on Oct. 11.
Platts assessed Human Induces Regeneration ACCU price at A$35/mtCO2e on Nov. 29.
The traded volume trended higher in the week starting Nov. 27, with at least 105,000 mt traded on Nov. 28 and 55,000 mt on Nov. 29, S&P Global data showed.
"It caught quite a few people by surprise," a carbon trader said, referring to higher trades.
"Broadly speaking, we are still within the range we have seen for a number of months, but we are not too far away when there was a little bit more buying going on that might start to look like a breakout," the trader said.
While the market was still not near that breakout point, participants will be keeping a close watch on any increase in buying activity, the trader added.
"I'm not hearing any particular reason but [this] could be in the wake of a firmer New Zealand Unit (NZU) market, and that you see more buying or surrendering [of] credits by the end of the year," a carbon broker said.
NZU volume and price have seen an increase after New Zealand's winning party coalition committed to halting the ongoing review of the emissions trading scheme on Nov. 24.
The NZU price reached a near nine-month high on Nov. 28 at NZ$73.90/mtCO2e, the highest since the Platts price assessment was launched on March 1.
With this price jump, the HIR-Generic spread narrowed to a 1.5-month low of A$2.75/mtCO2e, the lowest since Oct. 11 when it was assessed at A$2.70/mtCO2e.
While Generic ACCUs are generated by avoided emissions-based projects, such as landfill gas and avoided deforestation, HIR ACCUs are generated by projects that store carbon by regenerating permanent native forests through alternative land management practices.
"As the market comes off, near A$35/mtCO2e, the HIR doesn't want to follow the market very quickly," the trader said.
The HIR ACCU project developers will be interested in selling at levels above A$35/mtCO2e, thus creating a substantial supply in the market, the trader added.
"If [we] get an early leap from Generics, that will see the spread crunch back in and it could easily get into the $2 mark if there is buying in Generics," the trader said.