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Quarterly Carbon Market report – June Quarter 2021

09 September 2021

All the highlights from the Quarterly Carbon Market report (QCMR) – April-June 2021

The Clean Energy Regulator’s QCMR provides a regular view of supply and demand across the carbon markets it administers – large-scale generation certificate (LGCs), small-scale technology certificate (STCs) and Australian carbon credit unit (ACCUs). It explores key factors that influence market performance and provides information on trends and opportunities that may inform market decisions.

Highlights

Australia’s carbon markets are on track to meet 2021 expectations estimated in the December 2020 Quarterly Carbon Market report. Total emissions reduction is forecasted to reduce carbon dioxide equivalent (CO2-e) emissions by 57 million tonnes for the year. This is being driven by:

The Emissions Reduction Fund (ERF)

  • There has been an increase in projects registered under the ERF. The Australian carbon credit unit (ACCU) outlook for future supply is positive with a record 47 projects registered in the June 2021 quarter and new and varied methods starting to come online.
  • The ERF project portfolio recently passed 1,000 registered projects cumulative in the September quarter, with more registrations expected ahead of the 13th ERF Auction scheduled for 13 and 14 October.
  • June was a record Australian carbon credit unit quarter with supply increasing by 5.7 million units to achieve a first half result for 2021 of 8.8 million, up 5% over the same period in 2020. We are on track to reach 17 million ACCUs issued in 2021, up from 16 million in 2020.
  • These results will further strengthen as new government initiatives are developed and introduced including the Corporate Emissions Transparency report (CERT) and the Australian Carbon Exchange.
  • The Clean Energy Regulator’s call for expressions of interest to accelerate the emergence of an exchange traded market for emissions offsets saw a strong response from industry, with 27 tenders received.

Small-scale rooftop solar

  • It’s not only investment in large-scale renewables that remained strong in the June quarter. Australia’s demand for rooftop solar continued to climb with an estimated 803 MW installed, up 18% on the June 2020 quarter.
  • The forecast for investment in renewables remains solid for the second half of 2021 and will likely see it continue a three-year average of 6 GW per year of added capacity.
  • Over 5 GW of total renewable energy capacity is expected to be delivered this year. This follows 6.3 GW in 2019 and 7 GW delivered in 2020.
  • We forecast total installs to be just over 3 GW by the end of the year – the lower end of the expected range for 2021 of 3 to 4 GW. Although COVID-19 lockdowns in some jurisdictions are putting strain on the renewable industry and their supply chains, we expect the industry to rebound strongly once restrictions are eased, as they did in 2020.

Large-scale solar

  • Prospects for renewables in 2022 and beyond are bright with the pipeline of projects that have a power purchase agreement and development approval growing by 60 MW to 511 MW.
  • Voluntary demand for Australian units and certificates continued to strengthen with 530,000 ACCUs and Large-scale Generation Certificates (LGCs) cancelled in the quarter, up 39% from the June 2020 quarter. This excludes 2.2 million LGCs cancelled by the ACT Government against its 100% renewable electricity target.

Financial investment decision (FID)

  • Quarter 2 investment in large-scale renewables remained solid. We saw an increased capacity reaching FID with 725 megawatts (MW), up from a low of 19MW in the previous quarter.
  • Although this shows steady growth, annual and multi-year trends in capacity reaching FID provide the most reliable indicators of any changes in renewables investment.
  • 725 megawatt (MW) of large-scale projects reached final investment decision in the June 2021 quarter. A further 1.6 GW has or is expected to reach final investment decision in 2021.
  • We expect the capacity reaching FID will strengthen in the second half of 2021 and into early 2022. It maintains its estimated range of 2 to 3 gigawatts of capacity reaching FID this year.
  • Despite LGC supply exceeding statutory demand this year, the supply/demand balance looks tight for some time yet owing to both increasing voluntary demand and approximately $1 billion in shortfall charge that can be redeemed by surrendering certificates in future years.*

Downloads

Resources

Webinar – Quarterly Carbon Market Report – June Quarter 2021

A webinar providing commentary by the Clean Energy Regulator on the report, carbon market trends and estimates will be held on Monday 20 September at 11am AEST.

Register now to attend.

Video – Highlights from the Quarterly Carbon Market Report – June Quarter 2021

 


Infographic – 2021 market outcomes and tracking against estimates

Click on the image below to download a full-sized version.

Other Quarterly Carbon Market Reports

For a list of all other published reports, please see Quarterly Carbon Market Reports.

Footnote

* This value was as at the end of the 2020 assessment year, it may decrease over the course of 2021 as liable entities surrender further LGCs to make up for shortfall.



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