Australian Elections: Carbon Market Braces for Major Political Shock

The outcome of Australia's elections could redefine national carbon market regulations, potentially triggering significant shifts in emissions reduction policies, directly impacting local carbon credit prices (ACCU).

Share:

Comprehensive energy news coverage, updated nonstop

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access • Archives included • Professional invoice

OTHER ACCESS OPTIONS

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

FREE ACCOUNT

3 articles offered per month

FREE

*Prices are excluding VAT, which may vary depending on your location or professional status

Since 2021: 35,000 articles • 150+ analyses per week

Just days before Australia’s federal elections, economic players are closely examining possible scenarios regarding the future of the Safeguard Mechanism, the core framework regulating industrial emissions. This mechanism mandates major emitters to achieve a yearly reduction of 4.9% in their emissions through 2030. Companies exceeding these limits must offset excess emissions using Australian Carbon Credit Units (ACCU) or Safeguard Mechanism Credits (SMC). Since late 2024, election-related anticipations have introduced considerable volatility to the market, with ACCU prices recently fluctuating between AUD 33 and AUD 35 per tonne.

Impact of a Liberal-National Coalition Victory

According to several industry analysts, a victory by the Liberal-National coalition could lead to a softening of the Safeguard Mechanism, reducing constraints on high CO2-emitting industries. This scenario could trigger a potential revision of Australia’s commitments under the Paris Climate Agreement. Practically, such policy changes would likely result in increased early exits from fixed-delivery ACCU contracts. This would boost the secondary market supply, exerting downward pressure on carbon credit prices in the short term.

John Connor from the Carbon Market Institute indicated that implementing such policy shifts would require a strong Senate majority, as any modifications to existing rules would necessitate substantial legislative approval. Matt Pollard, an analyst at Climate Energy Finance, further noted that a Liberal-National government could temporarily generate an oversupply of ACCUs, placing sustained downward pressure on prices.

Alternative Scenario: Consolidation Under a Second Labor Term

Conversely, a re-election of the Labor Party, possibly supported by the Teal independents or the Australian Greens, would likely result in stricter environmental standards. Abhijeet Thakkar, senior analyst at S&P Global Commodity Insights, believes this scenario could maintain or even enhance the current annual emissions reduction rate of 4.9%. Continued strict regulatory requirements could restore market confidence and push prices upward towards the previously proposed ceiling of AUD 75 per tonne, as mentioned by Climate Minister Chris Bowen.

In this context, the Greens have proposed further limiting ACCU credits usage to sectors considered hard-to-decarbonize, mechanically reducing the supply available for emissions offsetting. Such a measure could exert additional upward price pressure while restricting flexibility for Australia’s major industrial emitters.

Medium-Term Market Projections

Despite immediate uncertainties, analysts forecast a gradual market rebalancing after the elections. According to Tasman Environmental Markets, ACCU prices could stabilize around AUD 40 per tonne starting in 2025 due to an expected temporary supply surplus lasting until 2028. This surplus would result primarily from accumulated excess credits during years of low demand driven by political uncertainty.

According to the 2024 Australian Business Climate Survey by the Carbon Market Institute, about two-thirds of respondents nonetheless anticipate significant price strengthening by 2035, with estimates exceeding AUD 90 per tonne. This projected level reflects an expected structural increase in demand driven by accelerating international climate regulation and increasingly stringent domestic requirements.

In an economic context where cost-of-living concerns currently dominate Australia’s political discourse, the evolution of national climate policies will play a crucial role in shaping strategic positioning for businesses and investors in the years ahead.

Japan and Malaysia have signed a preliminary cooperation protocol aiming to establish a regulatory foundation for cross-border carbon dioxide transport as part of future carbon capture and storage projects.
Green Plains has commissioned a carbon capture system in York, Nebraska, marking the first step in an industrial programme integrating CO₂ geological storage across multiple sites.
The price of nature-based carbon credits dropped to $13.30/mtCO2e in October as a 94% surge in September issuances far outpaced corporate demand.
Driven by the energy, heavy industry and power generation sectors, the global carbon capture and storage market could reach $6.6bn by 2034, supported by an annual growth rate of 5.8%.
Article 6 converts carbon credits into a compliance asset, driven by sovereign purchases, domestic markets, and sectoral schemes, with annual demand projected above 700 Mt and supply constrained by timelines, levies, and CA requirements.
The GOCO2 project enters public consultation with six industrial players united around a 375 km network aiming to capture, transport and export 2.2 million tonnes of CO2 per year starting in 2031.
TotalEnergies reduced its stake in the Bifrost CO2 storage project in Denmark, bringing in CarbonVault as an industrial partner and future client of the offshore site located in the North Sea.
The United Kingdom is launching the construction of two industrial carbon capture projects, backed by £9.4bn ($11.47bn) in public funding, with 500 skilled jobs created in the north of the country.
Frontier Infrastructure, in partnership with Gevo and Verity, rolls out an integrated solution combining rail transport, permanent sequestration, and digital CO₂ tracking, targeting over 200 ethanol production sites in North America.
geoLOGIC and Carbon Management Canada launch a free online technical certificate to support industrial sectors involved in carbon capture and storage technologies.
AtmosClear has chosen ExxonMobil to handle the transport and storage of 680,000 tonnes of CO₂ per year from its future biomass energy site at the Port of Baton Rouge, United States.
The Dutch start-up secures €6.8mn to industrialise a DAC electrolyser coupled with hydrogen, targeting sub-$100 per tonne capture and a €1.8mn European grant.
Japan Petroleum Exploration is preparing two offshore exploratory drillings near Hokkaidō to assess the feasibility of CO₂ storage as part of the Tomakomai CCS project.
The Singaporean government has signed a contract to purchase 2.17 million mtCO2e of carbon credits from REDD+, reforestation and grassland restoration projects, with deliveries scheduled between 2026 and 2030.
The Canadian government is funding three companies specialising in CO2 capture and utilisation, as part of a strategy to develop local technologies with high industrial value.
European carbon allowance prices reached a six-month high, driven by industrial compliance buying ahead of the deadline and rising natural gas costs.
Zefiro Methane Corp. completed the delivery of carbon credits to EDF Trading, validating a pre-sale agreement and marking its first revenues from the voluntary carbon market.
Hanwha Power Systems has signed a contract to supply mechanical vapour recompression compressors for a European combined-cycle power plant integrating carbon capture and storage.
A prudent limit of 1,460 GtCO2 for geologic storage reshapes the split between industrial abatement and net removals, with oil-scale injection needs and an onshore/offshore distribution that will define logistics, costs and liabilities.
Frontier Infrastructure Holdings drilled a 5,618-metre well in Wyoming, setting a national record and strengthening the Sweetwater Carbon Storage Hub’s potential for industrial carbon dioxide storage.

All the latest energy news, all the time

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access - Archives included - Pro invoice

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

*Prices shown are exclusive of VAT, which may vary according to your location or professional status.

Since 2021: 30,000 articles - +150 analyses/week.