AUSTRALIAN carbon credit units have hit a seven-month low after the industry regulator released its report last week flagging a year of strong supply ahead.

ACCU price benchmark Jarden opened today at $34 after closed last week $33.50, which was a seven-month low.

The Clean Energy Regulator’s quarterly carbon market report said liquidity was expected to pick up this year, going from 18m in 2024 to somewhere between 19 and 24m in 2025 “depending on the timing of ACCU claims and issuances.”

Australia’s carbon market has also seen the addition of a new type of carbon credit called safeguard mechanism credits. SMCs are issued to companies covered under the safeguard mechanism when they emit less than their yearly allowance of emissions. CER issued 8m safeguard credits.

The Labor party reformed the main demand driver carbon credits called the safeguard mechanism, which forces big companies to buy carbon credits if they exceed a certain level of emissions.

It has been forecast to increase demand for credits over the next 10 years, with first reporting deadline being the end of the month.

More soil carbon projects signing up

The CER said last year saw a year-on-year increase in carbon projects signing up, with new soil carbon projects in second half of the year largely being the reason for that increase.

More than 700 soil carbon projects are now signed up to the ACCU register, with last year’s new signings expanding the geographical area of projects.

Paraway Pastoral has signed up the first soil carbon project in the gulf country, with a small project listed at Gregory Downs. AA Co is also about to sign up.

Projects are also registered in the Murweh and Barcaldine Shires of Western Queensland.

Political uncertainty builds

The impending federal election is another factor in the carbon market at the moment.

While the Coalition has not made any firm commitments on its plans with the safeguard mechanism, it has been critical of the Albanese Government’s approach.

Safeguard mechanism was a policy under the Coalition, however, not as aggressive as Labor’s.

A minority Government with Teals and Greens on the crossbench is another possibility, which could also have impacts on the carbon market.

Internationally President Trump’s policies are no doubt contributing to some uncertainty. He has pulled out of the Paris Agreement, which is one of the main drivers behind an international carbon market.

Elon Musk is a participant in the carbon market and there has been a big environmental focus through health secretary Robert F Kennedy Jr.