The value of ACCUs eligible to be used under the carbon price mechanism could be around 23 Australian dollars during the fixed price period. In the flexible price period the value of these credits is likely to be above $15/tCO2-e.
A handful of must-have information for emission traders on new carbon offset currency – ACCU – can be found in ‘The Carbon Farming Initiative Handbook’, Version 1.0, by Department of Climate Change and Energy Efficiency, Commonwealth of Australia 2012.
The Handbook contains information about the Carbon Farming Initiative (CFI) that has been designed specifically for the land sector and is a central plank of the Australia’s Government’s Clean Energy Future plan to cut pollution and manage the impact of climate change on the Australian economy and landscape. CFI allows farmers and other land managers to earn carbon credits by storing carbon or reducing greenhouse gas emissions on the land. These credits, known as Australian Carbon Credit Units (ACCUs), can be sold to people and businesses wishing to offset their emissions. Participation in the CFI is voluntary; farmers and landholders can choose whether or not to be involved.
Some CFI activities are not included in Australia’s greenhouse accounts under the Kyoto Protocol and do not count towards Australia’s national target. These include soil carbon, feral animal management, improved forest management and non-forest revegetation. Through the CFI, these activities can earn non-Kyoto ACCUs.
Australia will have a price cap starting $20, and a price floor starting at $15/tCO2-e.
Kyoto ACCUs and compliance ACCUs
Activities that count towards Australia’s national target include reforestation, avoided deforestation, and reducing emissions from livestock, manure, fertiliser and waste deposited in landfills before 1 July 2012. These activities can earn Kyoto ACCUs. After the Kyoto Protocol commitment period ends in 2012, these activities will continue to receive ACCUs that can be used to meet liabilities under Australia’s carbon price mechanism. After 2012 these ACCUs are referred to as compliance ACCUs.
Kyoto ACCUs can be traded into the international compliance market established under the Kyoto Protocol. To facilitate export into these compliance markets, Kyoto ACCUs can be exchanged for an equivalent number of Kyoto units.