A quick glance at the current bid, offer, and volume demand dynamics for the various ACCU types reveals a complex picture of high demand, fluctuating supply, and varying outlooks.
| Type | Bid | Offer | Volume | Demand | Outlook |
|---|---|---|---|---|---|
| Generic | 31.00 | 32.00 | High | High | Good to Deteriorating to Constructive |
| HIR | 34.00 | 35.00 | High | High | Good to Deteriorating to Flat |
| Savannah | 35.00 | 37.00 | Low | Low | Low to Deteriorating to Flat |
| Indigenous Savannah | 47.00 | 50.00 | Low | High | Low to Deteriorating to Constructive |
| Soil Carbon | 38.00 | 48.00 | Low | Low | Low to High to Flat |
| Reforestation (EP) | 60.00 | 65.00 | Low | High | Low to Improving to Constructive |
Market Dynamics and Future Prospects
With continuous demand from large emitters and significant players within the safeguard mechanism, the market is on the cusp of a defining period. The forward markets, a traditional haven for large buyers seeking to hedge future carbon liabilities, are showing signs of strain with insufficient supply and unrealistic pricing.
Pricing Trends and Opportunities
The forward market pricing, particularly in the 2-3 year range, has spiked significantly above current spot levels. The theoretical price floor and the completion of hedging strategies by large emitters present an attractive opportunity to secure spot ACCUs around $32.
Understanding Market Inertia
The market’s hesitance to adapt is multifaceted. Historically, buyers have benefited from a lack of regulatory pressure to purchase units, and the looming need for increased efficiency poses a substantial challenge.
The Consultancy Conundrum
Sustainability teams and consultancy firms are in a race against time to assess and understand options to reduce emissions. The extensive reports and slow realization of the limited alternatives have led to a newfound recognition of ACCUs as a viable solution.
The Realization Moment and Forward Market Viability
With recent market activity and the return of Request For Pricing (RFP) in the past weeks, there is an awakening to the scarcity of ACCUs at current levels for a structured forward book.
Conclusion: Valuing ACCUs in the Current Climate
As we edge closer to Q1 2024, the market’s forced action and the uncertainty surrounding supply suggest that ACCUs are undervalued at $31.50, based on both outright value and strategic timing considerations.