ACCUs and Carbon Markets in Australia

Quick Answer: What Are ACCUs and Why Do They Matter?

An Australian Carbon Credit Unit (ACCU) represents one tonne of carbon dioxide equivalent (tCO2e) that's been avoided or removed from the atmosphere. Issued by the Clean Energy Regulator (CER), ACCUs are the backbone of Australia's carbon market — and since the Safeguard Mechanism reforms kicked in on 1 July 2023, they've become a compliance necessity for the country's biggest emitters.

If you run a facility emitting over 100,000 tCO2e per year, you need ACCUs (or Safeguard Mechanism Credits) to meet declining baselines. If you're a smaller business or individual looking to offset emissions, ACCUs are one of the most credible offset options available in Australia.

Key takeaway: ACCUs are Australia's primary carbon credit, each representing one tonne of CO2-equivalent reduced or removed, and they're the main compliance tool under the reformed Safeguard Mechanism.

How the Reformed Safeguard Mechanism Works

Before 2023, the Safeguard Mechanism was largely toothless — baselines rarely bound anyone. The reforms changed that. Now around 215 facilities across mining, oil and gas, manufacturing, transport, and waste face baselines that decline by roughly 4.9 percent per year on average, steering Australia toward its 2030 target of 43 percent below 2005 levels.

Here's the compliance cycle in plain terms:

1. Baseline assigned — Each facility gets a site-specific emissions baseline from the CER.

2. Emissions reported — At year-end, the facility reports actual scope 1 emissions.

3. Shortfall calculated — If emissions exceed the baseline, you owe the difference.

4. Surrender ACCUs or SMCs — You buy and surrender enough units to cover the gap by 31 March of the following year.

The first compliance deadline landed on 31 March 2025 (for the 2023-24 year). The 2024-25 deadline falls on 31 March 2026. Covered emissions are already trending down — from 135.9 MtCO2e in 2023-24 to an estimated 132.7 MtCO2e in 2024-25.

Facilities that beat their baseline earn Safeguard Mechanism Credits (SMCs), which can be banked, sold, or surrendered in later years. Over 8 million SMCs have been issued to 57 facilities so far, adding a second tradeable instrument alongside ACCUs.

ACCU Supply, Demand, and Pricing

The ACCU market has matured rapidly. Record issuances of 21.7 million units in 2025 reflected a surge in project registrations and methodological improvements, with projections of 22–26 million issuances in 2026.

The government's Cost Containment Measure (CCM) acts as a price ceiling. For 2025-26 it's set at $82.68, indexed at CPI plus 2 percent each year. If spot prices ever approach that ceiling, facilities can buy unlimited units from the CER at the CCM price instead of sourcing from the open market.

Right now, the market is roughly balanced. But as baselines decline faster and easy abatement options thin out, demand is expected to outstrip supply later this decade. That's why many analysts see the current ~$36 spot price as a floor, not a ceiling.

Worked Example: Safeguard Compliance for an Australian Mine

Let's walk through how a mid-size coal mine in Queensland would handle compliance.

Scenario: Glenfield Resources operates a surface mine emitting 320,000 tCO2e in the 2024-25 year. Its CER-assigned baseline for that year is 295,000 tCO2e.

• Shortfall: 320,000 − 295,000 = 25,000 tCO2e
• Options:

- Purchase 25,000 ACCUs on the spot market at ~$36 each = $900,000

- Or use a mix of ACCUs and operational changes (methane capture, fleet electrification) to reduce actual emissions closer to baseline

- Or purchase SMCs from outperforming facilities at a negotiated price

• Cost Containment backstop: If spot prices spiked above $82.68, Glenfield could buy from the CER at that fixed price, capping the compliance bill at $2,067,000 for 25,000 units.

Most facilities blend strategies — investing in abatement to shrink the gap while purchasing credits to cover the rest. The earlier you start reducing emissions, the less you'll spend on credits as prices tighten.

Use our Business carbon footprint calculator to estimate your facility's total emissions and potential offset costs.

Types of ACCU Projects

Not all ACCUs are created equal. The CER approves projects under specific methodologies, and each type carries different co-benefits and risks:

• Vegetation and reforestation — Planting native species or managing regrowth on cleared land. These generate high-integrity removals but take years to deliver volume.
• Savanna fire management — Indigenous-led early dry-season burns across northern Australia reduce methane and nitrous oxide from late-season wildfires. Widely regarded as a gold-standard methodology.
• Landfill and waste gas — Capturing methane from decomposing waste. Established technology with predictable output.
• Soil carbon — Boosting organic carbon in agricultural soils through changed farming practices. High potential but measurement uncertainty remains a challenge.
• Energy efficiency — Industrial upgrades that reduce fossil fuel consumption. Straightforward to verify but limited in scale.

The CER publishes a register of all ACCU projects, so you can verify exactly where your credits come from. If you're buying voluntarily, look for projects with co-benefits like biodiversity restoration or Indigenous employment.

Explore verified offset opportunities on our offset projects page.

How Australia's Market Compares Globally

Australia's carbon market sits in an interesting position. It's not as large as the EU Emissions Trading System (EU ETS), where allowances trade above €65, and it doesn't cover as many sectors as California's cap-and-trade program. But it has several distinct features:

• Crediting + baseline system — Unlike a traditional cap-and-trade scheme with auctioned allowances, Australia uses project-based credits (ACCUs) alongside declining facility baselines. This hybrid approach gives emitters flexibility.
• Government price floor and ceiling — The CCM ceiling prevents price shocks, while the government's commitment to purchase ACCUs through contracts provides a de facto floor.
• Growing international linkage potential — The government is exploring bilateral agreements to allow international carbon units for Safeguard compliance, though this hasn't been finalised yet.

Compared to peers, ACCU prices (~$36) are lower than EU ETS allowances (~€65) but higher than many voluntary market credits globally (~$5–$15 USD). That middle ground reflects a compliance market still maturing.

To compare your footprint across different national contexts, check our carbon footprint calculators hub.

Voluntary Offsetting: How Individuals and SMEs Can Participate

You don't need to run a 100,000-tonne facility to engage with ACCUs. Thousands of Australian businesses and individuals buy them voluntarily each year to offset flights, operations, or entire company footprints.

Here's how to do it:

1. Calculate your footprint — Use our Your footprint calculator to get a baseline number for your household or business emissions.

2. Choose a reputable broker or retailer — Several Australian platforms sell retirement-grade ACCUs, meaning the credits are permanently cancelled on your behalf.

3. Select a project type — Decide if you want savanna burning, reforestation, soil carbon, or another methodology based on co-benefits that matter to you.

4. Retire the ACCUs — The broker retires units in the Australian National Registry of Emissions Units, and you receive a certificate.

At ~$36 per tonne, offsetting the average Australian's 15–17 tonne annual footprint would cost roughly $540–$612. That's not trivial, but it's within reach for many households — especially once you've reduced what you can through energy efficiency and transport choices.

Track your reduction progress alongside offsets using our carbon price tracker.

Key takeaway: With demand expected to exceed supply later this decade, ACCU prices are likely to rise well above the current ~$36 spot level, making early action on emissions reduction a smart financial move.

What's Next for Australia's Carbon Market

Several developments will shape the ACCU market through 2026 and beyond:

• Tightening baselines — Each year the Safeguard baseline ratchets down, widening the gap between business-as-usual emissions and compliance thresholds. By 2028-29, aggregate baselines could sit 20–25 percent below 2023 levels.
• Supply-demand crunch — Even with record issuances, most analysts expect demand to overtake supply between 2027 and 2029. That will push spot prices toward the CCM ceiling.
• Methodology reforms — The CER continues tightening integrity standards, including improved additionality tests and permanence requirements. Some legacy project types may see reduced issuance.
• International units — If the government allows international credits under Article 6 of the Paris Agreement, it could ease domestic supply pressure — but it could also dilute demand for Australian projects.
• Nature Repair Market — A separate biodiversity credit scheme is being developed alongside the carbon market. Projects delivering both carbon and biodiversity outcomes could command premium prices.

For facility operators, the message is clear: invest in real abatement now while ACCUs are relatively affordable. For voluntary buyers and SMEs, it's a good time to build offsetting into your annual budgets before prices climb.

Estimate how energy efficiency improvements could shrink your offset needs with our Energy calculator.