Demand for carbon credits is strong, and it’s here to stay.

On a recent trip to the US, I attended the Carbon Unbound West Coast conference, an event for business leaders, policymakers and scientists to discuss strategies for decarbonisation.

What I heard was encouraging news for the Australian carbon market.

Carbon credits for past, present and future  

Demand for carbon credits in the US is strong. Leading the charge are the tech and energy industries, who have a significant environmental footprint and the margins to purchase offsets.

At the conference I spoke to entities buying carbon credits to meet ambitious emissions-reduction commitments. Not only were they seeking credits to meet this year’s targets but contracting up to five years ahead for future credits (known as offtake agreements).

If we look to Microsoft – a company known for its bold, market-leading commitments to decarbonisation – they are not just buying credits for the present and the future but are committed to addressing their historical emissions as well.

The good news for landholders is that demand for carbon credits is outstripping supply, especially when it comes to credits with high integrity. Buyers are taking a global approach to secure offsets, which is especially timely with negotiations taking place between governments at Cop29 to facilitate international carbon credit trading.

Australia’s carbon market advantage

On a global scale, Australia is in an enviable position, with a carbon market and methodologies that are recognised for their integrity.

The government oversight of the Australian Carbon Credit Unit Scheme (the ACCU Scheme) provides confidence to landholders and buyers, alike, who wish to participate in the market. The Clean Energy Regulator administers the scheme and the Department of Climate Change, Energy, the Environment and Water (DCCEEW) prescribes the methodologies eligible to generate credits. Methodologiesare periodically updated in line with the best available science.

Australia’s Safeguard Mechanism, which requires large emitters to adhere to an emissions threshold, gives weight to the scheme, requiring these entities to purchase ACCUs as offsets to reduce their carbon footprint. The March 2025 first year compliance deadline for this is fast approaching.  

By comparison, the US relies on a voluntary carbon market. This means that government does not oversee or regulate the generation and trading of carbon credits, except in some states that have compliance requirements. This has given rise to independent standards bodies that administer markets and methods.

Landholders who wish to participate in the US carbon market must choose which standard to participate in. This can be a complex process due to the variability between methods and the perceived rigour and scientific accuracy (and therefore, value) associated with each one. Sellers in these markets do not have the same certainty for demand as is provided by the Safeguard Mechanism so they need to put more effort into securing buyers early.

Reflecting the credibility of the Australian market, generally we are seeing Australian Carbon Credit Units (ACCUs) trading at a higher price than voluntary credits.

The importance of nature-based solutions

Carbon credits are not just about carbon. The importance of nature restoration for addressing climate change was well recognised by conference-goers in the US, echoing what we are seeing in Australia through the Nature Repair Act and recent Nature Positive Summit.  

Alongside engineered carbon removal solutions which have long-term carbon storage potential (e.g. biochar, enhanced rock weathering), US carbon credit buyers showed interest in nature-based solutions such as reforestation and soil carbon sequestration.

In Australia, the opportunity for nature-based emissions reductions is significant. Whilst not viable for every primary producer, those who can participate in such carbon projects are well positioned to see productivity improvements, alongside the benefits that come with new sources of income.

My trip to the US highlighted the opportunity for Australian producers to capitalise on the Australian carbon market, with the confidence that it is well regarded, it’s performing, and it’s delivering for farmers.

Contact Atlas Carbon today for a free Cost-Benefit Report to consider if a project is for you.

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