Australia’s carbon credit market is sending two signals at once, and they point in opposite directions. The Clean Energy Regulator (CER) has released new forecast data showing nearly 700,000 ACCUs are expected to be delivered to the government under carbon abatement contracts over the next six months, a surge it links to sellers taking advantage of the new permanent exit arrangement. In the same week, analysis from Reputex, the firm that designed the Safeguard Mechanism’s reformed architecture for the Labor government in 2022, concluded that Australian carbon prices would need to more than double from current forecast levels to put the scheme on a 1.5C trajectory. For buyers, developers, and investors, the short-term supply picture is improving while the long-term policy gap is widening.
700,000 Credits in Six Months
The headline number from the CER’s new forecast is concrete: close to 700,000 Australian Carbon Credit Units delivered to the Commonwealth under carbon abatement contracts (CACs) within the next six months. That is a meaningful volume against the scheme’s total output. The regulator has previously said it expects total ACCU issuance of between 22 and 26 million units in 2026, and around 84 million ACCUs remain scheduled for delivery under fixed delivery contracts.
The driver behind the surge is regulatory, not operational. On 1 July 2026, the CER opened a permanent fixed delivery exit arrangement, which allows contract holders to make a discounted exit payment instead of delivering ACCUs, once they have met a 25 percent minimum delivery requirement. Until now, sellers locked into older, lower-priced contracts faced a binary choice: deliver at a loss against market prices, or default. The exit valve converts that deadlock into a priced decision, and the CER’s forecast suggests it is getting stalled contracts moving again.
How the Exit Valve Reprices Delivery Risk
The mechanics matter for anyone holding or trading CAC-linked supply. Under a fixed delivery contract, the seller owes the government a set number of ACCUs on a set schedule at a set price, with make-good provisions: the quantity must be delivered regardless of how the underlying project performs, and shortfalls can be sourced from other projects or bought on the secondary market. That structure concentrates delivery risk on the seller, which is exactly why chronically underperforming contracts became a multi-year overhang on the market.
The permanent exit arrangement changes the calculus. A seller that has delivered at least a quarter of its contracted volume can now pay its way out at a discount rather than buy expensive spot credits to make good. For the market, that does two things: it clarifies which contracted volumes are realistically deliverable, and it lets sellers redirect above-market-value supply away from government contracts and toward compliance or voluntary buyers willing to pay more. The CER’s six-month delivery forecast is the first quantified read on how that repricing is playing out.
The 1.5C Bar: More Than Double
The second signal is about where prices need to go, not where they are. Reputex analysis published this week finds that Australian carbon prices would need to more than double compared with current forecast levels to align with a 1.5C temperature trajectory. Reporting by the Australian Financial Review on the same analysis frames the corporate exposure directly: manufacturing and resources companies would face a fivefold increase in a key cost of complying with Labor’s flagship emissions policy if the government aligned it with the Paris Agreement’s most ambitious goal.
The political context is what makes the finding actionable rather than academic. The government is simultaneously being lobbied by business groups to rule out major changes to the Safeguard Mechanism and pressed by environmental campaigners for harder and faster emissions cuts. Reputex carries unusual weight in that fight: it is the climate modelling firm that designed the scheme for Labor in 2022. When the architect of the policy says the price signal is less than half of what a 1.5C path requires, the debate shifts from whether settings will be revisited to when.
What It Means for Buyers, Developers, and Investors
For compliance buyers under the Safeguard Mechanism, the near-term message is that government-linked supply is loosening at the margin. The delivery surge and the exit arrangement together reduce the tail risk that contracted volumes simply fail to materialise. But the Reputex analysis is a reminder that today’s price levels reflect today’s policy settings, and those settings are under active political pressure from both directions. Hedging strategies built on a flat price assumption carry regulatory risk in both directions.
For project developers, the exit arrangement is the more immediate development. It draws a clean line under legacy contracts and clarifies which projects can redirect supply to higher-value channels. Developers holding optional delivery contracts, which carry no obligation to deliver, now sit in a structurally stronger negotiating position if compliance demand tightens later in the decade.
For investors, the two signals read as a market normalising its past while under-pricing its future. A regulator forecasting surging deliveries is solving a stock problem. A modelling firm calling for prices to double is describing a flow problem. The gap between the two is where ACCU market exposure will be repriced.
What to Watch
Three checkpoints over the coming months. First, whether actual deliveries track the CER’s 700,000-unit forecast, which would confirm the exit arrangement is unwinding the contract overhang rather than just restating it. Second, any government response to the Reputex analysis: a decision to hold Safeguard settings steady, or to tighten baselines, will move ACCU demand expectations well before it moves legislation. Third, uptake of the exit arrangement itself, since a wave of discounted exits would shrink the 84 million units scheduled under fixed delivery contracts and change the medium-term supply map for both government and private buyers.
