After being allowed to break long-standing government supply contracts to cash in on a booming market, private companies have been gifted a multi-billion-dollar windfall. In a surprise move, companies contracted to supply Australian Carbon Credit Units (ACCUs) to the government can instead trade them on the open market. While the government pays $12 a tonne, the market has surged 200 per cent in just over a year and been as high as $55 a tonne.
Companies have two ways to reduce their carbon emissions to net-zero. They can change what they do or buy credits to cover what they cannot or will not change. Carbon credits allow polluting companies to offset some of their carbon emissions rather than eliminating them. Forcing down the price of credits means there is less incentive to spend money to cut processes or products that pollute, as it becomes cheaper to offset the emissions on the market.
The idea is that companies will make reductions, systemic reductions, within their operating model to reduce emissions, and as a means of last resort, they purchase carbon credits if they can't reduce your emissions any further. With an increase in the carbon credit price, companies are dissuaded from buying them. If effect, the higher carbon price helps reduce emissions.
Companies have two ways to reduce their carbon emissions to net-zero. They can change what they do or buy credits to cover what they cannot or will not change. Carbon credits allow polluting companies to offset some of their carbon emissions rather than eliminating them. Forcing down the price of credits means there is less incentive to spend money to cut processes or products that pollute, as it becomes cheaper to offset the emissions on the market.
The idea is that companies will make reductions, systemic reductions, within their operating model to reduce emissions, and as a means of last resort, they purchase carbon credits if they can't reduce your emissions any further. With an increase in the carbon credit price, companies are dissuaded from buying them. If effect, the higher carbon price helps reduce emissions.