• New futures contract from CME to fuel Aussie carbon market
  • ACCU futures add transparency, depth
  • Futures could help Australia meet our 2050 targets

 

As Australia races towards its ambitious goal of net-zero emissions by 2050, new mechanisms are emerging to help businesses navigate the changing landscape.

One such tool is the Australian Carbon Credit Unit, or ACCU.

These carbon credits are designed to incentivise projects that reduce or remove greenhouse gas emissions.

But as the market grows, so does the need for a more liquid trading market.

To meet this demand, the CME Group, alongside Xpansiv, has launched the CBL ACCU futures contracts in Australia, providing a new way for businesses to manage their climate responsibilities.

Nicolas Dupuis, the Executive Director for Energy and Environmental Products at CME, arrived in Australia from Singapore to do a roadshow and explain the benefits of this new product.

 

How ACCUs have developed in Australia

Dupuis shared with Stockhead the story of Australia’s carbon market.

“Australia has actually done a very good job in developing one of probably the most sophisticated carbon incentive programs,” Dupuis began.

He explained how the country’s journey started in 2012, when the government first attempted to implement an emissions trading scheme, initially driven by the Liberal government.

“Now, we are here in 2025 with a very original framework that’s quite unique to Australia.”

The framework, Dupuis explained, is a two-pronged approach: companies can either offset their carbon emissions voluntarily, or participate in a mandatory compliance market known as the Safeguard Mechanism.

“There’s no other country that has chosen this kind of dual mechanism.”

But the ACCUs are not just allowances that are handed out by a regulator like in other markets; these credits are generated from real-world projects that actively reduce carbon emissions.

These projects can range from farming techniques to forest preservation, and they follow strict methodologies approved by regulators.

“Any activity that reduces carbon emissions, you can receive a credit, and those credits can be used in the compliance markets,” Dupuis said.

The interest in the Australian market, especially from international firms, has been growing significantly, with CME Group seeing an increasing number of inquiries from global players.

 

Hedging future risk

But how do derivatives like ACCU futures help in the pursuit of net-zero goals or energy transition?

Dupuis explained that futures markets bring a much-needed layer of transparency to the carbon credit market, particularly for investors and project developers.

“Once the liquidity picks up, derivatives markets really add transparency and price visibility,” he said.

The key here is that when the derivatives market develops, it will give investors clear indicators of future prices.

“If you are a project developer, you can now index your forward agreements on the settlement price of the futures contract,” Dupuis explained.

This helps companies hedge against price fluctuations, and gives them more confidence when it comes to long-term investments.

It’s essentially a lifeline for project developers who need financial backing for carbon-reducing projects.

“We’re linking together an ecosystem that benefits traders, project developers, and end-users who will need carbon credits to meet their emission reduction targets.”

Read later: Carbon Neutral versus Net Zero, and why offsets may not be the answer

 

More depth, less volatility

Before CME Group’s futures product came to market, the Australian carbon credit market was primarily spot-based, with a few brokers and trading platforms facilitating transactions.

“It was mostly bilateral transactions, with brokers helping to facilitate deals,” explained Dupuis.

Now, with the introduction of CME Group’s derivatives product, the market has more depth, transparency and opportunities for long-term hedging.

The CBL ACCU futures will offer five contracts, which go out to three years.

When asked about the forces that would dictate the price of these ACCU Futures, Dupuis didn’t hesitate.

“It’s mainly about supply and demand. The supply side is a bit tricky to predict because the regulator approves credits from various projects on a case-by-case basis.

“But on the demand side, you have both economic and regulatory forces at play.”

While supply can be unpredictable, the demand is driven by companies’ obligations – whether in the voluntary or compliance markets – to reduce their emissions.

This led to the inevitable question: would speculators make the market volatile, as they do in other commodities?

“We do expect some investors to come into the market, but they’re not necessarily speculators,” Dupuis clarified.

He explained that while banks and investment funds may enter the market, their primary aim isn’t to speculate but to help their clients access carbon credits or hedge their exposure.

And even if speculators do enter, CME Group’s approach is one of careful regulation.

“We are very careful not to create an extremely volatile market.

“We have strict price control mechanisms in place and regulations to ensure smooth market activity.”

 

‘Catalyst for change’

Dupuis also explained to Stockhead the mechanics behind these new futures contracts, clarifying what “physical settlement” actually meant.

“We deliver what we call a ‘generic ACCU’.

“ACCU isn’t a fungible product – it varies project by project, depending on the methodology used.

“Each project’s ACCU can look quite different from the next, but a ‘generic ACCU’ refers to a regulated version that’s accepted in the market.”

The delivery of these contracts, said Dupuis, takes place on the Australian National Registry Accounts, and CME partners with CBL Markets to handle the transfer of units between sellers and buyers.

He noted this system ensures smooth and regulated transactions.

There is indeed lot of excitement around this new product, but Dupuis believes people need to understand how these instruments work, and how they fit into the global carbon ecosystem.

“Our objective is simple: to help the market grow. We’re not just focused on traders. We’re thinking about the entire ecosystem.

“This is not just a futures market – it’s a catalyst for change.

“It’s a way to support investments in carbon-reduction projects and ultimately help the world achieve net-zero emissions.”

 

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