LGCs at Record Low Prices. Too Good to be True?

Yet, as with most problems in life, there is an unintended silver lining.
The same collapse in LGC prices that has stripped value from new C&I solar investment has created a significant opportunity for corporations seeking to reduce their Scope 2 emissions.

For the first time since the scheme’s inception, businesses can voluntarily acquire LGCs on the secondary market at a cost that is often less than 20 per cent of equivalent GreenPower products. For many organisations racing to meet 2025 climate commitments, the business case is compelling.

Unsurprisingly, businesses are taking notice.

Rather than entering into expensive GreenPower retail contracts or negotiating renewable energy purchasing arrangements through their energy retailers, many corporations are choosing to bypass these pathways entirely. Instead, they are sourcing LGCs directly from the secondary market, often through specialist providers such as Ecovantage, and achieving the same accounting outcome at a fraction of the cost. In an environment where sustainability budgets are under increasing scrutiny, this is being viewed internally as the deal of a lifetime.

The data supports this shift. Published Clean Energy Regulator figures show voluntary LGC holdings have grown by approximately 85-90 per cent in recent years. By the end of Q3 last year, around 14 million voluntary LGCs had already been surrendered in the first nine months of 2025, compared to 10.4 million for the entirety of 2024. Voluntary demand is not just rising, it’s exploding.

On the one hand, this is encouraging. At a time when legislated targets have failed to create sufficient demand, voluntary corporate action is stepping in to absorb surplus certificates. It demonstrates that Australian businesses remain committed to emissions reduction, even when policy frameworks fall short. In that sense, the market is showing resilience.

But this trend also raises two uncomfortable questions that the industry cannot help but ask.

The first is whether these record-low prices are sustainable. The C&I solar sector remains stagnant, and many of the utility-scale projects that were expected to generate future LGC supply are facing consecutive delays. Some are now unlikely to reach commissioning before 2030. Grid constraints, planning delays, and rising construction costs continue to bite. If new supply fails to materialise while voluntary demand continues to grow, today’s ultra-low prices may prove temporary.

A correction toward a more sensible LGC value then becomes not just possible, but likely. And when it comes, the same businesses currently benefiting from cheap certificates may find the economics change rapidly. The deeper question is whether the C&I renewables market will correct in a way that restores confidence and accelerates new investment, or whether such volatility will cement the hesitation seen among some developers and financiers as seen today.

The second question cuts even deeper: is this what the LRET was meant to become?

Was the scheme designed to evolve into a low-cost mechanism for corporations to purchase their way into favourable carbon accounting outcomes? Or was it intended to drive genuine, additional renewable energy generation by providing a durable investment signal to the market?

For most of its history, the answer was clearly the latter. The LRET played a pivotal role in scaling Australia’s renewable energy sector, underpinning billions of dollars in investment and delivering real emissions reductions. LGCs were not cheap, and that was the point. Their value reflected scarcity, ambition, and the cost of deploying new generation.

Today’s market looks very different. Cheap certificates may be good news for corporate sustainability teams, but they do little to stimulate real growth. They do not unlock new C&I solar projects, they do not support local supply chains or skilled jobs, and they do not provide the long-term certainty investors need.
There is a risk that we mistake high voluntary surrender numbers for success when in reality, they are a symptom of a scheme that has lost its edge.

Voluntary action is filling a gap left by outdated targets, but it is no substitute for a policy framework that actively drives new capacity.

None of this is an argument against voluntary purchasing. On the contrary, it is encouraging to see businesses stepping up when policy ambition has lagged. However, voluntary demand should be complementing a strong policy signal, not compensating for its absence.

If Australia is serious about accelerating the energy transition, the LRET targets must be brought back into alignment with national emissions goals and market conditions.

Without that reset, LGCs risk becoming little more than a cheap accounting instrument, disconnected from the physical reality of renewable energy deployment.

The irony is hard to ignore. Just as corporations are demonstrating unprecedented willingness to act, the scheme designed to harness that momentum is no longer doing its job. Until that changes, the LGC market will remain a place of missed opportunity, delivering short-term cost-effective offsets but falling well short of its original purpose.

The time to buy is now, but surely, that was never the intent.