Market Update | 8 December

• Australia becomes signatory to COP28’s 100+ nations pledge for tripling of renewables
• VEU downwind of ‘imminent’ broadening of program scope to fast-track electrification 
• Potential for ACCU reform seeking to improve baselines for landfill waste gas projects

Federal Government’s Bold Moves at COP28 In a significant development at the World Climate Action Summit during COP28, the Federal Government of Australia has aligned with 100+ nations in joining COP28’s Global Renewables and Energy Efficiency Pledge, which aims to triple global renewable capacity and double energy efficiency by 2030. Among those things highlighted, the expanded Capacity Investment Scheme (CIS) looks to facilitate 32GW of new renewable generation, fostering investor confidence and delivering cleaner, affordable energy for households and businesses across the nation. However, while generation is touted to increase, grid capability and transmission from renewable energy zones will need in-tandem attention. Emphasis was made on the role the groundbreaking $2 billion Hydrogen Headstart program for large-scale hydrogen projects will have for renewable energy generation, and with rooftop solar penetration being the highest globally, the Federal Government has set its sights on reaching 82% renewables by 2030. At COP28, Australia also unveiled the Net Zero in Government Operations Strategy, reinforcing transparency through public emissions reporting. The strategy outlines steps for the government’s shift to net zero in areas like energy, procurement, and fleet, emphasizing renewable energy adoption and building efficiency.

VEU looking to get cooking without gas

In a bid to accelerate what is to be a seismic shift away from natural gas (domestically), Victoria looks poised to introduce further financial incentives encouraging households to make the switch. Energy Minister Lily D’Ambrosio announced significant changes to the state’s Victorian Energy Upgrades (VEU) program, aiming to transition industry and over 2 million households to all-electric alternatives.

One of the potential updates is the consideration for an additional activity for electric cooktops, intended to broaden program participation and stimulate a faster transition for homes. New activities such as this are expected to increase the VEEC certificate creation which is currently trailing behind annual targets, and by relation, in this week’s public forum held by the VEU it was announced that the VEU has no concerns of meeting VEEC creation targets. 

Acknowledgment was made that Victoria will need to transition over 200 homes daily from natural gas to achieve its ambitious net-zero emissions target by 2045.

Australia’s largest ACCU projects – Landfill Gas, not going to waste

Positive developments are unfolding in Australia’s Carbon Credit (ACCU) landscape, showcasing the government’s commitment to environmental responsibility. The Australian Carbon Credit Unit (ACCU) scheme, a linchpin of the nation’s climate policy, is undergoing careful review.

ACCUs have predominantly supported landfill gas projects, which capture and combust methane emissions, either neutralised in flares or electricity generators. These projects have created around 30% of all ACCUs, totaling approximately 4.1 million ACCUs annually.

While a debate ensues about the integrity of landfill gas projects, recent updates reveal a strong commitment to reform. The primary concern, related to low baselines (particularly in projects with generators), is actively being addressed to answer conflict with “additionality” – a question of whether projects would capture and combust methane without ACCUs.

In a positive move, the Department of Climate Change, Energy, the Environment, and Water (DCCEEW) is in negotiations to introduce new rules and proposed increases to baselines.
While a 37% baseline is under consideration, experts argue for more conservative figures, reflective of regulatory requirements and revenue incentives.

The anticipated reforms signify a renewed dedication to ensuring a fair and effective carbon credit system.