Carbon credits are becoming a more established part of Australia's environmental investment landscape. They can create revenue from reducing emissions, restore landscapes and help businesses meet their emissions obligations. However, their value depends on more than the amount of carbon they represent. Project quality, market demand and government rules all influence the investment case.
In September 2026, the Climate Change Authority released its fifth review of Australia's Carbon Credit Unit (ACCU) Scheme. Its conclusion was reassuring: the scheme remains fundamentally sound. Rather than recommending a major overhaul, the Authority proposed six targeted improvements intended to strengthen confidence and investment certainty. A record 21.7 million ACCUs were issued in 2025, highlighting the growing scale of the market (1).
What Exactly Is a Carbon Credit?
One Australian Carbon Credit Unit represents one tonne of verified carbon dioxide equivalent emissions avoided or removed from the atmosphere. Eligible activities range from restoring native vegetation and improving soil carbon to capturing landfill gas. Projects must follow an approved method and meet monitoring, reporting and verification requirements before credits are issued.
Once issued, ACCUs can be held, sold or cancelled. A business covered by Australia's Safeguard Mechanism may surrender credits to meet its emissions obligations. Others may voluntarily cancel credits to support a legitimate offset claim. Importantly, cancellation permanently removes a credit from circulation. A credit purchased and cancelled for environmental purposes is not an investment asset available for resale.
Demand is no longer dominated by Government purchases. The review found Safeguard Mechanism compliance accounted for around 80% of ACCUs surrendered or cancelled in 2024–25. That shift has made the carbon market more closely connected to industrial emissions policy.
How Can Australians Invest in Carbon Credits Today?
Australian opportunities. An investor can buy ACCUs in the secondary market through a negotiated transaction or an intermediary. To hold units directly, they need an Australian National Registry of Emissions Units (ANREU) account, which can be opened by an eligible individual or organisation. Credits are recorded and transferred through the Clean Energy Regulator's Unit and Certificate Registry.
Another approach is to finance or own an eligible project. For example, a landholder might establish a soil-carbon project, earn verified ACCUs and sell them to industrial buyers. Outside land ownership, investors may access project developers, businesses generating credits, or appropriately structured investment funds. These approaches can produce revenue from credit sales, but introduce project delivery, verification, financing and liquidity risks.
Overseas opportunities. International voluntary carbon markets operate under different standards. Verra's Verified Carbon Standard, for example, issues Verified Carbon Units for independently verified reductions or removals. However, individuals cannot open Verra registry accounts, and Verra cautions that these units are not suitable investments for individuals. The Gold Standard marketplace allows people to purchase credits supporting overseas projects, but those credits are retired upon purchase. That is an environmental contribution, not a tradable investment. Australian ACCUs also cannot simply be transferred into foreign registries, and international voluntary offsets cannot be substituted for ACCUs in Safeguard compliance.
International carbon markets can also provide investment opportunities for Australians for those willing to do the work. Investors can gain exposure through funds, carbon-related businesses or projects that generate credits overseas. However, different markets operate under different regulatory frameworks, and investors need to consider the quality of the underlying assets, market liquidity and potential risks. Especially currency.
What Is the Authority Proposing?
The review at the centre of this insight makes six recommendations, with two focused on a particularly important question: how long should stored carbon remain protected? Australian sequestration projects can generally commit to 25 or 100 years. Most 25-year projects receive a 20% reduction in credit issuance, plus a separate risk buffer. Yet credits from shorter-duration projects are still used to offset industrial emissions that can remain in the atmosphere much longer.
The Authority recommends reviewing those discounts and buffers by the end of 2027, and assessing whether 25-year credits are suitable for Safeguard Mechanism compliance. It does not recommend an immediate ban or prescribe a new discount. In 2024–25, 22% of ACCUs surrendered for Safeguard compliance came from 25-year permanence projects, making any future change commercially significant.
The remaining recommendations seek to prioritise credible biodiversity, First Nations and other public benefits in any future Government purchasing; give buyers clearer project and unit information; publish a forward roadmap for approved credit-generating methods; and make method development more efficient and predictable. It is important to note here that these are recommendations for government consideration, not rules already in force.
What Would the Changes Mean for Investors?
For Australian investors, the review's recommendations could influence how carbon credits are valued, which projects attract capital and how easily investment opportunities can be assessed.
Firstly, credit quality could become a greater influence on pricing. The proposed review of permanence requirements may change how ACCUs from 25-year projects are treated under the Safeguard Mechanism. If restrictions or additional discounts are introduced, demand could shift towards longer-duration credits, potentially creating greater price differences between project types. This would be particularly relevant to investors already holding ACCUs or financing sequestration projects.
Secondly, improved transparency could make the market more accessible. The Authority recommends clearer information on individual credits, project performance, holdings and transactions. Better disclosure could improve price discovery, reduce due diligence costs and help investors distinguish between higher- and lower-quality opportunities. It may also improve market liquidity, although it would not automatically make ACCUs easier for retail investors to access.
Thirdly, greater certainty around future supply could encourage investment. The proposed roadmap for developing and approving new carbon credit methods would give investors better visibility of emerging opportunities and project timelines. This is significant because the report anticipates that new projects will account for an increasing proportion of ACCU issuance through to 2035.
Finally, prioritising biodiversity, First Nations participation and other public benefits in future Government purchasing could create additional demand for certain credits. For investors, this may provide opportunities to support projects delivering measurable environmental outcomes alongside financial returns, although any price premium would depend on buyer demand and the Government's eventual response.
Importantly, these proposals do not eliminate market risk. The Authority identifies considerable uncertainty around future ACCU prices, with forecasts ranging from $38 to $79 by 2030. Investors will still need to consider how policy changes, supply and demand influence their potential returns.
The Final Word
The significance of the 2026 review is not that Australia needs a new carbon market. It is that an increasingly important market needs clearer standards, more reliable information and greater confidence about what buyers are purchasing.
For Australian investors, the opportunity extends beyond holding credits and hoping prices rise. It includes backing credible projects, technologies and businesses capable of creating measurable emissions reductions. The prospective reforms could make those opportunities easier to assess, but integrity, access, liquidity and policy risk will remain central to the investment decision.
References
(1) Climate Change Authority, 2026 Review of the Carbon Credits (Carbon Farming Initiative) Act 2011: Enhancing the Stability and Integrity of the Australian Carbon Credit Unit Scheme.1 September 2026 https://www.climatechangeauthority.gov.au/publications/2026-review-australian-carbon-credit-units-scheme
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