Climate change is no longer a future risk on the horizon. It is a present-day business issue, and Australian companies of every size are being asked how they plan to reduce their environmental impact. Carbon credits have become one of the most talked-about tools in that conversation, though the mechanics behind them are often misunderstood.
This guide breaks down how carbon credits work, how the Australian carbon market operates, and what businesses need to know before they buy, invest in, or using carbon credits to offset emissions.
What Are Carbon Credits and How Do They Work in Australia?
A carbon credit is a certificate representing one tonne of carbon dioxide equivalent (CO2-e) reduced, avoided, or removed from the atmosphere. CO2-e is the standard unit used to compare the warming impact of different greenhouse gases, including carbon dioxide, methane, and nitrous oxide, against a single benchmark.
In Australia, this runs through the Australian Carbon Credit Unit (ACCU) scheme, administered by the Clean Energy Regulator. One ACCU equals one tonne of CO2-e avoided or removed by a registered project, such as landfill gas capture, savanna fire management, reforestation, or energy efficiency upgrades. Each project must follow an approved method, a set of rules for measuring and verifying emissions reductions, before the Regulator issues ACCUs into the proponent’s account.
How Australian Businesses Can Buy and Invest in Carbon Credits
Businesses buy carbon credits either on the secondary market, where ACCUs trade through brokers or carbon platforms, or directly from a project proponent via an off-take or forward purchase agreement.
Demand comes from two groups: Safeguard Mechanism facilities, which must surrender credits when emissions exceed their baseline, and voluntary buyers offsetting emissions to meet sustainability commitments. Compliance demand is substantial and growing — of the 208 facilities covered by the Safeguard Mechanism in the 2024–25 reporting period, 141 exceeded their baseline, surrendering a combined 10.8 million ACCUs to cover the shortfall (CER Quarterly Carbon Market Report, March Quarter 2026). As a tradable financial product, ACCU pricing moves with supply and demand and varies by project type, making credits an investment asset as well as an offset tool. The spot price has traded in the mid-$30s through early 2026, while businesses that can’t source credits on the secondary market can buy directly from the Regulator under its cost containment measure, currently priced well above spot to keep it a last resort rather than a first stop.
Investors buy anticipating price growth as Safeguard demand rises, while others fund offset projects directly for a long-term return. As with any market, this carries risk, including price volatility and evolving scheme policy — the ACCU Scheme itself is currently under review by the Climate Change Authority, with legislative reforms expected through 2026–27 — so the same due diligence applies as with any other investment.
What Offset Projects Fund, and the Co-Benefits They Deliver
Buying an offset credit means paying for a specific, measurable outcome, whether that’s capturing landfill methane, protecting native vegetation, or supporting Indigenous fire management. Each ACCU is backed by an approved ACCU Scheme method, which sets out exactly how a project must measure, verify, and report the emissions reduction it claims.
Beyond the tonne-for-tonne reduction, many projects deliver co-benefits. Vegetation and land management projects can improve water quality, restore habitat, and rebuild soil health. Savanna fire management, often led by Indigenous ranger groups, cuts emissions from uncontrolled bushfires while supporting traditional land practices and community employment.
The Clean Energy Regulator groups these activities into four main categories, each with its own approved methods and outcomes:
| Project Type (CER Method Category) | What It Does | Co-Benefits |
| Landfill and waste | Captures and destroys landfill methane, or upgrades it to biomethane | Reduces local air pollution, improves site safety |
| Vegetation (includes savanna fire management) | Reforestation, revegetation, safe fire burning, and protecting at-risk native forest | Water quality, habitat restoration, soil health, plus cultural benefits and ranger employment from savanna projects |
| Energy efficiency | Upgrades industrial or commercial equipment to cut electricity and gas use | Lower operating costs, reduced energy demand |
| Agriculture | Recycles animal waste, builds soil carbon, adjusts farm inputs | Improved soil health, reduced on-farm waste |
The project behind each credit determines the value it delivers, in emissions reduced and in the outcomes it supports.
Why Businesses Are Adopting Carbon Credits as Part of Their Strategy
The case for carbon credits now extends well beyond compliance. Businesses use them to cut their carbon footprint, demonstrate credible sustainability progress, meet emerging mandatory climate reporting obligations, and build trust with customers, investors, and supply chain partners. For those generating their own credits through land management, energy efficiency, or renewable energy projects, the ACCU scheme also turns sustainability investment into income rather than a cost centre, part of a broader carbon and climate strategy.
With ACCU issuance running at record levels — the Regulator issued 5.5 million units in the first quarter of 2026 alone, with 22 to 26 million expected across the year (CER Quarterly Carbon Market Report, March Quarter 2026) — supply is healthy for now. But declining Safeguard Mechanism baselines mean demand is projected to catch up with, and potentially outpace, supply later this decade. Businesses that build carbon credits into their strategy early are better placed to manage that shift than those who leave it until compliance forces the issue.
Carbon credits work best as part of a broader strategy, not a stand-alone fix: reduce emissions wherever feasible first, then use high-quality credits, backed by clear environmental and cultural benefits, to address what remains.
Ready to Build Your Carbon Strategy?
Getting this right isn’t just about buying a credit when the compliance deadline is close — it’s about knowing your emissions baseline, understanding which project types and methods suit your goals, and building a strategy that holds up as the scheme evolves. This is where most businesses get stuck, and it’s exactly where The Growth Activists comes in.
Whether you’re buying your first carbon credit, investing in the carbon market, or building a full emissions reduction strategy, The Growth Activists helps Australian businesses turn sustainability ambition into a practical, well-governed strategy, from emissions baselining through to ESG reporting and disclosure.
Get in touch with The Growth Activists today to start the conversation.
