The first tangible impact from the surprise re-election of the Morrison Coalition government has been a direct hit on environmental markets, where the price of renewable energy certificates and Australian carbon credits (yes, we do already have a carbon market) both fell.

As the overall share market surged, traders said the price of renewable energy certificates, officially known as LGCs (large scale generation certificates) slumped from $41/MWh to around $38/MWh, while the price of ACCUs (the Australian carbon credit units), fell 80c to $16.25.

The price of LGCs is the most interesting, given its recent volatility. Prices fell sharply earlier this year as it became clear that the renewable energy target (RET) of 33,000GWh by 2020 would be easily met, and the futures price of these certificates evaporated to nearly nothing.

But there was a big rebound in the price of LGCs – it jumped by one-third to more than $40/MWh – when it became clear that many projects would be delayed by connection issues and commissioning problems, and some left at the starting gate despite getting financial closure.

The price also rose on the assumption of a Labor win, and the potential to use LGCs to help big emitters meet more ambitious emissions reduction targets through the safeguard mechanism.

Those hopes have now evaporated with prime minister Scott Morrison making it clear that there will be no change to his government’s modest emissions reduction target of 26-28 per cent.

“We anticipate that LGC prices could ease from here,” Morgan Stanley analysts said in a note to clients. “Under a returned Coalition government we see little scope for additional LGC demand.” Marco Stella, from TFS Green, agreed.

“On the LGCs the election result seems to have impacted on the optimism that some participants were feeling about the potential for a change in government to revitalise the market or potentially allow some kind of fungibility of LGCs into a reinvigorated NEG or safeguard mechanism,” he said.

Tim Buckley, senior analyst from IEEFA, said the Coalition policy ignored international trends, particularly in the financial markets where there was increased focus on the risk of fossil fuel investments.

“Global markets are now pricing in carbon risk,” Buckley said. “Global capital is moving. Australian climate denial won’t stop the global transition, (but) it will slow it.”

Kane Thornton, from the Clean Energy Council, said while the government had been able to dodge questions about its energy policy in the election campaign, it would not be able to do so if it wanted to ensure a strong economy.

“Its focus on a strong economy will be seriously undermined in the medium and long term without a robust and efficient energy system,” Thornton said. “We all know that leads to clean energy. Every other advanced economy in the world is accelerating its investment in renewable energy and energy storage.

“While the results of the election were different from what the polls predicted, climate change and energy were clearly important issues during the campaign. Finding a credible approach to dealing with them remains urgent.”

Thornton said the clean energy industry had more work to do to build the case for clean energy policy, to show local communities and our politicians the benefits and importance of rolling out wind and solar across the country.

“Ironically, the lack of a coherent energy plan is only likely to encourage more and more households and businesses to invest in solar and batteries,” he said.

And Morgan Stanley echoed Thornton’s point about a strong economy and low energy prices. The Coalition has said it will seek cut wholesale prices to around $70/MWh by 2021, but no-one can see how they will do that if the focus is on fossil fuels, rather than wind, solar and storage.