ETS Market Update
Switch to Averaging Accounting
Earlier this month we reached out to all of our ETS service clients who have carbon accounting areas that are eligible to move to the new averaging carbon accounting system. The purpose of our email was to elicit an instruction whether eligible CAAs should be switched to averaging or remain on the legacy stock change system. This decision must be made before next year’s Final Emissions Return can be submitted. We are very pleased with the response we have received to date and strongly encourage those clients who have not yet had a chance to review our email, to do so and get back to us as soon as possible.
Climate Change Commission recommendations not adopted
Contrary to market expectations, the New Zealand government has not adopted the Climate Change Commission’s recommendation to raise the 2023 CCR trigger price to well over $170, but instead opted to increase it to a comparatively modest $80.64.
The impact was an immediate $10 drop in the NZU spot price to just below $75. At the time of writing, the NZU spot price had recovered somewhat to around $77.
New online platform Tupu-ake
This month, PF Olsen got a first glimpse at Tupu-ake, Te Uru Rakāu’s successor online platform to the Climate Change Information System. Tupu-ake is expected to go live on 24 January 2023. The new platform features a number of key changes, such as:
- Greater transparency around the processing status of applications, both for users and government employees
- Improved access to and availability of information on a wide range of ETS topics
- Improved efficiency and reduced risk of errors through so-called input returns, where users can upload shapefiles with harvest and replant information and Tupu-ake automatically calculates CAA-level stock change
- Ability to register multiple representatives. Historically, it has only been possible for one person to have access to the online platform, which has created issues around redundancy and (lack of) visibility for forest owners who engage ETS services providers.
Te Uru Rakāu has indicated that it will continually add more functionality and information to Tupu-ake and ETS providers will likely take some time to adapt their internal processes to the new platform, however, we expect the new system will significantly streamline and improve the functioning of New Zealand’s Emissions Trading Scheme in the short to medium term.