Forestry and the Emissions Trading Scheme
Domestic News
In December the Minister for Climate Change James Shaw announced consultation on the Zero Carbon Act will commence in May 2018 with the intention to introduce the bill to parliament by October. The Zero Carbon Act will provide the high level legislative framework for climate change policy. It will see New Zealand put a new climate change target for 2050 into law and establish an independent Climate Change Commission to provide advice to the government of the day. An interim commission will start to prepare advice for the government from March.
The Ministry for the Environment (MFE) released further consultation on NZ-ETS. Matters arising from the NZ-ETS review (that commenced in 2015) will be completed in the latter part of 2018, with any legislative changes to the Climate Change Response Act expected by the end of 2019. MFE work is progressing to improve the design and operation of the NZ-ETS including how best to implement the in-principle decisions (auctioning, international units, a different price ceiling, co-ordination of decision making), forestry accounting (averaging), industrial free allocations and operational and technical matters.
Mandatory Emissions Return
For post-1989 participants in the NZ-ETS, the start of 2018 marks the start of the third commitment period (CP3). The Mandatory Emissions Return for CP2 (1 January 2012 to 31 December 2017) is due for submission by June.
Deforestation
The Deforestation Emissions Return for any land use change of pre-1990 forest land is due by 31 March.
Price Update
NZU spot prices have remained firm through the Christmas break, closing the year at $20.60. The start of the new year has seen more gains with current trading (7th February) at a record high of $21.40.
In Europe, EUA prices continue their upward trend, which is putting further pressure on the margins of coal-fired power generators in particular. Prices have rallied in part due to news that the EU parliament has recently approved legislation to overhaul the EU ETS in the period 2021-2030 (more here).
Figure 1: Recent Carbon Prices - NZ$/t CO2e – Real (CPI adjusted)
