Forestry and the Emissions Trading Scheme
NZ ETS Decisions – Tranche Two
The Government has recently announced the second tranche of decisions on improvements to the NZ ETS. The decisions announced on 16 May 2019 are to:
- improve rates of compliance within the ETS through restructured penalties for late surrender or errors in reporting emissions
- increase transparency through publication of emissions and removals data at the participant level
- Prepare for robust and transparent auctioning by enabling independent oversight of the auctioning process
- Remove the fixed price option (FPO) by no later than 31 December 2022
- Enable a potential price floor in the future if desired, through an auction reserve price
- Establish a separate market governance work programme.
More information on the decisions can be found here.
Price update
NZU prices shed $1.00 during May for several reasons. Many emitters had already procured and surrendered ahead of the 31 May deadline, while others utilised the $25.00 FPO. The announcement of Tranche 2 ETS decisions mid-month provided a little more certainty to emitters for the near term which further eased prices offered. NZU pricing is currently (as at 4 June) around $24.50.
The Australian election result came as quite a surprise to market commentators, and ACCU prices have felt the weight of the Coalition Government’s somewhat less ambitious climate change policy than that campaigned by Labour. ACCUs last traded around A$15.75 (NZ$16.70) as at 4 June, down $0.90 since election night.
EUAs traded as high as €26.80 (NZ$45.86) during May but closed the month at €24.30 (NZ$41.71).
