Wood Matters

Mike Duckett NZIF Registered Forestry Consultant PF Olsen Limited

ETS Auction
 

The third NZ ETS carbon auction for 2022 was completed on 7 September. Once again, all the 4.825 million available auction units were sold. The auction cleared at $85.40 per NZU, an increase of 12.4% on the June auction, but slightly below the pre-auction secondary market price. More information on the auction results can be found here.
 

Price Update
 

NZU spot pricing traded around $80.00 for the first half of August, before shifting up as high as $87.20 by early September. From there it has gradually sold off to current pricing of around $79.00 (as at 29/9/22).
 

It is difficult to understand exactly why pricing has drifted off in recent weeks, but contributing factors could include:

•  
• - Buyers getting their fill at the September auction,
• - Government starting consultation on ETS volume and price control settings,
• - More press on perceptions that our policy settings will only result in “plant and pollute” behaviour.

In Europe, the challenge continues of maintaining a functioning ETS through an ongoing energy crisis. While some want the impetus towards emissions reductions to remain, others want relief (in the form of price caps or suspension) to alleviate the impact of soaring energy prices.
 

A proposal is being developed which would see EUA allowance sales brought forward from auctions later this decade. The aim is to raise emergency energy investment funds in response to the crisis triggered by Russia’s war on Ukraine.
 

EUA prices have dropped by a third from an all-time high of EUR 99/t last month, off the back of concern that more volume may be released, as well as the deteriorating economic outlook. Current EUA pricing is around EUR 65/t.