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Forestry and the Emissions Trading Scheme - July 2013

Prices for NZUs have fluctuated up and down between the $1.75 and $2.00 mark from mid June to mid July and are currently trading at around $2.00 per NZU. The cheaper imported ERUs, which can be used for surrender purposes until 2015, have fluctuated from $0.25 in mid June, down to $0.17 then peaked at $0.30. They are currently trading at around $0.28. Liquidity for ERUs has tightened in Europe on the back of no new issuance. There is still plenty of demand for ERUs from both emitters and forestry owners exiting the ETS.

On the international scene:

  • In China, the Shenzen scheme, the first of 7 pilot ETS schemes to be launched in China, opened this month. It's a significant development for the world's largest polluter to follow other countries down an ETS route.
  • In Europe the European Union Members of Parliament voted in favour of the back-loading proposal which seeks to allow the EU Commission to intervene in the European ETS to prop up prices. If implemented the bill will delay the sale of 900 million CO2 permits until the end of the decade. The bill has passed its first hurdle but the next hurdle is the European parliament passing the agreed package, not due until sometime in October.
  • In Australia, the change of leadership to Rudd in the Labour Party means that Australia's carbon price will be set by an ETS rather than a tax. Commentators interpret this as a substantial fall to around A$6 once introduced if Labour retains power after the election.

If you are a PF Olsen client and you require any advice relating to the status of your forest in relation to the ETS, then please contact erin.leahy@pfolsen.com