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Forestry and the Emissions Trading Scheme - May

The NZU price has fallen back over the last month from over $6.00 to currently trade at around $5.30 per NZU.

This month the government released its consultation on New Zealand's post 2020 targets for inclusion in its Intended Nationally Determined Contribution (INDC) for the purposes of the UNFCCC climate change negotiations in Paris this December.

The 2015 ETS review to be undertaken by the NZ government is still pending. This review could result in auctioning by the government of NZUs and also impact on the current two for one provisions for emitters (having to surrender one NZU for every two tonnes of CO2e emitted).

The use of ERUs and CERs (and other Kyoto units) for surrender purposes is coming to an end because New Zealand abandoned the second commitment period of the Kyoto Protocol in 2012. Surrender of these Kyoto units is no longer possible after the 31st May 2015. ERUs and CERs are currently trading at around $0.10 - $0.12 per unit.

The figure below shows the recent carbon credit prices for EUAs, CERs, NZUs and ERUs. Note that from 1st June 2015 only NZUs or New Zealand AAUs are valid units in the NZ ETS.

 CO2 Price Trend - May 2015

Figure 1: Recent Carbon Prices - NZ$/t CO2e – Real (CPI adjusted)

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