Forestry and the Emissions Trading Scheme

Price Update

Since the last issue of Wood Maters went to print the NZU market has moved through price levels of $11, $12 and $13 to currently trade at around $13.20 per NZU, representing a price rise of 23% over the last month. The NZU price rise since the start of 2016 now stands at 37%. The uncertainty around the ETS review and timing of any removal of the 2 for 1 transitional measures is a contributing factor, as any announcement directly affects supply and demand for NZUs. Volumes on the sell side are reported to be thin, as foresters await potential further price rises and are reluctant to sell in a rising market.

NZU prices have now moved to levels where PF Olsen is starting to receive enquiries around potential afforestation projects, for which there has been little interest since the NZU price collapse in 2011/12.

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. EUAs are valid units for trading within the European Union.

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

Carbon prices - April