Forestry and the Emissions trading Scheme

In December 2015, some 195 countries committed to the Paris Agreement with the goal to reduce greenhouse gas emissions. However the Paris Agreement is not binding until it is ratified by 55 countries representing 55% of global greenhouse emissions. As at August 2016 the Paris Agreement has been ratified by 22 countries representing only 1% of global emissions. New Zealand has not yet ratified.  The Government plans to ratify the Paris agreement on climate change by the end of the year

U.N. Secretary-General Ban Ki-moon is urging large nations, particularly USA and China with around 40% of global emissions, to ratify the Paris Agreement as soon as possible.

The USA accounts for around 18% of global emissions. President Obama intends on ratifying the Paris Agreement before he leaves office. If Obama does not manage to ratify by January there is uncertainty around ratification dependent on the outcome of the presidential election. Hillary Clinton would continue with ratification of the agreement however Donald Trump would not ratify. Trump has said previously that there is no evidence that humans are responsible for climate change.

Many other countries are likely awaiting the commitment of these large emitters before ratifying the Paris Agreement themselves.

Price Update

The NZU market price has corrected from around $18.00 last month to currently trade at around $17.55 per NZU. Market commentators report this is often a quiet part of the year for compliance buyers.

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)