Forestry and the Emissions Trading Scheme

Domestic News

Traders have been playing up the potential impact of Key’s resignation on carbon pricing, theorising that Labour has now got a better chance of winning the next election, and therefore the possibility of agriculture entering the ETS has increased.

Climate Change Issues Minister Paula Bennett has been appointed Deputy Prime Minister, and it remains to be seen what impact this will have on her portfolio.

Price Update

In late November, NZUs had their first major correction in 12 months, shedding almost $2 to bottom at just under $17. This correction seems to have been driven by:

  • Trump election win stirring uncertainty due to his climate change position.

  • Domestic sellers looking to take profits as the year comes to a close.

  • Domestic buyers "smelling a little blood" and obviously not needing large quantities of NZUs (in the short term).

December so far has seen price recover somewhat, and trading has been relatively consistent around the $17.40 - $17.70 mark. Market consensus seems to be that pricing will continue to recover, but slowly.

NZUs are currently trading at around $17.40 per NZU.

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)