Forestry and the Emissions Trading Scheme

International News

The inauguration of President Trump has brought much in the way of controversial “Executive Orders”, “Presidential Memoranda”, and “Proclamations”. Whilst none so far have been aimed directly at climate change, at some stage it is expected that Trump will formalise his position regarding US involvement in the Paris Accord.

Industry commentators see it as unlikely that the US would withdraw completely from Paris as this would be seen as isolating, given the broad support from the rest of the world.

You may have also seen recent press surrounding a social media post by the Swedish deputy prime minister, Isabella Lovin. In the photo posted online, Lovin is shown signing new climate law surrounded by female colleagues. This is a supposed dig at Trumps Executive Order to ban federal money going to international groups which perform or provide information on abortions. The image of Mr Trump signing the document surrounded by male colleagues was ridiculed on social media.

Unfortunately, most of the press has been on the photo, rather than what the deputy PM was signing. The new Swedish climate law sets an ambitious goal of phasing out greenhouse gas emissions by 2045, and the law will be legally binding for future governments. The law is expected to enter into force in 2018, and aims to provide more certainty to stakeholders.

Domestic News

The Ministry for the Environment and Ministry for Primary Industries have announced plans to hold a series of meetings with stakeholders during March, to discuss progress on the NZ ETS Review. We will hopefully be able to provide an update in the coming months.

Price Update

The market locally has not really “awoken” from its summer holiday yet - there is very little activity so far in 2017.

Large scale emitters may already have their unit requirements fulfilled for this year, but there may be some increase in activity in March, as emitters sort out their final requirements for the reporting period.

At current pricing, large-scale sellers seem prepared to sit on their hands and wait.

NZUs are currently trading at around $17.00 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)