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Forestry and the Emissions Trading Scheme

Consultation on the Zero Carbon Bill closed on 19th July 2018. Climate Change Minister James Shaw was impressed by the level of engagement, particularly from businesses and farming leaders. More than 14,000 submissions received during the six-week consultation period. (A summary of submissions will be released once analysed.) The Ministry for the Environment will now work through all the feedback to draft a bill that will be enduring. The bill is expected to be introduced in October 2018.

In Europe, carbon prices have continued to rise, as their summer heat wave strains power generators. Businessgreen.com reports that nuclear plants have been forced to shut down due to lack of available cold water for cooling reactors, while wind turbines have struggled with a lack of breeze. Energy suppliers have therefore increased output from coal and gas plants, increasing demand for EUA allowances to offset their emissions.

Price Update

After falling as low as $20.42 in mid-June, NZU prices have climbed rapidly up to a peak of $23.00 just six weeks later. That is a 12% gain in a relatively short period…. and it has spectators questioning what will happen as we creep closer than ever towards the $25.00 market cap. The market seems to have taken a breath since the peak at the end of July, with trading on or around $22.70 for the last week or so (up to 6th July 2018).

This month also sees the addition of Australian Carbon Credit Units (ACCUs) to our price trend graph. ACCUs are generated through Emissions Reduction Fund projects such as the Carbon Farming Initiative (CFI), a voluntary carbon offsets scheme that provides economic rewards to farmers and landholders who take steps to reduce greenhouse gas emissions.

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