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Forestry and the Emissions Trading Scheme

NZ ETS Decisions – Tranche Two

The Government has recently announced the second tranche of decisions on improvements to the NZ ETS. The decisions announced on 16 May 2019 are to:

  •          improve rates of compliance within the ETS through restructured penalties for late surrender or errors in reporting emissions
  •          increase transparency through publication of emissions and removals data at the participant level
  •          Prepare for robust and transparent auctioning by enabling independent oversight of the auctioning process
  •          Remove the fixed price option (FPO) by no later than 31 December 2022
  •          Enable a potential price floor in the future if desired, through an auction reserve price
  •          Establish a separate market governance work programme.

More information on the decisions can be found here.

Price update

NZU prices shed $1.00 during May for several reasons. Many emitters had already procured and surrendered ahead of the 31 May deadline, while others utilised the $25.00 FPO. The announcement of Tranche 2 ETS decisions mid-month provided a little more certainty to emitters for the near term which further eased prices offered. NZU pricing is currently (as at 4 June) around $24.50.

The Australian election result came as quite a surprise to market commentators, and ACCU prices have felt the weight of the Coalition Government’s somewhat less ambitious climate change policy than that campaigned by Labour. ACCUs last traded around A$15.75 (NZ$16.70) as at 4 June, down $0.90 since election night.

EUAs traded as high as €26.80 (NZ$45.86) during May but closed the month at €24.30 (NZ$41.71).