Forestry and the Emissions Trading Scheme

Zero Carbon Bill

The Government’s Zero Carbon Bill passed on the 7th November 2019 after the third reading of the Climate Change Response (Zero Carbon) Amendment Bill. All parties voted for the bill, although ACT was not represented due to the absence of David Seymour (who was generally expected to vote against). The bill formalises emissions reduction targets to achieve net zero emissions by 2050. It also facilitates the establishment of an independent Climate Change Commission to provide expert advice, and monitor and review progress towards emissions reduction targets. More information can be found here.

Climate Change Response Act Amendment

The Climate Change Response (Emissions Trading Reform) Amendment Bill was introduced to Parliament by Minister James Shaw in 24 October 2019. The Bill formalises changes put forward by the Government over past months aimed at improving the effectiveness of the Emissions Trading Scheme. There are 225 pages to the Bill, and PF Olsen will be reviewing these changes in detail over the coming weeks to understand how they affect our clients. The changes will soon go to Select Committee where submissions can be made. You can find out more about the select committee and how to make submissions by visiting the Environment Committee website here.

The Government has also announced the commencement of consultation on ETS Forestry Regulations, which will deal with the operational detail of the revised legislation. Three public meetings are scheduled (Christchurch 27/11, Rotorua 9/12 and Nelson 12/12), and submissions will be accepted up until 20 December 2019. More information can be found here

Price update

NZUs traded a reasonably tight range around $24.80 for most of October. Towards the end of the month prices crept up to around $24.95 where they have remained into early November. The odd parcel has traded at or slightly above the $25.00 FPO point and this seems to have stimulated some selling activity. We don’t expect prices to move much either way from here in the short term, even with the recent release of more detail around ETS regulations and the passing of the Zero Carbon Bill.