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Forestry and the Emissions Trading Scheme

ETS Consultation – Designing a governance framework for the NZ ETS

The Government is proposing improvements to the market governance framework of the New Zealand Emissions Trading Scheme (NZ ETS). Feedback is being sought on proposals to address:

• Governance of advice

• Governance of trading

• Governance of market conduct

• Appointing a regulator

Webinars have been held already. A recording of the forestry-specific webinar can be found here. If you wish to find out more or have your say on the proposals, visit the MfE consultation website.

Regulation updates – Auction unit limit and price control settings for 2022-2026

The Government has recently updated unit limit and price control settings for 2022-2026. The price floor is set to increase to $30.00 for 2022. The Cost Containment Reserve (CCR) trigger price will increase to $70.00. These increases are broadly in line with the Climate Change Commission’s recent advice. Unit supply is also planned to increase slightly for 2024 and 2025, and 2026 volume has been set. The tables below (from MfE) detail the new settings.

 

Price update

NZU spot pricing has continued on an upward trajectory through August. It broke through $50 around the time that the ETS price control changes above were announced. The current pricing (as of 30 August 2021) is $51.10.

The next auction is scheduled for 1 September, and the CCR Trigger at $50 is clearly in play. Up to 7 million units will be available if the clearing price reaches the trigger.