More than 200,000 NZUs -- domestic units for greenhouse gas emissions -- are reported to have traded on the local market this week, as participants gear up for July 1 when utilities, industrials and the transport sector are brought into trading market un
More than 200,000 NZUs -- domestic units for greenhouse gas emissions -- are reported to have traded on the local market this week, as participants gear up for July 1 when utilities, industrials and the transport sector are brought into trading market under the emissions trading scheme (ETS).
All trades went through within a $17-$18 price range, one broker told Point Carbon, a news website specialising in global carbon markets.
"Trading activity in NZUs has been on the increase in the last month as more market participants finalise their strategies and board approvals," said Mike McKensey, a carbon trader with Westpac.
"This increased activity has seen prices moving, but within a stable band compared to earlier in the quarter," he told Point Carbon. "However, the approach of July 1 could well bring another shift in the supply-demand balance prompting a new period of price discovery."
This week's prices were lower than when New Zealand's emissions trading scheme (ETS) recorded its first NZU carbon credit transaction in March last year -- 50,000 tonnes of 2008 NZUs traded at $20 a tonne. It was the world's first sale of Kyoto forestry credits.
New Zealand is the only country under Kyoto to include all six greenhouse gases in its ETS, and all NZUs are backed by a government "assigned amount unit" (AAUs).
Most of the NZUs are coming from carbon sequestration -- the capture of carbon to mitigate global warming --in forests and forest owners are able to claim these carbon credits from the Government annually, and either sell them offshore as AAUs or to local emitters who need to buy carbon credits to offset their footprints.
Separately, the Government also has the Permanent Forestry Sink Initiative (PFSI) intended to lock up canopy forests permanently -- and it also provides credits for annual carbon sequestration in these forests.
According to an online platform, New Zealand Carbon Market, bids for 2010, 2011 and 2012 vintage NZUs are being made at $18, while offers are at $20.50. New Zealand-generated emissions reduction units (ERUs) are quoted in the $20-$25 range.
Point Carbon said the New Zealand unit price remained relatively subdued as carbon credits in the European market had lost value over the past four weeks.
The December 2010 EU allowance has shed 7.5 percent of its worth over the past month. It closed at 15.26 euros ($NZ27.14) on June 3, down from 16.50 euros ($NZ29.36) four weeks earlier.
Secondary certified emissions reductions dropped even more, falling 13 percent to 12.57 euros ($NZ22.37) on June 3 from 14.45 euros ($NZ25.71) on May 3.
