The investment view on renewable energy remains positive in the wake of the Australian emissions trading scheme (ETS) deferral, according to Forsyth Barr.
Australian Prime Minister Kevin Rudd has decided to delay ETS implementation until 2013, citin
The investment view on renewable energy remains positive in the wake of the Australian emissions trading scheme (ETS) deferral, according to Forsyth Barr.
Australian Prime Minister Kevin Rudd has decided to delay ETS implementation until 2013, citing global uncertainty on the regulation of greenhouse gas emissions.
In a report released today, Forsyth Barr clients were told the New Zealand ETS roll-out on July 1 was likely to go ahead as planned, irrespective of increased political pressure over the next two months to defer the scheme.
The eventual introduction of an Australian ETS remained likely.
“At this stage it appears to us that politicians are still keen to reduce global carbon emissions, which ultimately means putting a cost on carbon,” the report stated.
Even if a delay occurred, the report stated, renewable energy players NZ Windfarms, TrustPower and Contact Energy will not experience significant value impact unless the scheme is abandoned altogether.
Under current legislation, electricity generators will be required to pay for all greenhouse gases emitted from July 1, although a transition phase applies until 2013.
NZ Windfarms and TrustPower, as generators of 100% renewable energy, stand to benefit more under an ETS scheme than Contact Energy, at around 58%.
“The key thing is that as long as an ETS comes in at some point in time, they will still get those benefits in the future,” analyst Andrew Harvey-Green told NBR.
In the event that the NZ ETS is removed, Contact Energy will receive an offset benefit, as the company will no longer be required to pay for the emissions of its geothermal and thermal plants.
Mr Harvey-Green said the chances of the NZ ETS eventually being removed are “just too far in the future” to predict.
