New Zealand spot CO2 prices recover

New Zealand’s carbon prices staged a recovery as they tracked a rebound in the international carbon markets. Spot permits under the NZ ETS were traded at NZD15.30 (US$12.54) compared with the previous week’s price of NZD14.25.

The rise in spot prices came despite light trading volumes of around 15,000 NZ units (NZUs). “With many emitters having met their accrued liability through CERs and many foresters holding onto their units for better pricing there has been light trading,” analysts at Westpac Bank said in a note to clients, referring to UN offsets called Certified Emissions Reductions (CERs).

Forestry is a major source of NZUs as long-term tree plantations absorb large amounts of CO2 from the air and the tradeable permits are considered a sweetener for forestry investors.

The price for CERs closed at EUR8.52 on 18 August, 3.84% lower than the previous day’s close. The NZ scheme allows polluters to buy CERS to meet their obligations and when CER prices decrease, particularly if accompanied by a fall in the euro, NZU prices are effectively capped.