ETS market outlook for New ZealandFriday 16 Jan 2026
The anticipated surge is driven by 2026 marking the first year of a new Mandatory Emissions Return Period (MERP). In the first year of each MERP, all forestry ETS participants are legally required to file emissions returns covering the entire previous period. In our experience, many participants only file returns in these mandatory years, and those returns tend to be net positive. The result is a significant issuance of forestry NZUs over and above the volumes we see in optional reporting years. From a supply perspective, however, what matters is how many NZUs actually reach the market. At current depressed price levels, it is reasonable to expect forestry ETS participants to be reluctant sellers unless compelled to transact. It is also worth noting that forestry NZU supply from this year’s mandatory returns will dry up midway through the year, with the next mandatory emissions return year not occurring until 2031. If recent times have taught us anything, it is that in periods of uncertainty the NZU spot price is shaped more by sentiment and short-term expectations than by long-term structural fundamentals. However, economic logic suggests that those fundamentals ultimately reassert themselves. This may explain why the vast majority of our NZU brokerage clients have been content to remain on the sidelines since last November’s sharp price decline. Bookmark our new Market Data page, which features the latest carbon and log price information and trends. Source & image credit: PF Olsen | ||
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