BNZ Carbon NewsFriday 18 Nov 2011  Carbon has continued to trade broadly downwards over the last couple of months, finishing at NZ$13.40. NZUs are at a slight premium to CERs, currently trading at NZ$12.40. The low price of carbon at the moment is driven largely by developments in Europe, the lack of demand for carbon credits as the economy slows couples with a low Euro, allows carbon to be imported into New Zealand at discount rates. Prime Minister John Key and Environment Minister Nick Smith announced the National Party’s environment policy last week, and have given some very clear signals as to what awaits the NZ ETS if National return to power. National have indicated they will slow the implementation of the ETS broadly in line with recommendations from the ETS Review Panel. The scheme is currently legislated to step up to full obligations for emitters on 1 January 2013, however, the review panel has recommended a phased approach. National’s policy adopts the recommendation that an emitter is required to only purchase units to cover 67% of their emissions in 2013, 83% in 2014 and 100% in 2015, but opted to maintain the fixed price at NZ$25 until 2015, rather than increasing it steadily over the next 3 years as recommended by the panel. The introduction of agriculture to the ETS will be reviewed again in 2014 under National, and will only be included in the scheme if new technologies are available to enable abatement, and if international progress has been made on reducing emissions. This is contrasted with Labour’s policy that agriculture should join the ETS as planned on 1 January 2013 with a 90% of 2005 emissions allocated to the sector in the form of NZUs. Perhaps the most interesting announcement from National is the introduction of offsetting from January 2013. Offsetting will allow owners of pre-1990 forests to re-plant an alternative but equivalent block of land upon harvest, freeing up land-use change. Currently a pre-1990 forest must be replanted (or allowed to regenerate) on the same piece of land to avoid carbon obligations. The move will, however, likely mean that the second tranche of NZUs to be allocated to the owners of pre-1990 forests comes under review. Across the Tasman, the Australian senate passed the Australian carbon legislation last week. The move will see a carbon tax at AUD$23 per tonne introduced from July next year, with a move to a full emissions trading scheme in July 2015. The vote passed with a majority of 36 to 32, however Tony Abbott, leader of the opposition, is still vowing to repeal the legislation should he take power in 2013.  |
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