BNZ Carbon NewsFriday 16 Dec 2011  The big news in carbon markets at the moment is that the Durban climate talks have ended with a new agreement. After two extra days of negotiations an agreement, called the Durban Platform, has been reached, which aims to legally bind all countries to reduce emissions. It was also announced last week that New Zealand and Australia have agreed to link our respective emissions trading schemes from 1 July 2015. Officials hope to have an agreement in place by the end of 2012, with a working group looking into how the two schemes should be linked. Despite all this good news, the prices of NZUs have continued to fall dramatically. This is due to the two fold effects of the European sovereign debt crisis; (1) lowering the EUR/NZD rate and (2) decreasing demand from industrial emitters for European carbon credits. The best way to describe the situation in European carbon markets at the moment is panic. The low price on the international stage has caused CERs to flood into the New Zealand market. As CERs can be used for compliance purposes, many New Zealand emitters have purchased these units, decreasing demand for NZUs. NZUs are currently trading at NZ$8.80 and CERs are trading at NZ$6.60. The New Zealand Government has proposed to ban industrial gas CERs for NZ ETS compliance, this should provide some relief when it comes into effect. The Government is consulting on two timing options, namely to ban industrial gas CERs that enter the NZEUR from 1 January 2012 or 1 January 2013. Both timing options are earlier than the 1 May 2013 effective start date of the EU ETS ban on industrial gas CERs. This is important to prevent the NZETS being the last scheme accepting the CERs, which would drive the price down to close to zero. The ban would apply to industrial gas CERs that have already been purchased under existing forward contracts but will not be delivered until after the regulations come into force. However, the Government is also consulting on whether there should be an exemption for such forward contracts. The ban would not apply to industrial gas CERs in the NZEUR at the time the regulations come into force.  |
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