The last week has seen plenty of news for Carbon markets, with the spot price rising to $70/NZU at the time of writing. An increase of some 70% since the June quarter.
Recent news items include:
The Emissions Trading Scheme (ETS) review is ongoing, but positive ETS rhetoric emanating from the major political parties has addressed some concerns surrounding NZ’s commitment to climate change, the need for a strong and stable carbon price and forestry’s role in New Zealand’s quest for carbon neutral.
International Monetary Fund Warns Further Action Needed
This week, the International Monetary Fund has said that New Zealand remains significantly off track in our hopes of meeting 2030 climate change targets. It has been estimated that we would miss our 2030 commitment by 17 million tonnes. The IMF has also said a real price for carbon credits of US $100 NZU (NZ $166 NZU equivalent) by 2030 would close the gap by two thirds. Find out more here.
Carbon Price Movements
Party Carbon Dividend
announced its tax plan in the build up to the election this October. As part of its tax policy, it has outlined a potential Carbon Dividend, which would see some proceeds from future government ETS auctions redirected toward its tax bracket indexation and help alleviate the rising costs placed on consumers as emitters pass on offsetting costs. Whether or not this is a good move for decarbonization goals, the fact that this requires a strong and stable NZU price to reliably fund its ‘carbon dividend’ places a certain amount of trust and confidence in our carbon markets going forward. Find out more here.
Positive Reinforcement at Carbon Conference
At an industry conference this week, Climate Change Minister James Shaw has reinforced ETS reviews are much more pro-forestry than some media and social outlets have led to believe. His view is that Forestry, including plantation and longer term indigenous permanent forestry, will remain a key component of NZ’s climate change policy.
The key messages were:
- A strong and stable NZU price is needed.
- Investors existing investments must be protected.
- Policies must prevent the ETS bottoming out during the 2030’s due to potential oversupply. Although many in the industry disagree that this is correct.
- More forests were required to meet our climate change goals, along with reductions in gross emissions.
At RDNZ, we remain positive about the outlook for forestry in the ETS and its contribution toward net-zero carbon commitments.
Our forest managers (FMNZ) have had a tremendous planting season, establishing more than 7,000 hectares of pine, redwoods and natives, much of which is carbon eligible and to be registered in the ETS under carbon averaging, generating the best outcome with respect to sustainable production forestry with carbon benefits.
Forestry is known to be the most efficient capturer of CO2, and our forest acquisitions achieve a present value cost of carbon at just a fraction of the price that carbon credits trade in the market. For those wanting sustainable forestry and carbon solutions in their portfolio, talk to the team about the Awatea Forest Fund. Awatea has reached +1,600 hectares of effective forest area, and is well placed to see the benefits of forestry’s role in the ETS.
To discuss Carbon, Forestry or Forestry investments, please contact the team today.