Emitters captured within the ETS still have to pay for their greenhouse gas emissions - but at the moment it is significantly cheaper to buy carbon units from elsewhere, such as forestry owners.
The minimum price carbon units could be sold for in the auction was $68, but emitters have been able to buy elsewhere for as little as $40 recently.
Brunel said the market had been spooked most recently by the Government’s decision last month to “de-couple” the ETS from New Zealand’s Paris Agreement pledges.
“They could have done it quite differently, instead of just going, ‘Surprise!’”
Markets hate uncertainty, he said.
“It was announced without a lot behind it, [or] the rationale for doing it, so it gave the market concern that there were changes happening to the ETS that weren’t well telegraphed - and the market reacted accordingly.”
However, the market had been weak all year.
“There’s been a number of things that have fed into it ... The fact that [the Government] reduced the methane target, the fact that mandatory reporting requirements were weakened, just the continual mantra that we’re not going to do anything in offshore mitigation to meet our [2030 Paris target] kind of sent the signal to the marketplace that ... the Government was weakening overall on climate change policy,” Brunel said.
That had not been helped by “quips from minor parties that we should withdraw from Paris”.
The units from all 2025 auctions will now be cancelled out of the ETS, meaning they will not be available to emitters in subsequent years.
- RNZ
