New Zealand carbon allowances had another strong week, touching NZ$7.80 ($5.14) on Thursday, the highest levels since March 2012, before settling Friday at NZ$7.70, a ninth straight week of gains as demand remained strong.
The market opened near last week’s closing levels of NZ$7.50, but rallied on Wednesday and Thursday as buyers tracked offers north.
NZUs traded in small clips as sellers kept asking buyers to make bigger jumps to get larger volumes. On Friday, some 60,000 NZUs were available at NZ$8, according to brokers OM Financial.
“Demand remains strong and we feel this market will be well supported over the coming weeks. It has been an excellent run recently, so a period of consolidation in the high $7s would not surprise,” OMF said.
Demand was driven by emitters looking to settle their books ahead of year-end as well as bullish sentiment due to the upcoming climate talks in Paris and the ETS review, although the government has yet to release any specific information about the review.
Most observers expect the two-for-one rule to be scrapped after the review, which would theoretically double demand from emitters in the years ahead. It remains uncertain if the government will make adjustments on the supply side.
By Stian Reklev – firstname.lastname@example.org