Spot NZUs rose 8.1% over the week to close Friday at NZ$8.32 ($5.47), a tenth straight week of gains, as traders reacted to the government’s ETS review paper.

Spot allowances closed 62 NZ cents higher than last Friday, with most market observers expecting the bullish trend to extend into next week.

“We expected some consolidation after the big run this week, but it is yet to transpire. To the contrary, the 100k offer at $8.40 is looking under pressure,” brokers OM Financial said.

Despite leaving agriculture out of the ETS in the future, the review discussion paper provided clear signals the government intends to adjust the scheme to increase demand, most likely by removing the 2-for-1 rule.

The paper was released after market close on Tuesday, but on Wednesday the spot allowances spiked, moving from NZ$7.85 to NZ$8.20 before making further gains on Friday.

“$8.50 is the next round number and at this rate we could trade there next week,” OM Financial said.

The spot NZU price is now 39% higher than it was at the beginning of the year and 93% above where it was 12 months ago.

By Stian Reklev – stian@carbon-pulse.com

Not yet signed up to CP Daily? Subscribe to our free newsletter here