NZUs rose 5.4% this week to close Friday at NZ$6.22 ($4.66), the highest level in the New Zealand carbon market since Dec. 31 as more emitters stepped in to buy permits.

Spot NZUs peaked Wednesday at NZ$6.25, and eventually closed 3 NZ cents lower, compared to NZ$5.90 last Friday.

“People have started to realise it’s going higher. There are few sellers, but buyers are coming in,” one market participant told Carbon Pulse.

The price had been steady in the NZ$5.85-6.00 range since early January after a 50% price surge in the past six weeks of 2014.

Most traders say prices are likely to rise in the longer term, as New Zealand emitters are no longer allowed to use Kyoto units to meet their targets, due to the government’s decision to opt out of the second Kyoto Protocol commitment period.

But the market remains over-supplied in the short term as the NZ registry has accumulated over 100 million NZUs over the past few years while emitters have almost exclusively used ERUs and CERs for their annual compliance.

Traders estimated that in excess of 100,000 NZUs changed hands over the week.

By Stian Reklev – stian@carbon-pulse.com