Spot NZUs climbed to their highest levels of 2016 on Wednesday as comments made by Climate Change Minister Paula Bennett resurrected the bullish mood in the market.

The spot allowances rose 2.2% on the day to close at NZ$13.70 ($9.42), 20 cents above the previous high of NZ$13.50 set on Apr. 13.

After the bull run in late March and early April, NZUs had consolidated in recent weeks.

But Bennett this weekend repeated comments that New Zealand needs a higher carbon price if it is to meet its emissions reduction targets under the Paris Agreement.

She is also considering cancelling more than 120 million surplus Kyoto units, a move that might force tougher targets in ETS sectors in the longer run.

“Her comments were fairly bullish on NZUs. People have taken a risk management approach and bought allowances, because it looks like it’s only going one way from here,” one trader told Carbon Pulse.

NZUs began the week at NZ$13.12, but rose to NZ$13.40 on Tuesday and moved up further on Wednesday.

“This looks to be the end of the consolidation period and $14 levels seem inevitable,” brokers OM Financial said in a market update.

By Stian Reklev – stian@carbon-pulse.com

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