Spot NZUs rose to year-high levels for the third day in a row on Friday, adding 1.4% to settle at NZ$14.50 ($10.11), albeit on thin volumes.

The allowances rose more than 10% over the week as Climate Change Minister Paula Bennett’s comments that the carbon price must go higher fuelled demand.

But after healthy volumes traded on Wednesday and Thursday, liquidity dropped to near zero on Friday.

“There is plenty of interest, but following yesterday’s big move it seems like the market is taking a breather before the weekend,” one trader told Carbon Pulse.

The deadline for submitting comments on the second part of the government’s ETS review is tomorrow.

Parliamentary commissioner for the environment, Jan Wright, on Thursday urged the government to start phasing out free allocation to trade-exposed industries and to limit access to international offsets post-2020.

There is still no word from the government on when it will make a decision on the issues in the first part of the review, which concerned dropping the 2-for-1 rule and the NZ$25 price ceiling.

“We believe there’s still momentum in this market and it would not surprise to see $15 prices in the very near future,” brokers OM Financial said in an email to clients.

By Stian Reklev – stian@carbon-pulse.com

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