Spot NZUs settled at NZ$6.75 ($4.67) on Friday after a rush of demand drove the price up earlier in the week to NZ$7.10, their highest levels in three years.

Strong demand from emitters looking to add allowances to their accounts pushed the NZU price through the NZ$7 level on Monday, but buyers were unwilling to keep paying those levels, causing the price to slide somewhat.

It eventually settled at NZ$6.75 on Friday, well below the peak but 5 NZ cents above last Friday’s close.

“There has been a lot of buy interest, but it has eased back a bit,” one market participant said. “But it feels more dynamic than ever before and you can really sense the interest building.”

Traders are still awaiting news on New Zealand’s INDC, which will inform the ETS review due later this year, but so far the government has not made any indications of what it may be willing to pledge at the UN summit in Paris in December.

Some observers say the price may rise further later in the year if the review leads to significant changes, such as removing the 2-for-1 rule.

Notably, forest-owners largely remained uninterested in selling their NZUs this week even when prices were at their highest since 2012, hoping the price rise may continue.

“There is considerable interest on both sides of the market with good bidding interest between $6.75 and $6.50 and good offering interest above $7,” brokers OM Financial said, but that supply was from emitters, not foresters, who are potentially the largest supply source in the market.

By Stian Reklev – stian@carbon-pulse.com